WCDefenseCA

Frequent readers of this humblest of blogs will know full well that I do not much care for lien claimants.  Regularly, this blog has cheered the efforts of Senate Bill 863 to curb liens, and to minimize or at least mitigate the damage their extortionate tactics wreak on California workers’ compensation.

It is a very common sight for the parties to resolve a claim without admitting liability, and then face liens ten or twenty times the settlement value from a swarm of repeat players.

SB-863 helped with this: lien claimants had to file activation fees for pre-1/1/13 liens, and filing fees for post 12/31/12 liens.  In fact, when lien claimants failed to pay their activation or filing fees by the time a lien hearing was set to start, they were automatically dismissed.

Several lien claimants invoked the power of the Federal Courts to stop this practice (at least, as it pertains to activation fees of $100), and recently, the Honorable George Wu, of the U.S. District Court, Central District of California, signed a preliminary injunction prohibiting California from collecting activation fees.

In fact, your humble blogger received an e-mail notice from the DWC just after four this past Friday, informing the folks of California Comp Land that lien activation fees would no longer be collected.

Judge Wu’s decision, granting several lien claimants’ motion for a preliminary injunction, has put a stop to this practice.  The plaintiffs claimed that the liens were vested property rights, and that SB-863 acted as a government taking, violated due process, and was a violation of the Equal Protection Clause of the 14^th Amendment of the United States Constitution.

Judge Wu rejected the due process claim, noting that the lien claimants still have ample opportunity to litigate their liens and recover the lien activation fee.  He also rejected the takings claim, reasoning that the California Legislature cannot “take away” something that is a procedural creation of the California Legislature.  Lien Claimants did not have a farm that was taken away by SB-863, nor did the “gubmn’t come and tuk m’pig!”  Lien claimants derived their right from California’s workers’ compensation system, and that system has been amended.

Unfortunately for all of us non-lien claimants, the Equal Protection argument struck home.  Lien claimants argued that they were being treated differently than various health care service plans, group disability insurers, self-insured employee welfare benefit plans, etc., etc.  (See Labor Code section 4903.06(b)).  Reasoning that such discrimination between two non-protected classes required the government to show that its actions were rationally related to legitimate legislative goals.

Your humble blogger could talk for hours about constitutional law with great pleasure (please stop by for coffee sometime, I’ll talk your ear off!), but what matters to me as a workers’ compensation attorney and, presumably, to both applicant and defense community members, is the immediate effect this decision has on our world.

For applicants, the effect is clear: defendants now have less money to spend on you and your clients, and more exposure for admitting an injury.

As for us defendants, we will have to be prepared to fight out the liens on the merits, or lack thereof again.

In the meantime, will the activation fees paid be returned? Will the previously-dismissed liens be resurrected? Will the Workers’ Compensation Judges suspend all actions on all pre-1/1/13 liens until the resolution of the Federal case?

And, if any members of the Legislature are reading, perhaps we could do an emergency amendment to remove the lien filing fee exemption?

Stay tuned, dear readers, for when your humble blogger learns more, so shall you.