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Department of Industrial Relations
Its Failure to Adequately Administer the Qualified Medical Evaluator Process May Delay Injured Workers’ Access to Benefits

Report Number: 2019-102

November 19, 2019

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

As directed by the Joint Legislative Audit Committee, my office conducted an audit of the Department of Industrial Relations’ Division of Workers’ Compensation (DWC) and its oversight and regulation of qualified medical evaluators (QME). This report concludes that DWC’s failure to adequately oversee QMEs and administer the process for selecting them to examine workers may delay injured workers’ access to benefits. DWC has not ensured that it has enough QMEs to meet demand, that it follows the department’s regulations to discipline certain QMEs, and that QMEs produce high-quality reports.

QMEs are physicians who examine injured workers when disputes arise between the workers and their employers regarding medical issues in workers’ compensation claims. DWC oversees QMEs by appointing physicians to be QMEs, and it administers the QME selection process by generating lists from which a QME is selected to evaluate an injury. Although DWC is responsible for overseeing QMEs and the selection process, it has not adequately ensured that it has enough QMEs to keep up with demand for their services. Without an adequate number of available QMEs, injured workers can experience delays in receiving evaluations and therefore delays in receiving the benefits they need.

Furthermore, DWC inappropriately used its reappointment process to discipline certain QMEs alleged to have committed overbilling violations. We believe that this practice raises concerns about due process. Specifically, instead of having used its regulatory process to discipline QMEs at the time it identified alleged violations, DWC denied their reappointments because of the alleged violations. When DWC denied their reappointments, QMEs were prohibited by law from performing QME services until the allegations were resolved, a process that can take months.

Finally, DWC has not ensured that QMEs produce high-quality reports. Although state law requires DWC to continuously review QME reports for quality and to generate an annual report with the results of those reviews, it has not done so since at least 2007. These reports provide medical evidence to help judges and others resolve disputes related to workers’ compensation claims; therefore, their quality is especially important. QME reports that are inaccurate or incomplete can delay resolution of disputes and workers’ receipt of benefits, and delays can increase costs for employers involved in the disputes.

Respectfully submitted,

California State Auditor

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