"Well, here's another fine mess you've gotten me into!"
Ah yes, Laurel and Hardy - probably the most popular comedy double act of early Hollywood. They were well ahead of their time, and who would predict that their routines could also illustrate SB 863's attempt to corral some, but not all, liens in the California workers' comp system.
Yesterday Federal Judge George Wu signed a preliminary injunction prohibiting the Division of Workers' Compensation from collecting the $100 activation fee or dismissing “unactivated” liens until the federal court in Los Angeles rules on whether the fee created by Senate Bill 863 violates the equal protection provisions of the U.S. Constitution.
The injunction puts a stop to lien armageddon which was scheduled for 1/1/14.
The plaintiffs in the case suffered the dismissal of their causes of action for taking of property and due process, but the receipt of a preliminary injunction on the equal protections argument is huge.
And they made a very compelling argument in my mind to support the assertion that SB 863 violated their equal protection rights.
Most of us in the work comp system in California equate lien claims with pesky, inscrutable medical vendors or leech-like receivables purchasers trying to milk pennies out of already-satisfied bills.
And the argument of the proponents of SB 863's lien armageddon language was that these ne'ar do wells were primary in causing all of the "backlog."
That argument failed in the eyes of Judge Wu, particularly when counsel for plaintiffs pointed out that Kaiser Health System and Anthem Blue Cross are No. 6 and No. 7, respectively, in terms of the most prolific lien filers in the state, yet both are exempted from paying the activation fee.
Imagine that - Big Health Care seeking subrogation of their health care expenses are among the biggest volume lien filers.
Defendants in this case (DWC and related governmental parties) argued that the fee was a “rational response” intended to eliminate the backlog of liens that “threatened the functioning of the entire workers’ compensation system” while also helping to “weed out frivolous lien disputes.”
How do we know that Kaiser and Anthem aren't filing "frivolous lien disputes"? How do we know that each and every single claim of subrogation for health care expenses paid by Big Health Care are: a) legitimate, b) not inflated, c) reasonable and necessary, d) related to industrial treatment, etc. etc. etc?
When DWC first implemented a $100 filing fee for liens, pre-EAMS, it was ill prepared to collect those fees. The result was a financial parody worthy of a Laurel and Hardy skit. So it was discontinued, only to resurface after a Commission on Health Safety and Workers' Compensation report made strong recommendations in favor of reinstating the program, except with more onerous requirements and tighter integration with DWC's processes and plans.
There is no rationality to this lien fee system, just as there is little rationality to the existence of liens in the first place - or at least as managed in the culture of California work comp.
Dealing with liens is very, very simple if anyone would just apply the law as it is written.
See Labor Code section 4903 - if the PLAIN LANGUAGE of that section were ever applied then there would be no issue. That section starts out, "The appeals board may determine, and allow as LIENS AGAINST ANY SUM TO BE PAID AS COMPENSATION...". [Emphasis added.]
Somehow this provision of the law has been perversely interpreted into providing lien claims independent rights over and above the money that is actually paid to the injured worker.
Apply this section literally and there will no longer be a lien problem. An injured worker (or his/her representative) is not going to allow another to take money out of his/her total compensation unless it is truly justified.
Until then, continuation of this aberrant custom of recognizing vendors with liens as having independent rights will simply continue the "problem" and there will always be "another fine mess."