Senate Bill (SB) 1160 and Assembly Bill (AB) 1244 introduced new changes to the workers’ compensation system for adjudicating liens.

Following a criminal conviction that provides a disposition order that the liens will be dismissed, those liens in which the convicted medical provider has an ownership interest will be automatically dismissed in the Workers’ Compensation system by operation of law.

Where the criminal case disposition is silent regarding the outstanding liens, the DWC Administrative Director will identify all liens owned, in whole or in part, by the convicted medical provider and will schedule a consolidated proceeding at a venue designated by the Chief Judge.

According to Labor Code Section 139.21(g), it will be presumed that the liens of the convicted medical provider were based on services connected to the fraud which resulted in the criminal conviction. The statute specifically requires that the medical provider affirmatively prove by a preponderance of the evidence that the services were not connected to the fraud.

Even assuming that the medical provider is able to overcome this hurdle, the employer will retain its ability to defeat the lien on all existing grounds, such as that the services were not reasonably designed to effectuate cure or relief of an industrial injury, that the services were not reasonably calculated to offer proof in connection with a contested issue or that the charges exceeded the Official Medical Fee Schedule or the Medical-Legal Fee Schedule.

The industry will now be given an opportunity to see how this new law works. Pending lien consolidation hearings for suspended physicians, practitioners or providers are posted on the DWC Website. The DWC has scheduled lien consolidation status conferences in August for suspended providers Philip A. Sobol, Michael R. Drobot and Michael D. Drobot on August 16, 17 and 23 respectively. All three will be heard in Van Nuys before WCJ William Gunn.

Combined, the three have roughly 13,000 liens, which have been consolidated pursuant to the chief judge’s order, in the workers’ compensation system pending further determination, according to the DWC.  The list of lien claims for Philip A. Sobol, is 322 pages, Michael R. Drobot is 183 pages, and Michael D. Drobot is 74 pages long.  The documents reflect the case number, injured worker, employer and claims administrator.  

Although LC 139.21(h) provides that “The special lien proceedings shall be governed by the same laws, regulations, and procedures that govern all other matters before the appeals board,” it is not yet clear if any of the employers will have due process rights to call witnesses and present evidence at the consolidated lien hearings, rights to discovery, or more importantly, if employers do not participate if they will be limited in presenting defenses at hearings on each individual case.

Michael D. Drobot, former CEO and owner of Pacific Hospital of Long Beach, pled guilty for his role in a scheme to illegally refer patients for spinal surgeries. DWC suspended him from participating in the California workers’ compensation system on April 28.

Michael R. Drobot operated California Pharmacy Management and Industrial Pharmacy Management, companies that also participated in the kickback scheme. The son of Michael D. Drobot, he pled guilty in U.S. District Court last year to conspiracy and illegal kickback charges and was suspended May 15.

Philip Sobol, an orthopedic surgeon in Los Angeles, was suspended in May based on a criminal conviction involving fraud and abuse of the workers’ compensation system. Sobol pled guilty for participating in the kickback scheme at Pacific Hospital of Long Beach, illegally referring thousands of his patients for spinal surgeries.