Angelotti Chiropractor v. Baker

In 2012 California enacted Senate Bill 863 (“SB 863”) to combat the “lien crisis” in its workers’ compensation system. Liens were being filed by medical providers and vendors seeking payment for services provided to injured workers with pending claims. California courts lacked the capacity to handle all of the lien disputes being filed. In order to clear the overwhelmed system, SB 863 imposed a $100 activation fee on entities like plaintiffs for each lien filed before January 1, 2013. Plaintiffs sued claiming that SB 863 violated the Takings Clause, the Due Process Clause, and the Equal Protection Clause of the United States Constitution. The district court dismissed the action. On appeal, the Ninth Circuit reviewed whether the dismissal was appropriate. The panel held the Takings Clause claim was properly dismissed because the economic impact of SB 863 and its interference with plaintiffs’ expectations was not severe enough to constitute a taking. Additionally, the panel found that the workers compensation liens were not property interests protected by the Takings Clause, since the interest does not vest until final judgment. The panel also held that the lien activation fee and its retroactive nature did not burden any substantive due process right to court access, stating the fee was more akin to a filing fee. Further, the panel found that the legislature’s decision to impose the fee on some entities and not on others was rationally related to the goal of clearing the backlog because the legislature rationally concluded that non-exempt entities were primarily responsible for the backlog. Therefore, the panel affirmed the district court’s dismissal. However, the panel reversed the district court’s denial of defendants’ motion to dismiss plaintiffs’ Equal Protection Clause claim. AFFIRMED in Part, VACATED in Part, and REVERSED in Part.