A federal court has issued a preliminary injunction that prevents the California Department of Workers' Compensation (DWC) from collecting activation fees on liens filed prior to January 1, 2013. The case, Angelotti Chiropractic, Inc., et al. v. Baker, et al., challenges the constitutionality of SB 863’s requirement that claimants holding legacy liens pay a $100 activation fee or lose the right to pursue payment on the claims.

The judge in this case, Honorable George Wu, issued a preliminary injunction, effective November 19, 2013, finding that the activation fees violate the Equal Protection Clause of the 14th Amendment of the United States Constitution. The fee for filing liens remains in effect. Only the lien activation fee (for claims filed prior to January 1, 2013) is affected by the ruling.

DWC began collecting lien activation fees last year as authorized by SB 863, which made wide-ranging changes to California's workers' compensation system. Among them was an attempt to reduce the volume of liens by requiring payment of lien filing and activation fees to discourage the filing and pursuit of low-dollar-value liens by rendering them valueless. Under the law, holders of ""legacy liens"" – those filed before the law took effect on Jan. 1, 2013 – are required to pay a $100 activation fee by Jan. 1, 2014 or have their liens dismissed. The law also requires lien filing fees on liens filed on or after January 1, 2013. These filing fees are not impacted by the court's ruling.

Effective immediately, lien claimants will not be required to pay the $100 activation fee in order to appear at a hearing or to file a Declaration of Readiness to Proceed.

For more information, see the DWC SB 863 pages.