Continuing Hope for Reinstatement of the Lien Activation Fee

Monday, December 22, 2014 | 0

It is not often that workers’ compensation issues become the subject of federal court proceedings. However, as we all know, the lien activation fee imposed by Senate Bill 863 has been challenged as unconstitutional in the Angelotti case.

While the District Court judge imposed a temporary restraining order prohibiting the Board from collecting the fee, the issue of whether it is constitutional or not continues to wend its way through the court system.

We are thankful to the 9th Circuit Court of Appeals in Pasadena, who heard oral arguments in the Angelotti case on Nov. 17. After careful consideration of the issues, the justices do not seem inclined to find the activation fee unconstitutional.

The parties challenging the activation fee claim that it is unconstitutional because it violates the equal protection clauses of the constitution and is an improper taking. Both sides answered questions regarding these claims. There were also opposing arguments regarding the proper level of review.  

The justices expressed concern that the case was not ripe, as Judge Wu (the trial judge) failed to address the equal protection claim. The equal protection claim centers around the fact that some lien claimants are exempt from paying the fee. In addressing the court’s questions, SCIF’s attorney cited lien report statistics on the top 10 e-filers, and pointed out that the entities exempt from paying the fee have their recovery reduced based on the applicant’s recovery.  

Because of their equal protection concerns, it appears the court will most likely remand the case back to the district court to allow Judge Wu to specifically address those claims. So while we are a little disappointed that the Court does not seem inclined to issue a decision on the issue any time in the near future, at least we can be thankful that the activation fee has not been declared unconstitutional.

Melissa LeBlanc is an attorney for the Van Nuys office of the Mullen & Filippi workers' compensation defense law firm. This column was reprinted with the firm's permission from its client newsletter.