UR is Not Protected Activity

California’s Second District Court of Appeals ruled that State Compensation Insurance Fund's utilization review process was not “protected activity” under the state’s anti-SLAPP (strategic lawsuit against public participation) law.

The court also dismissed an appeal from the state fund’s utilization review provider EK Health, which was seeking the declaration of UR as protected activity under the statute.

A strategic lawsuit against public participation (SLAPP) is a lawsuit that is intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition.

California's anti-SLAPP law provides for a special motion that a defendant can file at the outset of a lawsuit to strike a complaint when it arises from conduct that falls within the rights of petition or free speech.

The statute expressly applies to any writing or speech made in connection with an issue under consideration or review by a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law. There is no requirement that the writing or speech be promulgated directly to the official body.

It also applies to speech in a public forum about an issue of public interest and to any other petition or speech conduct about an issue of public interest.

Code of Civil Procedure § 425.17 prohibits anti-SLAPP motions in response to certain public interest lawsuits and class actions, and actions that arise from commercial statements or conduct.

Ouch - no anti-SLAPP here...

If the anti-SLAPP motion is denied, the order denying the motion is immediately appealable. Defendants prevailing on an anti-SLAPP motion (including any subsequent appeal) are entitled to a mandatory award of reasonable attorney’s fees and a plaintiff cannot escape the fee by amending its complaint.

Nicholas Roxborough of the firm Roxborough Pomerance, which has a history of taking on the State Fund, said the case is significant because it establishes that UR is not protected activity despite the declaration of the California Supreme Court in 2008 that the process is mandatory.

“The notion that an insurance company can hide behind utilization review as an official proceeding and then undermine the statutory intent of having utilization review to protect the injured worker is out the window,” Roxborough told WorkCompCentral in an interview.

The Second Appellate District compared the process of UR to a more defined process like fee dispute arbitration and concluded that UR did not fit the bill of an “official proceeding.”

“UR review is medical rather than legal and informal rather than formal,” the court said.

California, as you might expect, has a long history of court cases interpreting the anti-SLAPP laws - this additional case is important to the workers' compensation community because it defines UR as an administrative process, in my mind opening up the review of medical requests to all sorts of civil challenges where improper shenanigans are alleged and/or involved.

In the case at hand, the allegation is that a September 2005 memo from former SCIF Medical Director Gideon Letz improperly targeted Electronic Waveform Lab and its H-Wave treatment devices.

Letz stated that “when authorized, we will limit authorized equipment to the more thoroughly studied and less expensive (transcutaneous electrical nerve stimulation) units. The more expensive interferential and ‘H-Wave’ units will not be authorized.”

Electronic Waveform alleges that there are numerous high quality studies that support treatment therapy using the H-Wave device, and that UR guidelines denigrating such treatment are based on flawed, and ethically compromised studies, in part because either they are based on devices with a similar name in foreign countries, or because a study author was an employee of EK Health.

Regardless of the actual dispute behind this case, the fact that an appellate court, which is binding precedence at least in the second district, found that an administrative workers' compensation process that has been declared mandatory to be exempt from California's anti-SLAPP laws is significant - perhaps evidence of further erosion of the exclusive remedy of the Labor Code.

If I were an insurance company, or claims administrator, executive, I'd be looking very seriously at this case and the UR processes (and perhaps other administrative processes) in place. Exclusive remedy may apply to the actual employer and injured worker - but for those in the supply line chain, civil liability remains a real risk.

The Second Appellate District's opinion is here.