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Ramirez v. Workers' Compensation Appeals Board, State Department of Health Care Services

California Court of Appeals, Third District, Sacramento

March 29, 2017


         ORIGINAL PROCEEDING; petition for writ of review, WCAB No. ADJ6821103 Reversed and remanded with directions.

          Mastagni Holstedt, Eric D. Ledger, and Gregory G. Gomez for Petitioner.

          Law Office of Charles E. Clark and Charles E. Clark for California Society of Industrial Medicine and Surgery, Inc., as Amicus Curiae on behalf of Petitioner.

          The Rondeau Law Firm and Charles R. Rondeau; Thomas F. Martin for California Applicants' Attorneys Association as Amicus Curiae on behalf of Petitioner.

          No appearance for Respondent Workers' Compensation Appeals Board.

          Lisa A. Liebson, Deputy Chief Counsel, Mary R. Huckabaa, Assistant Chief Counsel, and William L. Anderson, Appellate Counsel, for Respondents State Department of Health Care Services and State Compensation Insurance Fund.

          Law Office of Allweiss & McMurtry and Michael A. Marks for California Workers' Compensation Institute as Amicus Curiae on behalf of Respondents.

          Haight Brown & Bonesteel, Theodore Penny, and Vangi M. Johnson for California Chamber of Commerce as Amicus Curiae on behalf of Respondents.

          Department of Industrial Relations Office of the Director, Legal Unit, Christopher Jagard, Chief Counsel, and Kim E. Card, Counsel; Department of Industrial Relations Division of Workers Compensation, George Parisotto, Chief Counsel, and Yvonne Hauscarriague, Counsel, for Administrative Director of the Division of Workers' Compensation as Amicus Curiae on behalf of Respondents.

          Blease, Acting P. J.

         In the last several years, the Legislature has reformed the workers' compensation system to increase efficiency and reduce costs. Treatment recommendations from a worker's physician were once subjected to a dispute resolution process that could be litigated before a workers' compensation judge and ultimately appealed to the Workers' Compensation Appeals Board (Board). In 2004 and 2012, the Legislature effected changes that resulted in taking decisions regarding the medical necessity of a treatment recommendation away from judges and the Board, and allowing such decisions to be made only by medical professionals. Now, if an employer challenges a treatment decision, a qualified medical professional performs a utilization review pursuant to established medical standards. (Lab. Code, § 4610.)[1] If the utilization review modifies, delays or denies treatment, the employee may seek review of the utilization review only by a process called independent medical review. (§ 4610.5, subds. (d) & (e).) Like the utilization review, independent medical reviews are performed by qualified medical professionals. (§ 4616.4.) In no event can a workers' compensation judge, the Board, or a court make a determination of medical necessity contrary to the determination of the independent medical reviewer. (§ 4610.6, subd. (i).) However, the Board may review the determination of the independent medical reviewer for certain nonsubstantive reasons.

         In this writ proceeding, Daniel Ramirez attempts review of his independent medical review on the ground the underlying utilization review was based on an incorrect standard. In effect, he seeks review of his utilization review with this court. We shall conclude that this is not a proper ground for appeal of a utilization review determination because it goes to the heart of the determination of medical necessity. The independent medical reviewer is in the best position to determine whether the proper standard was used to evaluate the medical necessity of the requested treatment, and the statutory scheme requires the independent medical reviewer to use the proper standard in determining medical necessity. (§§ 4610.5, subd. (c), 4610.6, subd. (c).) Ramirez makes no claim that the independent medical reviewer did not use the proper statutory standard. Ramirez has also not stated a proper ground for review of his independent medical review, which is appealable only for the nonsubstantive reasons set forth in section 4610.6, subdivision (h).

         Ramirez also challenges the constitutionality of the independent medical review process. He claims it violates the state Constitution's separation of powers clause, and state and federal principles of procedural due process. We shall conclude that the Legislature's plenary power over the workers' compensation system precludes any separation of powers violation, and the process afforded workers under the system affords sufficient opportunity to present evidence and be heard.



         Procedure for Disputes over Treatment

         Every employer is required to establish a utilization review process for screening, reviewing, and deciding on treatment recommendations that are made by an employee's physician. (§ 4610, subds. (a) & (b).) Any decision to modify, delay, or deny a request for medical treatment for a work-related injury must be made by a licensed physician pursuant to a utilization review process. (§ 4610, subd. (e).) The utilization review process must be governed by written policies and procedures that are based on medical necessity and consistent with the “schedule for medical treatment utilization” adopted pursuant to section 5307.27.[2] (§ 4610, subd. (c).) The employer must make its decision on treatment in a timely fashion, but not to exceed five working days from receipt of the information necessary to make the determination, and not more than 14 days from the date of the request by the employee's physician. (§ 4610, subd. (g)(1).)

         If the utilization review approves the requested treatment, the determination is final and the employer may not challenge it. (§ 4610.5, subd. (f)(1).) If the utilization review modifies, delays, or denies the requested treatment, the employee may seek review through a procedure called “independent medical review.” (§ 4610.5, subd. (d).)

         If the utilization review decision is untimely, the Board has determined that the dispute is not subject to independent medical review, but is resolved by the Board. (Dubon v. World Restoration, Inc. (2014) 79 Cal.Comp.Cases 1298, 1300 (Dubon II).) A utilization review decision remains effective for 12 months, unless a further recommendation is supported by a change in facts. (§ 4610, subd. (g)(6).)

         The “independent medical review” is performed by an independent organization using medical professionals to perform the review. (§ 139.5, subd. (d)(4).) Independent medical review organizations are under contract with the administrative director of the Division of Workers' Compensation. (§ 139.5, subd. (a)(1).) The organizations must be independent of any workers' compensation insurer or workers' compensation claims administrator doing business in California. (Ibid.) The medical professionals performing the review must be licensed physicians knowledgeable in the treatment of the employee's medical condition. (§ 139.5, subd. (d)(4) & (d)(4)(A).) To prevent conflicts of interest, the independent medical review organizations must submit information to the administrative director of the Division of Workers' Compensation regarding major stockholders, major bond and note holders, affiliated organizations, directors, officers, and executives, revenue sources, and a description of the organization's methods for ensuring compliance with conflict of interest requirements. (§ 139.5, subd. (d).)

         The employee may appeal the independent medical review determination to the Board, but only on the following grounds: (1) the administrative director acted without or in excess of his or her powers, (2) the administrative director's determination was procured by fraud, (3) the independent medical reviewer had a material conflict of interest, (4) the determination was the result of bias based on race, national origin, ethnic group identification, religion, age, sex, sexual orientation, color, or disability, or (5) the determination was the result of an erroneous finding of fact not subject to expert opinion. (§ 4610.6, subd. (h).)

         A decision by the Board (on one of the five allowed grounds) may be challenged by filing a writ of review in the Court of Appeal, but the courts are precluded from making “a determination of medical necessity contrary to the determination of the independent medical review[er.]” (§ 4610.6, subd. (i); see also § 5950.)


         Denial of Ramirez's Treatment

         In this case, petitioner Daniel Ramirez sustained an injury to his lower leg and ankle in the course of his job as an office assistant for the State Department of Health Care Services (Department). Department's claims were administered by the State Compensation Insurance Fund (State Fund). Ramirez settled his case by stipulations providing him with further medical treatment for the injury. The treatment included a gym/swim membership, and, over the course of about one and a half years (Dec. 11, 2013, to Apr. 17, 2014), 12 to 24 sessions of acupuncture were authorized.

         In July 2014, Ramirez's physician, Dr. Natalya Shtutman, prescribed another 12 sessions of acupuncture. Dr. Shtutman reported that Ramirez had missed five days of work in June, and that acupuncture significantly helped to decrease the pain and allowed Ramirez to be more functional. Dr. Shtutman stated that Ramirez had chronic neuropathic pain, and that acupuncture was needed due to the worsening changes in his condition.

         The utilization review recommended that the requested treatment be denied. The reviewer's rationale in denying the treatment was that acupuncture is recommended as a short-course treatment in conjunction with other interventions for a total of up to 8 to 12 visits over four to six weeks, where there is evidence of reduced pain and medication use, and there is functional improvement. The reviewer stated that Ramirez had already completed the maximum number of recommended therapy sessions, thus the request was not reasonable.

         Ramirez appealed the utilization review denial under the independent medical review process. The independent medical review noted that Ramirez had at least 24 prior acupuncture sessions approved, and that there had been no change in his work restrictions or functional improvement for almost a year. The independent medical review stated the following rationale for denying the requested treatment: “According to evidence[] based guidelines, further acupuncture visits after an initial trial are medically necessary based on documented functional improvement. ‘Functional improvement' means a clinically significant improvement in activities of daily living or a reduction in work restrictions, medication, or dependency on continued medical treatment. The claimant has had at least 24 acupuncture visits approved in the last year. The provider states the same benefit each time of decreased pain. The provider also states that it allows the claimant to be more functional and continue working. However even after extensive treatment, the claimant still needs one treatment a week. Due to the lack of objective functional improvement and decreased dependence on medical treatment, further acupuncture is not medically necessary.”

         Ramirez appealed the decision of the independent medical review to the Board. The grounds for the appeal were that the independent medical reviewer “may have been subject to a material conflict of interest that is in violation of Section 139.5, ” and the “determination may have been the result of bias on the basis of race, national origin, ethnic group identification, religion, age, sex, sexual orientation, color, or disability.” Ramirez wanted discovery to determine whether the doctor performing the independent medical review was biased or had a conflict of interest.[3] The appeal also argued the denial was materially defective because it failed to follow the medical treatment utilization schedule. Ramirez argued this material defect was equivalent to an untimely utilization review, which could be appealed to the Board under Dubon II. Ramirez argued the independent medical review doctor had improperly made credibility judgments about Ramirez's physician's report. The appeal also stated: “To the extent that the [Board] is prevented from disclosing the identity of the [independent medical review] doctor or substantively reviewing his opinion, Applicant raises all constitutional issues, including, but not limited to the denial of his right to substantive and procedural due process. Applicant understands that the [Board] cannot rule on the constitutionality of Labor Code provisions; however, Applicant raises these issues so as to preserve his rights upon appeal.”

         The appeal was ordered taken off calendar at the request of the Department and the insurer (the State Fund) because Ramirez wanted to raise only the constitutional issues, over which the Board could not rule.

         Ramirez petitioned for removal or reconsideration of the order taking the matter off calendar. A workers' compensation administrative law judge (ALJ) reviewed the petition and recommended the petition for reconsideration be dismissed or denied. The ALJ determined that the petition should be dismissed because it was not based on any of the grounds allowed under section 5903.[4] Likewise, a petition for removal must be based on the grounds that the order will result in ...

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