28 Cal. App. 5th 428
Cal. Ct. App. 5th2018Background
- In 2016–2017 California enacted two anti‑fraud statutes (§ 4615 and § 139.21) that automatically stay workers’ compensation liens filed by criminally charged medical providers and by entities “controlled” by them, and that create post‑conviction suspension and consolidated “special lien proceedings.”
- Petitioners (Barri, Tristar, CSWCR) challenged the statutes under multiple constitutional theories, seeking writ relief directing the WCAB to adjudicate stayed liens and to decline enforcement of the statutes. The court treated the WCAB/DIR as the Government.
- The Federal District Court in Vanguard granted a preliminary injunction in part, finding procedural due process defects; thereafter DIR updated its website to list noncharged flagged entities and WCJs began scheduling hearings on limited flagging disputes.
- The petitioners alleged the statutes (inter alia) (1) impede Barri’s Sixth Amendment right to counsel by freezing lien proceeds; (2) infringe the right to petition; (3) violate substantive and procedural due process (overbroad stay, inadequate notice, no timely hearing); and (4) violate ex post facto principles when applied retroactively.
- The Court accepted supplemental evidence of DIR’s procedural changes, held many claims were mooted or defeated by new evidence, and denied the writs, concluding the statutes are constitutional as applied and facially.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sixth Amendment right to counsel (Luis challenge) | Barri: stayed liens are untainted assets needed to pay counsel; §4615 denies his right to hire counsel of choice. | Government: liens are contingent statutory expectancies (not "pure and simple" assets); Luis does not apply. | Court: Luis inapplicable—liens are contingent statutory remedies, not fully owned untainted assets; Sixth Amendment claim fails. |
| First Amendment right to petition / access to courts | Barri: automatic stay creates lengthy, undue delays so lienholders cannot effectively petition tribunals. | Government: WCAB remains the exclusive forum; procedures exist and have been used to address grievances; petition is premature. | Court: Claim lacks merit; petitioners retain forum and access (and many complaint procedures were implemented). |
| Procedural due process — notice and timely hearing for flagged (noncharged) entities | Barri: noncharged entities received inadequate notice and no timely hearing to correct mistaken flagging. | Government: DIR updated website to list flagged noncharged entities; WCJs now schedule hearings on flagging disputes; AB 1422 clarified “control.” | Court: Notice defects largely remedied; claimants have meaningful opportunity to be heard; no federal/state due process violation. |
| Substantive due process & timing of adjudication of taint | Barri: automatic, overbroad stay of untainted liens is arbitrary and shocks the conscience. | Government: statute serves legitimate remedial goals—preventing payment on potentially fraudulent liens and protecting system integrity; consolidated post‑conviction process avoids duplication and conflicting judgments. | Court: Not a substantive due process violation; statute reasonably relates to valid legislative objective and is not conscience‑shocking. |
| Ex post facto / retroactivity of suspension and special lien proceedings | Barri: statutes retroactively punish providers convicted before enactment. | Government: provisions are civil regulatory measures to protect system integrity, not criminal punishment. | Court: §139.21 is civil/regulatory in purpose and effect; ex post facto claim fails. |
Key Cases Cited
- Powell v. Alabama, 287 U.S. 45 (Sixth Amendment right to counsel context)
- Wheat v. United States, 486 U.S. 153 (right to counsel of choice limits)
- Luis v. United States, 136 S. Ct. 1083 (pretrial restraint of untainted assets and Sixth Amendment plurality)
- Logan v. Zimmerman Brush Co., 455 U.S. 422 (statutory adjudicatory procedures as property for due process)
- Mathews v. Eldridge, 424 U.S. 319 (balancing test for procedural due process)
- Smith v. Doe, 538 U.S. 84 (distinguishing civil regulatory scheme from punitive/ex post facto application)
- Angelotti Chiropractic, Inc. v. Baker, 791 F.3d 1075 (Ninth Cir.) (nature of workers’ comp liens as statutory remedies)
- Vacanti v. State Comp. Ins. Fund, 24 Cal.4th 800 (workers’ compensation scheme and lien claimants’ due process rights)
- Stevens v. Workers’ Comp. Appeals Bd., 241 Cal.App.4th 1074 (scope of Legislature’s plenary power over workers’ compensation)