A recent WCAB panel decision highlighted the importance of serving final decisions issued by the appeals board or a WCALJ. This was addressed in an Opinion and Order Granting Petition for Reconsideration and Decision after Reconsideration issued on October 17, 2011 in Eustolia Montalvo v. Adir Restaurant Corporation. The issue raised was service of settlement documents on a lien claimant and whether failure to serve the settlement documents nullified an order dismissing the lien.

In Montalvo, defendant field a Notice of Intent to Dismiss the Lien Claim of Kevin Aminian, M.D. The lien was dismissed, although upon its request for reconsideration, lien claimant raised failure by the defendant to serve on him a copy of the settlement documents. The order dismissing lien was rescinded, and the matter sent back to the trial court to determine whether proof of service was executed. The court enforced its decision by way of sanctions against defendant should no proof of service be shown, without good cause as to that failure, or sanctions against the lien claimant for failure to attend the trial should proof of service be shown.

It seems fairly obvious that once a settlement is completed either by Compromise and Release and/or Stipulations that the documents should and will be served on all parties of record to include lien claimants. Title 8, California Code of Regulations section 10886 requires a Compromise and Release agreement or stipulations to be served on the lien claimant where a lien claim is on file with the Workers’ Compensation Appeals Board or where a party has been served with a lien. The action of the board in this panel decision by ordering sanctions is an aggressive approach to ensure service of settlement documents on lien claimants.

It also highlights the courts requirement for due process and notice. When service has been shown, the dismissal of a lien will be validated.

The same principals can be used to defend against the late filing of liens should the proper steps be utilized. Labor Code section 4903.5 limits the period for filing a lien to one year from the date for which the services were provided, five years from the date of injury, or six months from the date on which the appeals board of a workers’ compensation administrative law judge issues a final decision, findings, order, including a compromise and release, or award on the merits of the claim, whichever is later.

Labor Code section 4903.5 can be utilized against what the court deems “constructive” liens (services provided with notice to the employer/insurer without a formal lien being filed). There is no obligation pursuant to Title 8 CCR section 10886 to serve settlement documents where a lien has not been filed, however, a failure to do so will allow the late lien filer to claim a lack of notice and a tolling of the Labor Code section 4903.5 statute. Proof of service of settlement documents on all providers who have documented service with a request for payment will allow the Labor Code section 4903.5 defense to be asserted if and when necessary and avoid any due process arguments that might later be raised.

The Montalvo decision highlights the importance of service of settlement documents and potential sanctions for the failure to do so. More importantly, it allows service providers lack of notice and due process arguments and the tolling of limitation statutes. Service of settlement documents on all parties and service providers is important to defeat those due process claims and potential sanctions.