On July 1, 2017, the Labor Code Section 4903.05(c) Lien Declaration deadline came and went, but not without a hitch.* On June 26, 2017, the DWC dropped a bombshell by announcing in a Newsline that Lien Claimants must serve their Declaration for mandated liens in compliance with WCAB Board Rule 10324 rather than the conventional WCAB Board Rule 10770. This distinction was monumental. Rule 10770, which governs the filing and service of lien claims, requires that liens be served on the injured workers and the defense. In contrast, Rule 10324 requires service of liens on all parties in a claim, including all other lien claimants. This requirement mandated that claimants who had filed liens subject to the filing fee between January 1, 2013 and December 31, 2016, file declarations verifying the legitimacy of their liens.

Lien claimants, many of whom had filed hundreds if not thousands of liens, faced two choices: they could “stand pat” by asserting that the DWC erred in its last-minute press release, or they could drop everything and serve every Declaration again on all parties in each claim, including the other lien claimants. Neither option was ideal as they both posed negative consequences. The first option would result in the dismissal of every unresolved lien filed between January 1, 2013 and December 31, 2016. The second option required committing time, resources, and significant expenses in a mad dash to re-serve every verification before the deadline on June 30, 2017 at 5:00 P.M. The DWC issued another curative Newsline on June 28, 2017, clarifying that the 4903.5(c) Lien Declaration should be filed in compliance with WCAB Rule 10770, but the damage had already been done. Many lien claimants unnecessarily filed and served additional Declarations on all case parties and Lien Claimants.

The DWC reported that 441,070 Supplemental Lien Declarations were filed, representing about half of the 882,684 liens with a filing fee that were filed between January 1, 2013 and December 31, 2016. The DWC then went to work in reviewing and evaluating filed Declarations for compliance with the legislation and WCAB rules and procedures. In total, 292,074 liens were dismissed by operation of law, representing more than $2.7 billion in dismissed liens.

Unfortunately, missing from any of the regulations is an administrative process for contesting the dismissal of liens for which claimants can prove that their Declarations were timely and/or correctly filed. If the EAMS Help Desk does not respond to requests that liens dismissed by operation of law be vacated and re-added to the Official Address Record, then what is a Lien Claimant to do but refile their lien and seek a ruling from an Administrative Law Judge? Surely, not all 292,000 liens dismissed by operation of law went quietly into the night. Boehm will continue to keep you updated should precedent dictate an administrative process to successfully contest dismissal of a lien for failure to timely file a 4903.05(c) Declaration.

 

_{* This requirement mandated that claimants who had filed liens subject to the filing fee between January 1, 2013 and December 31, 2016, file declarations verifying the legitimacy of their liens.}