California EAMS: Verifications Are Now Required for Documents Filed by Lien Claimants

Pop Quiz Question: When does a "lien claimant" become a party in a litigated case per 8 CCR §10210(y)?

a.   The lien claimant files the application

b.   The lien claimant files a DOR

c.   The underlying case has been resolved

d.   The injured worker (IW) chooses not to proceed

e.   Either “c” or “d”

The correct answer is e. (See 8 CCR §10210(y) set forth at the end of this blog.) The lien claimant may proceed to enforce their lien after one of the following two options occur:

1.   When the underlying case has been resolved or

2.   When the injured worker decides not to proceed with a claim for workers’ compensation benefits.

Sometimes lien claimants jump the gun and file an application for adjudication, when the injured worker is still in the process of deciding whether or not to move forward on her worker’s compensation claim. Other times, lien claimants don’t realize that the underlying case is still ongoing and they file a declaration of readiness to proceed to resolve their lien claim, which would be premature.

In days past, the presiding judge (PJ) of each district office would carefully monitor each new filing to weed out any applications and/or DORs that had been incorrectly filed by lien claimants. This was quite time consuming, and took them away from their regularly assigned duties.

In an effort to lighten the burden on PJs and to assist lien claimants in correctly filing their documents, two new verifications are now required.

Verification for filing a lien or application: §10770.5

Regulation 8 CCR §10770.5 requires that any time a lien claimant files a lien claim or an application for adjudication, they must affix a verification to said document ensuring that all requirements have been met. If the lien claimant is filing an application, they must include a detailed statement of facts as to their diligent search efforts. Failure to attach the verification may result in sanctions.

The verification shall be in the following form:

“I declare under penalty of perjury under the laws of the State of California that one of the time periods set forth in Rule 10770.5(a) has elapsed and, if an application for adjudication is being filed, that venue is proper as set forth in Rule 10770.5(b) and that I have made a diligent search and have determined that no adjudication case number exists for the same injured worker and the same date of injury. In determining that no adjudication case number exists for the same injured worker and the same date of injury, I have made a diligent search consisting of the following efforts (specify):”

Verification for filing DOR: §10770.6:

Regulation 8 CCR §10770.6 requires that any time a lien claimant files a declaration of readiness to proceed (DOR) they must affix a verification to said document insuring that one of the following two prerequisites for filing the DOR have been met.

1.   The underlying case has been resolved; or

2.   That at least six months have elapsed since DOI, and the IW has decided not to go forward with their claim.

If the lien claimant selects the second precondition, the lien claimant must include a detailed statement of facts as to their diligent search efforts to verify their assertion. Failure to attach the verification may result in sanctions.

The verification shall be in the following form:

“I declare under penalty of perjury under the laws of the State of California: (Check at least one box)

[ ] that the underlying case has been resolved.

[ ] that at least six months have elapsed from the date of injury and the injured worker has chosen not to proceed with his or her case.  In determining that the injured worker has chosen not to proceed with his or her case, I have made a diligent search consisting of the following efforts (specify):”

Lien procedure: §10770:

Regulation 8 CCR §10770 has also issued which sets forth in detail the proper procedure for filing a lien claim and all the items and information that is needed to submit a valid and enforceable lien claim in the workers’ compensation system. The lien will not be accepted for filing if it does not include an ADJ number consistent with the applicant’s name. In addition, it is extremely important that the lien claimant provide the name, mailing address, and daytime telephone number of a person who will be available at the time of all conferences and trials, and who will have authority to resolve the lien on behalf of the lien claimant. Hopefully, these rules will assist all parties in streamlining the lien process and will help to resolve lien claims in an expeditious manner.

Query: What is the definition of “the case has been resolved”?

Set forth below are three excerpts, one from the Labor Code, one from the court administrator regulations and one from the WCAB regs which explain that a lien claimant may file a DOR and commence their action to proceed on their lien claim once the case has been resolved. (Emphasis added in all three excerpts.)

WCAB Reg. 10770(1) sets forth a definition of the phrase “the case has been resolved.” In part, the case has been resolved when the defendant has agreed to hold the IW harmless from the specific lien in either a stipulated award or a compromise and release (C&R). There are boxes in the stipulated award forms, as well as the C&R forms wherein the defendant can agree to hold the IW harmless from a specific lien. It’s interesting that in the verification requirements set forth above, the LC is not required to establish that this has been done for their specific lien.

In addition, LCs routinely file their DORs to adjudicate their claim after a findings and award (F&A) has issued. This is true even though the F&A is not indicated in the regulation 10770(c)(1) set forth below as an equivalent for the underlying case being resolved. However, LC 4903.5(c) states that once the case-in-chief has been resolved, the LC may then file a DOR to resolve their lien. Presumably, even not spelled out in the regulations below, this includes the issuance of a judicial F&A, as well as a stipulated award and C&R.

LC 4903.6: (b) “No declaration of readiness to proceed shall be filed for a lien under subdivision (b) of Section 4903 until the underlying case has been resolved or where the applicant chooses not to proceed with his or her case.”

Court administrator reg. 10210 (y)(3): "Party means: a lien claimant where either (A) the underlying case of the injured employee or the dependent of an injured employee has been resolved or (B) the injured employee or the dependent of an injured employee chooses not to proceed with his, her, or their case.”

WCAB Reg. 10770.6: No declaration of readiness to proceed shall be filed for a lien under Labor Code section 4903(b) without an attached verification “certifying under penalty of perjury either (1) that the underlying case has been resolved or (2) that at least six months have elapsed from the date of injury and the injured worker has chosen not to proceed with his or her case.

WCAB Reg. 10770(c)(1):For purposes of this subdivision, the underlying case will be deemed to have been resolved if:

(i).   in a stipulated findings and award or in a compromise and release agreement, a defendant has agreed to hold the worker or dependent(s) harmless from the specific lien claim being filed and has agreed to pay, adjust, or litigate that lien;

(ii).   a defendant had written notice of the lien in accordance with Labor Code section 4904(a) before the lien was filed and, in a stipulated findings and award or in a compromise and release agreement, that defendant has agreed to hold the worker or dependent harmless from all lien claims and has agreed to pay, adjust, or litigate all liens;

(iii).   the application for adjudication of claim filed by the worker or the dependent(s) has been dismissed, and the lien claimant is filing or has filed a new application; or

(iv).   the worker or the dependent(s) choose(s) not to proceed with his, her, or their case.” (Emphasis added.)

This blog has been approved by the California Division of Workers' Compensation.

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