Barri v. Workers' Comp. Appeals Bd.

28 Cal.App.5th 428

239 Cal.Rptr.3d 180

Michael E. BARRI et al., Petitioners,

v.The WORKERS' COMPENSATION APPEALS BOARD, Respondent.

G054838

Court of Appeal, Fourth District, Division 3, California.

Filed September 21, 2018

Bartlit Beck Herman Palenchar & Scott, Glen E. Summers and Alison G. Wheeler ; Silverman & Milligan and Stephen A. Silverman, Santa Monica, for Petitioners.

Christopher Jagard, Chief Counsel, Department of Industrial Relations Office of the Director, Legal Unit, and Kim E. Card, Berkeley, for Respondent.

OPINION

O'LEARY, P. J.

Michael E. Barri (Barri), Tristar Medical Group (Tristar), and Coalition for Sensible Workers' Compensation Reform (CSWCR) petitioned this court pursuant to Labor Code section 5955 (all further statutory references are to the Labor Code, unless otherwise indicated). They seek a peremptory or alternative writ of mandate, prohibition, or other appropriate relief directing the Workers' Compensation Appeals Board (WCAB)¹ to perform its duties and adjudicate Tristar's lien claims and not enforce certain unconstitutional provisions contained in newly enacted anti-fraud legislation. (§§ 4615 & 139.21.)

In 2016, the Legislature created two new statutes to address a financial crisis plaguing the workers' compensation system, however, the remedy came at a significant cost to all participating medical providers and related entities. Specifically, the new anti-fraud scheme cast a very broad net to halt all proceedings relating to any workers' compensation liens filed by criminally charged medical providers (charged providers), as well as any entities "controlled" by the charged provider (noncharged entities). The Legislature created this new scheme because existing laws permitted charged providers to collect on liens while defending their criminal cases, allowing continued funding of fraudulent practices. Pursuant to these two new statutes, the Government gained authority to automatically stay liens filed by charged providers and noncharged entities, without considering if the liens were actually tainted by the alleged illegal misconduct. (§ 4615.) As a result, untainted liens may be stayed (and go unpaid) for a lengthy stretch of time because, in addition to the period required for completion of the criminal case, the statute provides for two post-conviction evidentiary hearings. In the first hearing, the administrative director decides whether to suspend the convicted provider from further participation in the workers' compensation system. (§ 139.21, subd. (b).) Following this hearing, the "special lien proceeding" attorney identifies and gathers liens to be adjudicated together by a workers compensation judge (WCJ) in a consolidated "special lien proceeding." (§ 139.21, subd. (e)(2).) In this second hearing, the lienholder has the evidentiary burden to rebut the statutorily mandated presumption the consolidated liens are all tainted by the misconduct and should not be paid. (§ 139.21, subd. (g).)

In their petition, Barri, Tristar, and CSWCR² maintain these statutory provisions go too far and are forcing many legitimate lien providers to stop treating injured workers because the process has become too onerous, expensive, and financially risky. They maintain the creation of a "significantly delayed post deprivation hearing," the over-inclusive application to untainted liens, and the Government's failure to provide adequate notice to noncharged entities, has effectively dismantled the safety net in place for injured workers. They suggest the true legislative purpose of the statutes goes beyond fraud prevention and serves the district attorney's desire to financially cripple criminally charged lien claimants, hampering their ability to adequately defend themselves at trial. Petitioners point out a group of medical providers are currently litigating similar contentions in the United States District Court, Central District of California. We grant their request to take judicial notice of documents, declarations, and orders filed in Vanguard Medical Management Billing, Inc. v. Baker, No. EDCV 17–CV–965–GW(DTBx) (C.D.Cal. 2017) (Vanguard ). ( Evid. Code, § 452, subd. (e)(1) [judicial notice of any record of "any court of record of the United States"].)

It should not be overlooked that much has transpired since Barri's original petition was filed in April 2017. Some of these developments have changed the nature of the arguments and are worth noting. Specifically, the following events have taken place:

(1) In September 2017, our Governor signed additional legislation to clarify and close some loopholes found in sections 4615 and 139.21. This court requested, and the parties submitted, additional briefing regarding the effect, if any, of this clean-up legislation.

(2) In December 2017, Judge George H. Wu issued a preliminary injunction in the Vanguard case, concluding the lien stay provision suffered from two procedural due process problems despite the recent legislative amendments. (Vanguard, supra, (C.D.Cal. Dec. 22, 2017) [nonpub. ord.].)

(3) Soon thereafter, the Government modified its website page to notify not only charged providers, but also noncharged entities that had workers' compensation liens "flagg[ed]" and were subject to the section 4615 automatic stay. (< http://www.dir.ca.gov/fraud_prevention/> (as of Aug. 28, 2018).) Additionally, WCJs started scheduling trial/hearings to give lien claimants a more timely opportunity to litigate limited issues regarding the application of section 4615, such as cases of misidentification or mistaken flagging due to lack of the necessary degree of control by the charged provider. Lien claimants are currently not allowed to adjudicate the propriety of the underlying criminal charges or if a lien is tainted by misconduct.

(4) The Department of Industrial Relations Anti-Fraud Unit (AFU), formed at the end of 2016, obtained a new Chief of the Office of the Director, who implemented new procedures at the end of 2017. The AFU now receives notice from WCJs of scheduled lien hearings/trials and its staff may give the WCJs documentation supporting the AFU's "flagging" decision.

(5) Finally, in response to this court's request for additional information, the parties submitted multiple declarations and documents regarding the Government's procedural changes, current hardships faced by lien claimants, the status of several lien hearings in other cases, and recent developments in the Vanguard case.

In light of all of the above, we have determined some of Barri's constitutional challenges have been rendered moot. Other new evidence decisively defeats his "as applied" constitutional challenges. Having the benefit of a more complete picture of the issues facing claimants wishing to collect on stayed and untainted liens, it appears the Government has been slow to implement procedures and protocols. While the new system is far from perfect, it cannot be said sections 4615 and 139.21 are unconstitutional. We deny the petition.

INTRODUCTION

The instant writ petition is an original proceeding in this court. Under section 5955, "[n]o court of this state, except the Supreme Court and the courts of appeal to the extent herein specified, has jurisdiction to review, reverse, correct, or annul any order, rule, decision, or award of the [WCAB], or to suspend or delay the operation or execution thereof, or to restrain, enjoin, or interfere with the appeals board in the performance of its duties but a writ of mandate shall lie from the Supreme Court or a court of appeal in all proper cases." (See also Greener v. Workers' Comp. Appeals Bd. (1993) 6 Cal.4th 1028, 1042-1044, 25 Cal.Rptr.2d 539, 863 P.2d 784 [superior court lacks subject matter jurisdiction over action challenging constitutionality of workers' compensation statute].) " ‘In restricting any interference with the [WCAB's] decisions or orders to proceedings in the appellate courts, the Legislature has carried out the declared policy of the constitutional provision that the [WCAB] be unencumbered by any but proceedings in the appellate courts.’ [Citations.]" ( Abraham v. Workers' Comp. Appeals Bd. (2003) 113 Cal.App.4th 1082, 1088, 6 Cal.Rptr.3d 820.) Thus, only this court or the Supreme Court has jurisdiction to review constitutional challenges to a WCAB decision or process.

In these original writ proceedings, there is no procedural history directly underlying this action and our factual record is limited to documents and declarations provided by the parties. In considering the issues, we have reviewed all relevant evidence contemplated by the issues, including facts not existing when the petition was filed. (43 Cal.Jur.3d (2018) Mandamus and Prohibition, § 60, fn. omitted.) "[This] court may properly receive evidence of matters such as might render the litigation moot or the sought writ useless." (Ibid. ) We have exercised our discretion in these proceedings and accepted as true the facts disclosed in the parties' numerous declarations, to the extent the declarants describe admissible evidence (not hearsay or speculative opinions) and facts not contradicted by other credible evidence. (See Bruce v. Gregory (1967) 65 Cal.2d 666, 670-671, 56 Cal.Rptr. 265, 423 P.2d 193.)

In addition, both parties have asked this court to take judicial notice of numerous court documents relating to other workers' compensation cases, statutory history, and other related documents. We grant these requests for judicial notice, and on our own motion, we take judicial notice of the most recent version of the Government's website listing liens subject to a section 4615 stay. (< http://www.dir.ca.gov/fraud_prevention/> (as of Aug. 28, 2018).) (Evid. Code, §§ 452 & 459.)³

There are well-settled limits to our use of judicially noticed documents, but the parties' briefing indicates some confusion about these rules. "[W]hile courts are free to take judicial notice of the existence of each document in a court file, including the truth of results...