by Brandon N. Nadel –
“Have you heard about the new case about lien activation fees,” one lien representative asked another at the WCAB. “This is going to kill us.” “I know, some of my clients are going to go bankrupt,” responded the second lien representative.
Why the concern? The 9th DCA in Angelloti Chiropractic Inc. v. Christine Baker, et al. has finally cleared up confusion about liens. However, as in all aspects of workers’ compensation, there is still no finality or consensus.
Major setback for lien claimants? Let us hope!
When drafting SB 863, the Legislature saw that WCAB calendars were flooded with lien-only cases. To cure this problem, SB 863 mandated lien claimants pay a “filing” and “activation” fee.
The intent? Reduce the lien volume by forcing lien claimants to “pay to play”. This created uncharted territory, as lien claimants were previously allowed to participate in WCAB proceedings without paying a fee. The WCAB commonly saw lien claimants with minimal (very!) balances filing DORs and pushing cases to trial with virtually no cost to them.
SB 863 required lien claimants to pay an “activation” fee of $100 by January 1, 2014 for liens filed prior to January 1, 2013. If the lien claimants did not pay the activation fee by January 1, 2014, their lien was automatically dismissed. Conversely, any lien filed on or after January 1, 2013 required a $150 payment to participate in WCAB proceedings.
Lien claimants argued this new rule infringed on certain constitutional guarantees. Lien claimants challenged these rules and many did not pay fees. They filed a civil suit requesting an injunction against the State. Some arguments were–initially–successful in persuading the lower courts that the law was unconstitutional. The lower court granted an injunction, preventing the WCAB from enforcing the fee provisions.
Before the 9th DCA the lien claimants argued the lien activation fees violated the Due Process Clause as it constituted an “unlawful taking.” The lien claimants also argued their liens are a “property interest” and that by requiring them to pay $100 or lose that interest represented an unlawful taking.
The 9th Circuit disagreed, explaining that a small fee does not interfere with the plaintiff’s “expectations” enough to constitute a “taking.” They noted an activation fee is not a complete interference with the expectation/access to a property right.
Defendants statewide can argue that any lien claimants who filed liens prior to January 1, 2013, but did not pay the $100 activation fee, are barred from any future proceeding and the lien rights must be dismissed immediately. However, it is highly probable that the WCAB will not immediately dismiss all claimants who failed to pay this activation fee in light of the lien claimants’ reliance on the injunction that was issued just six weeks after SB 863 became law.
There is a split of opinion of how the Department of Industrial Relations (DIR) will treat this:
One possible scenario is that the DIR will allow lien claimants the 5-6 weeks they had before the injunction was issued to pay the activation fee. Allowing the lien claimants this time would generously allow them to check their balances and determine which liens were worth the activation charge. This would result in lien claimants who have already been paid at, near or above fee schedule to consider their liens satisfied and avoid paying the fee. This would, hopefully, go a long way to unclog the docket.
No matter how these issues proceed, rest assured that Angelloti will impact the WCAB docket for years to come.
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