DWC Reconsiders Lien Declarations Filed July 2-3

DWC Reconsiders Lien Declarations Filed July 2-3

When the California Division of Workers’ Compensation (DWC) mandated that lien claimants must file declarations asserting the validity of their liens, they weren’t kidding around. In August, the DWC dismissed over 292,000 previously filed liens for failure to file retroactive Supplemental Lien Declarations by the established deadline of July 1, 2017.

Now, it appears the DWC may change its mind regarding some of those dismissals. This week, the DWC announced that it will lift the dismissal notice on liens for which claimants filed the Supplemental Lien Declaration on July 2 or 3.

Last year, Senate Bill 1160 (a bill initially designed to speed the Utilization Review process that morphed into anti-fraud legislation) mandated the new lien declaration requirements. The bill amended Labor Code § 4903.5 to require a lien claimant to submit a declaration affirming that their lien falls under one of seven categories.

As defined by the amended Labor Code, the categories listed in sections (A) through (G) are the only legally valid rationales for claiming a lien.

Claimants were required to include the declarations with all new liens filed after January 1, 2017. The requirement was also applied retroactively to liens filed from January 1, 2013.  Claimants who filed a lien (and paid the filing fee) between January 1, 2013, and December 31, 2016, were required to submit the retroactive Supplemental Lien Declaration form by July 1, 2017.

The DWC dismissed the liens of claimants who failed to submit the Supplemental Lien Declaration on time “by operation of law.” On August 14, the DWC mass-dismissed all 292,000 liens, representing a combined value exceeding $2.7 billion.

But this week, the DWC decided to reconsider liens for which the claimant submitted the Supplemental Lien Declaration Form on either July 2nd or 3rd. Why? Because the filing deadline of July 1 fell on a Saturday. California Code of Regulations (CCR) § 10508 states:

“If the last day for exercising or performing any right or duty to act or respond falls on a weekend, or on a holiday for which the offices of the Workers' Compensation Appeals Board are closed, the act or response may be performed or exercised upon the next business day.”

The inherent unfairness of a Saturday deadline did not go unnoticed. Advocacy group California Society of Industrial Medicine (CSIMS) petitioned for an extended period per CCR §10508, since most offices— including the DWC—  were closed on July 1 and 2. Claimants, therefore, had until 5 pm on the next business day (Monday the 3rd) to file their Supplemental Lien Declarations.

The recent DWC Newsline announcement appears to acknowledge that unfairness. But before we get too excited for the reprieve offered lien claimants, it’s worth noting the precise language used in the Newsline:

DWC’s reversal of the dismissal notation is not a decision or order on the timeliness of the declarations, and shall not be construed as such.”

Further, the DWC Newsline instructs that the administrative law judges will adjudicate each lien “on a case-by-case basis.”

The DWC closed 2,794 liens for which Supplemental Lien Declarations were filed on July 2-3 as part of August’s Great Dismissal. Those liens will have the dismissal notation lifted in the DWC’s Electronic Adjudication Management System (EAMS), presumably pending adjudication. While the DWC is careful not to make any promises, there does appear to be hope.

We’ll keep you posted on any updates to this story as it unfolds.

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