California lien issues are surprising to workers' compensation professionals in other states because most states don't recognize liens as having independent rights apart from the case in chief.
I might add that a plain, black letter, reading of the statutes permitting liens in California cases would support outsider's initial thoughts - that a claim of lien against a worker's award should not have independent rights.
But that's not how the culture of California workers' compensation litigation has turned out, and in fact regulations over the years have codified this culture, from disallowing the adjudication of lien claims prior to resolution of the case in chief, to implementation of various statutes of limitation governing the timeliness of filing.
Due to this cultural diversity, issues regarding lien claims thus differ from Northern California to Southern California.
In attempting to quantify potential savings from the recent California reform bill, SB 863, the Workers’ Compensation Research Insurance Rating Bureau (WCIRB) conducted a state wide survey of liens which will be presented in its December 5 Actuarial Committee meeting.
WorkCompCentral obtained a copy of a PowerPoint presentation to be used in the meeting. The WCIRB's survey covered accident years 2002 through 2004, as well as accident year 2007.
Only one or two claims were filed on 24% of the reviewed claims, three or four claims were filed in 10% of the claims, and five or more liens were filed in 20% of the cases.
Broken down by geographic region, the WCIRB found liens were filed on 44% of the claims surveyed in Northern California and 64% of claims surveyed in Southern California.
But the difference is that in Northern California only a single lien was filed on half of the claims that were reviewed and 21% of the claims had two liens. Three or four liens were filed in 14% of the surveyed claims, and five or more liens were filed in 15% of the claims.
Contrast and compare with Southern California, where five or more liens were filed in 45% of the studied claims, and 10 or more liens filed in 15% of the claims. A single lien was filed in only 24% of the claims, and two liens were filed in 11% of the claims.
Consequently average lien defense cost per claim in SoCal was, on average, nearly three times the average cost in the northern part of the state.
SB 863 introduced some radical changes to many of the underlying processes that contribute to the assertion of liens, as well as direct impediments to such filings.
Some of the changes include a new medical bill review process that keeps payment disputes out of the normal adjudicatory processes, inclusive of penalties, fees and other financial incentives for both claimants and payers to resolve disputes informally and outside of the system.
Other changes include tighter statutes of limitations and fees for filing lien claims.
The whole process devised by the authors of SB 863 was based on changing the culture, and returning lien claims to what they are supposed to be: a claim upon the benefits being provided to the injured worker - not an independent right inherent in the service provider.
While the WCIRB has projected system savings attributable to the new lien process of up to $480 million, others such as risk management and brokerage firm Aon project less savings of only $356 million a year.
The disconnect on these projections stems from whether the new lien handling provisions are going to create a new cost to employers and whether employers are going to simply pay bills rather than dispute them.
I'm going to make a bold prediction.
1. The "lien problem" will essentially disappear. There will no longer be so many liens filed on so many cases for a couple of reasons: a) the cost of filing a lien for small amounts becomes prohibitive and b) payers and providers will not contest independent bill review because of the finality of decisions out of the process as well as the financial incentives (or disincentives) to contesting bills.
2. In a few years system observers will complain that payers are paying too much for services because it is easier and safer to just pay a bill rather than be subject to independent bill review and potential penalties and expenses inherent in the process.
3. Medical bill review specialists will be in high demand for the next 5 years or so until the next reform "crisis."