Liens in the California system have been a burden for years, and the volume has been increasing. The Commission on Health, Safety and Workers' Compensation (CHSWC) had issued a report earlier this year making recommendations to reduce the impact of liens on the system. The report was criticized by several different sectors of the industry as being incomplete, largely on the basis that the report did not get to the underlying cause of the problem, only addressing the symptoms expressed in the system.
I fear that the newly proposed regulations likewise address symptoms without seeking to influence the cause of these symptoms.
Nevertheless, the new regulations, at least initially, will not reduce the amount of liens being filed, but in fact I believe the reverse will occur - that filings and litigation activity regarding liens will increase.
New proposed Title 8, section 10582.5 would allow a lien claim to be dismissed if the lien claimant does not file a declaration of readiness to proceed (DOR) within one year of becoming a party to the case, or within one year of an order taking a lien conference or trial off calendar, whichever is later. The effect of this section may initially catch some lien claimants off guard, but eventually the savvy will institute more sophisticated and complete calendar management systems that will alert them when time deadlines approach so that they file more DORs more often.
When a case gets dismissed for lack of prosecution under 10582.5, another round of litigation concerning the appeal of the dismissal will take up more WCAB resources.
To make 10582.5 really effective, DWC should (assuming it has the regulatory authority to do so) force lien litigants to arbitration, with the right of trial de novo if the arbitrator makes an egregious error.
Arbitration could be provided by independent services, or staffed with DWC resources (but that takes budgetary dollars that likely aren't forthcoming in the current economy). And arbitration could be initiated at any time since lien litigation would not be distracting the WCAB from the case in chief - at least until such time as a trial de novo is requested, which should not be granted until after the case in chief is resolved.
I do like the proposed change to regulation 10770, which would provide that it is unnecessary to file supporting documents with the lien form (though service of supporting documents would still be required). This would reduce the amount of errors that lien claimants introduce into the Electronic Adjudication Management System (EAMS), free up DWC resources presently used to "screen" EAMS filings, and free up the amount of electrons floating around the ether-world. The WCAB does not need to see an itemization of the billing until such time as the lien comes before the WCAB for adjudication - only the defense really needs to see the underlying billing.
In addition it is a good rule to keep amended liens out of the system until such time as adjudication is warranted. Filing amendments does nothing to support the lien - the initial filing secures the lien claimant's position in the claim. Amendments are only for the purpose of putting the payor on notice that the amount has changed - the WCAB does not need to know about that until the lien comes up for adjudication.
Requiring the parties to a lien claim dispute to go through the machinations of a mandatory settlement conference, with the completion of a conference statement and designation of evidence and witnesses is good IF there is first an arbitration. I think this provision would be better applied in a trial de novo situation on an arbitration appeal.
But this is all digression. I understand that the DWC has limited authority on what it can do within its legal structure and that these proposed regulatory changes are an attempt to address the burden imposed on the DWC as a consequence of the Labor Code - something that only the Legislature can fix, and likely won't in the near future.
So, here's my bottom line: I like the provisions that reduce the amount of paper (real or digital) that would be required to be filed. I don't like the new time frames and punitive enforcement measures - I think those will actually increase the litigation burden on the WCAB. I think that the idea of moving lien claim litigation to arbitration should be part of the resolution.
But I think the first step in all of this should be a more complete study as to the underlying reasons for liens in the first place - there are as many reasons as there are parties to litigation, and there are common themes I'm sure. When we understand the behavior that causes the filing of liens then we can institute law and regulations to properly influence that behavior but until then we are treating the symptoms, not the disease.