Senate Bill 563

California’s Utilization Review Debate: SB 563 and What’s Happening Now

Senate Bill 563, authored by Senator Richard Pan (D-Sacramento) and sponsored by the California Medical Association, was introduced during the 2015–2016 legislative session to modify how utilization review (UR) applied to workers’ compensation medical treatment requests. While the bill did not become law, its proposed reforms continue to echo in today’s discussions about how to make California’s workers’ compensation system more efficient and fair for injured workers.

What SB 563 Proposed

Under SB 563, certain types of medical treatment would have been exempt from utilization review and independent medical review (IMR), including:

• Treatment requests intended solely to maintain an injured worker’s existing care plan due to a preexisting injury.
• Requests for treatment that had already been approved on the basis of medical necessity.
• Unchanged treatment requests when there had been no change in the worker’s condition requiring a modification of care.

The bill was introduced in response to widespread frustration among medical providers after passage of SB 863, which created the IMR process in 2012. Many doctors and worker advocates argued that the post-SB 863 UR process created unnecessary delays and administrative barriers for injured employees seeking ongoing treatment. Ultimately, SB 563 failed to pass the Legislature, leaving the existing UR/IMR framework in place.

The Real Action Today: Regulatory Reform, Not New Legislation

While SB 563 is no longer active, California’s Division of Workers’ Compensation (DWC) continues to review and update the state’s UR regulations under Title 8 of the California Code of Regulations. These regulatory changes—rather than new statutes—represent the most significant developments in 2025.

In April 2025, the DWC opened a second public comment period to gather feedback on proposed revisions to the UR process, including electronic treatment submissions, documentation standards, and timing requirements. However, in July 2025, the Office of Administrative Law (OAL) returned the DWC’s proposal for further clarification, delaying final adoption until at least January 1, 2026. This pause highlights how California’s UR framework continues to evolve, with regulators working to balance administrative efficiency and medical fairness.

Why Enforcement Still Matters Most

The underlying issue isn’t necessarily the lack of legislation—it’s enforcement and oversight. Even under existing law, utilization review must comply with Labor Code § 4610 and corresponding regulations. When UR decisions ignore medical evidence or delay treatment that’s already been approved or ordered, the problem lies in accountability, not in the statute itself.

We don’t need more laws; we need stronger enforcement of the ones that already exist. Agencies such as the DWC and the Department of Insurance have the authority to investigate and penalize non-compliance. Meaningful oversight—backed by significant business-practice penalties—remains the most effective way to ensure injured workers receive the care they’ve been promised.

What to Watch

• Will the DWC’s revised UR regulations take effect by January 1, 2026?
• Will lawmakers revisit language similar to SB 563 in a future session?
• How will enforcement efforts evolve as UR and IMR data continue to show rising reversal rates and administrative delays?

For now, California’s UR and IMR systems remain fully operational. Injured workers, employers, and healthcare providers should stay informed about upcoming regulatory changes and make sure all treatment requests, UR decisions, and IMR appeals comply with current law.