When Is a Lien Not a Lien?
Monday, May 20, 2013 | 0
The Southern California Workers’ Compensation system has been plagued by a glut of lien claims, which in recent years has reached crisis proportions, choking the system and forcing local offices to farm lien hearings to outlying offices having no nexus whatsoever to the case at hand. In an understandable effort to clear the stoppage, various provisions were added to LC 4903 requiring payment of lien-activation fees as a condition precedent to obtaining judgment on the lien. Subsequent to Jan. 1, 2013, there have been literally hundreds of liens dismissed with prejudice for failure to pay the lien-activation fee by the time the Mandatory Lien Settlement Conference arrived. LC 3903.06(a)(4) and 8 Cal. Reg. 10208(a).
It did not take very long before cases were being litigated defining when exactly that fee had to be paid to preserve the rights of a lien claimant to litigate its lien. On March 8, 2013, a WCAB panel issued a decision after Reconsideration dismissing a medical lien in the case of Sharon Meyer v. Target Corporation, ADJ 4146782, 2013 Cal. Wrk. Comp. P.D. Lexis 69, where the lien of Innovative Orthopedic Solutions was dismissed with prejudice because it had failed to pay the lien-activation fee prior to the Jan. 2, 2013 lien conference. The panel reviewed the application of the new Code sections:
Under Labor Code section 4903.06, subdivisions (a) and (a)(1), any lien filed before Jan. 1, 2013 is subject to a $100.00 lien activation fee unless the lien claimant "provides proof of having paid a filing fee as previously required by former Section 4903.05 as added by Chapter 639 of the Statutes of 2003." A lien claimant must include proof of payment of the lien activation fee with its declaration of readiness to proceed. (Lab. Code, § 4903.06(a)(2)) A lien claimant who does not file a declaration of readiness to proceed must submit proof of payment of the activation fee at the lien conference. (Lab. Code, § 4903.06(a)(4)) If a lien claimant does not pay the activation fee or submit proof of payment of the activation fee, the lien "shall be dismissed with prejudice." (Mid; see also Cal. Code Regs, tit. 8, § 10208(a) ("Any lien filed pursuant to Labor Code section 4903(b) filed prior to January 1, 2013 ... shall be subject to a lien activation fee in the sum of one hundred dollars ($100.00), payable to the Division of Workers' Compensation prior to filing a Declaration of Readiness to Proceed for a lien conference by that party, prior to appearing at a lien conference for a case, or on or before Jan. 1, 2014, whichever occurs first.") (effective Jan. 1, 2013)” (emphasis added).
Since the lien-filing fees can be paid electronically with the push of a button, lien representatives quickly joined the electronic age, coming to the lien conferences equipped with laptops and Smartphones and (perhaps understandably) strategically figuring that they did not have to “push the button” to pay the fee unless, upon discussion with the defendant, it became apparent that the lien claim was not going to be informally settled. The reasoning was that, as long as the lien fee was paid before getting a trial date, all was good.
Not so fast, said the Board. In the case of Jose Pedro Soto v. Marathon Industries, 2013 Cal. Wrk. Comp. P.D. LEXIS 81, a WCAB panel interpreted rule 10208(a) to mean that the fee has to be paid before the time the lien conference is slated to start (in other words, by 8:30 a.m. or 1:30 p.m., whichever is applicable). Said the Board:
“Administrative Director Rule 10208(a), operative Jan. 1, 2013, provides in relevant part: "No Lien claimant that is required to pay an activation fee shall file a declaration of readiness or participate in any lien conference including obtaining an order allowing its lien in whole or in part, without submitting written proof of prior timely payment of the fee, or without electronic proof of timely payment of the fee that is available to the judge and parties at the conference. 'Prior timely payment' means payment of the activation fee (1) prior to the filing of a declaration filing a declaration of readiness, or (2) prior to an appearance at a lien conference by a lien claimant of record that did not file the declaration of readiness."
As to lien claimants, the lien conference was scheduled for 8:30 a.m. Lien claimants have demonstrated that the activation fees were paid between 10:56 and 11:06 a.m. Pursuant to Rule 10208(a), payments of the fees were not "prior timely payments." In order to have been "prior timely payments," the payments would have had to be made prior to 8:30 a.m. on the date of the lien conference. Therefore, the liens were properly dismissed at the lien conference on Jan. 10, 2013.” WCAB Panel Decision after Removal, ADJ7407927, March 12, 2013.
On April 5, 2013, the Appeals Board issued a significant panel decision in another case relating to the lien-activation fee requirements of Labor Code Section 4903.06. In that decision, a WCAB panel held that, where a lien claim falls within the lien activation-fee requirements of Section 4903.06:
(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 a 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.
That case was later reissued 4/25/13 as a WCAB en banc opinion in Eliezer Figueroa v. B.C. Doering, ADJ3274228.
Not to be easily thwarted for lack of creativity, lien claimants turned to newly amended LC 5811, arguing that their claims were really litigation costs and therefore not liens. This applied in particular to claims filed by copy services (which will, after December, be subject to a fee schedule per LC 5307.9) and to interpreters (LC 5811(b)(2)). If the claim for payment is really a cost under LC 5811 (or so goes the reasoning), then a lien-activation fee is not applicable and the claim for reimbursement is not subject to chaotic procedures of the “lien intensive”conferences that have been taking place recently in Southern California.
Suddenly defendants were being inundated with withdrawn medical legal liens and newly filed substitute petitions for costs, often being conditionally granted on a “walk through” basis without a hearing.
In the hot-off-the-press WCAB en banc opinion in Luis Martinez v. Ana Tarrazas, ADJ7613459 (additional citations not yet available) the Board ruled that a claim for medical-legal expenses may not be filed as a petition for costs but that (trying to be fair about it) copy services and similar medical-legal cost claimants who previously withdrew liens in favor of filing petitions could still file a petition, pay a fee and proceed as in days of yore. The Board explains as follows:
“Historically, the section 5811 "costs" allowed by the WCAB have been litigation costs incurred by one of the parties in the case-in-chief. (See e.g., Costa v. Hardy Diagnostic (2006) 72 CCC 1492 (Appeals Board en banc) (Costa II) [costs of injured employee's vocational expert opinion in rebuttal to permanent disability rating payable under section 5811, if among other things, costs were reasonable and necessary at the time incurred]; Los Angeles Unified School Dist. v. Workers' Comp. Appeals Bd. (Kilgore) (1984) 49 CCC 631 (writ den.) [injured employee awarded costs of an expert witness, a former disability evaluation specialist, obtained to rebut permanent disability rating].)”
“Section 5811 "costs" do not include costs and expenses that are governed by other specific statutory schemes. (See Elliot v. WCAB (2010) 182 Cal.App.4th 355, 365 [75 CCC 81] ["as a matter of statutory construction, a specific provision relating to a particular subject will govern that subject as against a general provision"].) As stated in the Appeals Board's en banc decision in Costa II:
"There are ... limitations on the costs that may be reimbursed under section 5811. [Costs, expenses, or fees] which are awarded under conditions specified in the Labor Code ... are not available as 'costs' under section 5811." (72 CCC at p. 1497, fn. 3.)Interpreters, however, have apparently been given a specific inclusion as a cost under LC 5811 (b)(2) which now provides for and includes:
“Interpreter fees that are reasonably, actually, and necessarily incurred shall be paid by the employer under this section, provided they are in accordance with the fee schedule adopted by the administrative director.Arguably, fees for interpreters’ services, effective Jan. 1, 2013, even where rendered in conjunction with medical treatment, do not appear to be a legitimate subject of a lien and would not be subject to a lien-filing fee or consideration at a lien conference. This does leave us in some degree of uncertainty, however, since the condition precedent to claiming the fees as a cost is that the charges are in accord with a fee schedule not yet produced (and not due until this December). So does this mean an interpreter can petition for costs at any rate they choose for now and avoid filing a lien and paying a fee? Or may they, for now, file as a lien claimant? Our analysis is that, since by its terms LC 5811(b)(2) cannot apply until the expected fee schedule is adopted, interpreters are free to proceed as lien claimants but may not file petitions as costs.
A qualified interpreter may render services during the following:
(A) A deposition.
(B) An appeals board hearing.
(C) A medical treatment appointment or medical-legal examination.
(D) During those settings which the administrative director determines are reasonably necessary to ascertain the validity or extent of injury to an employee who does not proficiently speak or understand the English language."
In practice, we conduct an EAMS lien search on a case immediately prior to the start of a lien conference. If the lien still shows as inactive, we demand production of proof (often available as an electronic receipt) that the activation fee was paid at least a minute or so before the time the conference is due to start. If there is no proof, the lien must be dismissed with prejudice.
Editor’s Note: We cannot wait for the case defining which atomic clock must be used to determine the exact time (GMT, of course) the fee was paid.
We normally do not have access to trial level opinions and panel decisions following Removal or Reconsideration unless they involve cases within our own firm; therefore, our reporting of these cases is limited to information received via reliable sources, often from publication of those decisions on the internet. WCAB panel decisions or decisions of trial level judgments do not bind other judges, even at the same Board. However, they do give some indication of what judges may do at trial on cases with similar issues. Cases identified as “significant panel decisions” following Removal or Reconsideration are intended to guide future trial level decisions on the same or similar issues. Reports concerning important, or Significant Panel Decisions as well as writ-denied cases are published in the California Compensation Cases and may be cited at trial level but are not binding authority on a trial judge. Published decisions of the Court of Appeal are authority and judges will normally follow them, but technically they only bind judges in the appellate district from which the decision emanates. WCAB en banc decisions and decisions of the California Supreme Court are binding on all Workers' Compensation judges.
Howard Stevens is partner with the McDermott & Clawson law firm in Orange, Calif. This column was reprinted with his permission from the firm's Legal Briefs client newsletter.
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