Section 139.5.
Cal. Labor Code - LAB § 139.5.
in effect(a)
(1)
The administrative director shall contract with one or more independent medical review organizations and one or more independent bill review organizations to conduct reviews pursuant to Article 2 (commencing with Section 4600) of Chapter 2 of Part 2 of Division 4. The independent review organizations shall be independent of any workers’ compensation insurer or workers’ compensation claims administrator doing business in this state. The administrative director may establish additional requirements, including conflict-of-interest standards, consistent with the purposes of Article 2 (commencing with Section 4600) of Chapter 2 of Part 2 of Division 4, that an organization shall be required to meet in order to qualify as an independent review organization and to
assist the division in carrying out its responsibilities.
(2)
To enable the independent review program to go into effect for injuries occurring on or after January 1, 2013, and until the administrative director establishes contracts as otherwise specified by this section, independent review organizations under contract with the Department of Managed Health Care pursuant to Section 1374.32 of the Health and Safety Code may be designated by the administrative director to conduct reviews pursuant to Article 2 (commencing with Section 4600) of Chapter 2 of Part 2 of Division 4. The administrative director may use an interagency agreement to implement the independent review process beginning January 1, 2013. The administrative director may initially contract directly with the same organizations that are under contract with the Department of Managed Health Care on substantially the same terms without competitive bidding until January 1, 2015.
(b)
(1)
The independent medical review organizations and the medical professionals retained to conduct reviews shall be deemed to be consultants for purposes of this section.
(2)
There shall be no monetary liability on the part of, and no cause of action shall arise against, any consultant on account of any communication by that consultant to the administrative director or any other officer, employee, agent, contractor, or consultant of the Division of Workers’ Compensation, or on account of any communication by that consultant to any person when that communication is required by the terms of a contract with the administrative director pursuant to this section and the consultant does all of the following:
(A)
Acts without malice.
(B)
Makes a reasonable effort to determine the facts of the matter communicated.
(C)
Acts with a reasonable belief that the communication is warranted by the facts actually known to the consultant after a reasonable effort to determine the facts.
(3)
The immunities afforded by this section shall not affect the availability of any other privilege or immunity which may be afforded by law. This section shall not be construed to alter the laws regarding the confidentiality of medical records.
(c)
(1)
An organization contracted to perform independent medical review or independent bill review shall be required to employ a medical director who shall be responsible for advising the contractor on clinical issues. The medical director shall be a physician and surgeon licensed by the Medical
Board of California or the Osteopathic Medical Board of California.
(2)
The independent review organization, any experts it designates to conduct a review, or any officer, director, or employee of the independent review organization shall not have any material professional, familial, or financial affiliation, as determined by the administrative director, with any of the following:
(A)
The employer, insurer or claims administrator, or utilization review organization.
(B)
Any officer, director, employee of the employer, or insurer or claims administrator.
(C)
A physician, the physician’s medical group, the physician’s independent practice association, or other provider involved in the medical treatment in dispute.
(D)
The facility or institution at which either the proposed health care service, or the alternative service, if any, recommended by the employer, would be provided.
(E)
The development or manufacture of the principal drug, device, procedure, or other therapy proposed by the employee whose treatment is under review, or the alternative therapy, if any, recommended by the employer.
(F)
The employee or the employee’s immediate family, or the employee’s attorney.
(d)
The independent review organizations shall meet all of the following requirements:
(1)
The organization shall not be an affiliate or a subsidiary of, nor in any way be owned or controlled by, a workers’ compensation insurer, claims
administrator, or a trade association of workers’ compensation insurers or claims administrators. A board member, director, officer, or employee of the independent review organization shall not serve as a board member, director, or employee of a workers’ compensation insurer or claims administrator. A board member, director, or officer of a workers’ compensation insurer or claims administrator or a trade association of workers’ compensation insurers or claims administrators shall not serve as a board member, director, officer, or employee of an independent review organization.
(2)
The organization shall submit to the division the following information upon initial application to contract under this section and, except as otherwise provided, annually thereafter upon any change to any of the following information:
(A)
The names of all stockholders and owners of more than 5 percent
of any stock or options, if a publicly held organization.
(B)
The names of all holders of bonds or notes in excess of one hundred thousand dollars ($100,000), if any.
(C)
The names of all corporations and organizations that the independent review organization controls or is affiliated with, and the nature and extent of any ownership or control, including the affiliated organization’s type of business.
(D)
The names and biographical sketches of all directors, officers, and executives of the independent review organization, as well as a statement regarding any past or present relationships the directors, officers, and executives may have with any employer, workers’ compensation insurer, claims administrator, medical provider network, managed care organization, provider group, or board or committee of an employer,
workers’ compensation insurer, claims administrator, medical provider network, managed care organization, or provider group.
(E)
(i)
The percentage of revenue the independent review organization receives from expert reviews, including, but not limited to, external medical reviews, quality assurance reviews, utilization reviews, and bill reviews.
(ii)
The names of any workers’ compensation insurer, claims administrator, or provider group for which the independent review organization provides review services, including, but not limited to, utilization review, bill review, quality assurance review, and external medical review. Any change in this information shall be reported to the department within five business days of the change.
(F)
A description of the review process, including, but not
limited to, the method of selecting expert reviewers and matching the expert reviewers to specific cases.
(G)
A description of the system the independent medical review organization uses to identify and recruit medical professionals to review treatment and treatment recommendation decisions, the number of medical professionals credentialed, and the types of cases and areas of expertise that the medical professionals are credentialed to review.
(H)
A description of how the independent review organization ensures compliance with the conflict-of-interest requirements of this section.
(3)
The organization shall demonstrate that it has a quality assurance mechanism in place that does all of the following:
(A)
Ensures that any medical professionals retained
are appropriately credentialed and privileged.
(B)
Ensures that the reviews provided by the medical professionals or bill reviewers are timely, clear, and credible, and that reviews are monitored for quality on an ongoing basis.
(C)
Ensures that the method of selecting medical professionals for individual cases achieves a fair and impartial panel of medical professionals who are qualified to render recommendations regarding the clinical conditions and the medical necessity of treatments or therapies in question.
(D)
Ensures the confidentiality of medical records and the review materials, consistent with the requirements of this section and applicable state and federal law.
(E)
Ensures the independence of the medical professionals or bill reviewers
retained to perform the reviews through conflict-of-interest policies and prohibitions, and ensures adequate screening for conflicts of interest, pursuant to paragraph (5).
(4)
Medical professionals selected by independent medical review organizations to review medical treatment decisions shall be licensed physicians, as defined by Section 3209.3, in good standing, who meet the following minimum requirements:
(A)
The physician shall be a clinician knowledgeable in the treatment of the employee’s medical condition, knowledgeable about the proposed treatment, and familiar with guidelines and protocols in the area of treatment under review.
(B)
Notwithstanding any other law, the physician shall hold a nonrestricted license in any state of the United States, and for physicians and surgeons holding an M.D. or D.O. degree,
a current certification by a recognized American medical specialty board in the area or areas appropriate to the condition or treatment under review. The independent medical review organization shall give preference to the use of a physician licensed in California as the reviewer.
(C)
The physician shall have no history of disciplinary action or sanctions, including, but not limited to, loss of staff privileges or participation restrictions, taken or pending by any hospital, government, or regulatory body.
(D)
Commencing January 1, 2014, the physician shall not hold an appointment as a qualified medical evaluator pursuant to Section 139.2.
(5)
Neither the expert reviewer, nor the independent review organization, shall have any material professional, material familial, or material financial affiliation with any of the
following:
(A)
The employer, workers’ compensation insurer or claims administrator, or a medical provider network of the insurer or claims administrator, except that an academic medical center under contract to the insurer or claims administrator to provide services to employees may qualify as an independent medical review organization provided it will not provide the service and provided the center is not the developer or manufacturer of the proposed treatment.
(B)
Any officer, director, or management employee of the employer or workers’ compensation insurer or claims administrator.
(C)
The physician, the physician’s medical group, or the independent practice association proposing the treatment.
(D)
The institution at which the treatment would be
provided.
(E)
The development or manufacture of the treatment proposed for the employee whose condition is under review.
(F)
The employee or the employee’s immediate family.
(6)
For purposes of this subdivision, the following terms shall have the following meanings:
(A)
“Material familial affiliation” means any relationship as a spouse, child, parent, sibling, spouse’s parent, or child’s spouse.
(B)
“Material financial affiliation” means any financial interest of more than 5 percent of total annual revenue or total annual income of an independent review organization or individual to which this subdivision applies. “Material financial affiliation” does not include payment by the employer to
the independent review organization for the services required by the administrative director’s contract with the independent review organization, nor does “material financial affiliation” include an expert’s participation as a contracting medical provider where the expert is affiliated with an academic medical center or a National Cancer Institute-designated clinical cancer research center.
(C)
“Material professional affiliation” means any physician-patient relationship, any partnership or employment relationship, a shareholder or similar ownership interest in a professional corporation, or any independent contractor arrangement that constitutes a material financial affiliation with any expert or any officer or director of the independent review organization. “Material professional affiliation” does not include affiliations that are limited to staff privileges at a health facility.
(e)
The division shall provide, upon the request of any interested person, a copy of all nonproprietary information, as determined by the administrative director, filed with it by an independent review organization under contract pursuant to this section. The division may charge a fee to the interested person for copying the requested information.
(f)
The Legislature finds and declares that the services described in this section are of such a special and unique nature that they must be contracted out pursuant to paragraph (3) of subdivision (b) of Section 19130 of the Government Code. The Legislature further finds and declares that the services described in this section are a new state function pursuant to paragraph (2) of subdivision (b) of Section 19130 of the Government Code.
References
referencesCal. Health and Safety Code - HSC § 1374.32.
referencesCal. Government Code - GOV § 19130.
referencesCal. Labor Code - LAB § 4600.
referencesCal. Labor Code - LAB § 3209.3.
referencesCal. Labor Code - LAB § 139.2.
Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026