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Clancy McCafferty, 46, lay on his bed, surrounded by paperwork. Hundreds of letters, forms and records covered the floor and filled the plastic bins piled in the corner of his room. Much of the paperwork outlined the reasons he’s been denied medical treatment that his doctors have said he needs.
In 2010, McCafferty was injured on the job and came face to face with the barriers to care in the workers’ compensation system.
McCafferty was a groundskeeper at a Banning cemetery when he hit a sinkhole while driving a motorized lawnmower. The impact was so severe, it compressed portions of his spine. Workers’ compensation approved a surgery, but there were complications which caused another set of medical problems, affecting his ability to walk.
His doctors, all appointed by his employer, have recommended a second surgery, but it has been repeatedly denied.
While some of his requests for treatment have been approved, dozens of others have been denied.
“They are constantly denying,” said McCafferty. “They will get me a CT scan and the doctor will tell them what needs to be done and they will deny that.”
McCafferty may be part of a small group of injured workers who have been on the losing side of reforms aimed at cleaning up California’s workers’ compensation system.
Director of California Department of Industrial Relations, Christine Baker, was one of the architects of the 2012 workers’ compensation reforms and made sure they addressed what she saw as a troubling trend – unnecessary medical treatments.
Baker had been attending town hall meetings throughout the state when she met several injured workers who’d had multiple surgeries.
“I met workers who showed us their x-rays and they had had 19 surgeries. Somebody should have told them no more surgeries. But they didn’t,” said Baker.
Around the time of Baker’s tour, suspicious billing practices at several Southern California hospitals surfaced, eventually leading to the largest workers’ compensation fraud in state history. Former hospital executive Michael Drobot had paid kickbacks to doctors who performed unnecessary spinal surgeries implanting hardware purchased from Drobot. The scam cost California more than $500 million and incentivized lawmakers to tighten regulations on how medical treatments in the workers compensation system were approved.
“I think because of what that entailed, workers’ comp put the brakes on a lot of surgeries and as a consequence, the people who actually are injured and that need something done are finding it much more difficult to get anything done,” said Scott Lederhaus, a neurologist in Pomona who has treated injured workers for 30 years.
Following the scandal, SB 863 was enacted. The law put in place a set of workers’ compensation reforms aimed at combating fraud, increasing benefits to workers and cutting spending. It established a utilization review process whereby independent medical reviewers – instead of judges – decide if a medical treatment is approved, modified or denied using a set of state approved guidelines.
Since the utilization review process was adopted, spinal surgeries have dropped 30 percent according to the California Workers’ Compensation Institute (CWCI), a nonprofit research organization of insurers and self insured employers. The state also closed the loopholes which allowed for the Drobot scandal to flourish and started cross-checking certain kinds of data to look for signs of fraudulent billings.
“We have a better sense of abuses and successes of the system,” said Baker.
SB 863 also required the adoption of evidence-based medicine, which uses a set of guidelines to determine if medical treatment is necessary. Patients are not seen by medical reviewers; instead decisions about requested care are based on a review of medical records. According to Baker, the 2012 reforms have improved both care and access to it and cut down the wait times for treatment. Before the law was passed, Baker said, injured workers were waiting up to 18 months to resolve disputes over treatment denials. Under the utilization review process, the turn around for a decision is 30 days.
The reforms have also saved the system an estimated $1.3 billion annually according to an evaluation by The Workers’ Compensation Insurance Ratings Bureau.
McCafferty believes some of that savings is at a cost to injured workers like himself, who have serious and expensive injuries.
“I have had two doctors tell me they are not going to fix me, they are just waiting for me to die or just give up and quit completely,” said McCafferty.
Statistically, McCafferty’s experience with denials is somewhat uncommon. According to CWCI, 85 percent of all workers’ comp treatment requests are approved without dispute. Six percent are reviewed by doctors and of those, two out of three are denied. State agencies currently do not collect data on workers’ compensation claims, and instead often cite CWCI’s numbers.
In January, McCafferty was examined by a Qualified Medical Examiner, a neutral doctor, who was asked to render an opinion on whether a second surgery was necessary. In his report, the doctor agreed a second surgery was needed and then added, “The applicant is sick and tired of the denials, cutting off of medications and other problems… I understand why so many right minded practitioners want nothing to do with the California Workers’ Compensation System.”
Exact numbers on how many doctors have left the workers’ compensation system since 2013 are difficult to pinpoint, but applicant attorney Richard Smith said he has seen a kind of doctor drought in the Inland Empire.
“We are spending 30, 60 days to find a doctor in some cases,” said Smith, who could only think of one or two neurologists and one psychiatrist in the area who still see workers’ comp clients.
KCRW obtained a workers’ comp insurer provider list of Orange County neurologists but when reached, less than half said they still accept injured workers.
Dr. Lederhaus no longer accepts workers’ compensation cases because of the denials, enormous paperwork demands and the fear of a malpractice claim.
“I am worried for my own safety, in that I am sitting on something that needs to be treated that they are denying,” said Lederhaus.
A 2014 survey by the California Medical Association found 67 percent of doctors polled had experienced difficulties getting authorization for patient care.
The structure of the independent medical review system troubles some physicians and lawyers because of what they see as hidden conflicts of interest which could influence how a patient is treated.
Some doctors spoke anonymously to KCRW out of fear they could be blacklisted by insurers or utilization review companies. They voiced concerns about the financial ties between the utilization review companies, insurers and third party administrators, who manage claims.
In Clancy McCafferty’s case, the company responsible for making decisions about his care is a division of the company in charge of his claim, including its costs. That company, York Risk Services, was sued in Arizona in 2013 by a group of firefighters who alleged York was intentionally denying care. The case was confidentially settled before trial. In 2014, a similar case was filed against York by members of the Rialto Police Department, but most of it was dismissed.
A spokesperson for York Risk Services declined to comment on Clancy McCafferty’s case citing privacy laws but in a statement wrote, “in all cases we are committed to handling every claim professionally, ethically and fairly.”
Acting administrative director of the Division of Workers Compensation, George Parisotto, has heard concerns that utilization reviewers may be motivated to deny care in order to keep their contracts with the insurers or administrators who hire them.
“If there was that kind of financial arrangement and we came upon it I’m sure we would penalize it. While we have heard of it, we have no real evidence it actually exists,” said Parisotto.
A new law takes effect next year to address some of these potential conflicts. SB1160 bans insurers or administrators from hiring utilization review companies they have a financial interest in unless that relationship is disclosed to both the employer and the state. However, the state is not allowed to make those disclosures publicly available.
The law prohibits medical review doctors from being compensated based on how they decide a workers’ comp treatment request. The contracts between all of these parties – the doctors, utilization review companies, the insurers and third party administrators – must be made available to the state, although the public is denied access to the contracts.
The Department of Industrial Relations is also developing a database to track every utilization review decision, which Baker says will be useful in identifying any potential problems with the review process.
“We are going to have to detect if the utilization review doctors are denying care unreasonably so,” said Baker.
Baker and Parisotto are hoping these new rules will bring transparency to the nation’s largest and most expensive workers’ compensation system.
(Image: Clancy McCafferty/ Karen Foshay)