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.
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 Usual Suspects (Types of Liens)
Here are the most common liens one will typically see during WC claims:
EDD Lien: When an applicant gets money from the state disability program (unemployment or State Disability Insurance/SDI). These liens fall into the category of “liens against compensation.”
- Unemployment benefits – When an applicant is unemployed but able to work, but they are not disabled or suffering from a work-related injury. They must show that they are actively seeking employment. This does not require any proof of a work-related disability. For example, if one got laid off or terminated, they can apply for unemployment benefits until they are gainfully employed.
- SDI Disability benefits – The applicant must show evidence of a disability, which requires a medical doctor to certify this 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 they are unable to work due to this medical condition, they 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 they are collecting TD so EDD can discontinue paying disability benefits. Willful failure to report this or misrepresenting to EDD that they are collecting TD benefits is a crime and applicants could be charged with fraud. Please note, 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 they 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, then EDD can demand that they be reimbursed 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 interpreter services for court appearances, settlement discussions, medical appointments, etc., but have not yet 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.
Applicant Attorney liens
If the applicant changes lawyers during the claim, the prior applicant attorney will file a lien to be reimbursed for services they rendered during the claim prior to the new attorney taking over. These should typically be filed as soon as the change occurs, so they 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 they owe for child support out of their 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 their work-related claim to make themselves “whole” again, while also catching up on their back child support so their 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) their 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 treaters during their claim, or they obtain treatment for unrelated body parts, this is where disputes arise, and either the parties must negotiate to resolve it or address the dispute 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
If one does not agree with the lien after reviewing the file and supporting documentation, they can either negotiate for a reduction or dismissal of the lien. If there is no resolution, one can file a Declaration of Readiness (DOR) 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 their lien. For example, EDD can withdraw their lien if they 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 if 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 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. If you have questions about workers’ compensation defense issues, please feel free to contact Jessica at 408.392.8202 or via email at jbair@bradfordbarthel.com.
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