Lien Activation Fees

Spring Cleaning has come early! Well it did for old liens at least.  Any lien claimants with liens filed prior to January 1, 2013 whom did not pay the  activation fee prior to December 31, 2015 are SOL.  

History of the Law

Senate Bill 863 required all liens claimants to pay a lien activation fee. SB 863 also required liens filed prior to the effective date of SB 863 to pay an activation fee of $100.  This activation fee was meant as a disincentive to file frivolous liens, aimed to address the lien crisis and growing backlogs of liens in the workers’ compensation system. 

However, this lien activation fee was enjoined by the U.S. District Court for the past two years as it applied to liens filed prior to January1, 2013. In Angelotti Chiropractic v. Baker et. al., the plaintiff and other lien claimants sued the Director of the Department of Industrial Relations alleging that the lien activation fees under Labor Code § 4903.6 and SB 863 violated the U.S. Constitution. They argued that the activation fee was a violation of the taking and due process clause and equal protection under the U.S. Constitution due to its retroactive application. 

While U.S. District Court Judge George Wu dismissed the taking and due process claims, he did issue a preliminary injunction against enforcement of the activation fees on equal protection grounds. The injunction took effect on November 19, 2013.

On appeal, the Ninth Circuit United States Court of Appeals ruled that the lien activation fees were constitutional. On November 3, 2015, Judge Wu vacated the preliminary injunction. 

Paying the Fees

Under Judge Wu’s November 3, 2015 order, lien claimants had from November 9 until December 31, 2015 to pay the lien activation fee on any lien filed before January 1, 2013. Failure to pay the activation fee results in dismissal of the lien by operation of law under Labor Code §4903.06(a)(5). 

One provision of the Judge Wu’s order did provide for a one calendar day extension if the lien activation payment system became non-operational for six or more hours in a 24-hour period. However, this extension was not necessary. 

Dismissed With Prejudice

With the deadline to pay past, any lien with an unpaid required activation fee is now dismissed with prejudice by operation of law. Furthermore, CCR10770.1(c)(3)(A) states, “if the proof of prior timely payment of the activation fee is not submitted, the lien claim shall be dismissed with prejudice.” 


WHAT'S THE POINT

Any time you or defense counsel are negotiating liens, make sure to check when the lien was filed and if it was filed prior to January 1, 2013, make sure the lien activation fee was paid prior to December 31, 2015.  If not, tell those cockroaches to pound sand!

To take full advantage of this development, our offices will aggressively ensure that any lien filed prior to January 1, 2013 has proof of a timely paid activation fee. Should any lien claimant have not paid the required activation fee or not have proof, we will immediately ensure that the claim is dismissed with prejudice. 

Should you have any questions about the lien activation fee, please feel free to contact any of our attorneys.