Lawsuit Alleges Lien Activation Fee Unconstitutional

A group of medical and ancillary service providers have filed a lawsuit with the U.S. District Court for Central California to enjoin the state from dismissing liens for which the $100 activation fee has not been paid.

Here are the highlights of the lawsuit:

1) Enforcement of the lien activation fee constitutes a taking of private property for public use without just compensation in violation of the 5th Amendment.

2) The fee violates the due process provisions of the 5th and 14th Amendments because it “effectively eliminates plaintiff’s right to seek administrative and judicial vindication of the property rights secured by” the liens.

3) The fee violates the equal protection provisions of the 5th and 14th Amendments because arbitrarily and with no legitimate governmental purpose applied to independent service providers while insurance companies, health maintenance organizations and certain employer-sponsored benefit plans are exempt.

A provision of SB 863, effectively dismisses all liens that have not been activated by January 1, 2014. The revenue generated form the $100 lien activation fee (prior 2013) and the current $150 lien fees will be uses to fund the WCAB and administrative staff.