The federal courtroom battle over the survival of the new automatic stay law governing liens filed by indicted medical providers reached a milestone last week as Judge Wu issued his decision, one that is unlikely to provide the plaintiffs any substantial benefit for their efforts.
The lien claimants argued that the new law violated due process requirements among other complaints. The DIR sought to demonstrate ample opportunities for due process mostly articulated by a declaration by Chief Judge Paige Levy. Her declaration did not completely convince the federal court.
Judge Wu commented that “nothing in Judge Levy’s declaration demonstrates that WCALJs are uniformly adjudicating challenges to Section 4615 in the manner she endorses, or that any Court precedent requires them to do so. Nonetheless, Defendants argue that Judge Levy’s testimony proves the merit of Defendants’ initial legal argument in opposition to Plaintiffs’ procedural due process claim: pre-existing regulations afford claimants sufficient due process.”
“That being said, Judge Levy’s testimony still informs the Court’s interpretation of Section 4615 as well as the constitutionality of its current implementation. This is because established principles of interpretation permit the Court to look to extrinsic evidence to further discern the meaning of the statute if the statute is ambiguous on its face, including the statute’s legislative history, and its administrative implementation.”
Judge Wu then concluded “this Court finds that Section 4615, as currently implemented, does not provide the sufficient procedural due process before or after it deprives certain lien claimants of a protectable interest. Because the 14th Amendment requires basic notice and hearing rights that Defendants are currently denying certain Plaintiffs, the Court would GRANT Plaintiffs’ Motion for a Preliminary Injunction, but only to a limited extent.”
“After reviewing both parties’ second and third round of supplemental briefing, considering the relevant portions of AB 1422, and for the reasons stated below, the Court finds that Section 4615, even as amended, does not provide all affected lien claimants with a meaningful opportunity to be heard to challenge an erroneous application of Section 4615. See T.R. at 25-26. As such, the Court would find that Section 4615 as currently implemented fails to provide a specific group of affected claimants, namely those not listed on the DWC website, with the fair process the Constitution requires. The Court would also find that this deficiency is not solved even if it assumes what Defendants claim AB 1422 confirms, that the text of Section 4615 implicitly provides those lien holders the opportunity to utilize pre-existing procedures.”
But, Judge Wu also said the “relief granted would be narrow and targeted to solve the specific procedural due process defects identified above.”
“As to notice, the Court would require Defendants to include the name of any lien holder affected by Section 4615 on the “division’s [public] Internet Web site” as directed by statute. The Court would also prohibit Defendants from staying the processing of any lien pursuant to Section 4615 unless the lien holder is provided notice via the DWC Site, and given the opportunity to be heard as to whether that lienholder falls within the statute at a lien conference and/or lien trial. As stated above, the sole purpose of such hearing is to prevent the erroneous application of Section 4615, by its own terms, not the propriety of the underlying criminal charges, or whether or not a given lien arises from fraud.”
The Court has asked Plaintiffs to submit a proposed order that comports with the scope of relief the Court has described. It would seem that the plaintiffs, Vanguard Medical Management Billing, Inc., and Eduardo Anguizola M.D. would not ultimately be removed from the automatic stay requirements as they had hoped. The DIR need only provide them proper notice on its website, if they have not already, and once this is accomplished there are no other limits to the new law imposed by this ruling. One might say their effort was more or less like trying to eat soup with a fork.
Transcripts of the public hearings in this case have been requested, signalling that this case is headed to the 9th Circuit Court of Appeals. One can assume we have not heard the last of the arguments in this case.