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By Matthew Bowden


The Division of Workers' Compensation has promulgated new procedural rules, through the California Code of Regulations, which affect litigation of lien claims. There are three new rules: CCR 10582.5, CCR 10770, and CCR 10582.5(j).


Lien Conferences and Trials (CCR 10770.1)


The biggest change is that a trial can now be set directly from a lien conference. This has the ancillary effect, that it closes discovery at the time of the lien conference, unless the proponent of the evidence demonstrates that the evidence was not available or is newly discovered.


Another major change has to do with the actual litigation of the lien claim, specifically that lien claimants may no longer invoke Labor Code section 10240, to appear telephonically at a lien conference. If the lien claimant is not present in person, the workers' compensation judge has the discretion to enter a Notice of Intent to Dismiss the Lien under CCR 10770.1(g).


Continuances and OTOC's


Parties are now limited to one continuance. A lien conference can still be taken off calendar at the request of the parties. The regulations now require a 90-day waiting period if the matter is taken off calendar before a Declaration of Readiness to Proceed can be filed.


Additionally, the Workers' Compensation Appeals Board may now order that unresolved lien claims or lien issues be decided solely on the exhibits, as long as there are no witnesses listed, or if the witnesses that are listed do not have good cause for being listed. This has the effect of eliminating unnecessary testimony and everything is done within chambers.


Filing Service of Lien Claims (CCR 10770)


This new code section removes the ability of a lien claimant to file an amended lien with the court without prior approval of the Workers' Compensation Appeals Board, or in situations directed by the California Code of Regulations section 10223(g) or section 10223(h), which detail the service of medical reports.


Additionally, this code section removes, and in fact, prohibits the attachment of supporting documents to the original claim or any subsequently filed amended claims. It also now provides the Workers' Compensation Appeals Board power to destroy any additional documentation that is included with the filing of the claim. A full statement or itemized voucher must be served, which will lay out any amounts previously paid by any source for each itemized service. The statement must also include a clear and specific reason for the basis for the claim for additional payment. Lastly, it must include proof that the lien claimant is a service provider or owner of the alleged debt. This must be all done under penalty of perjury.


Statute of Limitations


This code section also establishes that the service of a lien claim on the defendant or the service of notice of any claim that would be allowable as a lien, shall not constitute the filing of a lien claim with the Workers' Compensation Appeals Board, in relation to Labor Code section 4903.1 et sec. This has the effect of codifying current case law, prohibits lien claimants from arguing that the bills serve as notice under section 4904 and, therefore should toll the statute of limitations under CCR 4903.5.


Dismissal of Lien Claims for Lack of Prosecution (CCR 10582.5)


This section will become active on August 1, 2012, and provides a new mechanism to dismiss lien claims. A lien claimant is required to file a Declaration of Readiness to Proceed within 180 days of becoming a party, or 180 days after a lien conference or a lien trial, at which the lien claim at issue was ordered off calendar.


The statute uses CCR section 10301(x)(3) in order to define what it means to become a party to the action. The section reads as follows:


“[Party Means] a lien claimant where either, (a) the underlying case of the injured employee or dependents of an injured employee has been resolved or, (b) the injured employee or the dependents of a deceased employee chooses not to proceed with his/her or their case.”


The timeframe for becoming a party is based off of the date the original owner of the lien claim became a party or would have become a party if they still owned the claim.


Process to Dismiss the Inactive Claim


  1. Send a 30-day notice to the lien claimant and their representative, stating your intention to file a Petition to Dismiss.
  2. File the Petition to Dismiss the lien claim for lack prosecution after waiting 30 days.  Include within the petition, the following documents:

            a. The 30-day notice letter regarding the Notice of Intent to Dismiss;

            b. Any billing documents you have received, indicating whether you made a reasonable good faith payment on the bill or why payment was not made;

            c. Indicate that all medical reports and med-legal reports have been served on the lien claimant, as required by CCR section 10608(f).


Who Must Be Served


A Petition to Dismiss a lien must be served on the lien claimant, and if represented, the lien claimant’s attorney or representative, any defendants and their attorneys, and the injured worker and his attorney.  The lien claimant has 30 days to object by showing good cause as to why the lien claim should not be dismissed. The Notice of Intent to Dismiss, once signed by the judge, must be served within ten (10) business days and shall be served only by the Workers’ Compensation Appeals Board.


The following entities are not affected by the statute: Employment Development Department, The California Victims of Crime Program, and any governmental entity pursuing a lien claim for child support or spousal support.


If you have any questions or would like to refer a lien claim to YRULEGUI & ROBERTS, please feel free to contact us.


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