18 Mar 2013

California WCAB Panel Dismisses Liens When Activation Fee Paid Hours After Commencement of Lien Conference

By David Bryan Leonard, Esq.

Citations link to lexis.com unless otherwise noted. All bracketed cites link to Lexis Advance.

In one of the first panel decisions issued after the implementation of the $100 lien filing fee, a WCAB panel has dismissed several liens that were activated over two hours after the scheduled lien conference commenced.

On 3/12/2013, the WCAB granted defendant’s Petition for Removal and issued a decision in Soto v. Marathon Industries, Inc., 2013 Cal. Wrk. Comp. P.D. LEXIS – (ADJ7407927, ADJ7407928), interpreting the new legislation addressing lien activation fees, effective 1/1/2013. In Soto, applicant/welder settled his claims for industrial back injury by way of Compromise and Release Agreement approved on 9/6/2012. At a 1/10/2013 lien conference scheduled for 8:30 a.m., the WCJ issued orders dismissing the liens of multiple lien claimants who had rendered medical and interpreting services to applicant. Disputing dismissal of their liens, lien claimants presented proof that they paid the requisite lien activation fees on the date of the lien conference between 10:56 a.m. and 11:06 a.m., just hours after the lien conference was set to begin. The WCJ subsequently rescinded his orders dismissing the liens.

Defendant sought removal to the WCAB, asserting in relevant part that dismissal of the liens was proper under Labor Code § 4903.06(a)(4) [4903.06] due to lien claimants’ failure to file the activation fees prior to the start of the lien conference, and that the orders of dismissal should have remained undisturbed. On removal, the WCAB panel concluded that payment of the required fees, even within hours after the scheduled lien conference, was insufficient to comply with the new statutory and regulatory requirements of timely payment. In this regard, the WCAB noted as follows:

Administrative Director Rule 10208(a), operative January 1, 2013, provides in relevant part: “No lien claimant that is required to pay an activation fee shall file a declaration o[f] readiness or participate in any lien conference including obtaining an order allowing its lien in whole or in part, without submitting written proof of prior timely payment of the fee, or without electronic proof of timely payment of the fee that is available to the judge and parties at the conference. ‘Prior timely payment’ means payment of the activation fee (1) prior to the filing of . . . a declaration of readiness, or (2) prior to an appearance at a lien conference by a lien claimant of record that did not file the declaration of readiness.”

Note: The WCAB appears to cite the proposed final version of Rule 10208(a). A public hearing on the proposed final version of Rule 10208 is scheduled for March 26, 2013. See http://www.dir.ca.gov/dwc/DWCPropRegs/LienfilingFee/LienfilingFeeRegulations/LienfilingFeeTextOfRegulations.pdf The emergency regulation 10208 [10208] filed 12/31/2012, operative 1/1/2013, provides in relevant part: “Any lien filed pursuant to Labor Code section 4903(b) [4903] filed prior to January 1, 2013 . . . shall be subject to a lien activation fee in the sum of one hundred dollars ($100.00), payable to the Division of Workers’ Compensation prior to filing a Declaration of Readiness to Proceed for a lien conference by that party, prior to appearing at a lien conference for a case, or on or before January 1, 2014, which occurs first.”

The WCAB determined that failure to timely pay the lien activation fees compelled dismissal of the liens based upon the language of Labor Code § 4903(a)(4), which provides:

All lien claimants that did not file the declaration of readiness to proceed and that remain a lien claimant at the time of a lien conference shall submit proof of payment of the activation fee at the lien conference. If the fee has not been paid or no proof of payment is available, the lien shall be dismissed with prejudice.

The WCAB reinstated the WCJ’s orders of dismissal, concluding that, under the new legislation, lien claimants were required to pay the lien activation fees prior to 8:30 a.m. on the date of the scheduled lien conference. According to the WCAB, lien claimants’ payment of the fees between 10:56 a.m. and 11.06 a.m. did not constitute “prior timely payments” of the activation fees within the meaning of 8 Cal. Code Reg. § 10208(a), thereby requiring dismissal of the liens pursuant to Labor Code § 4903.06(a)(4).

Author’s comment: The WCAB panel has relied primarily on a lien activation enabling regulation, 10208, subsection (a) to interpret and apply a broader statutory requirement set forth in Labor Code Section 4903.06(a)(4). Questions regarding the interaction and potential conflict between the statute 4903.06 which requires proof of payment at the conference, and the regulation 10208(a) which requires payment prior to appearing at a lien conference are presented. For the moment, it appears that a conservative lien claimant would pay the activation fee no later than two hours prior to the start of a scheduled hearing. It is noted that at the time of this comment, the WCAB panel decision was not final and subject to appeal.