Ah, good old liens. Love them or hate them, they are a major component of workers’ compensation claims, and failure to timely address them can result in tens of thousands of dollars being owed by claims adjusters.

Jessica E. Bair

Liens defined

A lien is essentially a bill from a third party to be reimbursed for benefits paid (such as medical care, interpreter services or EDD) to prevent the applicant from being paid twice for the same thing.

The most common liens one will typically see during WC claims are:

• EDD lien. When an applicant gets money from the state disability program (unemployment or State Disability Insurance/SDI). These fall into the category of “liens against compensation.”
• Unemployment benefits. When an applicant is unemployed and able to work, but not disabled or suffering from a work-related injury. Applicant must show that he is actively seeking employment. This does not require any proof of a work-related disability. For example, if one were laid off or terminated, she can apply for unemployment benefits until gainfully employed.
• SDI disability benefits. The applicant must show evidence of a disability, which requires a medical doctor to certify the applicant in order to obtain disability benefits from EDD. These do not have to be for work-related claims. For example, if someone is suffering from lupus or macular degeneration or hearing loss, or taking time off due to pregnancy/childbirth and is unable to work due to this medical condition, he or she can collect disability from EDD.

Please note: An applicant cannot collect both temporary disability and EDD disability during an open workers’ compensation claim. Temporary disability benefits are paid by claims adjusters while the applicant is recovering from a work-related injury.

An applicant must notify EDD that he is collecting TD so that EDD can discontinue paying disability benefits. Willful failure to report this or misrepresenting to EDD that he or she is collecting TD benefits is a crime, and applicants could be charged with fraud. Please note that there must be willful misrepresentation or intent to deceive for fraud to be applicable.

However, what happens if an applicant collects EDD and then later collects TD (when there is a denied or delayed claim, and no workers’ compensation benefits are being paid)? At the time of resolution, EDD typically files a lien so it can be paid back for the time frame in which the applicant should have been receiving TD rather than EDD benefits. You would then need a printout of all benefits paid by EDD and TD, the weekly rates paid by both, and the periods paid. If there is a duplication in benefits, EDD can demand that it be reimbursed for the difference, either by defendant or applicant.

Additionally, if an applicant is receiving unemployment benefits, and EDD later tries to seek reimbursement from the workers’ compensation adjusters, this can be disputed, as those benefits were not paid due to a work-related injury.

Interpreter liens

These are liens filed by interpreters who have provided services for court appearances, settlement discussions, medical appointments, etc., but have not been reimbursed for their time. They would typically need to show that they charged the market rate (which would vary in each county) and that they provided services related to the workers’ compensation claim.

Applicants' attorney liens

If the applicant changes lawyers during the claim, the prior applicant attorney will file a lien to be reimbursed for services rendered during the claim prior to the new attorney taking over. These should typically be filed as soon as the change occurs so that the attorney can get a piece of the proverbial settlement pie. These are also liens against compensation.

Child support liens

The Department of Child Support Services will typically file a lien against compensation if the applicant owes back child support. That allows the applicant to pay back what he or she owes for child support out of the settlement proceeds and provide the necessary support for the dependents.

Personally, I find child support liens to be the most “noble” liens of all to resolve and a win-win for the applicant. The applicant gets the dual benefit of receiving settlement money for the work-related claim to be made “whole” again, while also catching up on back child support so that the children also get the support they need.

Medical liens

Doctors who treat the injury usually send invoices right to the adjusters. But if unapproved doctors or those treating unrelated body parts get involved, they file a lien, leading to negotiations/disputes over whether the care was necessary and authorized.

This requires active negotiations with the medical providers to see if 1) the services rendered were related to the WC injury; 2) the services were reasonable, and 3) if they were authorized by the WC adjusters to provide treatment for the applicant. Where applicants receive treatment by unauthorized providers during their claim, or they obtain treatment for unrelated body parts, is where disputes arise, and either the parties must negotiate to resolve them or address the disputes at a lien conference before the WCAB.

Subrogation liens

If a third party (like a company with faulty equipment, or a bad driver who drove into the applicant) caused the injury, the claims adjuster can go after them for reimbursement for benefits paid. Again, this avoids double-dipping.

Disputing liens

Those who do not agree with the lien after reviewing the file and supporting documentation can either negotiate for a reduction or dismissal of the lien. If there is no resolution, one can file a declaration of readiness for a lien conference to address the disputed lien before the WCAB.

Alternatively, defendants can work out an informal agreement with the lien claimant and resolve via stipulation to address the lien without further litigation. One can also ask the lien claimant to withdraw the lien. For example, EDD can withdraw its lien if it paid benefits for an unrelated injury that has nothing to do with the current workers’ compensation claim.

When settling a case, always check with EDD as soon as possible to confirm whether benefits were paid and if there was any overlap. Failure to address EDD liens during settlement can result in an order suspending by the WCAB.

Please note: This is not necessarily a comprehensive list of liens, and they are complex and case-specific. It is always recommended that you speak with a qualified attorney to address liens if they arise.

Jessica E. Bair is an associate attorney at Bradford and Barthel’s San Jose office. This entry from Bradford & Barthel's blog appears with permission.