California Court Of Appeal Issues A Utilization Review Determination To Watch

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The Fourth Appellate District of the California Court of Appeal issued its determination in a dispute over utilization review in its opinion of January 5, 2016, Kirk King et al. v. CompPartners, Inc. et al, 2016 S. O. S. In King, the court reversed the trial court’s order sustaining a demurrer to a medical malpractice lawsuit brought by an injured worker and his wife (together the “Plaintiffs”). In permitting the medical malpractice action to proceed, the court determined that the suit is not barred by the exclusivity provisions of workers’ compensation and that a doctor-patient relationship exists between a UR reviewer and a workers’ compensation applicant.

Kirk King sustained an admittedly industrial back injury on February 15, 2008. As a result of his resulting chronic back pain, he suffered anxiety and depression. Through workers’ compensation provided medical care, Mr. King received Klonopin for his emotional symptoms. In July 2013, the workers’ compensation administrator of King’s claim submitted a prescription for Klonopin to utilization review pursuant to Labor Code Section 4610. UR review was performed by CompPartners and its physician, Dr. Naresh Sharma, an anesthesiologist. Dr. Sharma issued a determination that the medication was unnecessary according to his interpretation of the pertinent treatment guidelines. In October 2013, a second UR review was completed by Dr. Mohammed Ali, a psychiatrist, who also decertified the drug as unnecessary treatment under workers’ compensation.

According to the Plaintiffs’ complaint, Klonopin requires slow withdrawal, and sudden cessation of the drug may be harmful. When the drug was decertified by UR, Mr. King stopped taking the medication entirely. He sustained four seizures and additional injuries which Plaintiffs relate to the sudden termination of the medication. As a consequence, Plaintiffs filed their complaint alleging inter alia that the Defendants breached their duty of care to Mr. King by failing to warn him of the consequences of abrupt termination of the Klonopin. Defendants demurred on two grounds: (1) the complaint was barred by the exclusivity provisions of workers’ compensation, and (2) UR providers do not have a duty of care to workers’ compensation applicants because no doctor patient relationship exists between the two as UR occurs without an examination of the patient and only upon a review of the records made available by the parties. The trial court agreed with Defendants and dismissed the complaint without leave to amend.

In its review of the law governing workers’ compensation exclusivity, the Court of Appeal determined that the UR reviewer’s determination was in part within the pre-empted provisions of the workers’ compensation scheme, and in part not. Relying on the 4th District Court of Appeal’s 2001 decision in Charles J. Vacanti, M.D. v. State Compensation Ins. Fund, the Court holds that workers’ compensation benefits are the exclusive remedy for injuries that arise out of and occur in the course of an employment, including when claimed injury is “collateral to or derivative of the employee’s injury.” The corollary to that holding is that “a cause of action predicated on an injury where ‘the basic conditions of compensation’ are absent is not preempted. For example, courts have allowed tort claims in cases where the alleged injury - the aggravation of an existing workplace injury - did not occur in the course of an employment relationship.” The tenets of Vacanti led the Court of Appeal to conclude “if something goes wrong in the claims process for the work place injury, such as collecting the money for the workplace injury, then that collateral claim must stay within the exclusive province of workers’ compensation. However, if a new injury arises or the prior workplace injury is aggravated, then the exclusivity provisions do not necessarily apply.” Applying this conclusion to the King matter, the Court holds that the UR determination that Klonopin was not necessary falls within the scope of the workers’ compensation act (WCA), but “[t]o the extent the Kings are faulting Sharma for not communicating a warning to King, their claims are not preempted by the WCA because that warning would be beyond the ‘medical necessity’ determination made by Sharma.”

The Court of Appeal also overruled Defendants’ assertion that there was no duty of care based on a physician-patient relationship between the UR provider and Mr. King. Citing at length from Palmer v. Superior Court (2002), in which plaintiffs were attempting to circumvent the bar against punitive damages in medical malpractice actions, the Court adopts the proposition that UR is medical care because the UR “had to ‘be conducted by medical professionals, and they must carry out these functions by exercising medical judgment and applying clinical standards.’” However, while the Court finds a physician-patient relationship existed between King and Sharma, (and therefore Sharma owed King a duty of care), this does not mean that Dr. Sharma must exercise “the same degree of skill toward every person he sees.” The scope of the duty owed must be decided on a case-by-case basis. The Court concluded that the trial court must allow Plaintiffs an opportunity to file an amended complaint to potentially cure the problems which led the trial court to properly dismiss the complaint.

This decision comes at a time of major litigation over utilization review procedure in workers’ compensation; applicants are attacking it as unconstitutional and as an abdication of the responsibility of employers to provide necessary medical care. Employers are also complaining of the high cost of the system. The Court in King opens a door, albeit narrowly, to those attacking UR. The decision further creates what may be an unexpected risk for UR providers, potentially increasing the system costs further.

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