INSURANCE AND WORKERS COMPENSATION
The California Workers’ Compensation Lien Problem: A Happy Ending?
By Gene Clancy, Alliant Insurance Services
a known problem and area of abuse that cost the employers money to combat and the Workers’ Compen- sation Appeals Board (WCAB) time to adjudicate the liens on a claim-by- claim basis.
T
The Problem Liens were, and are, a formal
filing with the WCAB as an attempt to secure payment of a debt incurred by the lien holder for the provision of benefits in a workers’ compensation claim. Tese liens are primarily filed by medical providers for services and diagnostic studies provided but many were filed for interpreting services and other associated services. One might ask why liens exist,
because workers’ compensation is a no-fault system and benefits should, in theory, be provided timely and without dispute. Unfortunately, this is far from the case in the majority of claims. To no one’s surprise, many liens arise from services which are disputed as being either not reasonable or necessary for the treatment of the injured employee arising from the injury in question. However, a great number of legitimate factors and actions result in the filing of liens. Te primary drivers of justi- fiable liens include, but are not limited
to: Treatment being provided on a delayed or denied claim.
Treatment, or diagnostic studies, being provided absent prior claim handler approval or specific denial of the service in question.
Te pursuit of medical fees that are in excess of the published medical fee schedule.
www.AGC-CA.org
he California workers’ compen- sation lien problem has existed in the state for decades. It was
Historically,
liens have been regarded as a second-tier priority in the workers’ compensation administration and adjudication systems. Te primary focus
of both those systems is to provide needed benefits to, or on the behalf of, employees in the shortest possible time and adjudicating those barriers timely. In most of cases, liens are not time-sensitive and by their nature seem to indicate the parties are willing to wait and resolve them in the future. In fact, part of the problem was that liens could be filed at any time, even years after a claim had been closed, by an unknown party. Tese delays and surprises have only increased the claim management, time and allocated expense costs in addressing the liens for the claim administrators and hearing time at the WCAB.
The Solution A comprehensive workers’ compen-
sation reform package (SB 863), signed into law August 1, 2012, was developed and implemented which incorporated a $150 filing fee for liens after January 1, 2013 and a $100 activation fee for existing liens filed before then but activated for a trial or conference after January 1, 2013. Liens would be dismissed after January 1, 2014 absent the filing or activation fees and an 18-month statute of limitation for filing liens for services rendered after January 1, 2013 and a 3-year statute of limita- tions for services provided before then. Finally, assignment of lien claims was strictly limited and only allowed where the assignor went out of business.
In addition to the lien rules, the Independent Medical Review (IMR) process was developed and enacted to decide on what treatment is reasonable and necessary before it is incurred and a lien filed. Further reforms were enacted in SB
1160 which went into effect on January 1, 2017. Tat legislation added require- ments to verify that a lien is legitimate, that it is filed only by the lien holder, and that liens owned by providers who have been indicted or charged with crimes be stayed until the disposition of criminal proceedings. Additionally, it clarified what
form should be used and that original bills should be used in the lien filing. Finally, it amended Labor Code Section 1903.05(c) requiring lien claimants to file a declaration verifying the legitimacy of liens for medical treatment or medical-legal expenses. Claimants who had filed liens between January 1, 2013 and December 31, 2016, were required to file the declara- tions by July 1, 2017, to avoid having those liens dismissed.
The Results Between these two Senate bills,
the Workers’ Compensation Insurance Rating Bureau (WCIRB) estimated there would be a 10 percent reduction in lien filings with roughly $500 million in savings. Te Division of Workers’ Compensation announced that 292,000 liens were dismissed on July 1, 2017 with a claims value of $2.5 billion. Te WCIRB analysis opined that the value of the dismissed liens was actually much less as many had been settled prior to the due dates for the declarations to be filed. Unfortunately, the number of liens skyrocketed before the SB 863 filing
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