Petition Challenges Constitutionality of IMR

Published on April 15, 2014 by WorkCompCentral, authored by Greg Jones

An injured worker adjudged 100% permanently and totally disabled filed a petition with the California 1st District Court of Appeal seeking a declaration that the independent medical review process that denied her home health services violates the state constitution.


Such a challenge was clearly envisioned by the drafters of Senate Bill 863, who on Aug. 6, 2012, received a memo from a law firm saying the lack of “meaningful review” of IMR decisions may create due process concerns. An internal memo created by the Department of Industrial Relations on Aug. 15 also warned that the process could be struck down because it doesn’t provide injured workers with an opportunity for meaningful judicial review.


The petition, filed April 3 by San Francisco attorney Joseph C. Waxman, claims that Labor Code Section 4610.6 prohibiting a judge or appellate court from reviewing an IMR decision violates Article XIV, Section 4, of the state constitution, which vests with the Legislature authority to enact workers’ compensation laws “that provide substantial justice, without encumbrance” and that these laws be subject to review by a state appellate court.

“It is difficult to conceive of a statute-mandated system that is more encumbering and less expeditious, and that provides no justice, let alone substantial justice,” than the IMR process, Waxman writes.

Waxman, on behalf of his client Frances Stevens, is asking the 1st DCA to issue a writ of mandate finding the IMR process created by Senate Bill 863 denies injured workers of their “fundamental rights of due process by prohibiting cross-examination of the anonymous non-treating, non-examining medical reviewer, and by denying her a speedy or adequate remedy of judicial review.” 

 The attorney is no stranger to presenting novel issues of law to the appellate courts. He also had served as counsel to Wanda Ogilvie, the applicant whose comp claim gave rise to a line of cases addressing how and when an injured worker to rebut the permanent disability rating schedule by showing it didn't fully account for future lost wages caused by the injury.

 (Incidentally, the passage of SB 863 was supposed to eliminate the enduring litigation over the application of the en banc WCAB's 2009 decision in Ogilvie v. City and County of San Francisco.)

Waxman is asking the court to declare IMR unconstitutional and that Stevens be allowed to present the issue of medical necessity of her treating to a workers’ compensation judge.

Stevens, 46 sustained an injury Oct. 28, 1997, that required a series of surgeries, including the fusion of her first and second metatarsals. State Compensation Insurance Fund provided her a manual wheelchair, but difficulties moving the chair caused her to develop bilateral shoulder problems, according to the filing.

A combination of severe pain and confinement to a wheelchair caused Stevens to become severely depressed. She was declared permanently and totally disabled on Aug. 16, 2013.

Following the decision, Stevens’ physician recommended and prescribed pain and antidepressant medication as well as home health care. State Fund denied the recommendations. Maximus Federal Services, the contractor providing independent medical review services to the workers’ compensation system, affirmed that denial.

The court filing claims that a writ of mandate is the only recourse available to Stevens. While Labor Code Section 4610.6(h) allows an injured worker to appeal an IMR decision based on allegations of fraud, conflict of interest, or bias, because the reviewing doctor is anonymous, “the injured worker is not provided any information upon which to make an appeal on any of those grounds.”

Stevens does not allege that the IMR decision was based on bias or any other appealable grounds because she would have no way to prove such an allegation, Waxman writes.

“The issue is that since the process is a secretive one, the injured worker has no basis upon which to ever mount an appeal on the grounds cited above,” he argues.

He further asserts that a writ is appropriate because there are no other plain, speedy and adequate remedies available to his client. Even if she was able to prove the decision of the independent medical reviewer predicated on fraud or bias, the only recourse is to go back into the IMR system, further delaying care, the filing says.

State Fund denied the recommendation of home health care for eight hours a day, four days a week, as well as pain medications on July 25, 2013, and Oct. 17, 2013. Stevens appealed those decisions on Aug. 14, Sept. 19, Oct. 1, Oct. 15, Dec. 9 and Dec. 10, but Maximus did not issue its determination finding the treatments unnecessary until Feb. 20, 2014, according to the petition.

While Labor Code Section 4610.6(d) requires a decision be issued within 30 days – within three days for expedited cases – the failure of Maximus to issue a determination within the prescribed time frames is not a ground for appeal.

“In essence, Labor Code section 4610.6 has rendered petitioner’s WCAB award of future medical care for her devastating and permanently disabling industrial injury meaningless,” the petition says. “Based on these facts, petitioner has no plain, speedy and adequate remedy at the WCAB to enforce the award or seek a ruling on the constitutionality of Labor Code Section 4610.6, or to compel the administrative director and Maximus to render a transparent decision subject to cross-examination and a fair speedy hearing before a WCJ with full appellate rights.”

Jennifer Vargen, State Fund's senior vice president of marketing and communications, on Monday said that the carrier is reviewing the petition and preparing its response, which is due April 28.

Applicants' attorneys have long been critical of the IMR process and many have been questioning whether it would pass constitutional muster since its inception last year. Waxman, however, appears to be the first to take the issue up to an appellate court. 

Attorney Michael Win of Rowen, Gurvey & Win said Monday that he shares the widespread concern among his fellow applicants' attorneys over the limited nature of the appeal process for IMR decisions, so he was happy to see someone has finally taken the issue up on a writ.

Daniel R. Sovocool, an attorney with Nixon Peabody, also issued an analysis early-on in the IMR implementation process noting that IMR is the logical evolution of the trend toward controlling medical costs through the use of evidence-based medicine. However, his Aug. 6, 2012 memo also said there is an “outer limit” on how far the legislature can go without violating the constitutional requirement to create a “complete system of workers’ compensation.”

Sovocool wrote that independent medical reviewers deciding whether recommended treatments are appropriate did not appear to be problematic. The “lack of meaningful review” however, raises due process questions, he said.

One concern he raised was that the language he reviewed did not allow an injured worker to appeal an obvious factual error. This concern was addressed by including in the SB 863 language allowing an appeal of an IMR decision based on mistakes of fact.

The administration’s internal memo also notes potential constitutional challenges to the IMR process. The memo cites Costa v. WCAB, in which the 4th DCA upheld a mandatory dispute-resolution process for industrial accidents in a collective bargaining agreement because the decisions were subject to review by the Appeals Board and appellate courts.

The Costa decision that mandatory arbitration was only lawful because it was subject to judicial review could be used to determine that “limitations on workers’ compensation benefits have only been allowed when they are subject to review in the Court of Appeal,” the memo says.

At the same time, the author of the internal memo notes that a disagreement over an employer’s refusal to approve additional treatments is not a legally recognizable dispute. As such, one could argue that an IMR determination can be binding and only reviewable with a showing of fraud or bias, “as the decision to review would not be based on the worker’s need for treatment, but instead a clear rule that the IMR decision is the final rule.”

The Workers’ Compensation Insurance Rating Bureau initially projected that independent medical review would save $390 million a year by keeping about 5,000 disputes from going before workers’ compensation judges each month.

Only 870 applications for IMR were submitted in the first six months of 2013, while 4,410 were submitted in July after all dates of injury were eligible for the new process. But the number of applications jumped to 15,731 in August and Maximus has received more than 10,000 requests each month since.

In October, the Rating Bureau warned the savings it initially projected would be in jeopardy if the volume of requests is not reduced.

IMR was the second-largest cost-cutting provision of SB 863 behind new lien rules requiring the payment of a $150 filing fee for claims filed on or after Jan. 1, 2013 or a $100 fee before claims filed before that day can be heard.

The lien provisions, projected to save $480 million a year, are also in jeopardy because of a constitutional challenge.

In November, a federal judge in Los Angeles issued a temporary injunction prohibiting the Division of Workers’ Compensation from collecting the $100 lien-activation fee or dismissing any liens for which this fee has not been paid pending the outcome of an equal protections complaint.

The case, Angelotti Chiropractic v. Baker et al., is currently before the U.S. 9th District Court of Appeals. The plaintiffs are challenging the trial court judge’s decision to dismiss their due process and improper takings claim. The administration is asking that the equal protection claim be tossed out and the injunction lifted.

A number of interested parties including the State Compensation Insurance Fund, the California Chamber of Commerce, California Workers’ Compensation Institute and American Insurance Association have filed amicus briefs in support of the lien provisions. The California Society of Industrial Medicine and Surgery filed a “friend of the court” brief asking the court to find the lien provision are unconstitutional.

A special panel reviewing the briefs has not decided whether or not to accept them.