1. UR DISPUTES FOR IMR OR THE WCAB?
ISSUE 1 2015VOLUME 2
ARMSTRONG
AdvocateWORKERS’ COMPENSATION
LIABILITY FOR NON-EMPLOYEES?
Under new California Labor Code section
2810.3, effective 1/1/2015, a “hiring employer”
(client) shares legal responsibility with a labor
contractor (temporary agency/staffing agency) for
payment of wages and any failure to secure valid
workers’ compensation coverage. This new law
has been coined the “contractor’s law”.
What does this mean? Simply stated, it exposes
California businesses to potential liability for
Workers’ Compensation (and Wage and Hour)
claims by temporary workers. Companies (hiring
employers) who contract with a labor contractor to
perform activities which are “within the client
employer’s usual course of business”, could share
liability (joint liability) for the failure to have
Workers’ Compensation coverage. This applies
even if the client employer is unaware of the
violation.
What is not clear is what effect this will have on
the Workers’ Compensation system as we know it.
There is likely to be impact on workers
compensation premiums. It is prudent to assume
that Workers’ Compensation providers will now
seek additional information from employers with
regard to any workers provided by labor contractors
and that they will factor that new information in
setting premiums. It is also possible that employers
may see more restrictive language with regard to
coverage under Workers’ Compensation policies.
The industry may also see more civil court
filings similar to that filed by the Self-insurers’
Security Fund in SISF v Blue Lake Rancheria. In
Blue Lake, SISF alleges common law arguments
supporting reimbursement for over $40,000,000
from the varied “hiring employers” of workers
provided by Mainstay Business Solutions and Blue
Lake Rancheria for numerous Workers’
Compensation claims it administered on behalf of
the insolvent Mainstay Business Solutions. Labor
Code section 2810.3 may empower such actions by
the California Insurance Guarantee Association
(CIGA) as well.
The WCIRB has provided an advisory
endorsement so that amended policies exclude any
liability arising from Labor Code section 2810.3
from the Employers Liability Insurance portion of a
California Workers’ Compensation policy. [See
form WC 04 03 60 B]. This endorsement would
seek to avoid potential duplicate Workers’
Compensation and employers’ liability claims as a
result of the passage of Labor Code section 2810.3.
It is expected that, where the labor contractor
does appropriately carry workers’ compensation
coverage, Insurance Code §11663 will be operative
so that the liability for the work injury will be
provided through the coverage for the payroll (i.e.
the labor contractor).
~ Jessica M. Williams, Esq.
ANEWSLETTERof
ArmstrongLawFirm©
.
LeadersinDefendingand
CounselingforWorkInjury
Issues.
~ Owen Fennern, Esq.
SB863 took review of medical
necessity away from the WCAB by
implementing an Independent Medical
Review (IMR) process to review disputed
Utilization Review (UR) decisions.
(Labor Code sections 4610.5 and 4610.6.)
Applicant attorneys began arguing that
supposed deficiencies in UR decisions
made them invalid and that medical
necessity could therefore be litigated at
the WCAB despite the IMR statutes.
The WCAB issued an En Banc
decision on 2/27/14 in Dubon v. World
Restoration, finding that a UR decision is
invalid if it is “untimely or suffers from
material procedural defects,” and in that
event the issue of medical necessity is to
be determined by the WCAB.
However, the WCAB issued a new En
Banc decision in Dubon on 10/6/14, after
reconsideration. This opinion
significantly narrowed the circumstances
in which a UR decision is invalid.
“Dubon II” found that a UR decision is
invalid and not subject to IMR “only if it
is untimely, and that “[a]ll other disputes
regarding a UR decision must be resolved
by IMR.” The 4th District Court of
Appeal summarily denied review of
Dubon II, and a Petition for Review with
the California Supreme Court is pending.
WCAB Panel decisions subsequent to
Dubon II demonstrate the continuing
challenges to claims administrators from
Applicant attorneys attempting to avoid
IMR.
In Shanley v. Henry Mayo Newhall
Memorial Hospital (2014), a WCAB Panel
found that timely UR decisions were
invalid because Defendant did not meet its
burden of proof to show that the decisions
were communicated by phone, fax, or email
to the requesting doctor within 24 hours of
the decisions. (See CCR § 9792.9.1(d)(2).)
The Shanley Panel noted that the UR
decisions described phone contact as “left
message,” but found that without
specifying the nature or content of the
messages, the UR decision did not
demonstrate timely communication of the
decision to the medical provider.
In Rodriguez v. Air Eagle (2015), a
WCAB Panel found a UR decision
untimely and invalid because the requesting
provider had checked the box for imminent
and serious threat on the request for
authorization, invoking a 72 hour deadline
that Defendant did not meet. Home health
care was ordered on an ongoing basis, 24
hours per day, 7 days per week.
Another closely watched challenge to
the IMR process is Stevens v. Outspoken
Enterprises (2014). The Stevens WCAB
Panel found it did not have authority to
address an IMR determination’s purported
defects that were not within five limited
grounds set forth by Labor Code section
4610.6(h). The 1st District Court of Appeal
granted review of Stevens on 12/3/14 and is
expected to address the constitutionality of
IMR, a much anticipated development.
Oral argument is now set for 9/30/2015.
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