Utilization Review Denials v. Utilization Review Deferrals

Laughlin, Falbo, Levy & Moresi LLP
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Laughlin, Falbo, Levy & Moresi LLP

Ever since utilization review (UR) became a mandatory requirement for all medical treatment requests, there have been numerous attempts to challenge not only individual UR determinations and the timeframes in which they have to be made, but the entire UR framework itself. Usually, these challenges came in the context of UR denials; however, very few if any cases have explored the idea of utilization review deferral. Deferral of utilization review pursuant to Labor Code §4610(l) and California Code of Regulations (CCR) §9792.9.1.(b) is an often misunderstood procedural remedy where a requested treatment is disputed on grounds unrelated to medical necessity. Conflating the two separate procedures utilized for denials on medical necessity, and deferrals on legal grounds, can have potentially disastrous outcomes, and it is important to be aware of the difference.

The UR process is used by employers and claims administrators to determine whether a request for treatment is medically necessary. Labor Code § 4610 and California Code of Regulations § 9792.9.1 outline the procedural requirements for UR decisions.

To ensure that benefits are provided when due, strict time constraints have been prescribed for UR decisions, and administrative penalties have been imposed for failure to comply. Many of the cases that practitioners are familiar with concerning the UR process have been particularly focused on compliance with these timeframes, and what the proper procedure is when they are not strictly followed. However, it is important to note that utilization review is a system designed to determine the medical necessity of a given treatment. Many practitioners will recall that the UR system was designed to remove the judicial process from decisions regarding medical necessity, thus—in theory—expediting the administration of medical treatment, and taking those decisions out of the judge’s hands, except in specific scenarios.

On the question of medical necessity, it is important to remember that the UR process can function prospectively, retroactively, or concurrently to review the medical necessity of proposed treatment. Though we primarily only encounter prospective or concurrent requests, retroactive treatment authorizations can also occur. Where a requested treatment is disputed on legal grounds—such as denial of the body part for which treatment is sought—then retroactive utilization review comes into play.

When Deferral of Utilization Review is Appropriate

Issues can arise where a requested treatment is denied by a claims administrator for reasons related to legal disputes. Sometimes requests for authorization of treatment will be sent to the claims administrator when a claim is denied, or for treatment related to a body part which is currently disputed as industrial. Such requests are not put through UR, as, pursuant to §4610(l), UR “shall not be required” where there are disputes as to liability. One could reasonably conclude that this means the treatment must be “denied.” However, the inquiry does not stop there.

If the claims administrator disputes liability for either 1) the occupational injury for which the treatment is recommended or 2) the recommended treatment itself on the grounds other than medical necessity, the medical treatment request made on the DWC Form RFA may be deferred. The permissive “may” is used here by the code to indicate that the treatment need not be deferred in all situations, as it may also be approved by the claims administrator. However, this does not suggest that the claims administrator may do nothing, or may deny the treatment, as the later sections make clear. Indeed, a written decision deferring utilization review of the requested treatment must still be issued no later than 5 days from receipt of the RFA.  In other words, the timeframes that apply to utilization review determinations on medical necessity grounds are equally applicable to deferrals based on disputes regarding liability or other legal issues. Additionally, the written decision must be sent to the requesting physician, the injured worker, and applicant attorney.  (Title 8, CCR Section 9792.9.1(b)(1)).  This, again, mirrors the requirements that have been held to render utilization review determinations invalid where the decisions are not served to all of the above individuals.

In order to be valid, the UR deferral letter must include the following language and information per Title 8, CCR 9792.9.1(b)(1)(A‐E):

“1) The date on which the RFA was first received; 2) A description of the specific course of proposed medical treatment for which authorization was requested; 3) A clear, concise, and appropriate explanation of the reason for the claims administrator’s dispute of liability for either the injury, claimed body part, or parts, or the recommended treatment; 4) A plain language statement advising the injured employee that any dispute under this subdivision shall be resolved either by agreement of the parties or through the dispute resolution process of the Workers’ compensation Appeals Board; and 5) Mandatory language indicating “you have a right to disagree with decisions affecting your claim…..”.

If UR is deferred pursuant to this section, and it is later determined that the claims administrator is liable for the requested treatment, either by decision or by agreement, then retrospective UR is applied to the deferred requests (30-day rule). Under these circumstances, UR begins on the date it is determined that the claims administrator’s liability is final.  For prospective and concurrent UR, the claims administrator must issue a UR decision from the date of the receipt of the RFA after the final determination of liability.

This distinction between deferral and denial was made painfully apparent in the case of Rosenblum v. Lompoc Unified School District (2019) Cal. Work. Comp.P.D. LEXIS. There, the defendant failed to timely defer a request for treatment on a disputed body part, and instead sent the request through utilization review, where it was approved. The defendant wrote to the primary treater several days after the approval, objecting to the treatment on the grounds that it was for a body part which was not accepted, and exercising the right to have the liability for the same determined by a QME. The issue was activated by applicant’s attorney to an expedited hearing, where the judge indicated it lacked jurisdiction to try the issue where there was a timely utilization review approval. The WCAB, on petition for removal, reversed, and not only held that defendant’s retroactive deferral was untimely, but that the treatment must be authorized over defendant’s belated objection.

Furthermore, the court in Milette v. 81 Grand Holdings, Inc., held that utilization review deferrals must provide a “clear, concise, and appropriate explanation of the reason for the…dispute of liability.” In that case, the court held that simply stating “causation is in dispute” was not sufficient justification for deferral of utilization review.

To prevent the unfortunate authorization of treatment which may or may not be related to an industrial condition, proper care should be taken to note the distinction between denial and deferral, and where deferral is appropriate, proper steps taken to ensure that the deferral is above reproach. Decisions to defer should also be revisited if and when a determination as to causation is made pursuant to the proper timeframes, to ensure that utilization review remains a backstop for treatment that is otherwise not medically necessary.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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