WCAB Issues Significant Panel Decision on Activation Fee Procedures

Thursday, April 11, 2013 | 0

The WCAB has issued a “Significant Panel Decision”(1) for only the second time in the past six years on an issue of widespread, but time limited, application to workers’ compensation practitioners and participants at WCAB proceedings.

In Eliezer Figueroa v. B.C. Doering Co., Employers Compensation Insurance Co., the WCAB has firmed up the legal authority for the requirement for lien claimants to pay the “activation fee” required in Labor Code § 4903.6 and provide proof of payment.
 
In the reported case, the lien claimant failed to appear at a lien conference scheduled for January 2013. At the lien conference the workers' compensation judge reviewed the record (likely with the then-new lien search tool in the Electronic Adjudication Management System) and determined the activation fee had not been paid. Based on the failure to pay the activation fee, the WCJ dismissed the lien claim with prejudice and without providing an opportunity for the lien claimant to object to the dismissal. The lien claimant appealed the decision to dismiss its lien claim, asserting as a defense to its failure to pay the activation fee that defendant had not served supporting documents allowing the lien claimant an opportunity to resolve its lien (the decision does not indicate if there was an excuse offered for the failure to appear).
 
On reconsideration the WCAB took the opportunity to address a number of procedural issues regarding payment of activation fees, the timing of such payments and the procedural aspects of dismissal of liens where no activation fee was paid. The WCAB summarized its holding as follows:
 
1. The lien activation fee must be paid prior to the commencement of a lien conference, which is the time that the conference is scheduled to begin, not the time when the case is actually called;
2. If the lien claimant fails to pay the lien activation fee prior to the commencement of a lien conference and/or fails to provide proof of payment at the conference, its lien must be dismissed with prejudice;
3. A breach of the defendant’s duty to serve required documents or to engage in settlement negotiations does not excuse a lien claimant’s obligation to pay the lien activation fee; and
4. A notice of intention is not required prior to dismissing a lien with prejudice for failure to pay the lien activation fee or failure to present proof of payment of the lien activation fee at a lien conference.
 
The WCAB probably had the easiest time of these issues in addressing the basis for the appeal by the lien claimant. There is simply no rational reason for the lien claimant to believe it could shift the burden of its failure to pay the required lien fee onto an action or lack of action by defendant. The lien activation fee requirement is an affirmative step required by the lien claimant to pursue its right to collect on its lien claim. The board noted the mandatory statutory language regarding payment of such fees:
 
“All lien claimants that did not file the declaration of readiness to proceed and that remain a lien claimant at the time of a lien conference shall submit proof of payment of the activation fee at the lien conference. If the fee has not been paid or no proof of payment is available, the lien shall be dismissed with prejudice.” Lab. Code, 4903.06(a)(4) (emphasis added)
 
Given the mandatory statutory language, it would be very difficult for the WCAB, even if it were so inclined, to carve out exceptions to the payment requirements.
 
The WCAB also took the opportunity to affirm several other issues that have popped up in appeals on the new lien sections. In a widely disseminated decision issued in March, Soto v Marathon Industries (copy attached), the WCAB had reversed a WCJ decision allowing lien claims to proceed where the lien activation fee was paid between the time a lien conference began and the conclusion of the conference. In Figueroa, the WCAB ruled in the same manner and provided additional discussion of ADR 10208(a), which requires payment of the lien fee “prior to appearing at a lien conference for a case” means prior to the scheduled appearance time, in this case 8:30 am, not prior to the conclusion of the appearance.
 
“We interpret the payment at the lien conference” language of Section 4903.06(a)(4) and the payment “prior to appearing at a lien conference” language of Emergency Rule 10208(a) to mean that a lien activation fee must be paid prior to the commencement of a lien conference, which is the time that the conference is scheduled to begin, not the time when the case is actually called. Any payment made after the noticed hearing time is not timely.”
 
Finally the WCAB opined where the activation fee was not paid or proof of payment is not provided at the lien conference, dismissal is mandatory and does not require a notice of intent to dismiss.
 
Comments and Conclusions:
 
For several months after SB 863 went into effect, it became a common practice for lien claimants to appear at a lien conference and if they could not reach agreement on their lien, make payment online, and complete the lien conference. This decision, following and expanding on the rational in Soto v. Marathon Industries, will certainly require lien claimants to affirmatively pay and present proof of payment at the lien conference or face dismissal of their lien claims with prejudice.
 
In cases where the lien claimant followed the above practice (payment during the lien conference) and the matter was set for further proceedings, defendants should now insist on dismissal of the lien claims with prejudice. The requirement for dismissal where the fee was not timely paid is non-discretionary and mandated under the statute. There is no reason to believe a defendant was required to insist on dismissal of liens at the conference as dismissal is a statutorily mandated act. This approach is supported by the WCAB’s ruling that it is not necessary to issue a Notice of Intention prior to dismissal of lien claims where the activation fee was not timely paid. Since there is no defense to the failure to timely pay the fee, there is no basis to object. Further, at a lien conference, the lien claimant is obligated to attend. If there is an explanation (such as we made payment but the EAMS system is down or the “dog ate my receipt for the activation fee” or whatever), it can be presented at the conference. In this case, the lien claimant even failed to appear at the hearing.
 
A link to the case is embedded in the case name above and copies of the Figueroa and Soto cases are attached.

Footnote
 
1. The WCAB has identified Significant Panel Decisions as “Cases that are identified for dissemination by the WCAB in order to address new or recurring issues of importance to the workers' compensation community. Significant Panel Decisions have been reviewed by each of the commissioners, who agree that the decision merits general dissemination.”
Significant Panel Decisions are citable as authority but do not carry the same binding effect on trial judges and the WCAB as an en banc decision. However it is an expression of the WCAB’s consensus opinion on the issues addressed in the case and, while perhaps not binding, should still be very persuasive to any trial judge on the same issue.

Richard M. "Jake" Jacobsmeyer is founding partner of Shaw, Jacobsmeyer, Crain & Claffey in Oakland.