Stanford Law School - Robert Crown Law Library

Filed 7/3/08

IN THE SUPREME COURT OF CALIFORNIA

STATE COMPENSATION INSURANCE )
FUND, )

Petitioner,
S149257
v.
Ct.App. 3 C048668
WORKERS’ COMPENSATION
(W.C.A.B. No. RDG 115958)
APPEALS BOARD and BRICE
SANDHAGEN,
)
Respondents.

)
BRICE SANDHAGEN,
Petitioner,
v.
Ct.App. 3 C049286
WORKERS’ COMPENSATION
(W.C.A.B. No. RDG 115958)
APPEALS BOARD and STATE
COMPENSATION INSURANCE FUND, )
)
Respondents.

This case presents two related workers’ compensation issues: (1) When
deciding whether to approve or deny an injured employee’s request for medical
treatment, must an employer conduct utilization review pursuant to Labor Code
1

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section 4610? 1 (2) As an alternative to utilization review, may an employer elect
to dispute a request for medical treatment under section 4062, which permits an
employer to object to “a medical determination . . . concerning any medical issues
. . . not subject to Section 4610 . . . .”? (§ 4062, subd. (a).) We conclude the
Legislature intended to require employers to conduct utilization review when
considering requests for medical treatment, and not to permit employers to use
section 4062 to dispute employees’ treatment requests. The language of section
4610 and 4062 mandates this result; this conclusion is especially clear when the
language of those statutes is read in light of the statutory scheme and the omnibus
reforms enacted by the Legislature in 2003 and 2004. (Sen. Bill No. 228 (2003-
2004 Reg. Sess.) (Senate Bill No. 228); Sen. Bill No. 899 (2003-2004 Reg. Sess.)
(Senate Bill No. 899).) Accordingly, we reverse the Court of Appeal’s contrary
judgment and remand for further proceedings consistent with our decision.
I. BACKGROUND
In October 2003, a car struck Brice Sandhagen while he was working as a
foreman on a road construction project.2 He injured his neck, back, left elbow,
and left wrist and has received medical treatment continuously since the accident.
Sandhagen’s physician referred him to SpineCare Medical Group, Inc., for a joint
consultation by Drs. Goldthwaite and Josey. The physicians recommended a
magnetic resonance imaging (MRI) test of Sandhagen’s spine to determine if disc
herniations or disc degeneration was causing his pain. The physicians submitted a
report to Sandhagen’s employer’s insurer, State Compensation Insurance Fund
(State Fund), on May 24, 2004, with a request to authorize the recommended MRI.

1
All further unlabeled statutory references are to the Labor Code.
2
The factual and procedural history is largely taken from the Court of
Appeal’s opinion.
2

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State Fund referred the matter to Dr. Krohn for “utilization review.”3 On
June 11, 2004, when State Fund did not communicate its decision within the 14-
day statutory deadline (§ 4610, subd. (g)(1)), Sandhagen requested an expedited
hearing. Ten days later (before the expedited hearing but 28 days after the MRI
authorization request was submitted), Dr. Krohn sent a written denial of the
medical treatment request, citing new medical treatment guidelines.
An expedited hearing took place on July 15, 2004, on the sole issue of the
need for the recommended MRI. The workers’ compensation judge found that
State Fund’s failure to comply with the statutory deadlines precluded it from
relying on the utilization review process or Dr. Krohn’s report to deny Sandhagen
treatment. Only Dr. Goldthwaite’s report remained admissible. The workers’
compensation judge, finding the MRI authorization request to be consistent with
the new treatment guidelines, ordered State Fund to authorize the MRI.
State Fund sought reconsideration by the Workers’ Compensation Appeals
Board (WCAB). State Fund argued that the consequences for failing to comply
with utilization review guidelines are set forth in section 4610, subdivision (i),
which provides for administrative penalties, and in section 4610.1, which allows
possible penalties for delay, and that nothing in the statutory scheme allows for the
exclusion of a utilization review report. Sandhagen disagreed, contending section
4610, subdivision (g) requires an employer to meet specific deadlines and that
State Fund’s failure to comply with the deadlines meant that it could not rely on
the utilization review process to justify denial of treatment. In addition,
Sandhagen argued that the workers’ compensation judge properly excluded Dr.

3
“Utilization review” is the process by which employers “review and
approve, modify, delay, or deny” employees’ medical treatment requests. (§ 4610,
subd. (a).) The scope and effect of the term will be more fully addressed below.
3

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Krohn’s denial letter. He further argued that he had met his evidentiary burden to
prove that the requested treatment was medically reasonable and necessary.
The WCAB granted reconsideration. Due to the important legal issues
presented and in order to secure uniformity of future decisions, the matter was
assigned to the WCAB as a whole for an en banc decision. On November 16,
2004, the WCAB issued its decision, holding that the section 4610 deadlines are
mandatory and State Fund’s failure to meet the deadlines means that, with respect
to the particular medical treatment dispute in question, it was precluded from
using the utilization review process or any utilization review report it obtained to
deny treatment. However, the WCAB also held that, while precluded from using
the utilization review process, State Fund could nonetheless dispute the treating
physician’s treatment recommendation using the dispute resolution procedure set
forth in section 4062. 4 Accordingly, the WCAB vacated the workers’
compensation judge’s determination that Sandhagen was entitled to the MRI and
instead gave State Fund an opportunity to proceed under section 4062.
State Fund filed a petition for writ of review. Sandhagen also sought
review, specifically of the portion of the decision that held that State Fund could
object to the treatment authorization under section 4062, notwithstanding its
failure to comply with the procedures set forth in section 4610. The Court of
Appeal granted both petitions.
The Court of Appeal affirmed both of the WCAB’s holdings. The Court of
Appeal agreed that State Fund’s failure to comply with the mandatory deadlines
precluded State Fund from using the process to deny Sandhagen’s request for

4
Section 4062, subdivision (a) permits an employee or employer to object to
“a medical determination made by the treating physician concerning any medical
issues not covered by Section 4060 or 4061 and not subject to Section 4610 . . . .”
4

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medical treatment. However, as did the WCAB, the Court of Appeal concluded
that State Fund could nonetheless object to the medical treatment request under
the dispute resolution process set forth in section 4062, reasoning that an employer
is not required to use the utilization review process when considering employees’
requests for medical treatment. We granted Sandhagen’s petition for review.5
II. DISCUSSION
This case requires us to determine the meaning and effect of section 4610,
in which the Legislature established the utilization review process, in relation to
section 4062, which generally governs disputes between injured employees and
their employers regarding “medical issues . . . not subject to Section 4610 . . . .”6
In determining that the Legislature intended for employers’ review of employees’
medical treatment requests to be governed solely by section 4610, rather than
section 4062, we rely primarily on the clear statutory language. (Hsu v. Abbara
(1995) 9 Cal.4th 863, 871.) In addition, comparing the current statutory scheme
with previous iterations provides further support for our conclusion.
A. Statutory Scheme Requires Employers to Conduct Utilization
Review When Resolving Requests for Medical Treatment
Section 4610 requires that “[e]very employer . . . establish a utilization
review process in compliance with this section” (id., subd. (b)), defining

5
State Fund did not seek review of the Court of Appeal’s holding that its
failure to comply with the section 4610 deadlines precluded it from using the
utilization review process to deny the medical treatment request and rendered the
Dr. Krohn’s report inadmissible.
6
The WCAB’s interpretation of these statutes is subject to de novo review.
While we typically give great weight to the WCAB’s administrative construction
of the statutes it is charged to enforce and interpret, we will annul clearly
erroneous interpretations. (Lockheed Martin Corp. v. Workers’ Comp. Appeals
Bd. (2002) 96 Cal.App.4th 1237, 1241.)
5

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utilization review as “functions that prospectively, retrospectively, or concurrently
review and approve, modify, delay, or deny, based in whole or in part on medical
necessity to cure and relieve, treatment recommendations by physicians . . .” (id.,
subd. (a)). Notwithstanding the breadth of this statutory directive, State Fund
claims that section 4610 simply requires employers to “establish” a utilization
review process, but does not require employers to actually use the process. We
find this argument unpersuasive. Having broadly defined utilization review, and
requiring every employer to establish such a process at considerable expense and
with numerous statutory safeguards (discussed in further detail below), it is
unlikely that the Legislature intended to allow employers to circumvent the
process whenever an employer felt it expedient. To the contrary, the statutory
language indicates the Legislature intended for employers to use the utilization
review process when reviewing and resolving any and all requests for medical
treatment.
Believing that it can “opt out” of the review process, State Fund claims that
it can instead utilize the more general section 4062 dispute resolution procedures.
Not so. State Fund’s assertion is belied by the language of section 4062 itself.
The statute permits employers to object to a treating physician’s medical
determinations, but only to those determinations regarding “medical issues not
covered by Section 4060 or 4061 and not subject to Section 4610 . . . .” (§ 4062,
subd. (a), italics added.) By contrast, section 4062 explicitly permits employees to
use its provisions to object to an employer’s “decision made pursuant to Section
4610 to modify, delay, or deny a treatment recommendation . . . .” (Id., subd. (a),
italics added.) In summary, section 4062 simultaneously precludes employers
from using its provisions to object to employees’ treatment requests but permits
employees to use its provisions to object to employers’ decisions regarding
6

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treatment requests. The Legislature’s intent regarding employers’ use of section
4062 to dispute treatment requests could not be more clear.
Taken together, the language of sections 4610 and 4062 demonstrates that
(1) the Legislature intended for employers to use the utilization review process in
section 4610 to review and resolve any and all requests for treatment, and (2) if
dissatisfied with an employer’s decision, an employee (and only an employee)
may use section 4062’s provisions to resolve the dispute over the treatment
request. An employer may not bypass the utilization review process and instead
invoke section 4062’s provisions to dispute an employee’s treatment request. The
correctness of this conclusion is particularly evident when the current statutory
provisions are compared to prior schemes for handling employees’ treatment
requests.
B. Prior Schemes Demonstrate the Legislature Intended for Section
4610 to Govern Employers’ Review
In order to better understand what the Legislature intended when it adopted
the procedures in section 4610 and 4062, it is helpful to consider the way in which
the process for reviewing employees’ treatment requests has changed over time.
1. Historical Evolution of the Treatment Request Process
The workers’ compensation scheme makes the employer of an injured
worker responsible for all medical treatment reasonably necessary to cure or
relieve the worker from the effects of the injury. (§ 4600, subd. (a).) When a
worker suffers an industrial injury, the worker reports the injury to his or her
employer and then seeks medical care from his or her treating physician. After
examining the worker, the treating physician recommends any medical treatment
he or she believes is necessary and the employer is given a treatment request to
approve or deny. The standards applied in evaluating these treatment requests and
the process by which treatment requests are resolved have both been significantly
7

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modified in the recent past. For our purposes, the relevant periods are: (1) the
time preceding passage of Senate Bill No. 228, (2) after Senate Bill No. 228 went
into effect on January 1, 2004, and (3) after Senate Bill No. 899 went into effect
on April 19, 2004.
a. Before Senate Bill No. 228
Before the passage of Senate Bill No. 228, there were no uniform medical
treatment guidelines in effect. Whether a medical treatment request was
“necessary” depended solely upon the opinion of the treating physician measured
against the general standard that “necessary” treatment was that which was
“reasonably required to cure or relieve the injured worker of the effects of his or
her injury.” (Former § 4600, as amended by Stats. 1998, ch. 440, § 2.) Moreover,
former section 4062.9 provided a rebuttable presumption that the findings of an
injured employee’s treating physician were correct. (Stats. 2002, ch. 6, § 53.)
If an employer wanted to obtain a report from a doctor other than the
treating physician regarding the necessity of certain medical treatment, essentially
the only option for the employer was to initiate the rather cumbersome, lengthy,
and potentially costly process under former section 4062, a catchall dispute
resolution provision. Former section 4062, subdivision (a) provided that, “[i]f
either the employee or employer objects to a medical determination made by the
treating physician concerning . . . the extent and scope of medical treatment . . . or
any other medical issues not covered by Section 4060 or 4061,[7] the objecting
party shall notify the other party in writing of the objection . . . .” (Stats. 2002, ch.
6, § 52, italics added.)

7
Sections 4060 and 4061, like section 4062, are dispute resolution
provisions. Section 4060 governs disputes over the compensability of an injury,
and section 4061 covers disputes over permanent disability.
8

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An employer objecting to a treatment request had to do so within 20 days if
the injured employee was represented by counsel, and within 30 days if the
employee was unrepresented, although the time limits could be extended for good
cause. (Former § 4062, subd. (a), as amended by Stats. 2002, ch. 6, § 52.) In the
case of a represented employee, the statute directed the parties to seek agreement
on a physician to prepare a comprehensive medical evaluation resolving the
disputed issue. (Ibid.) If the parties were unable to pick an agreed medical
evaluator (AME) within 10 days (or 20 days if the parties agreed to extend the
time), the parties could not thereafter select an AME. (Ibid.) After the time for
reaching an agreement had expired, the objecting party could select a qualified
medical evaluator (QME) to conduct a comprehensive medical evaluation. (Ibid.)
The nonobjecting party could choose to rely on the treating physician’s report or
could select a QME of its own, to conduct an additional comprehensive
evaluation. (Ibid.)8 The employer was liable for the cost of a medical evaluation
obtained by the employee pursuant to former section 4062. (§ 4064, subd. (a).)
After the injured worker was examined, the scheduling of which often
resulted in further delays, the AME or QME had 30 days in which to prepare an
evaluation, addressing all contested medical issues, and serve the evaluation and a
summary on the employee, employer, and the Administrative Director of the
Division of Workers’ Compensation (administrative director).9 (Former § 139.2,
subd. (j)(1), as amended by Stats. 2000, ch. 54, § 1; former § 4062, subd. (c), as
amended by Stats. 2002, ch. 6, § 52.) If a dispute remained after the

8
Former section 4062 established a different procedure for unrepresented
employees.
9
Under former section 139.2, subdivision (j)(1), the AME or QME could, for
good cause, seek an extension of the 30-day deadline. (Stats. 2000, ch. 54, § 1.)
9

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comprehensive medical evaluations were completed, either party could request an
administrative hearing. (§ 5500.) If the hearing failed to satisfy the parties, they
could seek reconsideration by the WCAB (§ 5900) and, ultimately, review by the
Court of Appeal (§ 5950).
There was also an administrative (rather than statutory) utilization review
alternative to proceeding under former section 4062. (Cal. Code Regs., tit. 8,
former § 9792.6, Register 98, No. 46 (Nov. 13, 1998).) However, use of the
process was voluntary and, because the administrative process contained no
uniform medical standards, interested employers had to first undertake a
complicated effort to design and submit their own medically-based criteria to the
administrative director. (Id., subds. (b), (c), (d) & (e).)10 As a result, the
administrative process was little used and most treatment requests were resolved
via the procedures in former section 4062.
b. Senate Bill No. 228
Senate Bill No. 228, effective January 1, 2004, enacted comprehensive
workers’ compensation reform. The Legislature, reacting to escalating costs,
made a number of critical changes to the statutory scheme. Particularly relevant
here are changes to the standards used in evaluating medical treatment requests as
well as alterations to the process for resolving the treatment requests.
The Legislature added section 5307.27, directing the administrative director
to adopt a medical treatment utilization schedule to establish uniform guidelines
for evaluating treatment requests. (Stats. 2003, ch. 639, § 41.) The provision
further provides that this schedule shall incorporate “evidence-based, peer-

10
This process was also unattractive to employees, as it permitted a treatment
decision to be delayed as long as the employer gave notice of the delay in a timely
manner. (Cal. Code Regs., tit. 8, former § 9792.6, subd. (c)(1).)
10

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reviewed, nationally recognized standards of care” and address the
“appropriateness of all treatment procedures . . . commonly performed in workers’
compensation cases.” (§ 5307.27.) The Legislature also amended section 4062.9,
limiting the presumption of correctness that had previously applied to a treating
physician’s opinion (Stats. 2003, ch. 639, § 20), and added section 4604.5, which
created a rebuttable presumption that the treatment guidelines in the utilization
schedule were correct on the issue of extent and scope of medical treatment.11
(Stats. 2003, ch. 639, § 27.)
In addition to changing the standards for evaluating treatment requests,
Senate Bill No. 228 also made a number of important changes to the process of
resolving treatment requests. Most significantly, the Legislature enacted a
statutory utilization review process in section 4610. (Stats. 2003, ch. 639, § 28.)
In addition to requiring every employer to “establish a utilization review process”
(§ 4610, subd. (b)), section 4610 also enacted a number of procedural and
substantive requirements. Most notably, subdivision (e) of section 4610 allows
only a licensed physician, who is competent to evaluate the specific clinical issues
involved, to modify, delay, or deny requests for treatment. Accordingly, while
medical review is not required if the employer approves the treatment request,
section 4610 requires that a licensed doctor deny, delay, or modify the request.
This represents a significant departure from the process in former section 4062,
which permitted an employer or claims adjuster (without review by a physician) to
object to a treatment request. (§ 4062, as amended by Stats. 2002, ch. 6, § 52.)

11
Former section 4604.5 provided that until the administrative director
adopted a utilization schedule, guidelines promulgated by the American College of
Occupational and Environmental Medicine be used as interim standards and be
presumed to be correct on the issue of extent and scope of medical treatment.
(Former § 4604.5, subd. (c), added by Stats. 2003, ch. 639, § 27.)
11

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Section 4610, subdivision (g) imposes a number of additional requirements
that must be met as part of the utilization review process. Among them are:
(1) treatment decisions must be made in a timely fashion, not to exceed five
working days from the receipt of information reasonably necessary to make the
determination, and in no event more than 14 days from the date of the request for
treatment (§ 4610, subd. (g)(1)); (2) if the request is not approved in full, disputes
shall be resolved in accordance with section 4062 (§ 4610, subd. (g)(3)(A)); and
(3) if an employer cannot make a decision within the specified timeframes because
it (a) is not in receipt of all the information reasonably necessary and requested,
(b) requires consultation by an expert reviewer, or (c) has asked that an additional
examination be performed on the employee that is reasonable and consistent with
good medical practice, the employer must immediately notify the physician and
the employee. (Id., subd. (g)(5).) Upon receipt of all information reasonably
necessary and requested by the employer, the employer shall approve, modify, or
deny the request for authorization within the specified time frames. (Ibid.)
As the Court of Appeal here recognized, the Legislature intended utilization
review to ensure quality, standardized medical care for workers in a prompt and
expeditious manner. To that end, the Legislature enacted a comprehensive process
that balances the dual interests of speed and accuracy, emphasizing the quick
resolution of treatment requests, while allowing employers to seek more time if
more information is needed to make a decision. (§ 4610, subd. (g).) If the
treatment request is straightforward and uncontroversial, the employer can quickly
approve the request — utilization review is completed without any need for
additional medical review of the request. If the request is more complicated, the
employer can forward the request to its utilization review doctor for review, since
the statute requires that the employer seek a medical opinion before modifying,
delaying, or denying an employee’s request for medical treatment. (Id., subd.
12

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(e).)12 This ensures that a physician, rather than a claims adjuster with no medical
training, makes the decision to deny, delay, or modify treatment.
c. Senate Bill No. 899
As we recently noted, Senate Bill No. 899 was passed as an urgency bill in
response to “a perceived crisis in skyrocketing workers’ compensation costs.”
(Brodie v. Workers’ Comp. Appeals Bd. (2007) 40 Cal.4th 1313, 1329.) Like
Senate Bill No. 228, Senate Bill No. 899 was an omnibus reform that made a
number of significant changes to the workers’ compensation scheme, including, as
particularly relevant here, altering the standards used in evaluating workers’
requests for medical treatment and the process for evaluating them.
With Senate Bill No. 899, the Legislature amended section 4600 to define
“medical treatment that is reasonably required to cure or relieve the injured worker
from the effects of his or her injury” as “treatment that is based upon the
guidelines adopted by the administrative director pursuant to Section 5307.27 or,
prior to the adoption of those guidelines, the updated American College of
Occupational and Environmental Medicine’s Occupational Medicine Practice
Guidelines.” (Stats. 2004, ch. 34, § 23.) Senate Bill No. 899 also repealed section
4062.9, which had contained a presumption of correctness for the findings of an
injured employee’s treating physician (Stats. 2004, ch. 34, § 22), while making
slight modifications to section 4604.5, which contains a presumption of
correctness for the treatment guidelines. (Stats. 2004, ch. 34, § 25.)

12
Senate Bill No. 228 also repealed former section 4062 (Stats. 2003, ch. 639,
§ 16.5) and replaced it with a new section 4062 (Stats. 2003, ch. 639, § 17)
addressing the same subject matter. The new section 4062 was the same as the
previous version, except for the addition of language concerning requests for
spinal surgery. (Compare Stats. 2002, ch. 6, § 52 with Stats. 2003, ch. 639, § 17.)
13

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The Legislature amended section 3202.5 to underscore that all parties,
including injured workers, must meet the evidentiary burden of proof on all issues
by a preponderance of the evidence. (Stats. 2004, ch. 34, § 9.) Accordingly,
notwithstanding whatever an employer does (or does not do), an injured employee
must still prove that the sought treatment is medically reasonable and necessary.
That means demonstrating that the treatment request is consistent with the uniform
guidelines (§ 4600, subd. (b)) or, alternatively, rebutting the application of the
guidelines with a preponderance of scientific medical evidence. (§ 4604.5.)
While Senate Bill No. 899 did not alter the section 4610 utilization review
process, it made a number of changes to the dispute resolution process in section
4062 that are particularly relevant here. First, the prior version of section 4062,
subdivision (a) (Stats. 2003, ch. 639, § 17) permitted an employee or employer to
object to a treating physician’s medical determination regarding “the permanent
and stationary status of the employee’s medical condition, the employee’s
preclusion or likely preclusion to engage in his or her usual occupation, the extent
and scope of medical treatment, the existence of new and further disability, or any
other medical issues not covered by Section 4060 or 4061 . . . .” (Italics added.)
The Legislature amended section 4062, subdivision (a), eliminating “the extent
and scope of medical treatment” from the list of things to which an employer may
object. (Stats. 2004, ch 34, § 14.) Subdivision (a) of section 4062 now permits an
employer to object only to medical determinations regarding “any medical issues
not covered by Section 4060 or 4061 and not subject to Section 4610 . . . .”
(Italics added.) Second, Senate Bill No. 899 made another change to section 4062,
subdivision (a), adding that “[i]f the employee objects to a decision made pursuant
to Section 4610 to modify, delay, or deny a treatment recommendation, the
employee shall notify the employer of the objection in writing within 20 days of
receipt of that decision.” (Stats. 2004, ch 34, § 14, italics added.)
14

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Senate Bill No. 899 also changed the AME/QME process, eliminating the
competing comprehensive evaluations that often existed under former section
4062. In the case of represented employees, the bill repealed former section
4062.2 (Stats. 2004, ch. 34, § 17) and replaced it with new section 4062.2 (Stats.
2004, ch. 34, § 18). As with the procedure under former section 4062, new
section 4062.2 instructs the parties to attempt to select an AME. If the parties
cannot reach an agreement within 10 days (or 20 days if the parties agree to extend
the time), either party may request a three-member panel of QME’s be assigned.
(Ibid.) The parties must then confer and attempt to agree on one of the QME’s.
(Ibid.) “If the parties have not agreed on a medical evaluator from the panel by
the 10th day after the assignment of the panel, each party may then strike one
name from the panel” and “the remaining [QME] shall serve as the medical
evaluator.” (Ibid.)13 “[N]o other medical evaluation shall be obtained.” (§ 4062,
subd. (a).)14
2. Evolution of the Review Process Demonstrates Legislature’s Intent
Understood against this historical backdrop, it is clear the Legislature
intended for employers to resolve treatment requests via the section 4610 process.
As discussed above, Senate Bill Nos. 228 and 899 were aimed at controlling
skyrocketing costs while simultaneously ensuring workers’ access to prompt,

13
As with evaluations performed under former section 4062, evaluations
performed under section 4062.2 must be prepared and submitted within 30 days
unless the evaluator has sought, and received, an extension of time. (§ 139.2,
subd. (j)(1)(A), amended by Stats. 2004, ch. 34, § 2.) If the QME fails to
complete the evaluation within the timeline, either party can request a new
evaluation and the process begins again. (§ 4062.5, amended by Stats. 2004, ch.
34, § 20.)
14
As under former section 4062 (added by Stats. 2003, ch. 639, § 17), the
procedure is different for unrepresented employees.
15

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quality, standardized medical care. To accomplish those goals, the Legislature
made a number of significant changes, the most relevant of which was adopting
the comprehensive utilization review process in section 4610 along with the
concomitant changes to the dispute resolution procedure in section 4062.
In place of the often lengthy and cumbersome process employers used to
dispute treatment requests prior to the passage of Senate Bill No. 228, the
Legislature created a utilization review process that combines what are typically
quick resolutions (§ 4610, subd. (g)(1)) with accuracy — employers can have their
utilization review doctors review treatment requests, employers can seek
additional time to obtain additional information or examinations (id., subd. (g)(5)),
and medical review is required before the utilization review doctor can modify,
delay, or deny a treatment request (id., subd. (e)). State Fund asserts that there are
instances when, or reasons why, it might not be reasonable to subject a treatment
request to the utilization review process. We are not persuaded — indeed, the
cited examples betray a fundamental misunderstanding of the scope of utilization
review and its requirements.
For example, State Fund claims that “if the employer determines, without
[utilization review], that the recommended treatment is reasonably required,
‘imposing the [utilization review] process would be both time consuming and
expensive.’ ” But when the employer in the hypothetical reviews the request and
determines that treatment is reasonably required, the employer has engaged in
utilization review. (See § 4610, subd. (a).) The hypothetical actually
demonstrates that utilization review provides an expeditious manner of resolving
treatment requests, being neither time consuming nor expensive, especially when
compared to the process previously in place. In light of the comprehensive nature
of section 4610 and the goals the Legislature sought to accomplish, we conclude
16

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the Legislature intended for the utilization review process to be employers’ only
avenue for resolving an employee’s request for treatment.
We also conclude that section 4062 is not available to employers as an
alternative avenue for disputing employees’ requests for treatment. The
Legislature made clear that an employer may not use section 4062 to object to a
medical determination concerning medical issues “subject to section 4610” while
expressly permitting employees to use section 4062 to resolve disputes over an
employer’s decision not to approve treatment requests (Stats. 2004, ch. 34, § 14)
— i.e., the plain language of section 4062 establishes that only employees may use
section 4062 to resolve disputes over requests for treatment. This limitation is
made even clearer when the current section 4062 is compared to previous
versions. Former section 4062 allowed employers to object to medical
determinations concerning “the extent and scope of medical treatment . . . .” (Stats.
2003, ch. 639, § 17.) In Senate Bill No. 899, the Legislature deleted that phrase.
(Stats. 2004, ch. 34, § 14.) “We presume the Legislature intends to change the
meaning of a law when it alters the statutory language [citation], as for example
when it deletes express provisions of the prior version . . . .” (Dix v. Superior
Court (1991) 53 Cal.3d 442, 461.) State Fund would have us read “the extent and
scope of medical treatment” back into the statute as one of the matters employers
may object to under section 4062. We decline to do so.
Accordingly, in light of the clear statutory language and the Legislature’s
purpose in enacting the utilization review process in section 4610, we conclude the
Legislature intended to require employers to conduct utilization review when
considering employees’ requests for medical treatment. Employers may not use
section 4062 as an alternative method for disputing employees’ treatment requests.
17

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III. DISPOSITION
The judgment of the Court of Appeal is reversed and the matter is
remanded to that court for further proceedings consistent with this opinion.
MORENO, J.
WE CONCUR: GEORGE, C. J.
BAXTER,
J.
WERDEGAR,
J.
CHIN,
J.
CORRIGAN,
J.

18

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CONCURRING OPINION BY KENNARD, J.

I agree with the majority’s conclusion and much of its analysis.
Specifically, I agree that the “utilization review” process set forth in Labor Code1
section 4610 is mandatory. I also agree that, if an employer fails to meet section
4610’s deadlines, it may not object to the employee’s requested medical treatment
under section 4062. Certain language in the majority’s opinion, however, might
be misread to suggest that utilization review is a dispute-resolution process that
replaces the “cumbersome, lengthy, and potentially costly” dispute-resolution
process that previously applied under former section 4062. (Maj. opn., ante, at
p. 8.) As I understand the statutory scheme, utilization review process adds a new
step that the employer must take before section 4062 comes into play, but it does
not replace the section 4062 process. Section 4062 remains the means for
resolving any dispute between the parties regarding medical treatment, as I explain
below.
Section 4600 requires employers to provide their employees with medical
treatment for their work-related injuries. When disputes arise regarding the
conclusions and recommendations of the treating physician, section 4062 sets
forth the primary procedural mechanism for resolving those disputes. Among

1
All further statutory references are to the Labor Code.
1

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other things, section 4062 governs disputes regarding which specific medical
treatments are appropriate. Section 4062 played this role in the statutory scheme
before the Legislature mandated utilization review in the year 2003, and it
continues to play this role now.2 Utilization review, by contrast, is not concerned
with dispute resolution; rather, it governs the process by which the employer
makes its initial decision whether to approve or deny the proposed medical
treatment. Section 4610, subdivision (g)(3)(A), makes this point expressly. It
states that if the employer, having followed the utilization review process, does
anything short of fully approving the employee’s request for medical treatment,
any resulting dispute is resolved under section 4062, same as ever.
One purpose of utilization review is to prevent disputes about medical
treatment from ever arising. Before 2003, the medical treatment the employer was
obligated to provide for work-related injuries was only vaguely defined as
“treatment . . . that is reasonably required to cure or relieve from the effects of the
injury.” (Former § 4600, as amended by Stats. 1998, ch. 440, § 2.) This indistinct
standard left a lot of room for disagreement. The Legislature’s reforms of the
workers’ compensation law in 2003 and 2004 much more precisely define the
employer’s medical treatment obligation in terms of detailed treatment guidelines.
(See §§ 4600, subd. (b), 4610, subd. (c).) Because proper application of these
treatment guidelines requires medical expertise, the decision to modify, delay, or
deny a treatment request must be made by a licensed physician. (§ 4610, subd.
(e).) Thus, utilization review is best understood as a threshold procedure that the
employer must follow before any dispute about medical treatment has arisen. It

2
Section 4062 remains the means for resolving medical treatment disputes,
but in 2004 the Legislature changed the specifics of this dispute-resolution
procedure in significant ways.
2

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governs the employer’s evaluation of the treating doctor’s recommendation. If the
employer approves the requested treatment, then there is no dispute and likewise
no need to resort to dispute-resolution procedures. A dispute might arise only if
the employer modifies, delays, or denies the requested treatment, in which case the
employee may invoke section 4062’s dispute-resolution mechanism. (§§ 4610,
subd. (g)(3)(A), 4062, subd. (a).)
Hence, section 4610’s utilization review is not to be conflated with the
process of dispute resolution. Section 4062 continues to govern medical treatment
disputes, as it did before the reforms. The statutory scheme does not create two
separate dispute-resolution tracks for employers and for employees. Instead, it
sets forth two successive stages of a single-track process: The employer first
proceeds with utilization review under section 4610, and then the employee may
dispute the employer’s conclusion under section 4062. (§ 4610, subd. (g)(3)(A).)
The fact that the “employee (and only the employee)” (maj. opn., ante, at p. 7)
initiates the dispute-resolution process set forth in section 4062 is not intended to
exclude employers from that process; rather, it merely reflects the circumstance
that utilization review has been interposed as a threshold step. The employer who
seeks to object to a proposed medical treatment must follow the utilization review
process. If that process results in a modification, delay, or denial of the requested
treatment, then naturally the employee is the party that invokes the section 4062
dispute-resolution mechanism, because the employee is the aggrieved party.
To summarize, after the reforms enacted by the Legislature in 2003 and
2004, section 4062 remains the only process for resolving disputes regarding
medical treatment (see § 4610, subd. (g)(3)(A)), and its cumbersomeness and
3

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lengthiness merely reflect the Legislature’s desire to ensure fairness to the parties.3
Section 4610’s utilization review does not supplant section 4062’s dispute-
resolution process; rather, it adds a new threshold step to that process. It can only
be said to supplant that process in the practical sense—that is, it might prevent
some disputes from ever arising, thereby making resort to that process
unnecessary.
KENNARD,
J.

3
The 2004 reform streamlined the section 4062 dispute-resolution process in
several ways that are not at issue here. In particular, the 2004 reform created the
single-medical-examiner rule, thereby reducing the likelihood of litigation over
medical questions. (§ 4062.2, subd. (c).)
4

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See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion State Compensation Insurance Fund v. Workers’ Compensation Appeals Board
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted XXX 144 Cal.App.4th 1050
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S149257
Date Filed: July 3, 2008
__________________________________________________________________________________

Court:

County:
Judge:

__________________________________________________________________________________

Attorneys for Appellant:

Robert W. Daneri, Suzanne Ah-Tye and Don E. Clark for Petitioner and for Respondent State
Compensation Insurance Fund.

Law Offices of Saul Allweiss and Michael A. Marks for California Workers’ Compensation Institute as
Amicus Curiae on behalf of Petitioner and Respondent State Compensation Insurance Fund.

__________________________________________________________________________________

Attorneys for Respondent:

Sweeney and Forbes and Marguerite Sweeney for Respondent and for Petitioner Brice Sandhagen.

David Bryan Leonard for California Society of Industrial Medicine & Surgery, Inc., as Amicus Curiae on
behalf of Respondent and Petitioner Brice Sandhagen.

Hinden, Grueskin, Rondeau & Breslavsky, Graiwer & Kaplan and Charles R. Rondeau for California
Applicants’ Attorneys Association as Amicus Curiae on behalf of Respondent and Petitioner Brice
Sandhagen.

Neil P. Sullivan and Vincent Bausano for Respondent Workers’ Compensation Appeals Board.

---

Counsel who argued in Supreme Court (not intended for publication with opinion):

Don E. Clark
State Compensation Insurance Fund
1275 Market Street, Room 399
San Francisco, CA 94103
(415) 565-1266

Marguerite Sweeney
1414 Gold Street
Redding, CA 96001
(530) 245-1860

Charles R. Rondeau
Graiwer & Kaplan
3600 Wilshire Boulevard, Suite 2100
Los Angeles, CA 90010
(213) 380-7500

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Petition for review after the Court of Appeal denied petitions for writ of review of a decision of the Board. This case presents the following issue: May an employer who does not timely act on an injured worker's medical treatment request under the utilization review process set forth in Labor Code section 4610 nevertheless obtain review of the treatment request under the more general dispute resolution procedures set forth in Labor Code section 4062?

Opinion Information

Date:	Citation:	Docket Number:	Category:	Status:
Thu, 07/03/2008	44 Cal. 4th 230, 186 P.3d 535, 79 Cal. Rptr. 3d 171	S149257	Review - Civil Appeal	closed; remittitur issued

Opinion Authors
Opinion	Justice Carlos R. Moreno
Concur	Justice Carol A. Corrigan, Justice Kathryn M. Werdegar, Justice Marvin R. Baxter, Justice Ming W. Chin

Disposition
Jul 3 2008	Opinion: Reversed

Dockets
Jan 5 2007	Petition for review filed   Brice Sandhagen, Respondent Marguerite Sweeney, Counsel
Jan 5 2007	Record requested
Jan 9 2007	Received Court of Appeal record   C048668-file jacket - also - C049286-file jacket
Jan 25 2007	Answer to petition for review filed   State Compensation Insurance Fund, Respondent. Don E. Clark, counsel
Feb 7 2007	Petition for review granted (civil case)   Votes: George, C. J., Kennard, Baxter, Werdegar, Chin, Moreno and Corrigan, JJ.
Mar 9 2007	Opening brief on the merits filed   Brice Sandhagen, petitioner Marguerite Sweeney, counsel
Mar 9 2007	Certification of interested entities or persons filed   W.C.A.B., respondent Neil Sullivan, counsel
Mar 19 2007	Certification of interested entities or persons filed   Brice Sandhagen, real party in interest. Marguerite Sweeney
Mar 22 2007	Certification of interested entities or persons filed   State Compensation Insurance Fund, petitioner Don E. Clark, counsel
Apr 9 2007	Answer brief on the merits filed   State Compensation Insurance Fund, respondent by Don E. Clark, counsel
Apr 30 2007	Reply brief filed (case fully briefed)   Brice Sandhagen, Respondent by Marguerite Sweeney, counsel
May 10 2007	Received application to file Amicus Curiae Brief   California Workers Compensation Institute in support of respondent State Comp Insurance Fund Michael Marks, counsel
May 17 2007	Permission to file amicus curiae brief granted   The application of California Workers' Compensation Institute for permission to file an amicus curiae brief in support of petitioner State Compensation Insurance Fund is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
May 17 2007	Amicus curiae brief filed   California Workers' Compensation Institute in support of petitioner State Compensation Ins. Fund. Michael A. Marks, counsel
May 29 2007	Received application to file Amicus Curiae Brief   California Society of Industrial Medicine & Surgery, Inc., in support of respondents David B. Leonard, counsel
May 31 2007	Permission to file amicus curiae brief granted   The application of California Society of Industrial Medicine & Surgery, Inc. for permission to file an amicus curiae brief in support of respondents is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
May 31 2007	Amicus curiae brief filed   California Society of Industrial Medicine & Surgery, Inc. in support of respondents. David B. Leonard, counsel
May 31 2007	Received application to file Amicus Curiae Brief   California Applicants' Attorneys Association in support of respondent, Brice Sandhagen. Charles R. Rondeau, counsel (CRC, rule 8.25 - FedEx)
Jun 5 2007	Response to amicus curiae brief filed   Brice Sandhagen, respondent. Marguerite Sweeney, counsel ** response to California Workers' Compensation Institute amicus brief *
Jun 6 2007	Received:   Notice of Errata David Bryan Leonard, counsel for California Society of Industrial Medicine and Surgery, Inc.
Jun 8 2007	Permission to file amicus curiae brief granted   The application of California Applicants' Attorneys Association for permission to file an amicus curiae brief in support of respondent, Brice Sandhagen, is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jun 8 2007	Amicus curiae brief filed   California Applicants' Attorneys Association in support of respondent Brice Sandhagen. Charles R. Rondeau, counsel
Apr 9 2008	Case ordered on calendar   to be argued on Tuesday, May 6, 2008, at 2:00 p.m. in San Francisco
Apr 17 2008	Received:   Letter from Neil P. Sullivan, counsel for respondent Workers' Compensation Appeals Board. The board will not require argument time and defers to counsel for respondent Sandhagen as to argument time allocation.
Apr 18 2008	Filed letter from:   Marguerite Sweeney, counsel for respondent Sandhagen, requesting to share 10 minutes of oral argument time with amicus curiae California Applicants' Attorneys Association.
Apr 18 2008	Order filed   The request of counsel for respondent Sandhagen in the above-referenced cause to allow two counsel to argue on behalf of respondent at oral argument is hereby granted. The request of respondent to allocate to amicus curiae California Applicants' Attorneys Association 10 minutes of respondent's 30-minute allotted time for oral argument is granted.
May 6 2008	Cause argued and submitted
Jul 2 2008	Notice of forthcoming opinion posted
Jul 3 2008	Opinion filed: Judgment reversed   The matter is remanded to that court for further proceedings consistent with this opinion. Majority Opinion by Moreno, J. -----joined by George, C.J.; Baxter, Werdegar, Chin and Corrigan, JJ. Concurring Opinion by Kennard, J.
Aug 15 2008	Remittitur issued (civil case)
Aug 19 2008	Note:   Corrected version of remittitur issued on this date.
Aug 22 2008	Returned record   to 3DCA (1 doghouse)
Aug 25 2008	Received:   Receipt for Remittitur

Briefs
Mar 9 2007	Opening brief on the merits filed
Apr 9 2007	Answer brief on the merits filed
Apr 30 2007	Reply brief filed (case fully briefed)
May 17 2007	Amicus curiae brief filed
May 31 2007	Amicus curiae brief filed
Jun 5 2007	Response to amicus curiae brief filed
Jun 8 2007	Amicus curiae brief filed

If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website

May 25, 2011 Annotated by gayle denman	Facts: Plaintiff Bruce Sandhagen was injured when he was struck by a car while working as a foreman on a road construction project. Sandhagen’s physician referred him to two doctors who in turn recommended an MRI test of his spine to identify the cause of his back pain. The physicians submitted a report to Sandhagen’s employer’s insurer, State Compensation Insurance Fund (State Fund), with a request to authorize the MRI. State Fund referred the matter to another physician for “utilization review” of the request. Utilization review is defined by California Labor Code Section 4610 as “functions that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians . . . .” State Fund's physician denied the treatment request but failed to adhere to Section 4610’s deadline for utilization review decisions. A workers’ compensation judge found that State Fund’s failure to comply with the statutory deadline precluded it from relying on the utilization review process or on the utilization review report. Relying only on the report of Sandhagen’s physicians, the judge ordered the authorization of the MRI. State Fund appealed to the Workers’ Compensation Appeals Board (WCAB), which held that failure to meet the Section 4610 deadline precludes use of the utilization review process, or of any utilization review report obtained via the process, to deny treatment. However, the WCAB also held that State Fund could instead dispute the treatment recommendation using the dispute resolution procedure set forth in Section 4062. Accordingly, the WCAB vacated the judge’s determination and allowed State Fund to proceed under Section 4602. Sandhagen and State Fund each sought review of different portions of the WCAB’s decision. Procedural History: The Court of Appeals granted Sandhagen’s and State Fund’s petitions for review and affirmed both WCAB holdings. The California Supreme Court granted Sandhagen’s petition for review. Issues: When deciding whether to approve or deny an injured employee’s request for medical treatment, must an employer conduct utilization review pursuant to Labor Code Section 4610 or may he instead choose to dispute a request for medical treatment under Section 4602? Holding: Employers must conduct utilization review pursuant to Labor Code Section 4610 when considering employee requests for medical treatment. Reasoning: First, the statutory scheme shows that the Legislature intended for employers’ review of treatment requests to be governed solely by utilization review pursuant to Section 4610. Section 4610 requires every employer to establish a utilization review process and broadly defines what this process entails, thereby suggesting that the Legislature intends to require each employer to use its utilization review process for all requests. The Legislature did not intend to allow employers to opt out of these utilization review procedures; to the contrary, Section 4062 permits employers to object to a treating physician’s medical determinations only where those determinations regarding medical issues were “not subject to Section 4610 . . . .” By contrast, Section 4062 explicitly permits employees to use its provisions to object to employers’ decisions regarding treatment requests. The evolution of the process for reviewing employees’ treatment requests also shows that the Legislature intended to require utilization review by employers. Before the passage of Senate Bill No. 228, there was an administrative utilization review alternative to proceeding under former Section 4062. However, partly due to the lack of uniform guidelines for evaluating treatment requests, the review process was seldom used and most requests were resolved via former Section 4062. Senate Bill No. 228 required a medical treatment utilization schedule establishing uniform guidelines for evaluating medical treatment requests. The Bill also added the current Section 4610, requiring each employer to “establish a utilization review process” and imposing numerous procedural and substantive requirements on this process. Later, Senate Bill No. 899 did not alter the Section 4610 utilization review process but did make several changes to Section 4062. The Bill eliminated language stating that an employer could object to a treating physician’s medical determination of “the extent and scope of medical treatment” required. Moreover, it added the language stating that the employer can object only to medical determinations “not subject to Section 4610,” as well as added the language explicitly permitting an employee to object to an employer decision made pursuant to Section 4610. Thus the evolution of the utilization review process indicates that the Legislature intended for current employers to resolve treatment requests via Section 4610. Ruling: Reversed the judgment of the Court of Appeals and remanded for further proceedings consistent with the decision. Concurrence: The Concurrence agreed with the Majority but pointed out that Section 4610 was not intended to replace Section 4062. Rather, Section 4610 creates an additional step to be taken before the employer and employee turn to the Section 4062 process. Utilization review governs the process by which an employer makes his initial decision to approve or deny a request for medical treatment. When disputes arise regarding the employer’s decision, Section 4062 sets forth the primary procedural mechanism for resolving those disputes. Tags: Employee, employer, workers’ compensation, utilization review, request for medical treatment, medical care, workplace injury, Labor Code Section 4610, Labor Code Section 4062
Jan 9, 2009 Annotated by diana teasland	Written by Mike Scanlon In October 2003, a car struck Brice Sandhagen while he was working as a foreman on a road construction project. He injured his neck, back, left elbow, and left wrist and has received medical treatment continuously since the accident. Sandhagen’s physician referred him to SpineCare Medical Group, Inc., for a joint consultation by Drs. Goldthwaite and Josey. The physicians recommended a magnetic resonance imaging (MRI) test of Sandhagen’s spine to determine if disc herniations or disc degeneration was causing his pain. The physicians submitted a report to Sandhagen’s employer’s insurer, State Compensation Insurance Fund (State Fund), on May 24, 2004, with a request to authorize the recommended MRI. State Fund referred the matter to Dr. Krohn for “utilization review.” On June 11, 2004, when State Fund did not communicate its decision within the 14-day statutory deadline (§ 4610, subd. (g)(1)), Sandhagen requested an expedited hearing. Ten days later (before the expedited hearing but 28 days after the MRI authorization request was submitted), Dr. Krohn sent a written denial of the medical treatment request, citing new medical treatment guidelines. An expedited hearing took place on July 15, 2004, on the sole issue of the need for the recommended MRI. The workers’ compensation judge found that State Fund’s failure to comply with the statutory deadlines precluded it from relying on the utilization review process or Dr. Krohn’s report to deny Sandhagen treatment. Only Dr. Goldthwaite’s report remained admissible. The workers’ compensation judge, finding the MRI authorization request to be consistent with the new treatment guidelines, ordered State Fund to authorize the MRI. State Fund sought reconsideration by the Workers’ Compensation Appeals Board (WCAB). State Fund argued that the consequences for failing to comply with utilization review guidelines are set forth in section 4610, subdivision (i), which provides for administrative penalties, and in section 4610.1, which allows possible penalties for delay, and that nothing in the statutory scheme allows for the exclusion of a utilization review report. Sandhagen disagreed, contending section 4610, subdivision (g) requires an employer to meet specific deadlines and that State Fund’s failure to comply with the deadlines meant that it could not rely on the utilization review process to justify denial of treatment. In addition, Sandhagen argued that the workers’ compensation judge properly excluded Dr. Krohn’s denial letter. He further argued that he had met his evidentiary burden to prove that the requested treatment was medically reasonable and necessary. The WCAB granted reconsideration. Due to the important legal issues presented and in order to secure uniformity of future decisions, the matter was assigned to the WCAB as a whole for an en banc decision. On November 16, 2004, the WCAB issued its decision, holding that the section 4610 deadlines are mandatory and State Fund’s failure to meet the deadlines means that, with respect to the particular medical treatment dispute in question, it was precluded from using the utilization review process or any utilization review report it obtained to deny treatment. However, the WCAB also held that, while precluded from using the utilization review process, State Fund could nonetheless dispute the treating physician’s treatment recommendation using the dispute resolution procedure set forth in section 4062. Accordingly, the WCAB vacated the workers’ compensation judge’s determination that Sandhagen was entitled to the MRI and instead gave State Fund an opportunity to proceed under section 4062. State Fund filed a petition for writ of review. Sandhagen also sought review, specifically of the portion of the decision that held that State Fund could object to the treatment authorization under section 4062, notwithstanding its failure to comply with the procedures set forth in section 4610. The Court of Appeal granted both petitions. The Court of Appeal affirmed both of the WCAB’s holdings. The Court of Appeal agreed that State Fund’s failure to comply with the mandatory deadlines precluded State Fund from using the process to deny Sandhagen’s request for medical treatment. However, as did the WCAB, the Court of Appeal concluded that State Fund could nonetheless object to the medical treatment request under the dispute resolution process set forth in section 4062, reasoning that an employer is not required to use the utilization review process when considering employees’ requests for medical treatment. We granted Sandhagen’s petition for review.