California: Law bars comp insurers from refusing to pay for authorized services

Gov. Arnold Schwarzenegger signed legislation to prohibit workers' compensation insurers in California from refusing to pay for preauthorized services.

Sponsored by Assemblywoman Bonnie Lowenthal, D-Long Beach, Assembly Bill 361 closed a loophole in state law that allowed insurance companies to withhold payment after they had authorized particular medical services. Under California's workers' comp system, most doctors obtain authorization before beginning treatment. However, Lowenthal said that insurers still deny payment for the treatment they authorized.

"That's just wrong," she said. "If an insurance company tells a doctor they're going to pay for services, and the doctor provides the service, the company shouldn't be able to come back later and say they changed their mind. This bill says insurers have to mean what they say. They have to keep their word."

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Opponents of bill, including the Association of California Insurance Companies, argued that preauthorized services were denied after learning that the injury was not related to the employee's job or that the treating physician did not belong on the proper preferred provider panel.

"In order to facilitate the immediate provisions of care, it sometimes is necessary to authorize care when doubt exists," Samuel Sorich, president of the association, wrote in a letter to lawmakers this summer. "However, when information makes it clear that the injury was not a workplace injury or when the carrier discovers that the treatment was not appropriate the carrier/employer must, and should, rescind such authorization. A.B. 361's denial of this flexibility is not in the best interest for injured workers since it would prevent a carrier from denying treatment that is unnecessary. Nor is A.B. 361 in the best interest of the workers' compensation system since it would mandate the payment for injuries that are non-compensable."

Group health plans and health insurers in California are already prohibited from denying reimbursement for medically necessary care after it is authorized. A state law passed in 2007 prohibits a health plan or health insurer from rescinding or modifying an authorization for services after the services are rendered. However, that law does not apply to workers' comp insurance. Lowenthal said A.B. 361 makes it clear that the state expects the same kind of dependability from workers' comp insurers.

Other bills signed. Other legislation that will impact the workers' comp system includes Senate Bill 186, introduced by Sen. Mark DeSaulnier, D-Concord. S.B. 186 repealsthe "sunset" provision which will allow employees to choose their personal physician in the case of a work-related injury after December of this year. This bill was sponsored by the California Labor Federation and California Professional Firefighters.

"Under the old workers' comp law, firefighters could soon have been forced to see a doctor chosen not by them, but by their city manager," said Lou Paulson, president of the CPF. "We're gratified that the governor has seen the importance of ensuring that working people can choose their own doctor on and off the job."

Assembly Bill 483, introduced by Assemblywoman Joan Buchanan, D-San Ramon, was also signed into law. The legislation requires the Workers' Compensation Insurance Rating Bureau of California to create a Web site to identify whether an employer has workers' comp insurance.

Read more at the WORKERSCOMP Forum^TM homepage.

November 2, 2009

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