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| | Constitutional Challenges Portend Set-Back For Lien Defense. Combating Liens On Merits Now The Better Action Over Dependence On Procedural Defenses.
By B. Clark Haman - December 13, 2013
By now you have probably heard of the injunction issued by a federal judge in Angelotti Chiropractic v. Baker, prohibiting the DWC from collecting the $100.00 activation fee set forth in Labor Code section 4903.06. The injunction is temporary, and is in place pending the judge’s final decision on the constitutional challenges to the activation fee. Since the injunction is not a final decision on the merits, it has given rise to the question: What will the practical effect of the injunction be? A status conference in Angelotti had been set for December 23, 2013, but it was recently continued on the Court’s own motion to January 16, 2014. Therefore, it is clear the judge will not make a final decision before the end of the year, which means none of the legacy liens will be dismissed on 1/1/14 for nonpayment of the activation fee like originally anticipated and desired by the legislature in enacting this provision of SB 863. Further, should the lien claimants win on the activation fee issue we can expect continued challenges to the $150.00 filing fee as well, and if that is also stricken we will be back to square one and will have to deal with all liens as we did pre SB 863.
As a result of the injunction and ongoing constitutional challenges to the activation and filing fee, lien claimants are emboldened and are now holding fast on resolution. Previously, lien claimants would settle for a fraction of the amount billed in order to get a quick payout, issues surrounding the legitimacy of the original billed amount notwithstanding. Now, it seems they believe they need to secure settlements for 100% of the amount billed. This appears to be in part because of a defensive reaction to their perception of an industry-wide effort to do away with liens, and in part because they are being coached that taking the time to conduct discovery in an effort to get the 100% will benefit them with greatly increased resolutions and findings. These tactics are impacting resolution of liens across the industry. Additionally, claims can anticipate the rise of future liens with litigation on threshold and med-legal issues given the new rules of practice and procedure that were adopted by the WCAB on 10/23/13.
Because of these changes in lien claimant tactics there is a universal need for a change in defendants’ strategies in combating liens. A complete analysis of each claim, evaluating the case in chief issues in depth as they relate to the liens, is a must. Then, an evaluation of each lien can be done, both in terms of procedural issues as well as substantive issues on the merits of each lien. While sometimes tempting, a percentage methodology should not be used because it is not based on the merits of the lien. For example 30% of the amount billed is often still far beyond the reasonable value once all issues are considered. Thus, settling for a percentage not based on the merits is rewarding lien claimants for overbilling, in turn resulting in a never ending upward spiral of amounts billed.
Therefore, now more than ever claims departments and adjusters need resources such as lien negotiators and litigators to combat liens on their merits without relying solely on procedural defenses such as the activation and filing fee. The selection of the partner to claims is important--for example the lien negotiation company should have negotiators that are bill review experts so that there is no need for claims to incur the added expense of bill review. The lien negotiation partner should be focused on the substantive issues in order to obtain the best results. The lien negotiation partner should also have the ability to litigate the liens so that they have teeth to the positions they are taking, such as having hearing representatives and defense attorneys that understand both the case in chief and lien issues. Lastly, the lien negotiation team must work closely with claims in order to meet special handling, reporting and communication preferences, as well as quickly and accurately set settlement authority.
Written by: B. Clark Haman, Managing Attorney for Patriot National Insurance - legal advisor to Forza Lien, Inc.
© by B. Clark Haman; all rights reserved. Published with permission by adjustercom.
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