Kamin: The Lien Statute of Limitations

Thursday, December 8, 2022 | 0

The first and arguably easiest thing a defendant should do when evaluating any lien is to determine whether it was timely filed within the statute of limitations.

John P. Kamin

When lawmakers passed Senate Bill 863 in September 2012, one of the key elements was simplifying the statute of limitations for most liens. Under the bill, any liens with dates of service on or after July 1, 2013, had to abide by the 18-month statute of limitations. Liens with a last date of service prior to July 1, 2013, enjoyed a three-year statute of limitations.

Failure to timely file the lien within that time frame means that it is untimely and, therefore, barred by the statute of limitations defense.

So where does one look for that information? Check the itemized statement from your lien claimant for the last date that services were provided, and then compare it to the date the lien was filed on the EAMS public search tool. If your time calculator shows that those two dates are more than 18 months apart, you’ve got a statute of limitations defense.

Group health liens

Keep in mind that group health liens actually enjoy a different statute of limitations under LC 4903.5(b). That section gives the group health plans one year after “the entity first knew or in the exercise of reasonable diligence should have known that an industrial injury is being claimed, but in no event later from the date the services were provided to the employee.”

So what could trigger that statutory time frame to start ticking? Well, arguably that could be an applicant writing down that the treatment is for a work injury on intake forms, or telling the group health personal physician about that. Another event that could arguably trigger that is the issuance of a subpoena to that entity, which we do during case-in-chief litigation from time to time.

The SOL survived years of challenges

For years after SB 863, numerous lien claimants filed petitions for reconsideration disputing findings and awards stating that the statute of limitations barred their liens. The key commonality among many of them was that their dates of service included dates before and after July 1, 2013, and their argument was that the three-year statute of limitations should apply. The Workers' Compensation Appeals Board rejected this argument in numerous panel decisions ranging from 2016 through 2020.

End of 'lack of service' arguments

Another key side effect of SB 863 is that it ended the argument that the lien claimant's statute of limitations should be tolled until the defendant served the settlement documents. This is because SB 863 tied the statute of limitations to the last date of service, as opposed to other events in the case (such as the date of settlement).

Prior to SB 863, the lien statute of limitations found in the old (and later amended) LC 4903(b) was:

• Six months from a final decision, finding or award of a claim (including an order approving compromise and release).
• Five years from the date of injury for which services were provided.
• One year from the date of service.

As you can see, that first bullet point refers to the final decision, finding, award or settlement, which is what gave rise to the lack of service argument. However, that section is no longer the law, as LC 4903(b) was later amended.

Conclusion

The statute of limitations is a threshold defense that should be considered first and foremost. That being said, it’s something that’s so simple, it’s actually easy to forget about, especially if one has 20 or 30 lien claims on a file. Even with 30 liens on a file, double-checking the statute of limitations can be done in fewer than 15 minutes and could result in savings of thousands of dollars.

Another side effect of checking the statute of limitations on the EAMS public search is that it will also tell you if the lien is filed on the correct date of injury. For “frequent flyer” applicants who file a new workers’ compensation claim against a different employer every year or two, it’s very easy for a lien claimant or another party to mix up the ADJ numbers and the dates of injury. It’s happened before and will undoubtedly happen again.

While this topic has been relatively stable for some time, the possibility of omnibus workers’ compensation legislation in 2023 and beyond could bring the discussion of liens back into play. So in the meantime, we recommend that you dot your i’s, cross your t’s and apply that statute of limitations, please.

John P. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location. He is WorkCompCentral's former legal editor. This entry from Bradford & Barthel's blog appears with permission.