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October-November 2016


We all know the drill. Treating Dr. Smith reports that your injured worker might benefit from a Functional Restoration Program he and his partner, Dr. Wesson, run. Dr. Smith sends the report with a Request for Authorization to your UR department. Your UR folks certify the evaluation. You should not be surprised to receive the evaluation report concluding that the worker would benefit from the six week Smith & Wesson Functional Restoration Program. It comes with an RFA that your UR folks also certify. Now you have to provide a $36,000 Functional Restoration Program, no fee schedule.

Wait! Case law says that you do not have to authorize either the evaluation or the program! Why? Because both are conflicts in violation of Labor Code sections 139.3 and 139.32 and do not fall into any of the exceptions in 139.31. Two published cases and one Opinion of the Attorney General support the conclusion that Dr. Smith’s referral is prohibited.

Section 139.3 provides that “it is unlawful for a physician to refer a person for clinical laboratory, diagnostic nuclear medicine, radiation oncology, physical therapy, physical rehabilitation, psychometric testing, home infusion therapy, outpatient surgery, diagnostic imaging goods or services, or pharmacy goods, whether for treatment or medical-legal purposes, if the physician or his or her immediate family has a financial interest with the person or in the entity that receives the referral.” Both violation and payment are misdemeanors with a fine of up to $15,000.

Section 139.32 goes even further. It prohibits situations where there is a financial interest between the referring provider and the entity or person to whom the referral is made. Smith’s referral to Smith & Wesson clearly violates this provision.

Section 139.31 provides for some limited exceptions and allows defendants to agree to pay for services if the provider informs of the conflict when requesting it and obtains pre-authorization.

Physicians usually argue the referral is within their practice so it is not prohibited. But a 1999 Opinion of Attorney General Bill Lockyer disagrees, and the law has not changed since then.

“A physician may not enter into an agreement with a group of licensed and certified professionals to perform work hardening and rehabilitation services for patients, where the physician would control the scope of the services by prescription, obtain payment from a workers' compensation insurance carrier for the services, and retain a portion of the fee after compensating the group.”

The two published cases of Jones (1998), and Stakely (2000) agree. In Stakely, a doctor argued that his referral for therapy to be done within his office was not a “referral” since “referral” implied “sending the patient to someone else.”

In its order denying a writ by Dr. Stakely, the Court of Appeals said that “Dr. Stakely's interpretation of sections 139.3 and 139.31 renders the sections meaningless. The purpose of the statutory scheme is to prevent self-dealing.”

When asked for something like this in the future, reject it and explain that it is a conflict. Do not be deterred by a doctor’s reply saying that the referral is “in the course of my practice.” As the Court of Appeals said, that is what the statutes were enacted to prevent.

Richard Berryhill, Esq.


So, since the reforms that brought us UR and IMR, all of our problems with out-of-control, excessive medical treatment have been solved, right? Oops. No such luck. In fact, we, as an industry, have an opioid problem.

The DWC has a plan, however. Actually, it has two plans. First, we have the MTUS Opioids Treatment Guidelines and Chronic Pain Treatment Guidelines. The next step is expected the finalization of the MTUS Workers’ Compensation Formulary.

It is important to note that the DWC has now explicitly elevated the Chronic Pain Medical Treatment Guidelines over other sections of the MTUS in any case where the treatment for chronic pain is “addressed in both the Chronic Pain Medical Treatment Guidelines and the specific guideline found in the Clinical Topics section of the MTUS or if the treatment is only addressed in the Chronic Pain Medical Treatment Guidelines….” [Emphasis mine] In theory, this means that treating physicians will no longer be able to shop around in the various “other evidence-based medical treatment guidelines, peer reviewed studies and articles” permitted generally by the Administrative Director’s Evaluation and Reporting Guidelines for justification of treatment not consistent with the MTUS Chronic Pain Medical Treatment Guidelines.

The second part of the plan, the MTUS Drug Formulary, will categorize medications as Preferred, Non-Preferred or Not Listed. Preferred drugs would not be subject to prospective UR as long as they are prescribed in accordance with the MTUS. Presumably, this is another place where the Chronic Pain Treatment Guidelines would come into play, since, to my knowledge, there are no opioids on the Preferred list. A Non-Preferred drug will require prospective UR before it can be prescribed or dispensed. An exception to that is a drug designated “First Fill,” which can be prescribed at the initial visit within 7 days of injury and in limited supply, as long as they use is consistent with the MTUS.

A quick review of the draft Drug Formulary leads me to conclude that many drugs that we have seen become standard in the treatment of chronic pain in workers’ compensation are about to become medicinae non grata. Just a few of the perennial favorites that have been designated “Non-Preferred” are Amitriptyline, Buprenorphine, Bupropion, Desipramine, the ever-popular Hydrocodone, Lidocaine, Nortriptyline, Oxycodone, Tizanidine, Trazodone and Voltaren gel (Diclofenac Sodium). A four-day supply of Hydrocodone or Oxycodone is allowed on a “First Fill” basis, as is Tramadol.

What is the “take-away” here? On paper, these changes look like serious, much-needed reform. If implemented and not subverted by some as-yet unimagined means, they have the potential to bring workers’ compensation treatment in line with the best practices of medicine in the “real world.” How that works out in our world remains to be seen.

Patricia Hastings, Esq.


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