The federal courtroom battle over the survival of the new automatic stay law governing liens filed by indicted medical providers has been more than one year of mostly unsuccessful litigation.
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.
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.”
Last December 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 just denied both motions.
The defendants also filed a new motion to dismiss certain claims in the First Amended Complaint. The court granted the motion, and 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.
In support of the motion for contempt the plaintiffs argued that defendants have “employed new, bizarre, and unprecedented procedures, which they recently manufactured to continue the farce that the Section 4615 provides due process to aggrieved lien claimants.” They cited as examples that procedures used at lien conferences are not within WCAB’s usual procedures and are thus violate the injunction. The Court responded by noting “that WCAB judges have a wide latitude to develop the record and obtain evidence.”
After reviewing other arguments based upon claims of ex-parte communications, and illegal regulations the court concluded “In sum, the Court does not find clear and convincing evidence to hold Defendants in contempt of the December 22, 2017 Order.”