To Activate Or Not Activate… That Is The Question

So the Lien Activation Fee Deadline is a “Go”, and the new DEADLINE is 12/31/2015… two years to the day from when the original deadline was set by SB 863. What this provision means is that any claim of lien that was filed before 1/1/2013 must be “activated” and a $100 fee paid to the DWC as provided in Labor Code Section 4903.06 and CCR 10208. If the Activation Fee is NOT PAID by 12/31/2015 then all underlying accounts receivable connected with that lien claim shall become EXTINGUISHED by operation of law. Game over. You lose.

The exclusive jurisdiction of the workers compensation over all lien disputes means that any receivables connected to an LC 4903 lien claim cannot be enforced by any other court.

This blog post is about making a reasonable decision about which claims to pay the activation fee on, and which to let “die” in 2016. After all, if the lien hasn’t been satisfied by now it’s pretty clear the defendant is going to fight it… and if the provider adds another $100 to their demand for settlement because they paid an activation fee, that desire to go to trial on the lien only increases.

WHAT IS THE EXPECTED VALUE OF THE LIEN CLAIM?

Providers may be thinking they have a Lien for $xxx.xx, so another $100 investment is well worth it. However, I believe there are SO MANY hurdles to jump over along the path to supporting and collecting a lien claim before the appeals board that the value of most liens are NOT what shows up in the provider’s computer. Then, of course, the provider has to consider all the costs along the way. After all is “said and done”, what is the Return On Investment of that $100 Lien Activation Fee?

Curable defects and defects that Judges will likely overlook

To me, the most difficult part of making a decision to INVEST in an Activation Fee is pinpointing WHICH flaws in the lien claim will likely be overlooked or deemed “curable” by a Judge, and which will NOT. Because… let’s get one thing straight here, there is NO WAY that lien claim is perfectly CLEAN and supportable right now. There are too many new requirements, deadlines and proverbial “hoops” to jump through that were created as part of SB 863 for any provider to assume they have executed every requirement on any given claim.  I’ve been studying the medical-legal and lien changes and regulations pretty deeply lately, and It’s my opinion that 90% of the lien claims still outstanding are beatable. In other words, I bet I could point out deadlines the provider missed, responses they failed to perform, new forms they neglected to use or fill out correctly, and fee schedule requirements they failed to meet. The $100 question at this point is:  Will most Judges let the provider cure these defects… or not? That’s what providers have to decide before they pay any activation fees.

Some defects to consider before investing another $100 into the lien claim…

Here are some examples of what I mean…

• Statute of Limitations: Did the provider fail to FILE and serve an Opening Lien within 3-years of ALL of the invoices that were served as part of the “statement” supporting that Opening Lien claim? See LC 4903.5.
  • A lien claim must be supported by a statement or voucher that describes ALL of the fees and charges that make up that claim of lien. See CCR 10770(d)(2). So, if any of the invoices that were served on the Payer as part of that opening lien were more than three years old from the date of the invoice when that lien was filed, those particular invoices are likely not enforceable under that claim because of the Lien Filing Statute of Limitations in Labor Code Section 4903.5. The claim of lien might still be valid, but only for those invoices that were served as part of the statement supporting that opening lien claim within three years of the invoice date.
• Amended Liens: Did the provider fail to SERVE a CCR 10770-compliant Amended Lien on the Payer and other parties for ALL invoices served AFTER the Opening Lien claim was filed and served? If the provider failed to properly serve an amended lien for those additional invoices, has the LC 4903.5 statute of limitations expired on those invoices?
  • While amended liens have not been accepted for filing into EAMS for some time now, providers are still TECHNICALLY responsible in CCR 10770 for SERVING an amended lien on all parties to update the lien VALUE and underlying statement of amounts due. The way the lien procedure is setup, EACH invoice falls under it’s own Lien Filing Statute of Limitations in LC 4903.5. See CCR 10770(c)(2) and subsection (d)(1) for authority that amended liens and supporting statements are required to be served. Also refer to (d)(2) for the specific requirements of perfecting an Amended lien.
  • If we assume that the provider served only an opening lien, and failed to serve amended liens for subsequent invoices, how likely is it that such an error will be argued by the defense, or supported by a Judge? This seems like an unlikely event given the past history, but I mention this possible “error” because once the defense bar picks up on a consistent flaw in most providers’ claims, it tends to spread like wildfire. It would be an unhappy provider if they spent hundreds of thousands of dollars activating a series of liens that ended up having far less value than the provider originally intended, all because the provider failed to serve amended liens.
  • Amending Liens Now: If a subsequent medical-legal invoice is less than three years old at this point, the provider can still (and should!) serve an amended lien. However, that would mean the invoice was likely a post-2013 expense, so the provider is responsible for executing all the myriad requirements and deadlines written into the post-2013 Labor Code 4622 collection tracks. I seriously doubt the average provider has been fully complying with those procedures – which is a story for another day.
• Failure To Appear: If there has been a Lien Trial already where the provider was given notice of the hearings but failed to appear and enforce it’s lien claim, it’s very likely that lien is entirely unenforceable now, and should NOT be activated.  Check EAMS to see if a dismissal order in the file.
• Failure To Prosecute: IF the case in chief has already concluded, did the provider fail to file a DOR to enforce the lien within six months of becoming a Party to the case?
  • CCR 10582.5 sets up a condition where the lien could be dismissed for “failure to prosecute” if the provider has been a case party for longer than six months, and failed to file a DOR or otherwise properly prosecute the lien claim. Make sure the case in chief wasn’t settled or concluded more than six months ago.
• Contested Claim:  If the lien is for a medical-legal expense, can the provider prove there was a contested claim under Labor Code 4620 at the time the medical-legal expenses were incurred. If the provider is a copy service, see more discussion on this below…
• Copy Services: While the new fee schedule regulations are “prospective” and cannot be directly applied or used as legal authority regarding pre-fee-schedule-invoices, it’s likely that Judge’s will adopt the fee schedule pricing and other regulations informally when deciding the “reasonableness and necessity” of an expense at trial. This will happen regardless of the fact that the invoice is for services provided years ago, before these new regulations were conceived. The provider could petition the WCAB for reconsideration in such a situation, but the WCAB will likely find that the Judge acted within his/her power and made a reasonable decision based on his/her opinion. My point is that any new fee schedule regulations in play NOW can be used as arguments for what could be considered reasonable and necessary in the past – especially when the past had no regulations or labor code governing that issue.
  • For example, when records were ordered AFTER service of subpoenas by the defense copy service, it’s likely defendants will argue and Judges will consider what CCR 9982(c) stands for, and subsequently rule the provider’s services were duplicative and unnecessary.The Judge can simply find that records ordered after receiving a subpoena from the defense are “not necessary”, and the provider loses.
  • Another situation providers have to consider is that most Judges will likely award them the Fee Schedule amount for their invoices, even though the fee schedule should not govern services provided prior to July of 2015. Again, the argument will be that the Judge can decide what the “reasonable fee” is for the services, and he/she can use whatever they choose to guide them to this opinion. I would expect that records will only be payable at a flat rate $180, and Certificate of No Records and cancels will be paid at only $75, and ROI fees and witness fees will be included in that… so this needs to be considered when calculating the total value of a copy service lien claim before investing another $100 to activate the lien.
  • Using the same fee schedule arguments directly above, copy service providers should not intend on collecting any fees in the future for their old EDEX invoices and WCIRB invoices, as these are considered unnecessary in the fee schedule regulations in most situations (records can be obtained without a subpoena). See CCR 9982(e)(3).
  • Furthermore, copy services should only look forward to being awarded fees for ONE additional set of the records after the initial set was shipped, and even that ONE additional set will be limited to only $30.See CCR 9983(f)(2). All of this has to be considered when calculating the return on investment of that $100 activation fee on older, pre-2013 liens.
  • Another situation that should concern copy service providers about future lien trials is the requirement that there be a contested claim under LC 4620 when the services were incurred. Prior to 2013, if the claim was not yet contested but records were needed, the applicant attorney ordered the records and they were considered Labor Code 5811 “attorney expenses”. This system worked successfully for many years. However, in 2013 the Martinez En Banc decision changed this, wherein the WCAB opined that ALL copy service expenses are medical-legal in nature, and may not be part of a 5811 lien claim. This could cause copy services serious problems in the future as defense attorneys realize this situation and take advantage of it.

As I said above, ALL of what I’ve mentioned will be a “Judge by Judge” thing, as not all Judges act the same way towards lien claims, or towards specific lien claimants. These are just things for the provider to consider before investing another $100 into their outstanding receivable. These flaws are out there, and many have been out there for a long time without being argued very aggressively by the defense. However, the defense bar has SO many tools on their tool belt now to dismiss outstanding liens, I don’t think providers should depend on past experience when making assumptions about the future. It always takes a while for big changes in the law (like SB 863 ) to get assimilated and show up consistently day-to-day, so providers shouldn’t have expected a big change in lien defenses to go into effect right away.

 PAYING THE ACTIVATION FEE INCREASES THE ODDS OF THESE DEFENSES BEING USED

One more item to think about in all this is that increasing the lien value by another $100 (for the paid activation fee) will likely cause negotiations on that lien to break down, as neither side wants to absorb the activation fee. This becomes especially true with small value liens or expenses, like copy services and interpreters. My point here is that all of these “technicalities” I’ve written about in this post become more and more likely as valid considerations used by the defendant and Judge during TRIAL on provider liens ONCE THE ACTIVATION FEE is paid. I haven’t been part of the lien system in years, so if these technicalities jump out at me, the people in the system that focus on lien defense are aware of them – or will be soon enough.

CONCLUSION

We can all safely assume that defendants and their attorneys are going to “milk” every drop out of SB 863’s anti-lien provisions. I certainly would, if I were a claims adjuster or defense attorney. That’s their job and responsibility – to use the law to protect their client as vigorously as reasonable. Maybe providers haven’t run into that much of what I’ve discussed here yet… but that should not cause them to dismiss these issues as far fetched, or low-risk. The thing to remember is the lien has not been PAID yet, either. The “day in court” is in the future, and providers can’t accurately predict all the defenses to the lien that might be used against them in the future.

The DWC will still take a provider’s lien activation money even if the claim is weak… even if it’s entirely invalid. And the provider won’t get their paid activation fees back when the lien gets dismissed. It’s up to the provider to make sure their lien is supportable before they pay the fee.

In another blog post I want to talk about how to get the paid activation fees reimbursed under LC 4903.07. It’s not easy. In fact, on an older lien where there was no fee schedule it’s damned near impossible.

It’s clear the administration wants the old liens eradicated from the system overnight (12/31/2015). If providers expect those liens to survive they need to read the codes and regulations very carefully, dot every i, and cross every t, and do so timely and according to every Labor Code and Code of Regulation Section.