Wednesday, January 22, 2014

The Rancho Mirage Metaphor

Today I, along with a thousand other interested folks, will migrate to Rancho Mirage, CA for the annual Winter Conference of the California Applicant Attorneys Association (actual start of the conference is Thursday and continues through Sunday).

CAAA has two conferences a year. The Summer Conference has been held that past few years in Las Vegas. I don't go to that - Vegas in June, 110 degrees, glitz, noise and smoke ... no thanks.

Coachella Valley in the winter, however, is usually mid fifties at night, upper seventies during the day, clear air and lots of peaceful space to talk to people and do some recreation.

It's not on the agenda, but rest assured that much of the talk on the sidelines will be about lien claims and the current standing temporary restraining order against the Division of Workers' Compensation's collection of the lien activation fee that SB 863 imposed.

Recent reports indicate that it's nearly business as usual back at the district offices where initial hearings on disputes are held.

“Most lien claimants with small balances, or who had already been paid pursuant to fee schedule, or who had little chance of prevailing at trial, decided not to pay the fee and simply have their liens dismissed,” Lois Owensby, an associate attorney with Laughlin, Falbo, Levy & Moresi said in an email to WorkCompCentral. “As a result, and directly because of the activation fee, defendants were making progress in the elimination of frivolous liens and were able to devote more time to resolving viable lien claims.”

Now, she says, “The issuance of the injunction has resulted in lien claimants now fiercely pursuing their balances at every lien conference, as no one knows when the court will issue a final ruling re the constitutionality of the activation fee.” Consequently the district offices are again glutted with lien issues taking up resources that should be directed towards cases in chief.

And that would make sense - the injunction is only temporary, and if the ruling is adverse to lien claimants (i.e. the lien fee provisions are found constitutional) then there is no remedy for millions of dollars of claims.

On the other hand, if the injunction becomes permanent then new life is born into these claims, and the fact that there are other procedural hurdles just means more issues to litigate, ergo more resources diverted from the main case.

The negotiators of SB 863 knew they were running the risk of the lien fee program being challenged, and knew that there was a risk that there could be some interruption to the savings plan that was to offset an increase in indemnity to injured workers. That's why there's a provision in the bill that enables portions that may be challenged to be extricated without destroying the entire package.

Many of the exhibitors at the CAAA conference are entities that file liens to secure payment for their services - or at least used to file liens. What practices are now will be an interesting question to review on the exhibitor floor.

In the past, when I have talked to these people their nearly universal complaint is that they don't get paid fairly or timely and must file liens to protect their positions.

One copy service vendor that I know said the normal course of business is to render the service, wait for the applicable period of time before filing a lien, then wait for the two years or so before receiving some communication from the defendant for payment - and typically the bill is paid at or near claimed value. The accounts receivable wait is factored into the bill and lien.

I don't know who's right or who's wrong in this situation, if any. Ascribing fault isn't going to change the outcome. It's not going to change the reality of dealing with the complication of this injunction and related law suits.

In my mind the defect with the lien fee provisions of SB 863 is that some lien claimant categories are excluded from the fees - namely big medicine seeking subrogation of medical treatment paid through a general health plan. To me that is an equal protection problem that could quickly be remedied with some legislative action should the fee provisions be found unconstitutional.

But this issue isn't going to go away easily or any time soon. In the meantime any savings that were projected as a consequence of the dismissal of liens and the monetary road block to filing liens have evaporated. The numbers that we will see at the end of the year from the measuring entities will no doubt raise the hackles of payers and there will be more controversy, more debate, more lobbying, more legislation and more regulation.

When I'm in the desert I like to ride my bike up the Palms to Pines Highway, State Route 74. The road elevation tops out at about 5,000 feet near Idylwild, and that's where I typically turn around for the descent back to the hotel. There's not a lot of opportunity to reflect on much of anything on that ride. Going up the mountain the road is narrow and one must stay alert to passing traffic. Going down is pretty fast so concentration on the ride is necessary to prevent a high speed crash.

Overlooking Coachella Valley from SR 74

That's what's going to be needed to deal with this present lien claim issue - there was some traffic going up the hill towards passage of SB 863 but there weren't any accidents. Heading down however is going to require some skill, and a lot of concentration to keep the system from crashing.

Perhaps I'll get a sense of whether the "riders" in this contest will have the necessary concentration and skills to navigate the course back down to workers' compensation reality. The question is whether there is an appreciation for the reality.

Rancho Mirage is a fitting setting for a gathering of California workers' compensation industry participant - think about it: palm trees, golf courses, lakes, all out in the middle of the desert. Environmental elements that should not be there but for man's manipulation. I see it as a metaphor for California workers' compensation.

Is all of this real?

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