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The federal courtroom battle over the survival of the new automatic stay law governing liens filed by indicted medical providers, which has been mostly unsuccessful litigation, has now been dismissed.

Dr. Eduardo Anguizola, while facing multiple counts of insurance fraud filed by Orange County prosecutors, is one the plaintiffs who claims Labor Code 4615 – the automatic lien stay law – violates the procedural component of the due process clause because it immediately stays all liens without notice or a hearing.

Other plaintiffs were Vanguard Medical Management, One-Stop Multi-Specialty Medical Group and related entities.

Soon after this suit was filed, Governor Brown signed AB 1422 into law which was adverse to his federal claim. AB 1422 contains a new LC 4615 subsection (e) which reads “The automatic stay required by this section shall not preclude the appeals board from inquiring into and determining within a workers’ compensation proceeding whether a lien is stayed pursuant to subdivision (a) or whether a lien claimant is controlled by a physician, practitioner, or provider.”

In October, 2017 the federal court issued a restraining order against the DIR. It limited stays to instances where the lien claimant was given proper notice, and required a hearing before the WCAB should any of them claim they should not be subject to a stay. It was a partial victory for plaintiffs who sought more restraint.

In February 2018, the plaintiffs filed two new motions, one asking the court to hold the DWC in contempt, and the other, alternatively to reconsider its December 2017 ruling. The court denied both motions.

The defendants also filed a motion to dismiss certain claims in the First Amended Complaint. The court granted the motion, and last April, dismissed the first, second, third, fourth, and fifth claims (except for the facial due process component of the fourth claim for relief) without prejudice. As to the sixth and seventh claims for relief (the Supremacy Clause claim and the Takings Clause claim), the Court dismissed those claims with prejudice. The plaintiffs have until May 17 to file a Second Amended Complaint.

Things have not gotten any better for the lien claimants since then.

On November 28, the plaintiff lien claimants signed a Stipulation for Voluntary Dismissal of the Case. The parties agreed that “This stipulation and dismissal completely terminate the above-entitled action against all parties. Each party will bear its own attorneys’ fees and costs. The preliminary injunction currently in effect will be dissolved as of the filing of this stipulation of dismissal.”  Pursuant to the stipulation of the parties, Judge Wu signed an Order to Dismiss With Prejudice.