Utilization Review

Calif. Case Could Redefine Peer Review

A lawsuit being argued in California could drastically change UR workers' comp statutes and drive costs through the roof.
By: | January 27, 2017 • 4 min read

A case in the California Supreme Court could disrupt the state’s workers’ compensation medical treatment approval process and expose utilization review doctors to medical malpractice liability, said California attorneys on both sides of the issue.

“The entire workers’ compensation community should take notice,” said Mike Lemrick, senior director, operations utilization review and IME at Coventry, because “although the high court is unlikely to uphold the appellate court’s decision, the consequences would turn the workers’ comp process upside down.”

The civil case in question is Kirk King v. CompPartners Inc. et al., in which a husband and wife sued a utilization review (UR) company, CompPartners Inc., and two of its employee physicians, primarily for medical malpractice.

Bernie Baltaxe, partner, Smith & Baltaxe, LLP

King suffered a back injury in 2008, and his treating physician prescribed the sedative Klonopin for depression and anxiety related to chronic pain. Two years later, a CompPartners utilization review physician, an anesthesiologist, determined the Klonopin was medically unnecessary.

When the CompPartners physician decertified the Klonopin, King was obliged to stop taking it or pay for it out of pocket. King’s suit alleged that his sudden withdrawal resulted in four seizures, which in turn resulted in additional physical injuries.

The trial court sided with CompPartners, and the Court of Appeals partially reversed the lower court’s decision. The decision to decertify was within the exclusive jurisdiction of workers’ compensation, said Bernie Baltaxe, partner, Smith & Baltaxe, LLP, a San Francisco law firm specializing in workers’ compensation cases, but the failure to warn was not.

Baltaxe, who filed a brief on the case on behalf of the California Applicants’ Attorneys Association, said the case is noteworthy because it raises questions about:

  • Duty of care for UR doctors
  • The exclusive remedy of workers’ compensation
  • The UR process and preemption

Who Bears Duty of Care?

Among the reasons this is a significant case, Lemrick said, is that it establishes a doctor-patient relationship with the UR peer reviewer.

Advertisement




Contrary to the appellate court’s findings, he said, UR doctors’ role is not a doctor-patient relationship and so is not subject to duty of care obligations. Instead, their role is limited to “certifying, modifying, or denying treatment per medical treatment guidelines as established by the state.”

“The UR doctor never treats the injured worker or sees the entire medical file,” he said, only those the treating physician provides for episodic review of a specific treatment.

“The UR doctor isn’t allowed to make a diagnosis, a treatment plan or provide alternate treatments.”

“If upheld, it would drastically change the UR workers’ comp statutes and allow civil tort duties. It would change workers’ comp as we know it.” — Mike Lemrick, senior director, operations utilization review and IME, Coventry

Baltaxe disagrees. “When a physician is engaged in medicine and renders a professional opinion that affects treatment,” he said, “there’s a doctor-patient relationship.”

For purposes of malpractice, the court indicated that an essential element of a cause of action for malpractice is the existence of a doctor-patient relationship in order to give rise to a duty of care.

In this case, Lemrick said, “I believe the treating physician bore responsibility for the medical treatment and withdrawing King from Klonopin.”

That decision was made by the UR doctor, Baltaxe said. “There’s no methodology for the treating physician to ask for time to wean.” An appeal can take months, and an abrupt cessation of Klonopin can results in seizure in the first few days.

The UR doctors did, in fact, have a duty to warn, Baltaxe said. “When physicians make a medical recommendation, they’re required to warn of potential side effects. They also have obligation to not take action that will cause harm.”

Failure to warn does not fall within the exclusive remedy or workers’ compensation, he said, and injured workers should be permitted to seek legal recourse outside workers’ compensation statutes.

Workers’ Comp As We Know It

This could be a source of chaos and confusion in California, Lemrick said. If the appellate court’s decision is upheld, he said, “it will be more costly for companies do business in California because UR costs will go through the roof.”

Mike Lemrick, senior director, operations utilization review and IME, Coventry

If the duty of care for physicians who never sees a patient is upheld, all physician reviewers will require extra liability and malpractice insurance. “It will drive workers’ comp costs higher for California and delay care for injured workers,” Lemrick said.

Will the high court’s decision spill over to other states?

Absolutely, said Baltaxe. “Until this case came along, I hadn’t heard of any workers’ comp doctor immunized against negligence.”

Hopefully, he said, the state Supreme Court will rule that the decision to abruptly stop Klonopin does not fall within the exclusive remedy and that the doctor failed in his duty to warn. “All states should take notice.”

Lemrick is equally confident in the reverse outcome.

“If upheld,” he said. “It would drastically change the UR workers’ comp statutes and allow civil tort duties. It would change workers’ comp as we know it.”

Susannah Levine writes about health care, education and technology. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

As a professor of business, Jack Hampton knows firsthand the positive impact education has on risk managers as they tackle growing risks.
By: | April 9, 2018 • 4 min read

R&I: Who is your mentor and why?

Ellen Thrower, president (retired), The College of Insurance, introduced me to the importance of insurance as a component of risk management. Further, she encouraged me to explore strategic and operational risk as foundation topics shaping the role of the modern risk manager.

Chris Mandel, former president of RIMS and Risk Manager of the Year, introduced me to the emerging area of enterprise risk management. He helped me recognize the need to align hazard, strategic, operational and financial risk into a single framework. He gave me the perspective of ERM in a high-tech environment, using USAA as a model program that later won an excellence award for innovation.

Bob Morrell, founder and former CEO of Riskonnect, showed me how technology could be applied to solving serious risk management and governance problems. He created a platform that made some of my ideas practical and extended them into a highly-successful enterprise that served risk and governance management needs of major corporations.

R&I: How did you come to work in this industry?

Advertisement




From a background in corporate finance and commercial banking, I accepted the position of provost of The College of Insurance. Recognizing my limited prior knowledge in the field, I became a student of insurance and risk management leading to authorship of books on hazard and financial risk. This led to industry consulting, as well as to the development of graduate-level courses and concentrations in MBA programs.

R&I: What was your first job?

The provost position was the first job I had in the industry, after serving as dean of the Seton Hall University School of Business and founding The Princeton Consulting Group. Earlier positions were in business development with Marine Transport Lines, consulting in commercial banking and college professorships.

R&I: What have you accomplished that you are proudest of?

Creating a risk management concentration in the MBA program at Saint Peter’s, co-founding the Russian Risk Management Society (RUSRISK), and writing “Fundamentals of Enterprise Risk Management” and the “AMA Handbook of Financial Risk Management.”

A few years ago, I expanded into risk management in higher education. From 2017 into 2018, Rowman and Littlefield published my four books that address risks facing colleges and universities, professors, students and parents.

Jack Hampton, Professor of Business, St. Peter’s University

R&I: What is your favorite book or movie?

The Godfather. I see it as a story of managing risk, even as the behavior of its leading characters create risk for others.

R&I: What is your favorite drink?

Jameson’s Irish whiskey. Mixed with a little ice, it is a serious rival for Johnny Walker Gold scotch and Jack Daniel’s Tennessee whiskey.

R&I: What is the most unusual/interesting place you have ever visited?

Mount Etna, Taormina, and Agrigento, Sicily. I actually supervised an MBA program in Siracusa and learned about risk from a new perspective.

R&I: What is the riskiest activity you ever engaged in?

Advertisement




Army Airborne training and jumping out of an airplane. Fortunately, I never had to do it in combat even though I served in Vietnam.

R&I: If the world has a modern hero, who is it and why?

George C. Marshall, one of the most decorated military leaders in American history, architect of the economic recovery program for Europe after World War II, and recipient of the 1953 Nobel Peace Prize. For Marshall, it was not just about winning the war. It was also about winning the peace.

R&I: What about this work do you find the most fulfilling or rewarding?

Sharing lessons with colleagues and students by writing, publishing and teaching. A professor with a knowledge of risk management does not only share lessons. The professor is also a student when MBA candidates talk about the risks they manage every day.

R&I: What is the risk management community doing right?

Sensitizing for-profit, nonprofit and governmental agencies to the exposures and complexities facing their organizations. Sometimes we focus too much on strategies that sound good but do not withstand closer examination. Risk managers help organizations make better decisions.

R&I: What could the risk management community be doing a better job of?

Advertisement




Developing executive training programs to help risk managers assume C-suite positions in organizations. Insurance may be a good place to start but so is an MBA degree. The Risk and Insurance Management Society recognizes the importance of a wide range of risk knowledge. Colleges and universities need to catch up with RIMS.

R&I: What emerging commercial risk most concerns you?

Cyber risk and its impact on hazard, operational and financial strategies. A terrorist can take down a building. A cyber-criminal can take down much more.

R&I: What does your family think you do?

My family members think I’m a professor. They do not seem to be too interested in my views on risk management.




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]