There's apparently a huge backlog in California of liens which workers' comp medical providers file to seek payment for services they've provided to injured workers.
These are liens possessed by service providers for workers whose employers declined to provide treatment on the ground it is not work related. In those cases, the worker may seek treatment on her own, and if the injury is later determined to be covered by workers' comp, the employer is liable for payment. The service provider cannot seek payment from the injured employee, and is limited to filing a lien on the workers' comp case. The lien filing gives the provider standing in the workers' comp case to protect its interests. The rights of a lien holder are contingent on the worker prevailing on her claim that the injury is work-related.
In response to the huge backlog in processing such liens, the legislature adopted a $100 and $150 "activation fee" for liens that were already filed and pending (the fee varies, based on the date of the lien filing). The purpose of the activation fee is "to deter the filing of liens generally, and particularly to deter the filing of frivolous liens." If the activation fee isn't paid, the lien is "dismissed by operation of law." The lien holder may recover the activation fee in certain circumstances.
In Angelotti Chiropractic, Inc. v. Baker, No. 13-56996 (June 29, 2015), the Ninth Circuit held this scheme did not work a taking, because the liens were not property. Generally speaking, liens are considered property, but here, the workers' comp liens were not "vested," and thus were just contingent future interests. Only after the workers' claims are "reduced to final judgment" does the lien holder have any rights. The Ninth Circuit relied on California law, which treats these liens as "inchoate" rights, and only become worth something when the worker wins her case.
"Thus, because the right to workers' compensation benefits does not vest until reduced to a final judgment, it would be illogical to reach a different conclusion as to the liens." Slip op. at 15. Yes, liens are generally considered property protected by the Takings Clause, but in each case the Supreme Court has considered, the lien in question was secured by specific property. See, e.g, one of our favorite cases, Armstrong v. United States, 364 U.S. 40 (1960), a case about a lien on a boat, in which the Supreme Court held that a seizure of the boat was also a seizure of the liens.
The court also rejected the plaintiffs' due process and equal protection claims.
Angelotti Chiropractic, Inc. v. Baker, No. 13-56996 (9th Cir. June 29, 2015)
