A Federal Court Upholds the Legality of California Workers' Compensation Anti-fraud Legislation With Additional Procedural Due Process Warranties
| Publication year | 2018 |
| Author | By David R. Ruiz |
By David R. Ruiz
David R. Ruiz practices in the Strategy, Writs, and Appeals Team and in the Special Investigations Unit/ Insurance Fraud Litigation Team at Manning & Kass, Ellrod, Ramirez, Trester, LLP. Mr. Ruiz is also an associate Professor of Law at Glendale University College of Law.
Starting January 1, 2017, two Workers' Compensation anti-fraud provisions came into effect that affect the ability of medical providers charged or convicted of fraud-related offenses to collect on their liens. Shortly thereafter, the provisions were challenged by a medical provider alleging in federal court that the provisions failed to guarantee due process. In an effort to prevent an injunction curtailing the application of the anti-fraud provisions, the California Legislature soon thereafter enacted AB 1422 clarifying the anti-fraud provisions. The federal court upheld the legality of the California anti-fraud provisions and added some limited notice and hearing requirements to guarantee due process to medical providers.
Labor Code section 4615 as amended by Senate Bill 1160 and effective January 1, 2017, provided for an automatic stay of the adjudication of medical treatment and medical-legal liens of those providers charged with a fraud-related offense. The stay was to be in effect from the time the charges were filed until the disposition of the criminal proceedings.
On May 17, 2017, a charged medical provider challenged this legislation in federal court claiming that a blanket automatic stay of all their liens would deprive medical providers charged yet not convicted of due process and hinder their ability to pay for counsel. (Vanguard Medical Management Billing, Inc., et al. v. Christine Baker et al., CV17-00965 (C.D.Cal., filed May 17, 2017).) The medical provider requested injunctive relief to stop the application of the automatic stay until the case was adjudicated. The court issued a tentative decision in July 2017 upholding the legality of the anti-fraud provisions, but giving credence to the medical providers' argument that they were deprived of due process by their liens being automatically stayed without the possibility of a hearing.
On September 26, 2017, before the court was to rule on the medical providers' request for injunctive relief, California enacted AB 1422, which will become effective on January 1, 2018...
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