The Division of Workers’ Compensation has made further changes to its California EDI Implementation Guide, Version 2.0, pursuant to revision of the Workers’ Compensation Information System (WCIS) regulations. The changes are subject to an additional public comment period of 15 days. The comment period will close on November 28, 2014.

The California legislature enacted sweeping reforms to California’s workers’ compensation system in 1993. The legislature directed the DWC to put together comprehensive information about workers’ compensation in California. The result is the WCIS. The WCIS has four components: the First Reports of Injury (FROI) reporting guidelines were implemented March 1, 2000. The Subsequent Reports of Injury (SROI) reporting guidelines were implemented July 1, 2000. Reporting of annual summary of benefits began January 31, 2001

Medical bill payment reporting regulations were adopted on March 22, 2006. The regulations require medical bill payment records for services with a date of service on or after September 22, 2006 and a date of injury on or after March 1, 2000 to be transmitted to the DWC. The medical services are required to be reported to the WCIS by all claims administrators handling 150 or more total claims per year.

California workers’ compensation medical bill payment records are processed by diverse organizations: large multi-state insurance companies, smaller specialty insurance carriers, self-insured employers or insurers, third-party administrators handling claims on behalf of self-insured employers, as well as bill review companies. The organizations have widely differing technological capabilities, so the WCIS is designed to be as flexible as possible in supporting EDI medical transmissions. EDI is the computer-to-computer exchange of data or information in a standardized format. In California, workers’ compensation, medical EDI refers to the electronic transmission of detailed medical bill payment records information from trading partners, i.e., senders, to the California DWC.

The DWC incorporated the primarily technical changes to the California EDI Implementation Guide, Version 2.0 proposed by members of the workers’ compensation community, including these new proposed changes:

1) Adding a table showing California-adopted IK4 error codes for 999 acknowledgements
2) Editing the California Edit Matrix table to correspond to entries in the IK4 error code for 999 acknowledgements table
3) Further clarifying procedures for reporting lump-sum lien settlement payment data.

The DWC believes that these updates will allow WCIS to collect more robust and useful data that will assist with research regarding workers’ compensation issues. The notice and text of the regulations can be found on the proposed regulations page.

The California workers’ compensation community recently learned of questions raised about the authenticity of surgical screws used in spine implants at various hospitals in Southern California as a result of litigation brought by claimants who claim they received counterfeit hardware implants. The topic of questioning the manufacturing credentials of medical suppliers is now proving to potentially have significant benefits in claims administration strategies. It may be important to know more about what is at the forefront of implant technologies so that better treatment choices can be made. Unfortunately, the UR/IMR process typically answers the question “should someone have a surgery?” but typically omits answering the question “what brands of surgical implant devices are the best choice for the job?” To add to our knowledge about the surgical implant industry, here is some news about the latest surgical products recently approved by the FDA for spine surgeries.

The MEDICREA group, a company that specializes in the development of personalized implants produced for a patient’s specific need in the treatment of spinal pathologies, has announced the company has received 510(k) clearance from the U.S. Food and Drug Administration for UNiD, the world’s first patient-specific spinal osteosynthesis rod. The technology will be premiered at the 2014 North American Spine Society (NASS) Annual Meeting taking place on November 12-15 in San Francisco. The first U.S. patient underwent surgery to have personalized UNiD rods implanted earlier this month in New York.

UNiD is the first patient-specific device cleared to treat degenerative spine conditions including scoliosis and other type of deformities. According to the National Scoliosis Foundation, an estimated six million people in the U.S. have scoliosis. Each year scoliosis patients make more than 600,000 visits to private physician offices, and an estimated 38,000 patients undergo spinal fusion surgery. Adult spinal deformity surgery is likely to increase in frequency with as much as 32 percent of the adult population suffering from scoliosis and a prevalence of 60 percent among the elderly. Hospital costs of adult spinal deformity surgery can exceed $100,000 per patient. Revisions and reoperations place a large financial burden on the health care system – increasing the average cost of adult spinal deformity surgery by more than 70 percent.

UNiD patient-specific rods are universal implants available in two alloys (Titanium TA6V ELI/Cobalt Chromium) and two diameters (5.5 mm/6 mm), that match global standards. UNiD naturally fits into the PASS LP® thoraco-lumbar fixation system. The PASS LP® system is already used by numerous spine surgeons in 35 countries, and notably in the United States where this product accounts for the majority of MEDICREA USA Corporation’s sales. MEDICREA’s customized spine implant platform also includes the UNiD anterior lumbar interbody fusion (ALIF) spine cages created with a 3-D printer. With the support of specific software and advanced imaging, the UNiDTM ALIF customized cages made of Poly Ether Ketone Ketone (PEKK) exactly reproduce the anatomic details of a patient’s vertebral endplates. The world’s first spinal fusion surgery using the UNiD ALIF customized 3-D printed spine cages was performed on May 28, 2014 in France.

UNiDTM features a software tool to help surgeons preoperatively plan their surgery and order customized, industrially-produced rods to fit the specific spinal alignment needed for each individual patient. UNiDTM eliminates the need to manually contour a rod during surgery, providing surgeons with a precisely aligned rod prior to surgery and reducing the amount of time patients spend in the operating room, which directly impacts infection rate and quality of recovery.

The customized rod, according to the manufacturer, claims to offer numerous benefits to surgeons and patients undergoing spine surgery. The primary benefit is it allows surgeons to plan and then execute their operating strategy without compromises or approximation errors. Surgeons can improve their success rate in terms of global sagittal patient alignment, and reduce the risk of spinal implant failure.

Kimberly Rivera injured her back while working for Valley Radiology in 2010. Dr. Norman Kahan is the primary treating physician.

On June 13, 2013, Dr. Kahan issued a request for authorization (RFA) requesting acupuncture and medications (Flexeril, Norco, Neurontin, Terocin and a Theramine medical supplement). The parties dispute the date that defendant received the RFA. Applicant claims July 5, 2013 and defendant claims July 8, 2013. The UR non-certification is dated on 07/16/2013, yet it indicates a determination date of 07/15/2013, and has a proof of service date of 07/15/2013. Thus the WCJ characterized it as “internally inconsistent.”

The parties attended an expedited hearing and submitted the medical treatment issue framed by the UR dispute for determination. The WCJ determined that UR was untimely, and therefore the underlying medical treatment issue was not subject to Independent Medical Review (!MR). Defendant disputes the determination that UR was untimely and Petitioned for Reconsideration which was denied in the panel decision of Rivera v Valley Radiology.

Pursuant to 8 CCR Section 9792.9(a)(J) the RFA shall be deemed to have been received by Defendant by facsimile on the date the request was received if the receiving facsimile electronically date stamps the transmission. If there is no electronically stamped date recorded, then the date the request was transmitted is deemed the date upon which the RFA was received. Here, Defendant offered no evidence of what the receiving facsimile recorded or when. As such, the Regulations are clear that the received date is deemed to be 07/05/2013. Based on the Regulations as applied to the evidence offered, the UR determination was due by 07/12/2013. The UR letter is dated 07/16/2013 and an internally inconsistent proof of service dated 07/15/2013. The WCJ reasoned that “Utilizing either the 07/15/2013 date or the 07/16/2013 date really makes no difference as the UR determination was due by 07/12/2013 and therefore in either case Defendant’s UR is untimely.”

On Reconsideration Defendant claimed for the first time that it has an additional 24 hours pursuant to Section 4610(g)(l)(A) in which to communicate the decision, and therefore the 07/15/2013 determination was timely communicated on 07/16/2013. This argument was not raised at trial. The WCAB panel noted that the parties dispute the date that defendant received the RFA. “However, based on our review of the record, even assuming that defendant received the RFA on July 8, 2013, we find the UR untimely.”

Labor Code Section 4610 (3)(A) provides that “Decisions resulting in modification, delay, or denial of all or part of the requested health care service shall be communicated to physicians initially by telephone or facsimile, and to the physician and employee in writing within 24 hours for concurrent review, or within two business days of the decision for prospective review, as prescribed by the administrative director.”

Similarly, Administrative Director Rule 9792.9.1 states that: “For prospective, concurrent, or expedited review, a decision to modify, delay, or deny shall be communicated to the requesting physician within 24 hours of the decision, and shall be communicated to the requesting physician initially by telephone, facsimile, or electronic mail. The communication by telephone shall be followed by written notice to the requesting physician, the injured worker, and if the injured worker is represented by counsel, the injured worker’s attorney within 24 hours of the decision for concurrent review and within two (2) business days for prospective review and for expedited review within 72 hours of receipt of the request.”

The WCAB panel thus concluded “There is no evidence in this case that defendant communicated their decision “initially by telephone, facsimile, or electronic mail” before it served written notice on July 15, 2013. Therefore, we find defendant’s UR untimely. Accordingly, for the reasons stated herein, we affirm the September 26, 2013 Findings and Award.”

Martha Reyes sustained and admitted industrial injury while working for Target. Her primary treating physician Dr. Sobol submitted a Request for Authorization on 02/25/2014 seeking authority for “home care assistance 4 hrs/day x 3 days/wk x 6 wks for cooking/cleaning/laundry/med [illegible].” Utilization Review evaluated the request and denied it on 03/28/2014. The applicant did not claim any material defect in the UR decision. Applicant claims to have sought IMR of the UR decision which had not been decided as of the following events.

The Sobol Orthopedic Medical Group then submitted a second similar request on 05/22/2014. He again requested “Home Care Assistance, 4 hours/ day, 3 days/week for 6 weeks,” The form indicates it to be a “New Request” rather than a “Resubmission – Change in Material Facts.” The request was untimely denied by Utilization Review on 06/17 /2014. This untimely 06/17 /2014 UR denial forms the basis of the present controversy.

Applicant filed a 07/10/2014 Declaration of Readiness to proceed to Expedited Hearing, voicing an objection to the 06/17 /2014 Utilization Review Determination as being untimely, and not based on substantial medical evidence. Defendant filed a timely objection to the DOR.

The matter proceeded to Expedited Hearing on 08/21/2014. Submitted for decision was the applicant’s need for further medical treatment generally (in the context of the 06/17 /2014 utilization review decision.) The WCJ determined that Labor Code § 4610(g)(6) bars applicant from litigating the 06/17 /2014 Utilization Review denial, as the same requested treatment was previously denied by Utilization Review on 03/28/2014, and there had been no showing of material change in circumstance necessitating another utilization review. Applicant filed the instant Petition for Reconsideration on 09/16/2014 which was denied in the panel decision of Reyes v Target Inc.

The WCAB panel concluded “Because the March 28, 2014 UR decision was not invalid, then in the absence of changed circumstances (not alleged here), that UR decision “shall remain effective for 12 months from the date of the decision without further action by the employer with regard to any further recommendation by the same physician for the same treatment.” (Lab. Code, § 4610(g)(6).) Accordingly, it is immaterial that applicant’s physician’s May 22, 2014 request for authorization (RFA) was not denied by defendant until June 17, 2014, even though that denial otherwise might have been deemed untimely had it been an initial RFA. (Lab. Code,§ 4610(g)(3).) Under section 4610(g)(6), defendant could properly have disregarded the new RFA and not issued a UR decision at all.”

Legislators were concerned about unmanageable workers’ compensation losses by staffing companies who were “self insured” in California, and as part of SB 863 required them to become insured as of the end of this year. Perhaps this legislative premonition was well founded. Shares of Vancouver based staffing company Barrett Business Services Inc. were down more than 50 percent after the company announced a big quarterly loss late last month.The Company attributed the loss to an $80 million pretax increase in self insured workers’ compensation reserves, which effectively wiped out Barrett Business Services’ pretax earnings for the past five years. As a result of this news, the Company’s stock declined more than 58%, or $26.18 per share, to close at $18.28 per share on October 29, 2014, on unusually heavy volume.

The Vancouver, Wash. company, provides a variety of business management solutions for small and medium-sized companies with fifty locations in ten states and dozens of offices in Northern and Southern California. BBSI provides human resource outsourcing and professional management consulting, BBSI said the loss resulted from setting aside $80 million for old workers’ compensation claims. “We have every reason to believe that the workers’ compensation data we have presented in the third quarter will normalize over time, proving that the strengthening process and change in practice have had the intended effect,” said CEO Michael Elich, in a news release. “Until then, we believe taking a conservative approach right now allows us to look forward and removes the obstacles of the unknowns within the model.”

A number of attorneys are investigating the company, and at least one, Glancy Binkow and Goldberg LLP, representing investors of BBSI has filed a class action lawsuit in the United States District Court for the Western District of Washington on behalf of a class comprising purchasers of BBSI securities. The Complaint alleges that defendants made false and/or misleading statements and failed to disclose material adverse facts about the Company’s operations and financial performance and prospects. Specifically, the Complaint alleges that defendants made false and/or misleading statements and/or failed to disclose that: (1) the Company under accrued its self-insured workers’ compensation reserves; (2) as a result, the Company overstated its earnings; (3) the Company lacked adequate internal and financial controls; and (4), as a result of the foregoing, defendants’ statements were materially false and misleading at all relevant times. A Los Angeles law firm says it’s investigating potential claims on behalf of shareholders of BBSI. The Wagner Firm says its investigation concerns “possible violations of federal securities laws” and focuses on statements the company made about its “financial results, operations and business prospects” as well as others across the nation. Several other law firms nationwide have issued similar press releases.

Established in 1965,BBSI offers both temporary and long-term staffing to some 1,750 small and midsized businesses. Its staffing services focus on light industrial, clerical, and technical businesses. Barrett also does business as a professional employment organization (PEO), providing outsourced human resource services, such as payroll management, benefits administration, risk management, recruiting, and placement for more than 1,500 clients. Each year about 90% of its PEO revenue comes from customers residing in the states of California and Oregon. Barrett depends mostly on the light-industrial sector for the majority of its staffing services revenue (the sector represented 86% of its total revenue in 20010). Its light-industrial workers operate machinery and perform manufacturing, loading and unloading, and construction-site cleanup tasks.

The Company is a self-insured employer with respect to workers’ compensation coverage for all of its employees (including employees co-employed through client service agreements) working in California, Oregon, Maryland, Delaware and Colorado, with some exceptions. The Company maintains excess workers’ compensation insurance through its wholly owned captive insurance company, Associated Insurance Company for Excess (“AICE”), with a per occurrence retention of $5.0 million, except in Maryland and Colorado.

In February, 2014, BBSI entered into a workers’ compensation insurance arrangement with ACE to provide coverage to BBSI employees in California beginning in the first quarter of 2014. The agreement will be effective through January 2015 with the potential for annual renewals thereafter.The arrangement, typically known as a fronted program, provides BBSI a licensed, admitted insurance carrier in California to issue policies on behalf of BBSI without the intention of transferring any of the worker’s compensation risk for the first $5.0 million per claim. The risk of loss up to the first $5.0 million per claim is retained by BBSI through an indemnity agreement. While this portion of the risk of loss remains with BBSI, ACE assumes credit risk should BBSI be unable to satisfy its indemnification obligations to ACE. ACE also bears the economic burden for all costs in excess of $5.0 million per claim. The arrangement with ACE addresses the requirements of legislation enacted in California in 2012 (Senate Bill 863) under which the Company cannot continue its self-insurance program in California beyond January 1, 2015.