No Fees For Challenging UR Decisions, Supreme Court Says

California employers and carriers can use utilization review to challenge a requested medical treatment after an award of future medical without fear of having to pay the injured worker’s attorney fees if the decision is challenged and ultimately overturned. That’s the gist of a ruling handed down by the California Supreme Court yesterday in Smith v. Workers’ Compensation Appeals Board.

In the closely watched case, the court discounted the assertion by the applicant’s bar that without the threat of attorney fees employers would abuse the UR process. The court found that the intent and structure of the UR process protects injured workers. Besides, in reversing the court of appeal’s decision, the Supreme Court pointed out that the plain language of Labor Code section 4607 says attorney fees are only available when the employer and/or carrier moves to terminate the actual award — not a specific treatment recommendation.

“This was the clearest example of ‘judicial legislation’ I’ve ever seen in my entire career,” says defense attorney Jake Jacobsmeyer of the court of appeal’s decision. “The statutory language is so clear and unambiguous that when the court of appeal issued its decision they really had to reach and find a public policy that wasn’t expressed in the legislation. The statute is one sentence and it’s not like it’s a complicated statute.”

At issue in the cases was a denied request for an epidural injection for back pain in a case stemming from a shoulder injury, and a partial denial of a request for diabetes care and a weight loss program in a claim originating from a foot injury. The applicants’ attorneys sought fees for challenging the denials.

“The potential consequences invoked by the petitioners — employers issuing blanket denials of medical treatment requests to avoid paying attorney fees — ignores the existence of the utilization review process,” Associate Justice Carlos Moreno wrote for the court in the unanimous opinion. Referencing the court’s earlier decision in Sandhagen, Moreno pointed out that under Labor Code section 4607, only a physician can modify, delay or deny a treatment request which provides a safeguard for the worker from an unscrupulous employer or carrier.

Workers too are protected by Labor Code section5814.5 that provides for sanctions in the form of attorney fees “when the payment of compensation has been unreasonably delayed or refused subsequent to the issuance of an award…” The court pointed out that the petitioners reading of section 4607 would make this statute irrelevant.
“[H]olding out the prospect of attorney fees every time an employee successfully challenges a denial of a treatment request would likely transform the utilization review process, which was intended to be expeditious, inexpensive, and driven by uniform standards and the recommendations of treating physicians, into a more expensive, adversarial, and cumbersome process,” Moreno wrote. The court did note that the opinion does not apply to cases where a carrier or employer makes an independent decision to deny all future medical requests is different issue, but reasoned that section 5814.5 would be at the worker’s disposal in such cases and that additional penalties may be available under Labor Code section 4610.

“Accordingly, in light of the unambiguous statutory language and the legislative history, we hold that section 4607 authorizes an award of attorney fees only to employees who successfully resist efforts to terminate their award of medical treatment,” the court wrote. “It does not permit an award of fees to employees who successfully challenge the denial of specific treatment requests.”

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