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AB-1480 Workers’ compensation.(2003-2004)

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AB1480:v98#DOCUMENT

Amended  IN  Assembly  April 21, 2003

CALIFORNIA LEGISLATURE— 2003–2004 REGULAR SESSION

Assembly Bill
No. 1480

Introduced  by  Assembly Member Richman
 (Coauthor(s): Assembly Member Cogdill, Maddox, Wyland)

February 21, 2003

An act to amend Sections 4603.2 and 4650 of, to add Sections 3821 and 4600.37 to, to repeal Section 5814.5 of, and to repeal and add Section 5814 of, the Labor Code, relating to workers’ compensation.


LEGISLATIVE COUNSEL'S DIGEST


AB 1480, as amended, Richman. Workers’ compensation.
(1) Existing law provides that it is unlawful to commit various acts that compromise the integrity of the workers’ compensation system, including presenting any knowingly false or fraudulent written or oral material statements in order to obtain or deny a claim for workers’ compensation.
This bill would require an applicant for employment, upon the request of an employer, to disclose whether he or she has ever been adjudicated to have committed any of those unlawful acts or been convicted of violating other specified unlawful acts relating to fraud.
(2) Existing law requires employers to provide to an employee injured on the job health care treatment that is reasonably necessary to cure and relieve the effects of the injury. Existing law authorizes an employer to contract with a licensed health care organization for health care services to be provided to injured employees under workers’ compensation laws and requires the health care organization to be certified for this purpose.
This bill would authorize an employer to contract with a preferred provider organization (PPO) for health care services to be provided to injured employees under the workers’ compensation laws. The contract would be required to include, among other components, the opportunity for every employee to select a personal physician within the PPO network at any time and the right to a second opinion from a participating provider on a matter pertaining to diagnosis or treatment from a participating physician.
(3) Existing workers’ compensation law requires a physician treating an injured employee to submit a report to the employer within 5 working days from he date of the initial examination.
This bill would require the physician to submit additional reports to the employer, as prescribed.

(2)

(4) Existing law requires the employer to make payment for medical treatment provided or authorized by the treating physician within 60 calendar days after receipt of the billing for the services together with any required reports and authorization.
This bill would change this payment timeframe requirement from within 60 to within 45 calendar days.

(3)

(5) Existing law provides that any properly documented amount billed that is not paid by the employer within the prescribed time period shall be increased by 10%, together with interest, unless the employer contests the items, as prescribed.
This bill would provide that if the employer contests, denies, or seeks review of the billing, the employer shall only be required to pay any interest or increase in compensation for delayed payment pursuant to this provision if the provider objects in writing to the employer’s written explanation for contesting, denying, or seeking review of the billing within 45 calendar days of receipt of payment, notice of nonpayment, or explanation of review. The bill would preclude the provider from seeking further reimbursement or filing a lien if the provider fails to make this objection within the 45 calendar day period.

(4)

(6) Existing law requires the Administrative Director of the Division of Workers’ Compensation to adopt and revise, no less frequently than biennially, an official medical fee schedule that establishes reasonable maximum fees paid for medical services through the workers’ compensation system.
This bill would prohibit the total payment to the provider of medical services from exceeding the maximum reasonable fees listed in the official medical fee schedule.

(5)

(7) Existing law requires, if an injury arising out of employment causes permanent disability, that the first payment of permanent disability indemnity be made within 14 days after the date of the last payment of temporary disability indemnity.
This bill would provide that when the monetary value of the permanent disability has been determined or estimated, the payment of the permanent disability indemnity shall be made at the same weekly rate as the temporary disability indemnity. The bill would require the employer to provide to the employee notice of this fact and other information along with the first payment of permanent disability indemnity.

(6)

(8) Existing law provides that when payment of compensation has been unreasonably delayed or refused, the full amount of the order, decision, or award shall be increased by 10%. Existing law requires the Workers’ Compensation Appeals Board to determine the question of delay and reasonableness and to award reasonable attorney’s fees incurred in enforcing the payment of compensation awarded.
This bill would repeal these provisions. The bill, instead, would prescribe procedures under which, when the payment of compensation has been unreasonably delayed or refused, the amount of the benefit payment unreasonably delayed or refused may be increased up to 25% or $500, whichever is greater. The bill would require the appeals board to use its discretion in order to accomplish fair balance and substantial justice between the parties under these proceedings.
(9) The bill would also provide that it is the intent of the Legislature to enact legislation to increase civil penalties for workers’ compensation fraud and to use this increased revenue for additional antifraud investigations.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


Section 3821 is added to the Labor Code, to read:

3821.
 Upon the request of an employer, an applicant for employment shall disclose both of the following:
(a) Whether he or she has ever been adjudicated to be in violation of Section 3820.
(b) Whether he or she has ever been convicted of violating Section 1871.4 of the Insurance Code or Section 550 of the Penal Code with respect to a workers’ compensation insurance claim.

SEC. 2.

 Section 4600.37 is added to the Labor Code, to read:

4600.37.
 (a) Notwithstanding Section 4600, a self-insured employer, group of self-insured employers, or the insurer of an employer may contract with a preferred provider organization (PPO) for health care services required by this article to be provided to injured employees. Every employee shall have an opportunity to select a personal physician within the PPO network at any time. Every employee shall have the right to a second opinion from a participating provider on a matter pertaining to diagnosis or treatment from a participating physician.
(b) Each contract described in subdivision (a) shall provide all medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatus, including artificial members, that is reasonably required to cure or relieve the effects of injury, as required by this division, without any payment by the employee of deductibles, copayments, or any share of the premium. However, an employee may receive emergency medical treatment that is compensable from a medical service or health care provider that is not a member of the PPO.
(c) A self-insured employer, a group of self-insured employers, or the insurer of an employer that contracts with a preferred provider organization (PPO) for medical services shall give notice to each employee of eligible medical service providers, the employee’s right to select any provider within the PPO network and to a second opinion from a physician within the PPO network as provided in subdivision (a), and any other information regarding the contract and the manner of receiving medical services.
(d) In the event the self-insured employer, group of self-insured employers, or the insurer of an employer no longer contracts with the PPO that has been treating the injured employee, the employee may continue treatment provided or arranged by the PPO. If the employee does not choose to continue treatment provided or arranged by the PPO, the employer may control the employee’s treatment for 30 days from the date the injury was reported. After that period, the employee may be treated by a physician of his or her own choice or at a facility of his or her own choice within a reasonable geographic area.

Section 4603.2 of the Labor Code is amended to read:

4603.2.
 (a) (1) Upon selecting a physician pursuant to Section 4600, the employee or physician shall forthwith notify the employer of the name and address of the physician.
(2) The physician shall submit a report to the employer, within five working days from the date of any of the following:
(A) The initial examination.
(B) Any significant changes in the employee’s condition, treatment plan, or status.
(C) A claims administrator’s reasonable request for additional information.
(3) The physician shall also submit a report within 21 days from the last report of any type during ongoing treatment.
(b) (1) Payment for medical treatment provided or authorized by the treating physician selected by the employee or designated by the employer shall be made by the employer within 45 calendar days after receipt of each separate, itemized billing, together with any required reports and any written authorization for services that may have been received by the physician. If the billing or a portion thereof is contested, denied, or considered incomplete, the physician shall be notified, in writing, that the billing is contested, denied, or considered incomplete by the employer, within 30 working days after receipt of the billing by the employer. A notice that a billing is incomplete shall state all additional information required to make a decision. Any properly documented amount not paid within the 45 calendar day period shall be increased by 10 percent, together with interest at the same rate as judgments in civil actions retroactive to the date of receipt of the bill, unless the employer does both of the following:
(A) Pays the uncontested amount within the 45 calendar day period.
(B) Advises, in the manner prescribed by the administrative director, the physician, or another provider of the items being contested, the reasons for contesting these items, and the remedies available to the physician or the other provider if he or she disagrees. In the case of a bill that includes charges from a hospital, outpatient surgery center, or independent diagnostic facility, advice that a request has been made for an audit of the bill shall satisfy the requirements of this paragraph.
(2) If an employer contests all or part of a billing, any amount determined payable by the appeals board shall carry interest from the date the amount was due until it is paid.
(3) An employer’s liability to a physician or another provider under this section for delayed payments shall not affect its liability to an employee under Section 5814 or any other provision of this division.
(c) Any interest or increase in compensation paid by an insurer pursuant to this section shall be treated in the same manner as an increase in compensation under subdivision (d) of Section 4650 for the purposes of any classification of risks and premium rates and any system of merit rating approved or issued pursuant to Article 2 (commencing with Section 11730) of Chapter 3 of Part 3 of Division 2 of the Insurance Code.
(d) (1) Whenever an employer or insurer employs an individual or contracts with an entity to conduct a review of a billing submitted by a physician or medical provider, the employer or insurer shall make available to that individual or entity all documentation submitted together with that billing by the physician or medical provider. When an individual or entity conducting a bill review determines that additional information or documentation is necessary to review the billing, the individual or entity shall contact the claims administrator or insurer to obtain the necessary information or documentation that was submitted by the physician or medical provider pursuant to subdivision (b).
(2) An individual or entity reviewing a bill submitted by a physician or medical provider shall not alter the procedure codes billed or recommend reduction of the amount of the bill unless the documentation submitted by the physician or medical provider with the bill has been reviewed by that individual or entity. If the reviewer does not recommend payment as billed by the physician or medical provider, the explanation of review shall provide the physician or medical provider with a specific explanation as to why the reviewer altered the procedure code or amount billed and the specific deficiency in the billing or documentation that caused the reviewer to conclude that the altered procedure code or amount recommended for payment more accurately represents the service performed.
(3) Unless the physician or medical provider has billed for extraordinary circumstances related to the unusual nature of the medical services rendered pursuant to subdivision (b) of Section 5307.1, this subdivision shall not apply when a bill submitted by a physician or medical provider is reduced to the amount or amounts specified in the official medical fee schedule, preferred provider contract, or negotiated rate for the procedure codes billed.
(4) The appeals board shall have jurisdiction over disputes arising out of this subdivision pursuant to Section 5304.
(e) When the employer contests, denies, or seeks review of the billing, the employer shall only be required to pay any interest or increase in compensation for delayed payment pursuant to subdivision (b), if the provider of medical services objects in writing to the employer’s written explanation for contesting, denying, or seeking review of the billing within 45 calendar days of receipt of payment, notice of nonpayment, or explanation of review. The failure of the provider to object within this 45 calendar day period shall preclude the provider from seeking further reimbursement or filing a lien.
(f) The total payment to the provider of medical services shall not exceed the maximum reasonable fee listed in the offical medical fee schedule.

SEC. 2.

Section 4650 of the Labor Code is amended to read:

4650.
 (a) If an injury causes temporary disability, the first payment of temporary disability indemnity shall be made not later than 14 days after knowledge of the injury and disability, on which date all indemnity then due shall be paid, unless liability for the injury is earlier denied.
(b) (1) If the injury causes permanent disability, the first payment shall be made within 14 days after the date of last payment of temporary disability indemnity. Where the extent of permanent disability cannot be determined at the date of last payment of temporary disability indemnity, the employer nevertheless shall commence the timely payment required by this subdivision and shall continue to make these payments until the employer’s reasonable estimate of permanent disability indemnity due has been paid, and if the amount of permanent disability indemnity due has been determined until that amount has been paid.
(2) When the monetary value of the permanent disability has been determined or estimated, the payment of the permanent disability indemnity shall be made at the same rate as temporary disability indemnity. Along with the first payment of permanent disability, the employer shall provide the employee with the notices specified in Section 4061 and the following warning in at least 12-point type:
“WARNING: Your permanent disability indemnity is paid at the same weekly rate as your temporary disability indemnity, and any future payments of permanent disability indemnity may be deducted from the ultimate award or settlement.”
(3) This subdivision shall not apply to payments made pursuant to subdivision (a) or (b) of Section 4659, or Section 4702.
(c) Payment of temporary or permanent disability indemnity subsequent to the first payment shall be made as due every two weeks on or before the day designated with the first payment.
(d) If any indemnity payment is not made timely as required by this section, the amount of the late payment shall be increased 10 percent and shall be paid, without application, to the employee, unless the employer continues the employee’s wages under a salary continuation plan, as defined in subdivision (g). No increase shall apply to any payment due prior to or within 14 days after the date the claim form was submitted to the employer under Section 5401. No increase shall apply when, within the 14-day period specified under subdivision (a), the employer is unable to determine whether temporary disability indemnity payments are owed and advises the employee, in the manner prescribed in rules and regulations adopted pursuant to Section 138.4, why payments cannot be made within the 14-day period, what additional information is required to make the decision whether temporary disability indemnity payments are owed, and when the employer expects to have the information required to make the decision.
(e) If the employer is insured for its obligation to provide compensation, the employer shall be obligated to reimburse the insurer for the amount of increase in indemnity payments, made pursuant to subdivision (d), if the late payment that gives rise to the increase in indemnity payments, is due less than seven days after the insurer receives the completed claim form from the employer. Except as specified in this subdivision, an employer shall not be obligated to reimburse an insurer nor shall an insurer be permitted to seek reimbursement, directly or indirectly, for the amount of increase in indemnity payments specified in this section.
(f) If an employer is obligated under subdivision (e) to reimburse the insurer for the amount of increase in indemnity payments, the insurer shall notify the employer in writing, within 30 days of the payment, that the employer is obligated to reimburse the insurer and shall bill and collect the amount of the payment no later than at final audit. However, the insurer shall not be obligated to collect, and the employer shall not be obligated to reimburse, amounts paid pursuant to subdivision (d) unless the aggregate total paid in a policy year exceeds one hundred dollars ($100). The employer shall have 60 days, following notice of the obligation to reimburse, to appeal the decision of the insurer to the Department of Insurance. The notice of the obligation to reimburse shall specify that the employer has the right to appeal the decision of the insurer as provided in this subdivision.
(g) For purposes of this section, “salary continuation plan” means a plan that meets both of the following requirements:
(1) The plan is paid for by the employer pursuant to statute, collective bargaining agreement, memorandum of understanding, or established employer policy.
(2) The plan provides the employee on his or her regular payday with salary not less than the employee is entitled to receive pursuant to statute, collective bargaining agreement, memorandum of understanding, or established employer policy and not less than the employee would otherwise receive in indemnity payments.
(h) Nothing in this section is intended to increase the aggregate amount of permanent disability due under Section 4659.

SEC. 3.

Section 5814 of the Labor Code is repealed.
SEC. 4.

Section 5814 is added to the Labor Code, to read:

5814.
 (a) When payment of compensation has been unreasonably delayed or refused, either prior to or subsequent to the issuance of an award, the amount of the benefit payment unreasonably delayed or refused may be increased up to 25 percent or up to five hundred dollars ($500), whichever is greater. In proceeding under this section, the appeals board shall use its discretion to accomplish a fair balance and substantial justice between the parties.
(b) As a precondition to a claim for penalties under this section, the employee shall give written notice to the employer of the claimed unreasonable delay or refusal of benefits payment of compensation. If, within 20 days from the date of services of this notice, the employer pays a self-imposed increase of 10 percent of the amount of compensation payment delayed or refused, in addition to any other self-imposed increases due under this division, there shall be no further penalty allowed under this section. If the employer disputes whether the delay or refusal is unreasonable, and the workers’ compensation administrative law judge determines that the delay or refusal violates this section, the workers’ compensation administrative law judge shall award the penalty prescribed in subdivision (a). In determining whether the delay or refusal is unreasonable, the workers’ compensation administrative law judge shall consider only the specific facts resulting in the delay or refusal of the specific benefit payment that is the subject of the request for penalties.
(c) The appeals board shall have no jurisdiction to hear a claim for penalties under subdivision (a), unless the employee files a claim for a penalty within one year from the date of the alleged unreasonable delay or refusal to pay benefits. Upon the approval of a compromise and release by the appeals board, it shall be conclusively presumed that any existing or potential penalties have been resolved, unless expressly excluded by the terms of the compromise and release.
(d) When a penalty is awarded under subdivision (a), the appeals board may allow a credit for any self-imposed increase under subdivision (d) of Section 4650 or subdivision (b), in order to accomplish a fair balance and substantial justice between the parties.
(e) Nothing in this section shall be construed to create a civil cause of action.

SEC. 5.

Section 5814.5 of the Labor Code is repealed.

SEC. 8.

 It is the intent of the Legislature to enact legislation to increase civil penalties for workers’ compensation fraud, and to use this increased revenue for additional antifraud investigations.