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Labor Code §4903.8(b) – The Most Overlooked and Non-Litigated Subsection Regarding Assignment in a Lien Litigation

By Danny Leu


Currently, the common litigated issues at a Lien Trial regarding “assignment” under Labor Code §4903.8 have been focused on the enforceability of the assignment at the Workers’ Compensation Appeals Board forum and on the standing of the lien claimant trying to collect on behalf of the assignee, both in accordance with Labor Code §4903.8(a). However, the filing and service requirement of the assignment agreement under Labor Code §4903.8(b) is often overlooked by the workers’ compensation judge when issuing the Finding and Orders and by the litigating parties.


Labor Code §4903.8(b) provides that:

“If there has been an assignment of a lien, either as an assignment of all right, title and interest in the accounts receivable or as an assignment for collection, a true and correct copy of the assignment shall be filed and served.

(1) If the lien is filed on or after January 1, 2013, and the assignment occurs before the filing of the lien, the copy of the assignment shall be served at the time the lien is filed.

(2) If the lien is filed on or after January 1, 2013, and the assignment occurs after the filing of the lien, the copy of the assignment shall be served within 20 days of the date of the assignment.

(3) If the lien is filed before January 1, 2013, the copy of the assignment shall be served by January 1, 2014, or with the filing of a Declaration of Readiness to Proceed or at the time of a lien hearing, whichever is earliest.”


The “key” phrase in section (b) is that “a true and correct copy of the assignment shall be filed and served” within the timeframe set forth in subsection (1) - (3). Failure to comply with this section shall invalidate the lien under Labor Code §4903.8(e), and will not serve to toll the applicable Statute of Limitation under Labor Code §4903.5(a).


Labor Code §4903.8(e) provides that:

“A lien submitted for filing on or after January 1, 2013, for expenses provided in subdivision (b) of §4903, that does not comply with the requirements of this section shall be deemed to be invalidated, whether or not accepted for filing by the Appeals Board, and shall not operate to preserve or extend any time limit for filing of the lien.”


Keep in mind, Labor Code §4903.8(e) will not apply to a lien filed before January 1, 2013. A lien claimant's noncompliance with Labor Code §4908.3(b) will not have a specific penalty, if the lien is filed before January 1, 2013 (See. Martinez v. City of Los Angeles, 2017 Cal. Wrk. Comp. P.D. Lexis 38).


Now, Labor Code §4903.8(b), on its face, appears to be quite straightforward. If a lien assignment agreement was not filed within the time frames set forth is subsection (1) - (3), the lien is invalid. However, the gray area appears when the assignment agreement filed is incomplete or ambiguous. The question then becomes whether such incomplete or ambiguous assignment agreement is considered “a true and correct copy of the assignment agreement.”


Often times, a lien claimant will file an agreement that is undated and signed by an unknown individual. The incomplete assignment contract would be between the assignor and the assignee regarding an “undisclosed account receivable.” This makes it impossible to determine whether the assignment contract includes the bill/liens in the case being litigated. The authenticity and validity of the assignment agreement then becomes an issue.


A Workers’ Compensation Judge must make a factual finding as to whether the incomplete and ambiguous assignment agreement is a true and correct copy. I believe the legislative intent behind Labor Code §4903.8(b) is to ensure that an actual assignment has taken place, not simply a notice of an assignment arrangement between two parties. If the latter were the case, the legislature could simply require the parties to give notice of the assignment, and not require the filing of an actual assignment agreement. Also, the date and subject of the agreement (i.e., which account receivable is being purchased) should be considered highly relevant and necessary concerning the contract, if it appears the lien claimant/assignee is purposely generating a genetic, ambiguous, and undated assignment agreement to try and bypass the requirements under Labor Code §4903.8(b).


Regardless, the lien claimant should have the burden of proof that the assignment agreement is a true and correct copy and that it is pertaining to the assignment arrangement of the receivable at issue. Failure to meet this burden shall make the lien considered invalid under Labor Code §4903.8(e) if the lien is filed on or after January 1, 2013.


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