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Angelotti Chiropractic v. Baker

United States Court of Appeals, Ninth Circuit

June 29, 2015

ANGELOTTI CHIROPRACTIC, INC.; MOONEY & SHAMSBOD CHIROPRACTIC, INC.; CHRISTINA-ARANA & ASSOCIATES, INC.; JOYCE ALTMAN INTERPRETERS, INC.; SCANDOC IMAGING, INC.; BUENA VISTA MEDICAL SERVICES, INC.; DAVID H PAYNE M.D., INC., Plaintiffs-Appellants,
v.
CHRISTINE BAKER, in her official capacity as Director of the California Department of Industrial Relations; RONNIE CAPLANE, in her official capacity as Chair of the Workers' Compensation Appeals Board; DESTIE LEE OVERPECK, in her official capacity as Acting Administrative Director of the California Division of Workers Compensation, Defendants-Appellees. ANGELOTTI CHIROPRACTIC, INC.; MOONEY & SHAMSBOD CHIROPRACTIC, INC.; JOYCE ALTMAN INTERPRETERS, INC.; SCANDOC IMAGING, INC.; BUENA VISTA MEDICAL SERVICES, INC.; DAVID H PAYNE M.D., INC.; CHRISTINA-ARANA & ASSOCIATES, INC., Plaintiffs-Appellees,
v.
CHRISTINE BAKER, in her official capacity as Director of the California Department of Industrial Relations; RONNIE CAPLANE, in her official capacity as Chair of the Workers' Compensation Appeals Board; DESTIE LEE OVERPECK, in her official capacity as Acting Administrative Director of the California Division of Workers Compensation, Defendants-Appellants

November 18, 2014

Petition for Rehearing Filed July 13, 2015

Page 1076

[Copyrighted Material Omitted]

Page 1077

United States District Court for the Central District of California. D.C. No. 8:13-cv-01139-GW-JEM--Hon. George H. Wu, District Judge, Presiding

Appeal from a decision of the United States District Court for the Central District of California. Decision affirmed in part, vacated in part, reversed in part, and costs awarded to defendants.

SUMMARY[**]

Civil Rights

The panel affirmed the district court's dismissal of plaintiffs' claims under the Takings Clause and Due Process Clause challenging California Senate Bill 863, vacated the district court's preliminary injunction and through pendent appellate jurisdiction, reversed the district court's denial of defendants' motion to dismiss plaintiffs' Equal Protection Clause claim.

In 2012, California enacted Senate Bill 863 to combat an acute " lien crisis" in its workers' compensation system. These liens are filed by medical providers and other vendors to seek payment for services provided to an injured worker with a pending claim. In an effort to clear an enormous and rapidly growing backlog of these liens, SB 863 imposes a $100 " activation fee" on entities like plaintiffs for each workers' compensation lien filed prior to January 1, 2013. Plaintiffs sued, claiming that SB 863 violates the Takings Clause, the Due Process Clause, and the Equal Protection Clause of the United States Constitution.

The panel held that the district court properly dismissed the Takings Clause claim because the economic impact of SB 863 and its interference with plaintiffs' expectations was not sufficiently severe to constitute a taking. The panel further concluded that the lien activation fee did not burden any substantive due process right to court access and also rejected plaintiffs' claim that the retroactive nature of the lien activation fee violated the Due Process Clause.

Vacating the district court's preliminary injunction, the panel held that the district court abused its discretion in finding that a " serious question" existed as to the merits of plaintiffs' Equal Protection claim. Applying rational basis review, the panel held that Labor Code § 4903.06(b), which exempts certain entities other than plaintiffs from having to pay the lien activation fee, was rationally related to the goal of clearing the lien backlog. The panel also reversed the district court's denial of defendants' motion to dismiss the Equal Protection Clause claim because the panel's ruling on the preliminary injunction necessarily resolved the motion to dismiss.

For defendants-appellants & cross-appellees--Donna M. Dean (argued), Deputy Attorney General, Joel A. Davis, Supervising Deputy Attorney General, Kristin G. Hogue, Senior Assistant Attorney General, Kathleen A. Kenealy, Chief Assistant Attorney General, Kamala D. Harris, Attorney General of California, Los Angeles, California

For plaintiffs-appellees & cross-appellants--Bartlit, Beck, Herman, Palenchar & Scott LLP, Denver, Colorado, by Glenn E. Summers (argued), Sundeep K. Addy, Daniel C. Taylor, and Murphy Rosen LLP, Santa Monica, California, by Paul Murphy and Mark Nagle

For California Society of Industrial Medicine and Surgery, as amicus curiae--Roxborough, Pomerance, Nye, & Adreani, LLP, Woodland Hills, California, by Nicholas P. Roxborough, Anne S. Kelson

For California Workers' Compensation Institute & American Insurance Association, as amicus curiae--Allweiss & McMurtry, Tarzana, California, by Michael A. Marks

For California Chamber of Commerce, as amicus curiae--Finnegan, Marks, Theofel & Desmond, San Francisco, California, by Ellen Sims Langille, Katherine F. Theofel

For State Compensation Insurance Fund, as amicus curiae--Horvitz & Levy LLP, Encino, California, by Eric S. Boorstin (argued), Jeremy B. Rosen

Before: Mary M. Schroeder and Jacqueline H. Nguyen, Circuit Judges and Jack Zouhary,[*] District Judge. Opinion by Judge Nguyen.

OPINION

Page 1078

NGUYEN, Circuit Judge:

In 2012, California enacted Senate Bill 863 (" SB 863" ) to combat an acute " lien crisis" in its workers' compensation system. These liens are filed by medical providers and other vendors to seek payment for services provided to an injured worker with a pending claim. In an effort to clear an enormous and rapidly growing backlog of these liens, SB 863 imposes a $100 " activation fee" on entities like plaintiffs for each workers' compensation lien filed prior to January 1, 2013. Plaintiffs sued, claiming that SB 863 violates the Takings Clause, the Due Process Clause, and the Equal Protection Clause of the United States Constitution.

We affirm the district court's dismissal of plaintiffs' claims under the Takings Clause and Due Process Clause. As to the Equal Protection claim, however, we vacate the preliminary injunction and, through pendent appellate jurisdiction, reverse the district court's denial of the motion to dismiss this claim.

BACKGROUND

A. Overview of the Workers' Compensation System

Employers in California typically provide medical care and other services to employees for work-related injuries. See generally Cal. Lab. Code § § 3600, et seq. An employer or its workers' compensation insurer may choose to provide medical care to workers through the employer's Medical Provider Network (" MPN" ), 2 Witkin, Summ. Cal. Law, Work. Comp. § 262 (10th ed. 2005), its Health Care Organization (" HCO" ), Cal. Lab. Code § 4600.3, or neither of these. An MPN is a group of health care providers selected by an employer or insurer to treat injured workers, and an HCO is a managed care organization that contracts with an employer to provide managed medical care.

In certain cases, an employer or its insurer might decline to provide medical treatment to an injured employee on the grounds that an injury is not work-related or the treatment is not medically necessary. An injured worker may then seek medical treatment on his or her own, and, if the injury is later deemed work-related and the treatment medically necessary, the employer is liable for the " reasonable expense" incurred in providing treatment, which may include ancillary services such as an interpreter to facilitate treatment. Cal. Lab. Code § 4600(a), (f); 2 Witkin, Summ. Cal. Law, Work. Comp. § 264; Guitron v. Santa Fe Extruders, 76 Cal. Comp. Cases 228, at *9 (WCAB 2011). An employer also may be liable for " medical-legal expenses" necessary " for the purpose of proving or disproving a contested claim" for workers' compensation benefits, such as diagnostic tests, lab fees, and medical opinions. Cal. Lab. Code § 4620(a).

A provider of services--whether for medical treatment, ancillary services, or medical-legal services--may not seek payment directly from the injured worker. Id. § 3751(b). Nor may a provider seek payment through the filing of a civil action against the employer or its insurer. Vacanti v. State Comp. Ins. Fund, 24 Cal.4th 800, 815 [102 Cal.Rptr.2d 562, 14 P.3d 234] (2001) (" [C]laims seeking compensation for services rendered to an employee in connection with his or her workers' compensation claim fall under the exclusive jurisdiction of the [Workers' Compensation Appeals Board]." ). Instead, these providers may seek compensation by filing a lien in the injured employee's workers' compensation case. See generally Rassp & Herlick, Cal. Workers' Comp. ...


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