Compensation Claims

Part 3 of Division 4 of the Labor Code deals with workers’ compensation claims. Chapter 1 deals with payment and assignment.

Section 4900 provides that no claim for compensation is assignable before payment, but this provision does not affect the survival thereof.

Section 4901 states that no claim for compensation nor compensation awarded, adjudged, or paid, is subject to be taken for the debts of the party entitled to compensation.

Section 4902 provides that no compensation, whether awarded or voluntarily paid, is to be paid to any attorney at law or in fact or other agent, but be paid directly to the claimant unless otherwise ordered by the appeals board. No payment made to an attorney at law or in fact or other agent in violation of this section is to be credited to the employer.

Section 4903 allows the appeals board to determine, and allow as liens against any sum to be paid as compensation, any amount determined as specified. If more than one lien is allowed, the appeals board may determine the priorities between the liens allowed. The liens that may be allowed are as specified.

Section 4903.05 requires every lien claimant to file its lien with the appeals board in writing upon a form approved by the appeals board. The lien must be accompanied by specified information. Any lien claim for expenses or for claims of costs must be filed with the appeals board electronically using the form approved by the appeals board.

Section 4903.07 requires a lien claimant to be entitled to an order or award for reimbursement from the employer of a lien filing fee or lien activation fee, together with interest at the rate allowed on civil judgments, only if all of the three specified conditions are satisfied.

Section 4903.1 requires the appeals board or arbitrator, before issuing an award or approval of any compromise of claim, to determine, on the basis of liens filed, whether any benefits have been paid or services provided by a health care provider and its award or approval must provide for reimbursement for benefits paid or services provided under these plans as specified.

Section 4903.2 provides that, where a lien claimant is reimbursed for benefits paid or services provided, the appeals board may award an attorney’s fee to the applicant’s attorney out of the lien claimant’s recovery if the appeals board determines that all four of the specified actions occurred. The amount of the attorney’s fee out of the lien claimant’s recovery is based on the extent of applicant’s attorney’s efforts on behalf of the lien claimant. The ratio of the amount of the attorney’s fee awarded against the lien claimant’s recovery to that recovery cannot exceed the ratio of the amount of the attorney’s fee awarded against the applicant’s award to that award.

Section 4903.4 allows the director, as administrator of the Uninsured Employers Fund, to provide compensation, including medical treatment, from the Uninsured Employers Fund in cases to which the director is a party before the issuance of any award, if compensation is not being provided to the applicant. The appeals board determines and allows as a first lien against any sum to be paid as compensation the amount of compensation.

Section 4903.4 provides that, if a dispute arises concerning a lien for expenses incurred by or on behalf of the injured employee, the appeals board may resolve the dispute in a separate proceeding, which may include binding arbitration upon agreement of the employer, lien claimant, and the employee, if the employee remains a party to the dispute, according to the rules of practice and procedure.

Section 4903.5 says that a lien claim for expenses cannot be filed after three years from the date the services were provided, nor more than 18 months after the date the services were provided. Any health care service plan licensed, group disability insurer, self-insured employee welfare benefit plan, may file a lien claim for expenses within 12 months after the entity first knew or in the exercise of reasonable diligence should have known that an industrial injury is being claimed, but in no event later than five years from the date the services were provided to the employee.

The injured worker is not liable for any underlying obligation if a lien claim has not been filed and served within the allowable period. Except when the lien claimant is the applicant or as otherwise permitted by rules of practice and procedure adopted by the appeals board, a lien claimant cannot file a declaration of readiness to proceed in any case until the case-in-chief has been resolved.

Section 4903.6 explains that a lien claim or application for adjudication cannot be filed or served until both of the specified conditions have occurred. All lien claimants must notify the employer and the employer’s representative, and the employee and the employee’s representative, and the appeals board within five working days of obtaining, changing, or discharging representation by an attorney or nonattorney representative. The notice must contain specified information.

Section 4903.8 states that any order or award for payment of a lien filed is to be made for payment only to the person who was entitled to payment for the expenses at the time the expenses were incurred, who is the lien owner, and not to an assignee unless the person has ceased doing business in the capacity held at the time the expenses were incurred and has assigned all right, title, and interest in the remaining accounts receivable to the assignee.

The lien cannot be assigned unless the person has ceased doing business in the capacity held at the time the expenses were incurred and has assigned all right, title, and interest in the remaining accounts receivable to the assignee. The assignment of a lien in violation of this paragraph is invalid by operation of law.

Section 4904 states that, if notice is given in writing to the insurer, or to the employer if uninsured, setting forth the nature and extent of any claim that is allowable as a lien in favor of the Employment Development Department, the claim is a lien against any amount payable as temporary or permanent disability compensation, subject to the determination of the amount and approval of the lien by the appeals board.

When the Employment Development Department has served an insurer or employer with a lien claim, the insurer or employer is required to notify the Employment Development Department, in writing, as soon as possible, but in no event later than 15 working days after commencing disability indemnity payments.

Section 4904.1 provides that the payment of liens in no way affects the commencement of immediate payments on any balance of the award to the injured claimant where an installment payment for his disability has been determined.

Section 4905 states that, if it appears in any proceeding pending before the appeals board that a lien should be allowed if it had been duly requested by the party, the appeals board may, without any request for the lien having been made, order the payment of the claim to be made directly to the person entitled.

Section 4906 provides that a charge, claim, or agreement for the legal services or disbursements mentioned, or for the expense mentioned is not enforceable, valid, or binding in excess of a reasonable amount. The appeals board may determine what constitutes a reasonable amount.

An attorney or agent is prohibited from demanding or accepting any fee from an employee or dependent of an employee for the purpose of representing the employee or dependent of an employee in any proceeding of the division, appeals board, or any appellate procedure related thereto until the amount of the fee has been approved or set by the appeals board.

Any fee agreement must be submitted to the appeals board for approval within 10 days after the agreement is made. In establishing a reasonable attorney’s fee, consideration must be given to the responsibility assumed by the attorney, the care exercised in representing the applicant, the time involved, and the results obtained.

Section 4907 explains that the privilege of any person, except attorneys admitted to practice in the Supreme Court of the state, to appear in any proceeding as a representative of any party before the appeals board, or any of its workers’ compensation administrative law judges, may, after a hearing, be removed, denied, or suspended by the appeals board for either of two specified reasons. Nonattorney representatives are held to the same professional standards of conduct as attorneys.

Section 4908 provides that a claim for compensation for the injury or death of any employee, or any award or judgment, has the same preference over the other debts of the employer, or his estate and of the insurer which is given by the law to claims for wages.

Section 4909 states that any payment, allowance, or benefit received by the injured employee during the period of his incapacity, or by his dependents in the event of his death, does not, in the absence of any agreement, be an admission of liability for compensation on the part of the employer. The acceptance of any payment, allowance, or benefit does not operate as a waiver of any right or claim which the employee or his dependents has against the employer.

Section 4909.1 allows the Department of the Youth Authority to request the State Compensation Insurance Fund to provide any payment, allowance, or benefit. When requested by an authorized representative, the State Compensation Insurance Fund is required to administer the benefits in a timely fashion.