Why Judge Wu was Wrong on the Property-Rights Issue in Angelotti

Tuesday, November 12, 2013 | 1

The tentative ruling issued on Nov. 4 by federal District Court Judge George Wu in Angelotti Chiropractic et al. v. Baker et al. revealed that the court was not convinced liens were property interests so as to implicate the Takings Clause. Defendant argued that liens are not protected property interests because they were statutory creations that are inchoate and not vested. The court concluded that the rights of lien claimants were derivative of the rights of the injured worker and that there were threshold hurdles that needed to be cleared before a provider's right to compensation matured.

The court's analysis is spot on for some liens yet off the mark on others. Let's examine some types of medical treatment, medical-legal, and interpreter liens where the analysis is awry.

1. A primary treating physician on an admitted claim requests preauthorization for a specific course of treatment, utilization review authorizes the services and sends the provider a certification, yet the claims adjuster does not process payment for the services. The provider is forced to file a lien and later pay an activation fee for the adjuster's malfeasance. Note that the PTP never intended to treat on a lien basis; arguably it was a contractual basis after the services were authorized. Note further that entitlement to payment is no longer derivative of the injured worker's rights. The lien in such a scenario is a vested property interest for which the provider has a certainty of expectation.

2. An injured worker submits a claim form to her employer but is not offered medical treatment. A few days later she receives notice that the claim is under investigation. The injured worker self-procures medical treatment consistent with Division of Workers' Compensation-approved treatment guidelines. The physician later submits a bill for an amount up to $10,000 for services provided prior to the time the claim was accepted or denied. Defendant refuses payment, forcing the provider to file a lien and later pay an activation fee. Observe that defendant has statutory liability for the charges under Labor Code Section 5402(c), and it is immaterial how the underlying claim eventually resolves. The lien in such a scenario is a vested property interest for which the provider has a certainty of expectation.

3. The parties confer and select a particular physician to act as the agreed medical examiner. They send him a jointly-completed appointment letter specifying the issues and the items they want the AME to address in the report. After the AME completes the evaluation and serves the report, the claims adjuster refuses payment because it is a denied claim (which is an invalid basis for an objection to medical-legal charges). The AME is forced to file a lien and later activate it due to the claim's adjuster's failure to act competently. Certainly not even the DWC would claim that such AMEs, whose services were contractual, helped cause the lien backlog. Payment for the services is not dependent on the outcome of the injured worker's claim, and the physician was not speculating when he agreed to perform services. The lien in such a scenario is a vested property interest for which the provider has a certainty of expectation.

4. Interpreting services rendered at defense-ordered depositions, at Workers' Compensation Appeals Board appearances, deposition transcript readings, deposition preparations, compromise and release readings, AME/qualified medical evaluator examinations and other such services are not derivative of or dependent upon an injured worker's recovery of compensation or the approval or denial of a claim. Services are contractual, not speculative. Liens in such scenarios are vested property interests for which the interpreters have a certainty of expectation.

Perhaps Judge Wu should revisit the concept of property interests in light of the examples described above. If the court remains unconvinced, it might be prudent to allow plaintiffs leave to amend the pleadings with respect to the issue.

Jon C. Brissman of Colton is an attorney for the California Workers' Compensation Interpreters Association.