Report 2019-102 All Recommendation 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 for Legislative Action

To ensure that DWC maintains a sufficient supply of QMEs and appropriately compensates these individuals, the Legislature should amend state law to specify that DWC review and, if necessary, update the medical-legal fee schedule at least every two years based on inflation. DWC's review of the medical-legal fee schedule should be separate from its review of the Official Medical Fee Schedule.

Description of Legislative Action

AB 404 (Salas, 2021) would require the DWC to review the medical-legal fee schedule every two years and update, if necessary, to increase the conversion factor by the percentage increase in the most recent federal Medicare Economic Index. This bill is pending in the Senate Appropriations Committee.

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Introduced

Description of Legislative Action

AB 1815 (Daly/Salas, 2020) would have required the DWC Administrative Director to adopt and revise the medical-legal fee schedule at least every two years and to do so separate and apart from adopting and revising the medical fee schedule . This bill failed passage due to the adjournment of the 2019-20 Regular Legislative Session.

California State Auditor's Assessment of 1-Year Status: Legislation Proposed But Not Enacted

Description of Legislative Action

AB 1815 (Daly/Salas) would require the DWC Administrative Director to adopt and revise the medical-legal fee schedule at least every two years and to do so separate and apart from adopting and revising the medical fee schedule.

California State Auditor's Assessment of 6-Month Status: Legislation Introduced

Description of Legislative Action

AB 1832 (Salas, 2019) would require the Administrative Director of the Division of Workers' Compensation to increase the conversion factor for the fee scheduled quarterly, as necessary, to reflect any increase in the Bureau of Labor Statistics Consumer Price Index for medical care, as specified. The bill would also require the administrative director, on or before January 15, 2020, to assign a reasonable relative value, greater than zero, for a missed or failed appointment for a comprehensive or follow-up medical-legal evaluation and for a review of medical records associated with a missed or failed appointment. As of January 2020, this bill is pending in the Assembly Insurance Committee.

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

Recommendation for Legislative Action

To reduce the delays that replacement panels cause in resolving workers' compensation claims, the Legislature should revise state law to increase the number of QMEs on the panels DWC provides. Specifically, unrepresented employees should continue to choose from a panel of three QMEs, and represented employees should be provided with a panel of five QMEs, of whom the employee and the employer can each strike one, leaving both parties with the same number of QMEs to choose from as unrepresented employees. The party—the worker or the employer—that did not request the panel would select the final QME. If the selected QME is unavailable, the parties would then select from among the two remaining QMEs until they find one that is available.

Description of Legislative Action

As of November 19, 2021, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of November 19, 2020, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Description of Legislative Action

As of May 19, 2020, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Description of Legislative Action

As of January 2020, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #3 To: Industrial Relations, Department of

To ensure that DWC appoints enough QMEs to keep up with the demand for QME services, it should, by April 2020, develop and implement a plan to increase the number of QMEs commensurate with demand. The plan should describe how DWC will actively recruit for and increase the pool of QMEs, prioritizing specialties with the greatest shortages relative to demand. It should also use QME data trends to project the necessary QME supply to meet demand. The plan should include continuing negotiation with medical groups to allow their physicians to become QMEs, as well as establishing goals for recruiting new QMEs in specific specialties.

1-Year Agency Response

The DWC has developed and implemented a strategic plan to recruit physicians and increase the pool of QMEs. The plan includes virtual QME examinations, outreach and recruitment strategies targeted at medical communities, and increased remuneration for QMEs.

Please see the full response submitted to the State Auditor on November 18, 2024 complete details.

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

DWC's response indicates that it will expand the availability of its QME examination and publicize the availability of the exam through sending letters to physicians who have previously failed the exam, using its social media accounts, and advertising in the newsletter of a professional organization of industrial physicians in California. DWC also provided an analysis of QMEs and demand for QMEs and identified specialties that require recruitment of additional QMEs to meet demand. DWC's response also indicates that it has begun the process of reaching out to institutional medical providers to begin recruitment of its members and plans to perform this outreach with other organizations. To the extent that DWC follows through with its plan and recruits the QMEs necessary to meet the demand it identified in its analysis, it will implement our recommendation.

6-Month Agency Response

DWC 180-Day Status on the Recommendation: Completed and Implementing.

The DWC's plan to recruit physicians as QMEs is as follows:

1. The DWC has identified physicians that passed the QME exam in 2017 and 2018 but never registered as a QME.

2. The DWC has identified physicians who failed the QME exam in 2017 and 2018.

3. The DWC has identified physicians who previously were active QMEs but have become inactive during the period of 2013 to October 2019.

Upon development of the final lists of physicians identified above, the DWC will reach out to these physicians via mail and email by July 1, 2020 to encourage them to complete the process to become or recertify themselves as QMEs. A follow-up communication will be sent again in January 2021 since, given the current crisis, doctors may miss advertisements and recruitment materials received during this time.

With

DWC is working to increase the fees for medical-legal evaluations.

The DWC has held numerous stakeholder meetings over the course of nine months, to work collaboratively to formulate a new medical-legal fee schedule. The DWC has drafted proposed regulations for a new fee schedule. Given the current State of Emergency, the DWC is assessing options for holding the required public hearing on these important proposed regulations. (See Exhibit A - Proposed Regulations regarding Medical-Legal Fee Schedule.)

DWC is assessing its data to better understand QME assignments and requested specialties.

The DWC's plan is to be able to bring in medical groups like the UC-system physicians as this would allow for a more diverse range of specialties being offered in the QME database. Again, we intend to pursue these discussions with medical groups in the fall of 2020.

See further detail in Letter response

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

Although DWC lists several ways it plans to recruit physicians, its letter response does not indicate that it will use data to identify the number of QMEs it needs to recruit or what specialties it should focus on. As we state in our report, it should ensure that it uses data to better manage the QME supply and recruit more QMEs. We recommended that DWC specifically prioritize specialties with the greatest shortages relative to demand.

60-Day Agency Response

The DWC has identified physicians that passed the QME exam in 2017 and 2018, but never registered as a QME. Additionally, the DWC has identified physicians who failed the QME exam in 2017 and 2018, and those who were QMEs but have become inactive from 2013 to October 2019. (Exhibit B.)

The DWC is currently working to identify the physicians in 2019 that passed the QME exam and have not registered as a QME, in addition to those who did not pass the exam in 2019.

With regard to the list of physicians who passed the exam and did not register as a QME, the DWC is currently checking the doctor's status with the California Medical Board to

confirm they are in good standing. Upon development of a final list, the DWC intends to reach out to these physicians and encourage them to complete the process to attain QME status. It will also be important to ascertain why the physicians decided not to become

QMEs so that the DWC can remove any perceived barriers to appointment in the future.

The DWC has an educational conference in the spring of every year, held in northern and southern California. We are developing a flyer to be distributed to the medical community at the upcoming conference. A working copy of the flyer is attached hereto as Exhibit D.

The DWC continues to actively work with stakeholders to formulate a new fee schedule. It is anticipated that the new fee schedule will include increased rates for medical-legal reporting, which the Auditor cited as a possible factor in attracting QMEs and increasing

QME availability.

The DWC is working with our Information Technology ("IT") Department to better understand the current process for panel assignments and determine if there is a problem with the current process resulting in some QMEs not getting panel assignments. The DWC is committed to developing a system that takes advantage of 100% of the current QME

population in panel assignments.

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

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

Recommendation #5 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 its internal process for reappointing QMEs and how that process should proceed if any disciplinary investigations are pending.

Annual Follow-Up Agency Response From October 2022

The utilization of the Reappointment Protocols has proven that these provisions keep the regulatory processes of discipline and reappointment separate.

In the past 12 months, the Medical Unit has processed 1117 applications for reappointment. In that time period only one physicians has been denied reappointment. The physician was denied reappointment because of failure to truthfully complete reappointment application (8 CCR section 50). The physician filed an appeal to the denial which was granted. The current denial rate for QMEs for reappointment is .08%. This declining denial percentage is evidence that of reappointment is not being used to discipline QMEs.

During that same 12 month period, not a single QME with an open investigation case was denied reappointment. Physicians that had a pending investigation at the time of reappointment were informed that the investigation was ongoing. However, as a result of stages of the investigations and application of the policies in the manuals, the physicians were reappointed. This means that the practical application of the policies outlined in the Litigation Manual and the Reappointment Protocols are working to ensure fair application of discipline processes and the reappointment of QMEs.

The DWC continues to pursue implementation of a rulemaking process 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. It is anticipated that these regulations will further clarify the reappointment process and help to eliminate any impression that it is part of the discipline process.

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

Although DWC created a reappointment review process for physicians under investigation and indicated that it has only denied reappointment once in the last 12 months, we have concerns that the policy does not require its staff to follow the reappointment process. DWC's new reappointment process 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.

Annual Follow-Up Agency Response From November 2021

The DWC has utilized the provisions of the Reappointment Protocol over the past year with respect to QME reappointment. The results of the application of these policies has been a success. Since the time of the publication of the State Auditor's report, there have been eight QME reappointment cycles. In that time period, the Medical Unit has processed approximately 1,883 QME applications for reappointment. In that same time period, only 10 physicians have been denied reappointment. Of those 10, three were denied reappointment because of problems with their Medical Board licensing. The remaining seven denials were issued as a result of repeated violations of 8 CCR section 51 related to three instances of late reporting within a calendar year. All seven of these physicians filed appeals to the denials which were granted. All seven of these physicians are currently QMEs. It can be seen from these results that a denial rate of approximately 0.5% cannot sustain an allegation that denial of reappointment is being used to discipline QMEs.

The results of the most recent QME reappointment cycles also indicate that the policies outlined in the Reappointment Protocol are working. The practice of reappointing physicians with open discipline files when the investigation is not complete ensures that the DWC is not engaging in activities that give the appearance of using the reappointment process as discipline.

Once the proposed regulations have been adopted that give the Administrative Director the authority to assign hearing officers and effectuate speedy trials, QMEs who are unfortunate enough to find themselves subject to the Statement of Issues process will be assured of a hearing within a reasonable time.

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

Although DWC created a reappointment review process for physicians under investigation, we have concerns that the policy does not require its staff to follow the reappointment process. DWC's new reappointment process 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 Legal Unit - QME Discipline - Litigation Manual as Exhibit C to its 180-day response. DWC has also developed and implemented specific written protocols to govern the handling of the reappointment process for a QME who is under investigation at the time of reappointment. That protocol is attached as Exhibit G. Both the Litigation Manual and the Reappointment Protocol have been officially adopted as the policies of the DWC QME Discipline Unit and make it clear that the reappointment process shall not be utilized to discipline QMEs, and the discipline and reappointment processes are independent of one another.

Training on use of the Litigation Manual and the Reappointment Protocol have been provided to all members of the QME Discipline Unit, and they have all been provided with copies of the manual, the protocol, and the memoranda adopting both documents as policy. Training will be provided on a recurring basis to all relevant staff.

The adopting memoranda are attached as Exhibits H & I.

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

Although DWC created a reappointment review process for physicians under investigation, we have concerns that the policy does not require its staff to follow the reappointment process. DWC's new reappointment process 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 C: Legal Unit - QME Discipline - Litigation Manual; and

Exhibit F: Proposed amended title 8, California Code of Regs section 50.

California State Auditor's Assessment of 6-Month Status: No Action Taken

DWC did not develop and implement written policies and procedures that define the internal process for reappointing QMEs and how that process should proceed if any disciplinary investigations are pending. As stated in the report, there are two separate regulatory processes for discipline and reappointment. DWC should address this recommendation by developing a separate process for reappointment. Instead, DWC only created a policy (QME Discipline - Litigation Manual) for the discipline process. Further, the proposed amended regulations referenced do not address the recommendation.

60-Day Agency Response

The DWC has policies and procedures in place to address these issues and is currently re-evaluating these policies and procedures. The existing policies and procedures will be updated with specific protocols for the reappointment process when investigations are pending.

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

Recommendation #6 To: Industrial Relations, Department of

To ensure that DWC monitors and reviews QME report quality and timeliness and to ensure the efficient resolution of workers' compensation claims, DWC should, by April 2020, create and implement a plan to continuously review the quality and timeliness of QME reports, including time frames for review, methodology for selecting reports to review, and the minimum number of reports to be reviewed annually.

1-Year Agency Response

DWC created and implemented a plan for reviewing continuously the quality and timeliness of QME reports, as described in Recommendation # 6 and discussed below. (See Exh. M and previously provided Exh. D.)

The DWC developed a process to track the timeliness of QME reports and dedicated staff has been assigned to this endeavor.

The DWC has convened committees of judges, lawyers, physicians, and retired judges to review and comment on the quality of medical-legal reports. The established policy calls for the committees to meet four times a year (i.e., March, June, September, and November). The committee members may attend the quarterly meetings either by phone or in person.

The first committees have already been convened. The committees have received reports for review and joint meetings took place in November 2020. There are currently six committees made up of QMEs, workers' compensation judges, applicant's lawyers, and defense lawyers.

The committee members will review the reports and fill out the quality assessment checklist prior to the individual meetings. Their findings will be discussed at the scheduled meetings and an overall assessment of report quality will be formulated in conjunction with representatives from the QME Discipline Unit Legal Unit attorneys will tabulate the results of all of the committee meetings and formulate a memorandum detailing the committees' findings that will be delivered to the Executive Medical Director.

Please see the full response submitted to the State Auditor on November 18, 2024 for complete details.

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

DWC provided an internal process for reviewing the quality and timeliness of medical-legal reports, including time frames for review, a methodology for selection report to review, and the minimum number of reports to be reviewed annually. To the extent that DWC follows through with performing these reviews, it will implement our recommendation.

6-Month Agency Response

DWC 180-Day Status on the Recommendation: Completed.

Timeliness of Reports:

The DWC has a system in place to track timeliness of reports and dedicated staff has been assigned to this project (Frankie Yan and Ruth Manzo, with back-up support provided by Michael Barron). See Exhibit D.

Quality Review of Medical-Legal Reports:

The DWC will convene a committee of judges, lawyers, physicians, and retired judges four times a year (i.e., March, June, September and December) to review and comment on medical-legal report quality. The committee members may attend the quarterly meetings either by phone or in person.

There will be at least five groups made up of five committee members in each group. Each member of an individual group will receive the same 10 redacted medical-legal reports to review 30 days prior to the committee meeting. This should allow for a review of at least 200 reports annually.

Each reviewer will receive a quality assessment checklist to help with the review of the medical-legal report. See Exhibit E.

What reports will be reviewed?

DWC is in the process of amending the QME regulations to require that the QMEs provide, at the time of re-appointment, two medical-legal reports with their reappointment application. See Exhibit F. The Department is currently assessing options for rulemaking with regard to this proposed regulation.

The DWC will also access the Electronic Adjudication Management System (EAMS) in January, April, July and October to obtain at least fifty reports that served as the basis for settlements approved by workers' compensation judges. In addition, the DWC will obtain at least twenty-five reports from the Disability Evaluation Unit (DEU) and twenty-five reports from the DWC discipline unit.

It is anticipated that the committee will be able to review approximately 200 reports annually.

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

DWC provided a policy related to reviewing the timeliness of QME reports. However, it did not provide a finalized plan to continuously review the quality of QME reports, which should include time frames for review, methodology for selecting reports to review, and the minimum number of reports to be reviewed annually. Further, it must demonstrate that it has implemented the plan.

60-Day Agency Response

The DWC has a procedure in place to address untimely reporting by QMEs. In consideration of the audit findings, the DWC is assessing this procedure for efficiency. The DWC has held stakeholder meetings to obtain input regarding report quality. The DWC anticipates making regulatory changes regarding obtaining a random sample of reports by requiring QMEs to provide reports at the time of reappointment. The DWC has limited resources to review these reports so the DWC is working with stakeholders to create a committee that can review these reports and provide feedback. The DWC is also working with stakeholders on a standard identifying what constitutes a "quality QME report". Items of agreement from the stakeholder meetings for assessing report quality include complying with the requirements of California Code of Regulations, title 8, section 10606, ensuring that there is no bias in QME reporting, and requiring evidence-based opinions in QME reporting.

The DWC has obtained a consensus from our stakeholder meetings that there should be an increase in the continuing educational requirements for QMEs. The proposal from these meetings indicate that the continuing educational requirements for QMEs should increase from 12 hours a year to 16 hours a year. The proposed specific requirements for education will include 4 hours on impairment rating, 3 hours on report writing, 1 hour on anti-bias, 2 hours on case law, 1 hour on fee schedule or clerical issues, and 1 hour on report review. Based on the results of the annual audit of report quality, the DWC will provide recommended topics for QME educational courses to improve quality. The DWC is in the process of drafting regulations to implement this change.

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

Recommendation #7 To: Industrial Relations, Department of

To ensure that DWC monitors and reviews QME report quality and timeliness and to ensure the efficient resolution of workers' compensation claims, DWC should, by April 2020, develop and implement a process for annually reporting to DWC's administrative director its findings on the quality and timeliness of QME reports and recommended improvements to the QME system.

1-Year Agency Response

The written plan for reviewing continuously the quality and timeliness of QME reports, as described in Recommendation # 6, includes an annual reporting requirement to the DWC administrative director. (See Exh. M.)

The medical-legal report quality committees will produce a summary of report quality four times a year. These reports will be provided to the QME Discipline Unit after each quarterly committee meeting. The QME Discipline Unit will review and prepare a memorandum within 30 days following each quarterly meeting and the QME Discipline attorneys will finalize the committee memorandum for inclusion in the report to the Executive Medical Director.

By December 15th of each year, the QME Discipline attorneys will prepare a memorandum on QME report quality, the tally of QME reports rejected by workers' compensation judges, and QME report timeliness for review by the Executive Medical Director. The Executive Medical Director will review the memorandum and have available for his/her review all the reports that the QME Discipline attorneys reviewed in preparation of the memorandum. Upon completion of the review and editing, the Executive Medical Director will submit a final summary as part of the annual report, to the Administrative Director by the end of each year.

Please see the full response submitted to the State Auditor on November 18, 2024 for complete details.

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

DWC provided an internal process for reviewing the quality and timeliness of medical-legal reports, which includes reporting on findings to the administrative director annually. To the extent that DWC follows through with annually reporting its findings to DWC's administrative director, it will implement our recommendation.

6-Month Agency Response

DWC 180-Day Status on the Recommendation: Completed with partial implementation in 2020 and full implementation in 2021.

Each year by November 15th, the QME Discipline attorneys will receive a report regarding the timeliness of medical-legal reporting. The attorneys will review the report and based on that review, a memorandum will be prepared outlining what, if any, recommended changes are needed.

The medical-legal report quality committee will produce a summary of report quality four times a year. These reports will be provided to the QME Discipline team after each quarterly committee meeting. The QME Discipline team will review and prepare a memorandum within 30 days following each quarterly meeting and provide it to the QME Discipline attorneys.

By December 20th of each year, the QME Discipline attorneys will prepare a memorandum on report quality and timeliness for review by the Medical Director. The Medical Director will review the memorandum, and have available for his review all the reports that the QME Discipline attorneys reviewed in preparation of the memorandum. Upon completion of the review and editing, the Medical Director will submit a final summary to the Administrative Director by January 15th of each year.

Annually, the DWC will post on its website recommended QME continuing education courses based on the findings of these report quality and timeliness reviews. The, DWC is also working to amend title 8 California Code of Regulation section 55 to include additional educational requirements as agreed to in various stakeholder meetings. See Exhibit G. However, this proposed regulatory amendment is currently pending while DWC assesses options for holding public hearings.

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

60-Day Agency Response

In conjunction with its efforts to develop a plan for evaluating the quality of QME reporting, the DWC is also formulating a process for annual reporting of its findings.

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

Recommendation #8 To: Industrial Relations, Department of

To ensure that DWC monitors and reviews QME report quality and timeliness and to ensure the efficient resolution of workers' compensation claims, DWC should, by April 2020, create written policies and implement a consistent process for ensuring that workers' compensation judges and the Appeals Board inform DWC of QME reports they rejected for not meeting minimum standards.

6-Month Agency Response

DWC 180-Day Status on the Recommendation: Completed.

DWC provided the workers' compensation judges with a form Order to ensure that both the QME and the DWC are served with any judicial findings rejecting a medical-legal report. If the DWC cannot determine if the QME was served with the order, the DWC has prepared a form letter to send to the QME. See the following:

Exhibit H: Order Rejecting Medical Report (section 139.2(d)(2)) form for Judges

Exhibit I: Memorandum to Judges Re Protocol for Use of section 139.2(d)(2)

Order form

Exhibit J: DWC Policy for Tracking Reports Rejected by a Judge

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

DWC provided written policies to ensure that workers' compensation judges and the Appeals Board inform DWC of QME reports they rejected for not meeting minimum standards. DWC also provided an example of a notification of a rejected report using the new process. To the extent that judges follow this process, the department will have implemented the recommendation.

60-Day Agency Response

The DWC provided the workers' compensation judges with a form Order to ensure that both the QME and the DWC are served with any judicial finding rejecting a medical-legal report. If the DWC cannot determine if the QME was served with the order, the DWC has prepared a form letter to send to the QME. The DWC is tracking rejected reports. (Exhibit F.)

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

Although DWC provided copies of documents for judges to use when rejecting QME reports, it did not provide evidence that it established and implemented policies. DWC provided a template order that judges could use to notify DWC of a QME's rejected report. DWC also provided a template letter that it can use to notify the QME that a judge rejected their report and that if a QME has more than five evaluations rejected, DWC may deny the QME's reappointment. However, DWC still needs to create and implement written policies--as we recommended--to ensure that judges and DWC staff use the templates consistently.

Recommendation #9 To: Industrial Relations, Department of

To ensure that DWC monitors and reviews QME report quality and timeliness and to ensure the efficient resolution of workers' compensation claims, DWC should, by April 2020, create written policies and implement a process for tracking QME reports rejected by workers' compensation judges and the Appeals Board for not meeting minimum standards. DWC should consider and include these reports in its annual review of report quality and recommend improvements to the QME system.

1-Year Agency Response

Dear Ms. Howle:

The Labor and Workforce Development Agency has authorized me to provide the requested three hundred and sixty-five day status on the implementation of the State Auditor's recommendations regarding the Department of Industrial Relations' administration of the Qualified Medical Evaluator (QME) program (Report 2019-102), which is administered by the Department's Division of Workers' Compensation (DWC).

The DWC previously submitted a 180-day report on the progress made in implementing the audit recommendations. The one-year progress report details the efforts of the DWC towards that goal since the submission of the 180-day report. Efforts previously documented in the 180-day report will not be repeated here.

The one-year progress report will be uploaded to the website pursuant to your direction. However, this email version is being forwarded to facilitate the submission of exhibits that are essential to evidence compliance.

The DWC has worked diligently to implement fully the audit recommendations that were outstanding as of the 180-day report. Please find below updated responses showing that the status on each of those recommendations is completed.

Please see complete response sent via email and mail

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

DWC provided a policy for tracking rejected QME reports, including providing the total number of requested reports in a calendar year in its annual review of report quality and suggested recommendations to improve the QME system. To the extent that DWC follows its policy, it will implement our recommendation.

6-Month Agency Response

DWC 180-Day Status on the Recommendation: Completed.

DWC provided the workers' compensation judges with a form Order to ensure that both the QME and the DWC are served with any judicial findings rejecting a medical-legal report. If the DWC cannot determine if the QME was served with the order, the DWC has prepared a form letter to send to the QME. See the following:

Exhibit H: Order Rejecting Medical Report (section 139.2(d)(2)) form for Judges

Exhibit I: Memorandum to Judges Re Protocol for Use of section 139.2(d)(2)

Order form

Exhibit J: DWC Policy for Tracking Reports Rejected by a Judge

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

DWC provided a policy for tracking rejected QME reports. However, it has not included in the policy that it will consider including these reports in its annual review of report quality and recommend improvements to the QME system.

60-Day Agency Response

The DWC provided the workers' compensation judges with a form Order to ensure that both the QME and the DWC are served with any judicial finding rejecting a medical-legal report. If the DWC cannot determine if the QME was served with the order, the DWC has prepared a form letter to send to the QME. The DWC is tracking rejected reports. (Exhibit F.)

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

Although DWC provided copies of worksheets for tracking rejected QME reports, it did not provide evidence that it established and implemented written policies. DWC provided its tracking sheet for rejected reports. However, DWC still needs to create and implement written policies--as we recommended--for tracking QME reports rejected by worker's compensation judges and the Appeals Board for not meeting minimum standards. DWC should also consider and include these reports in its annual review of report quality and recommend improvements to the QME system.

All Recommendations in 2019-102

Agency responses received are posted verbatim.