Angelotti v. Baker - Lien Update

On Monday, June 29, 2015, the U.S. 9th Circuit Court of Appeals issued its decision in Angelotti v. Baker, the lien activation fee case. The Court lifted the injunction put into place by the lower federal court.

Recall that SB 863 required lien claimants to pay a $150 filing fee for any new lien filed after January 1, 2013, and required a reactivation fee of $100 for any lien filed before January 1, 2013. In addition, any lien filed before 2013 had to be activated before January 1, 2014, or it would be dismissed by operation of law.

The plaintiffs in Angelotti filed suit in federal court arguing that the fee was a government taking of private property and was in violation of both due process and the equal protection clause. The lower federal court dismissed the first two causes of action but ruled that there was a serious question regarding a potential violation of the equal protection clause because the fee was forced upon some providers but not others, such as insurance companies. Due to this question on due process, the lower court judge ordered an injunction and prevented the DWC from collecting any further fees.

Plaintiffs appealed the lower federal court ruling, as to the first two causes of action, to the U.S. 9th Circuit Court of Appeals. The 9th Circuit held that the lower federal court correctly dismissed the first two causes of action and the 9th Circuit ruled there is no serious question regarding due process and lifted the injunction.

The plaintiffs have 14 days to request a rehearing if they believe the 9th Circuit overlooked a material point of fact or law. The plaintiffs also have 90 days to petition the U.S. Supreme Court for review. However, the chance of the Supreme Court taking this matter on review is remote.

If the plaintiffs fail to request a rehearing from the 9th Circuit, then the decision is final within 7 days after the period to file for rehearing. As such, effective July 21, 2015, if there is no granting of rehearing or reinstituting of the stay, the decision should be final and the following should occur:

· All lien claimants of record who are required to pay the fee but have not done so by July 21, 2015, should be dismissed by the WCAB;

· All lien claimants who existed prior to January 1, 2013, but have not paid the $100 fee by the time the 9th Circuit's decision is final should be dismissed by operation of law.

After July 21, 2015, we would recommend that a Petition for Dismissal of lien claimant be filed with the Board on liens where no fee has been filed. This is a proactive approach in order to clear out non-compliant lien claimants. The Board simply does not have a system in place for doing these dismissals automatically.

If we hear anything further concerning this decision, we will let you know.

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