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Lien Filing/Activation Fees, and a Warning to Defendants
By Jon C. Brissman, Esq.

Both defendants and lien claimants are required to engage in good-faith negotiations. The filing of a DOR requires a statement under penalty of perjury of the “specific, genuine, good faith efforts to resolve the dispute(s).” Failure to comply results in taxing the time and resources of the WCAB to resolve lien disputes and circumvents the assumed purpose of the law, which is to encourage lien resolution prior to setting hearings on the WCAB calendars.

Legislation effective January 1, 2013 requires medical treatment providers to pay a $150 lien filing fee for a new lien. It also requires medical and certain other providers who filed liens prior to 2013 to pay a $100 lien activation fee at the earliest of 1) filing a Declaration of Readiness to Proceed (DOR), 2) before attending a lien conference, or 3) December 31, 2013. Labor Code §§4903.05 and 4903.06; 8 CCR §10208. The consequence of failure to submit proof of payment when filing a DOR is that the DOR will be rejected and not processed, and the consequence of failure to pay the activation fee by the time of a lien conference or 01/01/2014, whichever is earlier, is dismissal of the lien with prejudice.

While judges have information available to them via EAMS and the EAMS Public Access Website documenting whether or not the lien filing fee or lien activation fee has been paid, LC §4903.06(a)(4) specifically states that lien claimants that did not file the DOR must submit proof of payment of the activation fees at the lien conference. Do not assume that a judge will take the time to look in EAMS to see if the activation fee has been paid. It would be prudent for all lien claimants, including the one that filed the DOR, to have proof of payment of the fee at the time of the lien conference, to avoid any confusion or misunderstanding.

The WCAB has proposed regulations which are currently pending in the regular rulemaking process and not in effect yet that will expand the types of appearances at which a legacy (pre-2013) lien claimant must pay the activation fee. For now, an activation or filing fee is not required for appearances at status conferences, mandatory settlement conferences, pretrial conferences, expedited hearings, rating MSCs, trials on case-in-chief issues, or at lien trials when the lien conference occurred prior to 2013. Practitioners need to be aware that if a lien claimant is a “party” as defined by 8 CCR §10301(x)(3), pursuant to 8 CCR §10770.1(a) and (c), any type of hearing set is to be construed as a “lien conference,” before which payment of the activation fee will be required.

LC §4903.07 specifies a procedure for a lien claimant to recover the activation or filing fee from defendant. Prior to payment of the fee, the lien claimant must make a dollar-specific written demand and defendant has twenty days to respond in writing. If settlement does not result and lien claimant still wishes to pursue its lien balance, lien claimant must pay the activation or filing fee. Certainly this must be done on legacy liens before filing a DOR to have the lien adjudicated before the WCAB or before 12/31/13. If the final determination of the WCAB is that defendant owes an amount equal to or greater than the demanded amount, defendant is liable for reimbursement of the amount plus the fee.

Unfortunately, the drafters of the legislation did not specify any mechanism for lien claimants to recover the fee when they receive a Notice of Hearing for a lien conference when they did not file the DOR. It is likely that regulations will be proposed to fill the gaps. Until then, lien claimants should make written settlement demands as soon as they receive a Notice of Hearing for a lien conference (or any type of hearing) and specifically request the WCAB to award reimbursement of the fee under LC §5811 if the demanded amount is found reasonable.

The rationale of the legislation is to encourage parties to resolve outstanding liens before the jurisdiction of the WCAB needs to be invoked. However, several claims adjusters and defense attorneys are demanding that lien claimants produce proof of payment of the filing or activation fee as a precondition to lien negotiation. The tactic is contrary to the spirit of the law which mandates that lien claimants attempt negotiation of the liens prior to filing DORs or appearing at lien conferences. On legacy liens, payment of the activation fee is not required until a lien claimant files the DOR or, if they did not file the DOR, prior to appearance at a lien conference. LC §4903.06(a)(4). For services provided in 2013 and beyond, lien filing is not required to initiate settlement discussions.

Both defendants and lien claimants are required to engage in good-faith negotiations. The filing of a DOR requires a statement under penalty of perjury of the “specific, genuine, good faith efforts to resolve the dispute(s).” Failure to comply results in taxing the time and resources of the WCAB to resolve lien disputes and circumvents the assumed purpose of the law, which is to encourage lien resolution prior to setting hearings on the WCAB calendars.

Workers’ compensation judges will have ample justification to grant a petition filed by a lien claimant requesting sanctions, attorney fees and costs for bad-faith actions or tactics when defendant insists on proof of activation- or filing-fee payment before negotiating.

Observe that non-attorney lien claimants may request and be awarded attorney fees: Under LC Sections §§4907 and 5813 and 8 CCR §10561, anyone who appears at the WCAB is subject to an assessment or award of attorney fees (although someone who is not a member of the State Bar likely will be awarded a lesser hourly fee). Note that 8 CCR §10561(e) specifically states: Notwithstanding any other provision of these rules, for purposes of this rule and Labor Code Section 5813: (1) a lien claimant may be deemed a “party” at any stage of the proceedings before the Workers’ Compensation Appeals Board; and (2) an “attorney” includes a lay representative of a party or lien claimant.”

Prudent lien claimants who find themselves in the position in which claims adjusters or defense attorneys are refusing to negotiate liens prior to proof of payment of a lien activation or filing fee will be collecting or documenting proof of defendants’ refusal to negotiate, and may soon be filing petitions on the issue. Since lien claimants are considered a party at any stage of the proceedings for purposes of LC §5813 and 8 CCR §10561, there is nothing to prevent them from filing such a petition before paying an activation or filing fee. To capture the attention of the judges, lien claimants should clearly reference 8 CCR §10561(e) in their pleadings.

It may take a few well-publicized cases where sanctions, costs, and attorney fees were assessed to extinguish the tactic of using the activation or filing fee as a precondition to lien negotiation. The DWC Newsline already issued a press release telling defendants not to do this. Defendants would be well advised to abandon the tactic now.

Jon C. Brissman is an attorney based in Colton, CA whose practice is exclusively representing lien claimants.

Brissman & Associates
900 E. Washington, Ste. 210
Colton, CA 92324-4192
Voice (909) 512-9205
Fax (909) 512-9209


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