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Michael E. Barri, Tristar Medical Group, and Coalition for Sensible Workers’ Compensation Reform petitioned the court of appeals pursuant to Labor Code section 5955, seek orders directing the Workers’ Compensation Appeals Board to perform its duties and adjudicate Tristar’s lien claims and not enforce provisions contained in newly enacted anti-fraud legislation. (§§ 4615 & 139.21.) claiming certain provisions were unconstitutional.

The new anti-fraud scheme cast a very broad net to halt all proceedings relating to any workers’ compensation liens filed by criminally charged medical providers, as well as any entities “controlled” by the charged provider. The Legislature created this new scheme because existing laws permitted charged providers to collect on liens while defending their criminal cases, allowing continued funding of fraudulent practices.

Pursuant to these two new statutes, the Government gained authority to automatically stay liens filed by charged providers and noncharged entities, without considering if the liens were actually tainted by the alleged illegal misconduct. (§ 4615.) As a result, untainted liens may be stayed (and go unpaid) for a lengthy stretch of time because, in addition to the period required for completion of the criminal case, the statute provides for two post-conviction evidentiary hearings. In the first hearing, the administrative director decides whether to suspend the convicted provider from further participation in the workers’ compensation system. (§ 139.21, subd. (b).)

Following this hearing, the “special lien proceeding” attorney identifies and gathers liens to be adjudicated together by a workers compensation judge (WCJ) in a consolidated “special lien proceeding.” (§ 139.21, subd. (e)(2).) In this second hearing, the lienholder has the evidentiary burden to rebut the statutorily mandated presumption the consolidated liens are all tainted by the misconduct and should not be paid. (§ 139.21, subd. (g).)

In their petition, Barri, Tristar, and CSWCR maintain these statutory provisions go too far and are forcing many legitimate lien providers to stop treating injured workers because the process has become too onerous, expensive, and financially risky. They maintain the creation of a “significantly delayed post deprivation hearing,” the over-inclusive application to untainted liens, and the Government’s failure to provide adequate notice to noncharged entities, has effectively dismantled the safety net in place for injured workers. They suggest the true legislative purpose of the statutes goes beyond fraud prevention and serves the district attorney’s desire to financially cripple criminally charged lien claimants, hampering their ability to adequately defend themselves at trial.

The court of appeal took judicial notice of a number of related documents including the proceedings in federal court by other lien claimants -Vanguard Medical Management Billing, Inc. v. Baker, No. EDCV 17 CV 965 GW(DTBx). It found no merit to any of their claims and denied them the requested relief in the published case of Barri v WCAB.