Report 2019-102 Recommendation 4 Responses

Report 2019-102: Department of Industrial Relations: Its Failure to Adequately Administer the Qualified Medical Evaluator Process May Delay Injured Workers' Access to Benefits (Release Date: November 2019)

Recommendation #4 To: Industrial Relations, Department of

To ensure consistency and transparency in overseeing QMEs, DWC should, by April 2020, develop and implement written policies and procedures that define and specify its internal processes for disciplining QMEs, including timelines for taking disciplinary action and for scheduling hearings or responding to settlement proposals.

Annual Follow-Up Agency Response From October 2022

The DWC adheres to the provisions of the QME Discipline Investigation Desk Manual, the Litigation Manual and the Reappointment Protocols. The emphasis placed on early contact with physicians through interviews, emphasis on communicating pathways to rehabilitation has allowed the resolution of investigation cases without moving to the litigation stage. It is important to understand that there two separate regulatory processes for Administration of the QME program: discipline and reappointment. The challenge for the DWC Discipline Unit is to administer these processes in a way that is fair to the regulated physician, and achieves the overriding responsibility of protection of the injured worker. The results of the implementation of the policies indicates that this balance has been achieved.

The DWC has maintained a concentration on implementing the provisions of Title 8. California Code of Regulations ("CCR") section section 50-57 in the policies of both the Litigation Manual and the Reappointment Protocols has not yielded the results anticipated. These regulation sections are specific to the reappointment process and enumerate incidences of violations that do not require investigation to elicit corroborating evidence and these violations are rightfully elevated to the scrutiny of the Executive Medical Director and ultimately the Administrative Director upon review of the application for reappointment.

Despite the valid emphasis placed on these particular regulatory sections 50-57 in the manuals and protocols, in the past year only one physician has been denied reappointment as a result of violation of these regulations. That physicians was reappointed upon review of his individual case by the Executive Medical Director. These results are proof that the practical application of the policies are working.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

DWC did not address the concerns that we raised in its 6-month response regarding the policy. Although DWC developed a written policy describing how it will discipline QMEs, we have concerns that the policy does not require its staff to follow the disciplinary process. Instead, the policy allows staff to continue using its reappointment process to discipline QMEs. For example, the QME Discipline Desk Manual states that the investigator should recommend whether the QME should be disciplined (i.e., reappointment denied or an accusation should be issued..."). However, as we indicate in the report, DWC should not have used the reappointment process to discipline some QMEs for alleged violations. It should have followed its disciplinary process as outlined in regulations. Further, DWC's new Litigation Manual indicates that physicians should be reappointed and notified of pending Discipline Unit action unless violations are of such a serious nature that denial is indicated or 8 CCR section 50-57 prevents reappointment. However, those sections of regulations do not prevent DWC from reappointing a QME. DWC should be expediting the investigations of QMEs up for reappointment, as well as following its reappointment regulations if it decides to deny reappointment.

Annual Follow-Up Agency Response From November 2021

The DWC has implemented the provisions of the QME Discipline Investigation Desk Manual, the Litigation Manual and the Reappointment Protocols over the last year. Utilizing the timelines for the investigation process and the reappointment protocols outlined in the manuals has resulted in settlement of pending investigations without resort to litigation. The Discipline Unit has negotiated settlements with QMEs who were found to be in violation of the Administrative Director's regulations or statutory provisions of the Labor Code. Physicians were contacted at the outset of the investigation and given a chance to respond to the allegations. In addition, settlement options were regularly communicated to physicians during the course of the investigation. Settlements have focused on rehabilitating the QME and maintaining the physician in the QME program. The concerns expressed by the State Auditor in their one-year assessment with reference to recommendation #4 have not materialized. Investigators are utilizing the QME Discipline Investigation Desk Manual in processing open investigations.

Utilizing the timelines and protocols of the manuals, physicians have been reappointed and notified of pending Discipline Unit action unless there existed prima facie evidence of violations of such a serious nature that there was a statutory impediment to reappointment, or the physician was in violation of 8 CCR 50-57.

The DWC is nearing the final phase of instituting rulemaking on a series of regulations that deal with the QME process. As part of that regulatory process, a rewriting of 8 CCR 50-57 is contemplated. New subdivisions are being added to clarify the criteria upon which the Administrative Director can base a decision to deny reappointment of a QME. The regulations will specify the grounds as detailed in the statutes, regulations, and sanctions guidelines that grant mandatory or discretionary authority to the Administrative Director to deny reappointment of a QME.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Similar to the concerns we raised in the 6-month and one-year response, we have concerns that its policy does not require its staff to follow the disciplinary process. Instead, the policy allows staff to continue using its reappointment process to discipline QMEs. For example, the QME Discipline Desk Manual states that the investigator should recommend whether the QME should be disciplined (i.e., reappointment denied or an accusation should be issued..."). However, as we indicate in the report, DWC should not have used the reappointment process to discipline some QMEs for alleged violations. It should have followed its disciplinary process as outlined in regulations. Further, DWC's new Litigation Manual indicates that physicians should be reappointed and notified of pending Discipline Unit action unless violations are of such a serious nature that denial is indicated or 8 CCR section 50-57 prevents reappointment. However, those sections of regulations do not prevent DWC from reappointing a QME. DWC should be expediting the investigations of QMEs up for reappointment, as well as following its reappointment regulations if it decides to deny reappointment. Again, DWC has two separate regulatory processes: one for discipline and one for reappointment. Those processes should remain separate and be outlined appropriately in its policy.

1-Year Agency Response

The DWC attached the Medical Unit - QME Discipline - Desk Manual as Exhibit B to its 180-day response. The manual has been officially adopted as the policy of the DWC Investigation Unit and mandates staff to follow the disciplinary process outlined therein. (See Exh. F.) The desk manual and memorandum adopting the manual as policy have been distributed to staff in the QME Discipline Unit and all Medical Unit and Legal Unit staff who participate in the QME discipline process. In addition, training on the disciplinary process has been provided to all members of the QME Discipline Unit, and will be given on a recurring basis to all relevant staff.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

DWC did not address the concerns that we raised in its 6-month response regarding the policy. Although DWC developed a written policy describing how it will discipline QMEs, we have concerns that the policy does not require its staff to follow the disciplinary process. Instead, the policy allows staff to continue using its reappointment process to discipline QMEs. For example, the QME Discipline Desk Manual states that the investigator should recommend whether the QME should be disciplined (i.e., reappointment denied or an accusation should be issued..."). However, as we indicate in the report, DWC should not have used the reappointment process to discipline some QMEs for alleged violations. It should have followed its disciplinary process as outlined in regulations. Further, DWC's new Litigation Manual indicates that physicians should be reappointed and notified of pending Discipline Unit action unless violations are of such a serious nature that denial is indicated or 8 CCR section 50-57 prevents reappointment. However, those sections of regulations do not prevent DWC from reappointing a QME. DWC should be expediting the investigations of QMEs up for reappointment, as well as following its reappointment regulations if it decides to deny reappointment. Again, DWC has two separate regulatory processes: one for discipline and one for reappointment. Those processes should remain separate and be outlined appropriately in its policy.

6-Month Agency Response

DWC 180-Day Status on the Recommendation: Completed.

See Exhibit B: Medical Unit - QME Discipline - Desk Manual

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Although DWC developed a written policy describing how it will discipline QMEs, we have concerns that the policy does not require its staff to follow the disciplinary process. Instead, the policy allows staff to continue using its reappointment process to discipline QMEs. For example, the QME Discipline Desk Manual states that the investigator should recommend whether the QME should be disciplined (i.e., reappointment denied or an accusation should be issued..."). However, as we indicate in the report, DWC should not have used the reappointment process to discipline some QMEs for alleged violations. It should have followed its disciplinary process as outlined in regulations. Further, DWC's new Litigation Manual indicates that physicians should be reappointed and notified of pending Discipline Unit action unless violations are of such a serious nature that denial is indicated or 8 CCR section 50-57 prevents reappointment. However, those sections of regulations do not prevent DWC from reappointing a QME. DWC should be expediting the investigations of QMEs up for reappointment, as well as following its reappointment regulations if it decides to deny reappointment. Again, DWC has two separate regulatory processes: one for discipline and one for reappointment. Those processes should remain separate and be outlined appropriately in its policy.

60-Day Agency Response

The DWC is actively working to outline

best practices and procedural timelines. The DWC has completed a first draft of an update to the existing investigation manual and includes timelines for task completion. A copy of

the draft of the manual is attached hereto as Exhibit E.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2019-102

Agency responses received are posted verbatim.