Labor Code 4903.1 and the Service of Lien Claims

Saturday, January 14, 2006 | 0

The following set of questions and answers recently appeared in our California Professional Forums. The editors felt this discussion was instructive and informative regarding WCAB procedure. The post has been edited slightly for readability, grammar and punctuation.

Q: Labor Code 4903.1(b) says "When a compromise of claim or an award is submitted to the appeals board, arbitrator, or settlement conference referee for approval, the parties shall file with the appeals board, arbitrator, or settlement conference referee any liens served on the parties."

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Does anybody have any practical experience with the compliance of this section of the Labor Code?

A1: I'd say it is probably "honored more in the breach than in the observance," as someone once said.

Take QMEs. There is supposed to be only one QME per party...EE or ER/IC. If there is an AME, there is supposed to be only one. The theory is that if further evaluations are needed, or felt necessary by a party, which is perceived as the same thing, then the AME/QME is supposed to refer out to a specialist who reports back to the AME/QME who incorporates the report into a new AME/QME report.

The practice? We set AMEs or QMEs, sometimes an ortho, neuro, psyche, and often a few more. Technically, it is not correct, but if no one complains, who cares?

There is only a small window to select an AME, but no WCJ in the state is going to enforce it.

L.C. 5400 lists a 30 day statute of limitation. As far as I know, it has never been enforced.

There used to be a "gung ho" defense attorney who came to Fresno who represented some self-insureds. He would huff and puff and raise a lot of smoke, write nasty letters and cite multiple, primarily worthless defenses and reasons not to pay a claim. I'm sure the employer loved him, but he didn't accomplish much.

This was one of his favorite reasons for not paying...but he eventually settled or on occasion tried a case. I do not recall him ever "winning" one.

So, to digress to your question...I don't know what to say. Would the party filing the lien have to pay the $100 filing fee?

Is this a sneaky way to avoid the filing fee or am I misreading something?

A2: I agree in that, "I'd say it is probably "honored more in the breach than in the observance."

I do not see it as a way of the actual lien claimant avoiding payment of the lien filing fee by having the AA file the lien, as CCR 10250(h) disposes of that route to avoid paying the lien filing fee.

My initial thoughts are that the WCJ who is signing off on the C&R, Stip, or F&A should be apprised of all outstanding bills/liens, perfected or not, submitted by "a health care provider, a health care service plan, a group disability policy, including a loss of income policy, a self-insured employee welfare benefit plan, or a hospital service contract."

As I recall, the basis for implementation of the "Gregory formula" may be applicable, to the question posed by Puzzled, as a practical manner for the WCJ to dispose of group health bills/liens, much to the chagrin of the lien claimant --- but to the benefit of the defendant.

The case of BC of CA v. WCAB, 66 CCC 1073 sheds some light on this issue. Naturally, if I were representing a "a health care provider, a health care service plan, a group disability policy, including a loss of income policy, a self-insured employee welfare benefit plan, or a hospital service contract" and the defendant wanted to impose the "Gregory Formula" on my client, I would vociferously oppose it.

Q2: What happens if applicant attorney (AA) has not been served with a lien but Defendant has? Is Defendant supposed to abide by the Section regardless?

A1: Sounds reasonable to me.

A2: Yup.

As an aside, many green-behind-the-ears lien claimants (and I used to be one) think that they only have to serve the lien on the defendant and/or counsel for the defendant. Not so.

See LC 4903.1(c): "Any lien claimant under Section 4903 or this section shall file its lien with the appeals board in writing upon a form approved by the appeals board. The lien shall be accompanied by a full statement or itemized voucher supporting the lien and justifying the right to reimbursement and proof of service upon the injured worker, or if deceased, upon the worker's dependents, the employer, the insurer, and the respective attorneys or other agents of record.

" LC 4903.1(c) is administratively implemented by CCR 10770(a): "Any lien claimant under Labor Code sections 4903 or 4903.1 shall file its lien in writing upon a form approved by the Appeals Board or electronically as approved by the Administrative Director. Lien claims filed in writing shall be accompanied by a full statement or itemized voucher supporting the lien and justifying the right to reimbursement and proof of service. All liens, along with a full statement or itemized voucher supporting the lien, shall be served upon the applicant, the injured worker (or, if deceased, upon worker's dependents), the employer, the insurance carrier and the respective attorneys or other representatives of record. Service of a lien on a party shall constitute notice to it of the existence of the lien.

" After having my feet held to the fire some 15 years ago for my failure to serve the IW and AA, I have consistently served all parties and counsel. Natch, once-in-a-while, I get a call from an irate IW about service of the lien and billing statements --- and my staff informs the IW that we are just following the rules regarding service.

As a word of advice to lien claimants, be sure to adhere to LC 4903.1(c) and CCR 10770(a). Failure to serve all parties and counsel constitutes incomplete service.

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