California SB 1160: UR Exemption, Lien Declarations, and Penalties

California SB 1160, signed in 2016 with most provisions taking effect on January 1, 2017 or January 1, 2018, made four main changes to the state’s workers’ compensation system: it exempted most medical treatment from prospective utilization review during the first 30 days after a work injury, required every lien claimant to file a sworn declaration or lose the lien, doubled the annual penalty cap for claims administrators who fail to report claims data, and created a faster independent medical review track for disputes over formulary drugs.¹

The 30-Day Utilization Review Exemption

Before SB 1160, nearly all proposed medical treatment in a workers’ compensation claim had to clear prospective utilization review, the insurer’s medical-necessity check, before a physician could provide it. That process routinely slowed care during the weeks right after an injury, when treatment usually matters most. SB 1160 amended Labor Code Section 4610 so that most treatment during the first 30 days after a work-related injury is no longer subject to that prospective review.¹

Three conditions have to be met. The treatment must follow the Medical Treatment Utilization Schedule (MTUS), the state’s evidence-based treatment guidelines. The treating physician must belong to the employer’s medical provider network or a health care organization, or be a physician the employee predesignated before the injury. And the physician must submit both a treatment report and a complete request for authorization within five days of the employee’s first visit.²

If care given during those first 30 days doesn’t follow MTUS, the employer or insurer can review it after the fact. That retrospective review won’t undo treatment already provided, but the physician can be removed from treating the injured worker going forward.

Treatments That Still Need Prior Approval

The 30-day exemption is not a blanket pass. Labor Code Section 4610(c) keeps several categories of treatment subject to prospective utilization review even during the first 30 days, unless the employer authorizes them or they qualify as emergency care:

Non-formulary medications (formulary-compliant prescriptions are exempt).
Non-emergency surgery, both inpatient and outpatient, including pre- and post-surgical services.
Psychological treatment.
Home health care.
Advanced imaging such as MRIs and CT scans (simple x-rays are exempt).
Durable medical equipment when the combined value exceeds $250 under the official medical fee schedule.
Electrodiagnostic testing, including EMGs and nerve conduction studies.

The practical line the bill drew: routine office visits, basic diagnostics, simple x-rays, and formulary medications move without insurer pre-approval, while the higher-cost interventions still go through the review process.²

Sworn Declarations for Lien Claimants

Lien abuse was one of the largest cost drivers in California’s workers’ compensation system before SB 1160, with hundreds of thousands of liens filed by medical providers and others, many fraudulent or without merit. The bill amended Labor Code Section 4903.05 to require every lien claimant to file a declaration under penalty of perjury verifying that the lien is legitimate and was filed only by the actual lienholder or a proper assignee.¹

Liens filed without the declaration are dismissed automatically by operation of law. Claimants who had filed liens between January 1, 2013 and December 31, 2016 were given until July 1, 2017 to submit the required declarations for those existing liens. Roughly 292,000 liens were automatically dismissed when claimants failed to file by that deadline.¹ The reform imposed no financial penalty on employers or insurers; the entire burden fell on lien claimants, who now have to stand behind their filings under oath or lose them.

Higher Penalties for Claims Administrators

Under Labor Code Section 138.6, every claims administrator must report specified claims data to the Division of Workers’ Compensation. Before SB 1160, the maximum administrative penalty for violating those reporting requirements was $5,000 per year. SB 1160 doubled the annual cap to $10,000.³

Within that annual cap, penalties are assessed per violation:

Reports not submitted or not accepted: up to $100 per violation.
Reports that are late or contain errors: up to $50 per violation.
Multiple errors in a single report count as one violation, not several.

Claims administrators who accumulate more than $8,000 in fines in consecutive years face enhanced penalties of between $15,000 and $45,000. The bill also requires the administrative director to post the names of non-compliant claims administrators on the Division of Workers’ Compensation website.³

Faster Independent Medical Review for Drug Formulary Disputes

SB 1160 updated the independent medical review (IMR) process, which resolves disputes when an injured worker disagrees with a utilization review decision. The bill created a separate, faster track for disputes involving medications prescribed under the state’s drug formulary. For a formulary-related dispute, the worker must request independent medical review within 10 days of receiving the utilization review decision, compared to 30 days for other treatment disputes. The review organization then has five working days from receiving the request to issue its determination.

The bill also required utilization review organizations to be accredited by an approved body by July 1, 2018, with renewal every three years. The administrative director can require more frequent re-accreditation when warranted.

The $10,000 Early Treatment Cap Is a Separate Law

One of the most common misconceptions about SB 1160 is that it created the $10,000 medical treatment authorization requirement. It did not. That rule comes from Labor Code Section 5402(c), enacted by SB 863 in 2012, four years earlier. Under Section 5402(c), within one working day after an employee files a claim, the employer must authorize all MTUS-consistent treatment for the alleged injury and keep providing it until the claim is accepted or rejected, with the employer’s liability during that period capped at $10,000.⁴

The two rules operate in adjacent spaces. Section 5402 governs how much treatment an employer must authorize before deciding whether to accept the claim. SB 1160 governs whether that treatment has to run through utilization review. An injured worker gets the benefit of both: the employer can’t refuse early treatment under Section 5402, and routine early treatment doesn’t get held up in prospective review under SB 1160.

What the Changes Mean in Practice

For injured workers, the most tangible effect is faster access to routine care after an injury. If you see a physician in your employer’s medical provider network (or a physician you predesignated) and the treatment follows MTUS, most early care proceeds without waiting on insurer pre-approval. Treatment outside the network doesn’t automatically qualify for the 30-day exemption, so the choice of physician matters.

For employers and insurers, compliance stakes rose on the reporting side, with doubled penalties, enhanced fines for repeat violators, and public identification of non-compliant claims administrators. The lien declaration requirement cleared a large backlog of questionable claims, leaving the remaining liens backed by sworn statements.

Disputes tend to cluster around which treatments fall inside the utilization review carve-outs. Whether an imaging study counts as a simple x-ray (exempt) or advanced imaging (needs approval), or whether a given prescription is formulary-compliant, can decide between immediate treatment and a multi-week review. Treating physicians who want to keep care moving during the first 30 days need to work from the MTUS guidelines and the drug formulary, because non-compliant treatment during that window can trigger retrospective review and removal from the case.

1
Division of Workers’ Compensation. Senate Bill 1160
2
California Legislative Information. California Labor Code LAB 4610
3
California Legislative Information. California Labor Code LAB 138.6
4
California Legislative Information. California Labor Code LAB 5402