California: Lien Claimants’ Notice of Representation Under SB 863

WCAB seeks to rein in the insanity of ever-changing hearing reps and to maintain respect of the judicial process, but does the new rule raise equal protection arguments?

Recent noteworthy panel decisions indicate a trend whereby the WCAB is strictly enforcing new Rule 10774.5 (reprinted in full below), effective October 25, 2013, which was adopted in connection with Labor Code § 4903.6, part of the SB 863 reforms, requiring that lien claimants who are represented by an attorney or non-attorney must provide written notice, under penalty of perjury, to the WCAB and parties of (1) the full case caption, including the case adjudication number, to which the notice relates, (2) the lien claimant’s full legal name, mailing address, and telephone number, and (3) the attorney or non-attorney’s full legal name, mailing address, and telephone number, or the name of the former attorney or non-attorney representative where the lien claimant becomes self-represented. In addition, the lien representative must execute the following declaration: "By signing below, I affirm that I am not disqualified from appearing under Labor Code section 4907, WCAB Rule 10779 (Cal. Code Regs., tit. 8, 10779) or by any other Rule, order, or decision of the Workers' Compensation Appeals Board, the State Bar of California, or court.”

Publisher’s Note: Citations to statutes and rules link to Lexis Advance.

The rule also requires that the both the lien claimant and the representative who is assuming representation sign and date the notice of representation. By contrast, when an attorney undertakes to represent a party, such as an employer or an insurance carrier, the notice of representation is not generally executed by the client, although consent of the client is implicitly required. One of the major difficulties of the rule for lien claimants may be getting a signature of the lien claimant, which may be a corporation, in time for service of the notice of representation on the parties when a lien representative is first retained close to the time of a hearing.

In addition, the rule sets forth instructions for the filing, service and content of the notice when any change of status occurs in a lien claimant’s representation before the WCAB.

The kicker is that Rule 10774.5 provides that if the lien claimant representative or attorney fails to meet all of the notice requirements, the judge is required to treat the lien claimant as not having appeared at the hearing, even if the representative or attorney actually shows up at the hearing, and to dismiss the lien for the lien claimant’s failure to appear.

The question is whether the new rule violates equal protection under the law when arguably the notice of representation requirements for lien claimants are more burdensome for lien claimants than the notice of representation requirements for parties. Does the strict enforcement of Rule 10774.5 make it much more difficult and more costly for lien claimants to be represented before the Board?

On the other side of the equation is the frustration felt by some judges and parties who are fed up with the flood of lien litigation and what they perceive as lien claimant antics and practices that are wasteful of the WCAB’s limited judicial resources. There has been speculation that Rule 10774.5 reflects, at least in part, a similar perception on the part of the Appeals Board. Some non-lawyer lien claimant representatives have been known to assert that they should be held to a lower standard of conduct and ethics than lawyers.

In Ochoa v. Checkmate Staffing, 2014 Cal. Wrk. Comp. P.D. LEXIS – (Appeals Board noteworthy panel decision), the WCAB affirmed the WCJ’s order dismissing the lien claimants’ liens pursuant to 8 Cal. Code Reg. § 10562 for failing to appear at a lien conference and for not timely objecting to a notice of intention to dismiss the liens. The WCAB remanded the matter to the WCJ for further proceedings on the issue of Labor Code § 5813 sanctions.

In Ochoa, the WCAB acknowledged that the lien claimants’ hearing representative, Pinnacle Lien Services/Melissa Hernandez, signed an appearance sheet at the lien conference and filed objections to the notice of intent to dismiss the liens. But the WCAB found that (1) the hearing representative was required under Labor Code § 4903.6(b) to file letters of representation signed by the lien claimants within five business days, (2) no such letters of representation were ever filed by Pinnacle/Hernandez on the lien claimants’ behalf and, therefore, the WCAB considered the lien claimants to be unrepresented and determined that they failed to appear at the lien conference and failed to object to a notice of intention to dismiss the liens, (3) the requirement of a representation letter is plainly set forth in Labor Code § 4903.6(b) and compliance with that requirement is necessary to assure that the agent is authorized in writing to provide representation and to assure that the WCAB and parties are fully apprised of that fact, (4) Pinnacle has never filed letters of representation showing that it is authorized to act for the lien claimants, (5) Pinnacle’s failure to provide necessary documentation before attempting to appear at the lien conference, filing two petitions for reconsideration and filing two requests to dismiss the petitions for reconsideration is unexplained and may support the imposition of sanctions, and (6) Pinnacle’s failure to conform to the procedural and substantive requirements of the workers’ compensation statutes and regulations supports removal of its privilege of appearing before the WCAB as set forth in Labor Code § 4907. The WCAB further admonished Pinnacle for acting in contravention of the workers’ compensation statutes and rules and warned that if Pinnacle engages in such future conduct, additional adverse consequences will result.

In Martinez v. Mainstay Business Solutions, 2014 Cal. Wrk. Comp. P.D. LEXIS – (Appeals Board noteworthy panel decision), the WCAB affirmed a WCJ’s order dismissing the lien claimants’ liens after the lien claimants failed to object to a notice of intention to dismiss the liens, but the WCAB granted reconsideration for the purpose of issuing a notice of intention to impose a sanction of up to $300.00 against each lien claimant and each lien representative individually for filing a petition that was frivolous within the meaning of Labor Code § 5813 and indisputably without merit within the meaning of 8 Cal. Code Reg. § 10561(b).

In Martinez, the WCAB found that (1) although the hearing representative from BBE Management was physically present on behalf of the lien claimants at the time of trial, there were no fully-executed Notices of Representation on file for the lien claimants in compliance with Rule 10774.5, which requires a signature from each lien claimant, entity representing the lien claimant, and the actual representative appearing, (2) under Rule 10774.5(e)(5)(A) and (B), the failure to comply with a notice of representation requirement is a basis for finding that the lien claimant did not appear at the hearing, and the lien claimant is “subject to all of the consequences of a failure to appear,” (3) based upon the lien claimants’ failure to comply with the notice of representation requirements, the WCJ acted within his authority under 8 Cal. Code Reg. § 10562(e)(1) in issuing a notice of intention to dismiss and, after no objection was entered by the lien claimants or their representatives, dismissing the lien claims, and (4) the lien claimants wasted the WCAB’s resources by filing a petition for reconsideration when the lien claimants and their representatives had ample opportunity to object to the notice of intent at the time it was issued, but instead chose to do nothing until after the WCJ dismissed the lien claims.

It remains to be seen whether the rule will be challenged by some lien claimants.

© Copyright 2014 LexisNexis. All rights reserved.

_______________

Rule 10774.5 "Notices of Representation, Change of Representation, and Non-Representation for Lien Claimants" provides as follows:

(a) Whenever any lien claimant obtains representation by an attorney or a non-attorney, changes such representation, or such representation ceases, the lien claimant shall provide written notice to: (1) the Workers' Compensation Appeals Board; (2) the injured employee and the dependent(s) of a deceased employee or, if represented, to the attorney or non-attorney representative of the employee or dependent(s); and (3) each defendant and each defendant's attorney or non-attorney representative, if any. The written notice shall be accompanied by a proof of service made under penalty of perjury.

(b) The notice shall:

(1) caption the case title (i.e., the name of the injured employee and the name of the defendant or primary defendant(s)) and the adjudication case number(s) to which the notice relates;

(2) set forth the full legal name, mailing address, and telephone number of the lien claimant; and

(3) set forth the full legal name, mailing address, and telephone number of the initial or new attorney or non-attorney representative or, where a lien claimant becomes self-represented, the name of the former attorney or non-attorney representative.

(c) The notice shall be filed and served within five working days of when: (1) a self-represented lien claimant obtains an attorney or a non-attorney representative; (2) a represented lien claimant changes to a new attorney or non-attorney representative; or (3) a represented lien claimant becomes self-represented.

(d) The notice shall be verified by a declaration under penalty of perjury stating: I declare under penalty of perjury that the statements and information contained in this notice are true and correct."

(e) Notices of Representation and Notices of Change of Representation:

Whenever a lien claimant obtains or changes representation to an attorney, the lien claimant's duties, as set forth in subdivisions (a) through (d), may be satisfied by notice of representation or change of representation filed and served by the attorney. If the attorney assuming representation files and serves such a notice, the provisions of subdivision (e)(1) through (e)(7) shall not apply.

In all other instances, the lien claimant shall comply with the following procedures:

(1) Where a self-represented lien claimant obtains a representative, a Notice of Representation" shall be filed. Where a represented lien claimant changes to a new representative, a Notice of Change of Representation" shall be filed.

(2) If a lien claimant becomes represented by or changes representation less than five working days before a scheduled hearing or if, for any reason, a copy of the notice of representation or change of representation does not appear in the Workers' Compensation Appeals Board's record by the time of hearing, a copy of the fully executed notice shall be lodged with the workers' compensation judge presiding over the hearing and shall be concurrently personally served on each party or lien claimant appearing at the hearing or, if represented, their appearing attorney or non-attorney representative.

(3) The notice of representation or change of representation is required even if the initial or new representative has signed or is signing a pleading on behalf of the lien claimant.

(4) The lien claimant and the representative who is assuming representation must each sign and date the notice of representation or change of representation before the relationship shall become effective.

If the lien claimant or the representative is a partnership, corporation, or other organization, the notice of representation or change of representation may be signed by a corporate officer, partner, or fiduciary under a statement certifying that the person signing has the authority to sign.

(5) If no fully executed notice of representation or change of representation has been filed at or before the time of any hearing:

(A) the lien claimant shall be deemed not to be represented even if a representative who purportedly has assumed representation appears; and

(B) if the lien claimant does not otherwise appear at the hearing, it shall be subject to all of the consequences of a failure to appear.

(6) A notice of representation or change of representation shall not be filed for the sole purpose of allowing a third party agent, such as a copy service, to sign and issue a subpoena or subpoena duces tecum under Labor Code section 130, Labor Code section 5710, or Rule 10530 et seq.

(7) The notice of representation or change of representation shall contain each of the following, verified under penalty of perjury:

(A) a declaration executed by both the lien claimant and by the representative assuming representation stating: I declare that the named initial or new representative has consented to represent the interests of the named lien claimant and that the named lien claimant has consented to this representation.";

(B) a declaration executed by both the lien claimant and by the representative assuming representation stating one of the following, as appropriate:

(i) This representation began on ..........., .., 20... I am not aware of any other attorney or non-attorney who was previously representing the lien claimant."; or

(ii) This representation began on: ..........., .., 20... I am awarethat ...............................................

[specify person or entity] was previously representing the lien claimant. This Notice of Change of Representation supersedes a previous Notice of Representation dated ........................., 20.... I hereby certify that I have notified the previous attorney or non-attorney representative in writing of the change of representation.

(C) a declaration executed by the representative stating: By signing below, I affirm that I am not disqualified from appearing under Labor Code section 4907, WCAB Rule 10779 (Cal. Code Regs., tit. 8, 10779) or by any other Rule, order, or decision of the Workers' Compensation Appeals Board, the State Bar of California, or court."

(f) Notice of Non-Representation:

(1) If a lien claimant's representation by an attorney or non-attorney representative terminates for any reason (including but not limited to the attorney or non-attorney's discharge or death, or the suspension or removal of the attorney's or non-attorney's right to appear) and the lien claimant does not concurrently execute a notice of change of representation, the lien claimant shall be deemed self-represented and shall file and serve a Notice of Non-Representation."

(2) The notice of non-representation shall comply with the provisions of subsections (a) through (d), above.

_____________________________________

Get the edge on recent case law developments

Designed especially for Lexis.com and Lexis Advance subscribers, this monthly reporter saves you research time so that you can quickly find recent panel decisions on key topics.

Purchase here (Format: PDF).