New Lien Time Limits ... and Ambiguities

Sunday, December 22, 2002 | 0

California's 2003 legislation via AB 749 and 486 brought in some new rules in the filing and enforcement of medical liens, the most important of which are time limitations on the filing and prosecution of liens. Perhaps of greater importance than the black letter statutory time frames set forth in the new statute are the great variety of ambiguities built into the new law. This article is not the final say on lien filing limitations as there certainly will be opinions from higher authorities within the California judicial system.

Labor Code section 4903.5 was added by the 2002 legislation, and becomes effective 1/1/03. Before we review the actual mechanics of the statute, one observation from a technical legal standpoint: the effective date of a statute is the first of the year following its enactment, unless stated otherwise. This means, obviously, that LC 4903.5 becomes effective 1/1/03 as there is nothing in the statute stating it starts on an earlier date. But the question becomes whether the new lien rules are for liens filed after 1/1/03, or are for liens arising out of injuries that occur after 1/1/03. Until an authority provides otherwise, for purposes of this article we are going to assume that the statute applies to liens filed after 1/1/03, regardless of date of injury.

The first paragraph in 4903.3 delineates the basic time line for filing a lien. There are three applicable time restraints, and the latest applicable time limit takes precedence. A lien must be filed no later than:

1) 6 months from the date of a final award or order on "the merits of the claim" (which includes a C&R or Stipulated Award);
2) 5 years from the date of injury (so for a continuous trauma case, one would assume that LC 5412 and interpretive case law apply);
or 3) one year from the date services were provided.

The final qualitative sentence in 4903.5 is "whichever is later". Ostensibly, this could mean that even if a lien were filed more than six months after a final order, or more than 5 years post injury, it could be enforceable so long as it was filed within one year from date of service. This ambiguity in the language of the statute will likely lead to further litigation and will require interpretive case law to determine just how late after services are rendered would a lien filing not be time barred.

In addition, another possibility that will be a source of attorney fees in the future is the catch all in subparagraph (b) in 4903.5: "Notwithstanding subdivision (a), any health care provider... providing medical benefits on a nonindustrial basis, may file a lien claim...within six months after the person or entity first has knowledge that an industrial injury is being claimed." If a case starts out as disputed, and services are rendered to the injured worker prior to a determination of AOE/COE in favor of the applicant, then does subsection (b) apply, making the time limit only 6 months, or does subsection (a) apply, giving the lien claimant a different set of time limits? There will also certainly be many factual disputes and litigation about when "the person...first has knowledge that an industrial injury is being claimed".

In addition, it seems that the law is adding further pressure on the Appeals Board by requiring the filing of a lien for virtually any and all services. If the lien is not filed within the appropriate time limit, there is no recourse against the injured worker. Subparagraph (c) provides: "The injured worker shall not be liable for any underlying obligation if a lien claim has not been filed and served within the allowable period." Of course, the inverse is in question as well ￯﾿ﾯ￯ﾾ﾿￯ﾾﾢ￯﾿ﾯ￯ﾾﾾ￯ﾾﾀ￯﾿ﾯ￯ﾾﾾ￯ﾾﾓ if a lien is filed timely, then is the injured worker liable?

Unless the lien claimant is the applicant in a case (was the original filer of an Application for Adjudication of Claim), the lien claimant is prohibited from filing a Declaration of Readiness to Proceed until after the case in chief has been resolved (another ambiguity ... is "resolved" the same as a final order or award, or does it have a meaning involving less finality?).

For the time being, it appears that the medical provider's best course of action is to file a lien with the WCAB immediately after providing services, and to stay on top of the litigation status in any and all cases by using modern tools provided by the WCAB such as the EDEX system as well as litigation representatives.