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California: Principles of 2013 Lien Activation Fee Take Shape in WCAB Panel Decisions

June 10, 2013 (12 min read)
By David Bryan Leonard, Esq.
Attention Lexis Online Subscribers: Citations link to lexis.com. Bracketed citations link to Lexis Advance.
Since January 2013, all participants in California workers’ compensation act have wrestled with dynamics imposed by the amendments to Labor Code Section 4903-4903.8 [4903-4903.8]. Due to its immediate application, the filings fees of 2013 established under section 4903.06 [4903.06] have taken front and center stage. To address the new issues, the WCAB has issued one en banc and one significant panel decision. While the legal interpretations remain at the administrative level, several additional panel decisions have issued refining the subject.
WCAB En Banc: Figueroa v. B.C. Doering Co.
As the single en banc decision on the topic, the case of Figueroa v. B.C. Doering Co., 78 Cal. Comp. Cases 439 [78 CCC 439], remains the current focal point of refinement. En banc decisions of the Appeals Board are binding precedent on all WCAB panels and WCJs. Therefore, they are considered the law of the land unless subsequently addressed by a Court with greater jurisdiction.
In Figueroa, the WCAB detailed the process for lien activation and the consequences for not activating a lien prior to a lien conference set after 2013. Interpreting Labor Code Section 4903.06, the Board determined that:
1. The lien activation fee must be paid prior to the commencement of a lien conference, which is the time that the conference is scheduled to begin, not the time when the case is actually called.
2. If the lien claimant fails to pay the lien activation fee prior to the commencement of a lien conference and/or fails to provide proof of payment at the conference, its lien must be dismissed with prejudice.
3. A breach of the defendant’s duty to serve required documents or to engage in settlement negotiations does not excuse a lien claimant’s obligation to pay the lien activation fee; and
4. A notice of intention is not required prior to dismissing a lien with prejudice for failure to pay the lien activation fee or failure to present proof of payment of the lien activation fee at a lien conference.
Reflecting the high level of friction between the participants, along with widespread disagreement concerning the current administrative interpretation of law, since the WCAB issued its en banc decision, there have been a number of individual disputes involving the application of Figueroa and the meaning of Labor Code Section 4603.06. These disputes have generated some individual, non-precedential panel decisions that are of interest to the workers’ compensation community at large.
Lien Conference Occurred in 2012; Another Lien Conference Occurs in 2013
In Alexandrescu v. Walmart (2013) ADJ3951241, 2013 Cal. Wrk. Comp. P.D. LEXIS --, the case was set for lien conference in 2012. The medical provider did not appear, and a notice of intention to dismiss lien was issued by the Court. An objection was lodged and the matter placed back on lien conference calendar in 2012. It was then continued to a lien status conference for 1/14/2013. The medical provider failed to appear and another notice of intention to dismiss was issued. When its lien was dismissed, the medical provider sought Reconsideration. It alleged that proper service of notice was not provided. In response, Defendant alleged that service was perfected. Rather than address the due process issues, the WCAB panel focused on its decision in Figueroa and concluded that because the activation fee was not paid prior to the 2013 conference, the lien was dismissed by operation of the law under 4903.06. In Alexandrescu, the Board has clearly determined that even if a lien conference occurred in 2012, if another conference occurs in 2013, the lien activation must be paid. At the time of the writing of this comment, the Alexandrescu panel decision was not final and is within the timeframe of further appeal.
Lien Conference Set in 2012; Lien Trial Set for 2013 Returned to Conference Calendar
In Garate v. Leading Edge (2013) ADJ7259058 and ADJ725313, 2013 Cal. Wrk. Comp. P.D. LEXIS --, a panel of WCAB Commissioners upheld the dismissal of two medical providers’ liens. Here, the case was set for lien conference in 2012 and set for lien trial on 2/14/2013. Due to multiple case numbers, and a separate Declaration of Readiness to Proceed, the trial was returned to lien conference on 3/17/2013. The lien claimants at the 2/14/2013 trial were advised of the return of all cases to conference calendar. The activation fees were not paid and their liens dismissed.  In the Report and Recommendation on Reconsideration, the WCJ reasoned that even though conferences were set in 2012, the trial of 2013 was returned to conference calendar. Because the lien conference occurred in 2013, the lien claimant’s were required to pay the activation fee. The panel agreed. At the time of the writing of this comment, the Garate panel decision was not final and is within the timeframe of further appeal.
DOR Filed Prior to 1/1/2013, Lien Conference Occurs Prior to 1/1/2013, Lien Trial Takes Place in 2013 Without Any Intervening 2013 Lien Conference
In Mendez v. Le Chef Bakery (2013) ADJ6509620 & ADJ6509621, 78 Cal. Comp. Cases 454 [78 CCC 454] (Significant Panel Decision), the case was set for lien conference in 2012 and continued to trial on 1/3/2013.  Because the lien conference occurred in 2012, the medical provider did not pay the activation fee prior to the 2013 trial. However, at trial, the WCJ concluded that the activation fees must be paid for all lien events, including trials occurring after 2012 lien conferences. It dismissed the medical provider’s lien for non-payment. The medical provider sought reconsideration, arguing that the lien activation fee was not required. Reconsideration was granted. After reviewing the applicable lien statutes, the panel concluded that a lien claimant is not required to pay a lien activation fee prior to a 2013 lien trial where: (1) the declaration of readiness (DOR) is filed prior to January 1, 2013; (2) the lien conference takes place prior to January 1, 2013; and (3) the lien trial takes place in 2013, without any intervening 2013 lien conference. Noting the narrow language of the 4903.06 exception along with the retroactive nature of the lien activation fees, the WCAB panel cautioned if the medical provider had filed a DOR in 2012 but was required to participate in 2013 lien conference, the activation fee would have been required prior to the lien conference. The significant panel decision of Mendez stands for the narrow exception that lien claimants that are on cases without lien conferences prior to 2013 do not have to pay an activation fee. With that caveat, the author notes that this exception will expire. Beginning January 1, 2014, section 4903.06(a)(1) requires that all medical lien claims and costs filed as liens prior to 2013 must have the activation fee paid irrespective of conference status. The WCAB designated Mendez a significant panel decision. A significant panel decision is a case selected by the WCAB as involving new or recurring issues about which there is little published law, or where it would be beneficial to provide a restatement of a legal principle or an issue of general interest. A case designated as significant has been reviewed by all of the board members who agree that the panel decision merits general dissemination in order to provide information and guidance to the compensation community. They are not binding as precedent.
In Ortiz v. Waterway Plastics (2013) ADJ3863284, 2013 Cal. Wrk. Comp. P.D. LEXIS --, a WCAB panel granted Reconsideration of an Order Dismissing liens for failure to pay activation fees. Here, the lien conferences occurred in 2012 and the lien trial took place 2/27/2013. At trial, the WCJ dismissed two medical lien claimants that had not paid the lien activation fee. Citing its significant panel decision in Mendez, and after reviewing applicable lien statutes, the WCAB panel in Ortiz concluded that a medical lien clamant is not required to pay a lien activation fee prior to a 2013 lien trial where: (1) the declaration of readiness (DOR) is filed prior to January 1, 2013; (2) the lien conference takes place prior to January 1, 2013; and (3) the lien trial takes place in 2013, without any intervening 2013 lien conference. The panel reasoned that there is “a clear and unambiguous distinction” between a lien conference, where the pretrial conference statement is completed, and the trial, when evidence is actually presented to the WCJ. In this instance, the lien claimants had no obligation to pay the lien activation fees at the time of trial. Once again, this exception will expire 12/31/2013. Commencing 2014, all remaining lien claimants will have to have paid the activation fee or their liens will be dismissed by operation of law.
Service of Order Dismissing Lien Claim
Addressing the procedural service obligations of Orders Dismissing Lien Claim for Failure to Pay Lien Activation Fee, a WCAB panel in Ramirez v. Kroger (2013) ADJ7446809, 2013 Cal. Wrk. Comp. P.D. LEXIS --, observed that because such Orders are “final” for purposes of WCAB Rule 10500(b), the WCAB is required to serve all parties and lien claimants of record. A WCJ may not designate a party or lien claimant, or their attorney, to serve a final order, decision or award. However, a contrary panel decision in Venegas v. American Honda (2013) ADJ3814780, 2013 Cal. Wrk. Comp. P.D. LEXIS --, upheld an Order of Dismissal served by Defendant. This panel reasoned that a conditional Order Dismissing Lien for Failure to Pay Activation Fee was not an order regarding a disputed issue because there was no dispute that the lien claimant had not paid their activation fee.
Payment of Activation Fee Required Before Commencement of Conference
Finally, in addressing the continued dispute about when payment of the activation fee is due (i.e., before the commencement of the conference or before the end of the conference), a WCAB panel in Utvitch v. Brotman (2013) ADJ2062160, 2013 Cal. Wrk. Comp. P.D. LEXIS --, concluded that an activation fee paid 1-1/2 hours after the conference commencement time of 1:30 p.m. was not timely. The panel agreed with the WCJ that 4903.06(4)’s requirement that the proof payment of activation fee be presented at the time of the lien conference requires such payment to have been made prior to the commencement of the lien conference. The Utvitch panel decision is consistent with an early panel decision on the topic. (See Soto v. Marathon Industries (2013) ADJ7407927 & ADJ7407928, 2013 Cal. Wrk. Comp. P.D. LEXIS 81 [2013 Cal. Wrk. Comp. P.D. LEXIS 81].)
Conclusion
While applicable only to the calendar year of 2013, the lien application fees prior to conference remain a contested and highly litigated issue. As the issues makes their way through administrative interpretation, the calendar year proceeds towards 2014, a time when all remaining medical treatment and costs filed as lien claims must be activated or subject to dismissal by operation of law. Ultimately, the questions of constitutionality of the elements of the statutory reform and required fees are likely to take center stage.
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