Supreme Court Limits Employer Remedies

State Comp. Ins. Fund v. Workers’ Comp. Appeals Bd. (Sandhagen) (2008) __ Cal.4th. ___:  The California Supreme Court has dealt an enormous blow to employers and insurance carriers in our ongoing struggle to control wasteful and frivolous medical treatment.  After four years of litigation the struggle between Brice Sandhagen and SCIF over authorization of an MRI has ended in disaster.

The Sandhagen case arose out of a May 24, 2004 request for a spinal MRI.  SCIF referred the matter for utilization review (UR) under the recently enacted statutory scheme adopted under SB 228 and codified as Labor Code section 4610.  SCIF’s denial did not occur until 28 days after the request and ten days after a request for an expedited hearing had be filed.  SCIF lost at trial because the UR report was excluded from evidence as untimely.

SCIF filed for reconsideration.  The WCAB, en banc, granted reconsideration.  In its decision the WCAB determined (1) the timelines set forth in Labor Code section 4610 are mandatory; (2) failure to meet the time constraints prohibits denial of treatment based on UR; and (3) an employer, regardless of UR, still retains the right to contest medical treatment through the AME/QME process.

Both SCIF and Sandhagen challenged the WCAB’s holdings at the third District Court of Appeal.  Both petitions were granted with the Court of Appeal affirming the WCAB’s holdings.  Only Sandhagen sought review by the Supreme Court.

The California Supreme Court reversed the Court of Appeal and WCAB in favor of Sandhagen.  In doing so, the Court concluded SB 899’s changes to Labor Code section 4062 materially altered the rights and remedies of employers.  Specifically the Court held that an employer’s sole remedy for challenging requests for medical treatment is UR.  Employers are prohibited from challenging medical treatment decision using the QME process.  Employees however still retain the right to use the UR process, MPN process and/or QME process.

The Supreme Court did not address the issue of how timeliness affects the admissibility of UR as SCIF did not contest the Court of Appeal’s decision.  However, the Court implicitly endorsed the lower court’s holding.

The only real bright spot for employers was that the Court made clear that the UR schedule is presumed to define what is medically reasonable and necessary.  The Court explained that when UR denies a treatment request, the injured worker bears the burden of “demonstrating that the treatment request is consistent with the uniform guidelines … or, alternatively, rebutting the application of the guidelines with a preponderance of scientific medical evidence.”

The net effect of the Sandhagen cases has been a weakening of employer’s position to contest medical treatment.  Employers are now limited to the five business day/14 day maximum UR process to contest treatment requests.  Employees now have multiple and successive remedies and face no draconian remedies for delayed action. 

We at Heggeness, Sweet, Simington & Patrico, A P.C. are already hard at work in our effort to find ways to use this seemingly onerous decision to our advantage and to avoid its inequitable application.  Now more than ever highly skilled legal counsel is necessary to assist employers in navigating the minefields created by Legislature with the enactment of AB 227, SB 228 and SB 899.  We are here to assist you.

Opinion filed July 3, 2008.

To learn more about how we can help you with your case, please contact us today!

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