Sandoval: Avoid Standing in the Intervention Line
Friday, June 19, 2020 | 0
When a person applies for college, there is a possibility of receiving one of three letters: admitted, wait-listed or rejected.
It is nice to know either way if you are accepted, but what about wait-listed? You are not yet accepted, but you are not fully rejected. You are in limbo.
In California, interventions are handled in a similar fashion. If you don’t file the intervention, you are considered rejected. If you file a motion to intervene, you are considered wait-listed. If the intervention is granted, you are considered admitted.
These distinctions are very important to understand. Below, I will discuss intervention in the workers’ compensation subrogation field as treated in California.
Intervention is either permissive or mandatory, but regardless you need to seek leave from the court to intervene. When the court is considering a motion to intervene, it must initially determine whether the petition is timely. Lohnes v. Astron Computer Products (2001) held that, notwithstanding an unconditional right to intervene under Labor Code Section 3853, the right is not absolute and the request to intervene must be timely.
Motions to intervene need to be timely: “[I]t is the general rule that a right to intervene should be asserted within a reasonable time and that the intervener must not be guilty of an unreasonable delay after knowledge of the suit,” according to Allen v. California Water & Tel. Co. (1947).
Noya v. A.W. Coulter Trucking (2006) held that timeliness is dependent on the factual circumstances of a particular action, as “no statutory time limit is placed on motions to intervene.”
In Noya, the court found a motion to intervene to be untimely when the proposed intervenor “took no steps to participate in the litigation until several years had passed and a comprehensive settlement agreement had been reached between” plaintiffs and defendant.
The court noted that to allow intervention “at this late juncture could delay or impede the resolution reached by [plaintiffs and defendant],” and that allowing the settlement to be undone at the “eleventh hour” would prejudice the parties to an extent that warranted denial of the motion to intervene.
Conversely, intervention has been held to be timely where the proposed intervenor “acted immediately upon being informed of plaintiffs’ demand for civil damages,” as decided in Sanders v. Pacific Gas & Elec. Co. (1975).
When do you receive party status? Until you have received permission from the court, a party lacks any standing to the action. Filing a motion to intervene can be equated to just filing a notice of lien in the underlying third-party action, as you still have not received the all-powerful “admitted” status.
Filing a notice of lien does not make you a party to the action, nor does it give you any rights to actively participate in the underlying lawsuit. In addition, it does not prevent the plaintiff and defendant from settling around your lien, leaving the carrier with potentially no recovery, especially if the statute of limitations has expired.
Filing a notice of lien does not work any magic other than putting the salient parties on notice of a carrier’s workers’ compensation subrogation interest. It does not give a subrogated party any greater rights than already exist under California law but serves only to memorialize notice to the parties. It will help ensure that the parties do not settle without giving notice to the carrier.
However, this is absolutely the weakest form of enforcing a workers’ compensation carrier’s subrogation interest. Merely filing a notice of lien will not protect the carrier if the parties settle around it and will not give any protection from the plaintiff’s attorney’s claim for fees that will be paid out of the carrier’s lien. Therefore, until a motion to intervene is granted, you lack any standing to the action, other than the fact that you are lien claimant in the action. Not until a court grants your motion to intervene do you become a party to the claim.
So why is this so important? California has one of the busiest court systems in the country. Typically, motions were being heard two to three months for the date you reserved the motion. With COVID-19 shutting the court down for months, causing further delays in an already backlogged system, you could potentially be looking at four to six months for your intervention motion to be heard. This means that during those months of waiting, a case could be settled and dismissed, potentially leaving no other way to recover the benefits paid on the claim.
So how do you make sure you are admitted? Upon making the determination that there is a subrogation potential, a claims professional should send the subrogation file to counsel, regardless of whether the claim is settled. Once a claim is received, contact the other parties to determine what the status of the case is.
If the statute of limitations has expired and intervention is the only route, determine if the parties to the action are willing to stipulate to the intervention.
Not only is it the fastest way to become a party and secure your subrogation interests, it also saves costs and time. If it appears the parties may settle around you or the hearing date is far out in the future, considering filing an ex parte application for the motion to intervene. If the statute of limitations has not expired, file a direct action, and then consolidate your action with the employee’s actions.
Do not be left wait-listed.
Katherine A. Sandoval is an insurance litigation attorney in Matthiesen, Wickert & Lehrer's California office. This blog post is reprinted with permission.