Oakland, CA – The Workers’ Compensation Appeals Board (WCAB) has adopted or amended three sections of its Rules of Practice and Procedure (Rules) relating to lien claims. These new lien Rules went into effect on May 21, 2012. The lien Rules are posted on the WCAB’s website.
A brief summary of the changes follows:
Dismissal of liens for lack of prosecution: Rule 10582.5 establishes new procedures for dismissing a lien claim for lack of prosecution.
- Although Rule 10582.5 became effective on May 21, 2012, it is not operative until August 1, 2012. This approximately 2½ month period gives lien claimants that have not previously filed a declaration of readiness to proceed (DOR) the opportunity to do so before the Rule becomes operative.
- Rule 10582.5 essentially provides that, after a lien claimant is given notice and an opportunity to be heard, a lien claim may be dismissed for lack of prosecution if the lien claimant does not file a DOR by the later of: (1) 180 days after it has become a “party” within the meaning of Rule 10301(x)(3); or (2) 180 days after a lien conference or lien trial in which the lien claim is directly at issue is ordered off calendar.
- Rule 10582.5 also establishes procedures that must be followed before a lien claim may be dismissed for lack of prosecution. These procedures include a requirement to send the lien claimant a 30-day letter before a petition to dismiss for lack of prosecution may be filed. They also include various requirements regarding the contents of a petition to dismiss for lack of prosecution. Further, there are provisions requiring that a lien claimant must be given notice and an opportunity to be heard before its lien may be dismissed for lack of prosecution.
- Rule 10582.5 also establishes certain classes of liens that are not subject to dismissal for lack of prosecution, i.e., the lien claims of specified governmental entities (including the Employment Development Department) and of self-represented lien claimants with living expense, burial expense, and spousal or child support expense liens.
The WCAB emphasizes that, although Rule 10582.5 gives lien claimants a 2½ month grace period to file DORs, a lien claimant that files a DOR before it is actually ready to proceed runs various risks. These risks include, but are not limited to, (1) sanctions for filing the DOR prematurely and (2) discovery closure at the lien conference without the allowance of a continuance. Further, lien claimants who file multiple DORs must appear at each lien conference and, if they fail to appear, they may be subject to sanctions and/or dismissal of their liens. It might well be that a lack of personnel to handle multiple appearances will not constitute good cause for failing to appear.
Filing and service of liens: Rule 10770 amends the procedures for the filing and service of lien claims.
- Rule 10770 changes the filing requirements for lien claims to provide that: (1) only original (i.e., initial or opening) liens shall be filed, and not amended liens; and (2) no supporting documentation for any liens (original or amended) shall be filed. However, Rule 10770 does not affect the filing of supporting documentation and/or amended liens at hearings or as otherwise ordered by the WCAB.
- Rule 10770 still requires lien claimants to serve all original liens, amended liens, and supporting documentation on the parties. Therefore, the parties will remain fully apprised of the nature and amount of each lien claim, even though some information is not being filed with the WCAB.
- Rule 10770 allows the WCAB to reject and destroy amended liens and supporting documentation lodged in violation of the Rule, as well as to destroy any amended lien claim or any documentation in support of any lien claim (original or amended) that was previously lodged or filed.
In addition, Rule 10770 addresses the problem of so-called “zombie liens.” Rule 10770 interprets Labor Code section 4904(a) to mean that if a lien claim (or notice of any claim that would be allowable as a lien) is served on a defendant, this does not constitute the filing of a lien with the WCAB. Also, Rule 10770 interprets sections 4904(a) and 4903.1(b) to mean that a defendant does not have “notice” that a lien is being asserted—and, therefore, has no duty to “file” a lien with the WCAB when a compromise and release agreement or a stipulated Findings and Award is submitted to it for approval—if the lien claimant is silent for at least 90 calendar days after a defendant has made a good faith partial payment, together with a clear written explanation justifying the amount paid and specifying all additional information that must be submitted to receive full payment, in conformity with various existing laws, e.g., section 4603.2(b)(1).
Lien conference and trial procedures: Rule 10770.1 establishes new procedures for lien conferences and lien trials, including:
- When a lien conference is set, all unresolved lien claims will be the subject of the lien conference, unless otherwise expressly ordered by the WCAB.
- All defendants and all lien claimants must appear at a lien conference and/or trial without regard to the amount of the lien.
- If any lien claim(s) or lien issue(s) are not fully resolved at the lien conference by an order signed by a WCJ, the defendant(s) and lien claimant(s) shall prepare, sign, and file a pretrial conference statement with the WCJ that lists all documentary evidence and witnesses.
- Discovery shall close at the time of the lien conference, except as to evidence or witnesses that could not have been discovered with the exercise of reasonable diligence, and that the right to present any issue, documentary evidence, or witness not listed in the pre-trial conference statement shall be deemed waived, absent a showing of good cause.
- In general, all lien issues not resolved at the lien conference shall be set for a lien trial; however, a one-time continuance or an order taking off calendar may be allowed only upon a showing of good cause, and no subsequent DOR may be filed thereafter for at least 90 days.
- Certain classes of lien claims—i.e., the lien claims of specified governmental entities (including the Employment Development Department) and of self-represented lien claimants with living expense, burial expense, and spousal or child support expense liens—are not subject to certain of Rule 10770.1’s provisions.
The above summary of Rules 10582.5, 10770, and 10770.1 does not purport to fully cover all new or amended provisions. Members of the workers’ compensation community are encouraged to go to the WCAB website to review the complete copies of the new lien Rules and to adequately familiarize themselves with all of the changes.