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One of the key components of the 2012 California workers’ comp reforms now appears to be on shaky ground.

Challenged by a group of medical, chiropractic, interpreter and copy service plaintiffs, the SB 863 lien activation fee may soon be a goner.

The issue was repeatedly argued this week in front of U.S. District Judge George Wu of the U.S. District Court of Central California.

Wu indicated that he plans to rule that the lien activation fee requirement violates the equal protection clause. While a written decision has not been
issued as of the date of this post, it appears less likely that Wu will find in favor of plaintiffs on their other theories, including the “takings clause” cause of action.

Wu is likely to issue an expansive injunction against enforcement of the lien activation fee, though that is not a certainty til an order is rendered.

An appeal by the DWC to the 9th U.S. Court of Appeals is probable, but it’s also likely that a decision could turn up the pressure for more talks about comp reform.

It was never surprising that big lien claimants such as Kaiser, some union trust funds, and health plans such as Anthem Blue Cross would seek exemption from the lien activation fee requirement. Those providers have considerable political muscle, and were never seen as abusers of the comp system.

But other medical and service providers were often seen as abusers, and the backlog of liens in the Los Angeles area WCAB district offices was astronomical.

Unfortunately, some smaller but legitimate service providers are subject to the lien activation fee requirement, and their equal protection argument is probably appropriate.

It is ironic that in many ways the lien fee provision seems to be one of the most successful features of SB 863. The lien backlog has been substantially reduced as liens get worked through the system, whereas on the other hand substantial IMR delays are building and the QME process remains problematic.

One solution would be for the legislature to end the lien activation fee exemption.

But this might require some legislative heavy lifting to convince unions and healthcare insurers to contribute to the solution by paying activation fees.

It’s not clear what might happen to liens already dismissed because an activation fee was not paid. Will those dismissals be set aside? Do some of those liens have such poor underlying documentation that the lien claimants will not bother to pursue them?

And even if the statute’s lien provisions are declared unconstitutional, will IMR, IBR and the toughened MPN requirements of SB 863 make the “lien problem” less significant going forward?

Stay tuned. I’ll be commenting as Judge Wu issues a written decision soon.

Julius Young
www.boxerlaw.com
www.workerscompzone.com

Category: Political developments

Julius Young

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