Historic Workers’ Compensation Reform Bill Headed to Governor Brown

Tackles Medical Billing Fraud & Helps Injured Workers SB 1160 by Mendoza Will Transform System

August 31, 2016

Sacramento – SB 1160 authored by Senator Tony Mendoza, Chair of the Senate Labor & Industrial Relations Committee, is on its way to Governor Brown after receiving final approval today by the State Senate on an overwhelming bipartisan concurrence vote of 35 to 3.

The bill will implement major reforms to California’s Workers’ Compensation system to address persistent delays and denials of medical care for injured workers and address billions of dollars in workers compensation billing fraud. SB 1160 has received broad support from workers, organized labor, doctors, medical providers and attorneys.

“SB 1160 will crack down on the billions of dollars in fraudulent medical billing and improve the timely delivery of appropriate medical treatment and benefits so injured workers can get back to work,” said Senator Tony Mendoza. “Fraud hurts injured workers and drives up costs for California’s businesses.”

This year, a series of news stories and prosecutions highlighted billions of dollars in rampant workers’ compensation insurance fraud perpetrated by doctors and workers’ compensation service providers and the delay and denial of necessary medical care for injured workers.

The fraudulent schemes included submitting medical billings for fraudulent or unnecessary surgeries and medical procedures, prescription compound medicines and interpreting services, as well as the selling of patient referrals to lawyers and doctors. Additionally, doctors and medical providers who had been criminally charged and prosecuted with workers’ compensation insurance fraud were continuing to seek payment through the filing of liens.

“I am outraged by the pervasiveness of fraudulent medical billing in California’s workers’ compensation system,” said Senator Mendoza. “The degree and severity of the problem negatively impacts workers, businesses and California’s economy.”

“A worker who is legitimately injured on the job is entitled to immediate medical treatment. My bill ensures that injured workers will no longer be subject to delayed or denied medical treatment within the first thirty-days of a reported injury,” said Mendoza.

“SB 1160 will implement much-needed reforms and create safeguards against fraud. We must provide all the necessary tools so the state can crack down on and ultimately stop those who commit these despicable crimes,” added Mendoza.

Specifically, SB 1160 will do the following:

  • Require that, if a physician or provider is criminally charged with workers’ compensation, Medi-Cal, or Medicare fraud, the physician or provider’s liens are stayed until the resolution of criminal charges.
  • For liens filed on or after January 1, 2017, require the lien claimant to submit a declaration stating how the lien claimant qualified to file a lien.
  • Curb workers’ compensation fraud by codifying the Chorn (2016) decision on lien assignments and prohibiting lien assignments on or after January 1, 2016.
  • Prohibit the use of financial incentives to a physician based on a Utilization Review (UR) decision, and give the Division of Workers’ Compensation (DWC) the authority to review UR compensation information.
  • Increase the minimum penalty for failing to report workers’ compensation data to the Workers' Compensation Information System (WCIS) from $5,000 to $10,000;
  • Starting January 1, 2018, eliminate prospective Utilization Review (UR) in the first 30 days of an accepted claim if the medical treatment follows medical guidelines and is under the employer’s control, as specified.
  • Require that, on or before July 1, 2018, all Utilization Review (UR) processes must be accredited by an independent, nonprofit organization.
  • Require that, on or before July 1, 2018, employers will need to submit Utilization Review (UR) plans to the DWC for approval of their UR process.
  • Require that all Utilization Review (UR) documentation be submitted to the DWC in an electronic format, allowing for the creation of a comprehensive Utilization Review (UR) database.
  • Modernize the Utilization Review (UR) /Independent Medical Review (IMR) timelines to include the upcoming formulary (July 1, 2017) for medicine in the workers’ compensation system.
  • Update the existing Medical Treatment Utilization Schedule (MTUS) in the workers’ compensation system and link the MTUS with the upcoming formulary by creating an alternative public hearing process for MTUS updates.

In 2012, SB 863 (De Leon) was signed into law in order to help reduce costs, improve medical delivery, and address fraud and abuse. Some strides have been made, however endemic medical and service provider billing fraud persists. Additionally, many workers’ compensation stakeholders continue to report consistent problems with the workers’ compensation system, including medical dispute resolution, the quality of workers’ compensation data, and the lack of peer-to-peer communication in the denial of medical treatment for injured workers.

During the past year, Senator Mendoza has taken the lead by holding a series of hearings on the state of the workers’ compensation system around the state with key stakeholders including the Division of Workers’ Compensation (DWC), organized labor, employers, doctors, medical providers and workers’ compensation attorneys and injured workers. SB 1160 is the product of these hearings.

Senator Tony Mendoza, a Los Angeles native and a former elementary school teacher in East Los Angeles, represents the 32nd Senate District encompassing portions of Los Angeles and Orange Counties. For more information about Senator Mendoza visit his website or follow him on Facebook and Twitter.

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