Act NOW To Get Reimbursed For Lien Activation Fees

by Stephen Schneider, principal at ScanFiles, Inc. and DocuCents

Lien Activation Fee
Lien Activation Fee

Author’s Note: Stephen is not an attorney and cannot give legal advice. Consult your attorney before implementing any of these suggestions.


Important:  Providers should consider the process in this post BEFORE filing a Lien Declaration of Readiness on their lien – and before any OTHER lien claimant files a DOR. 

Every provider in the system who filed liens prior to 2013 is likely scrambling right now to pay the lien ACTIVATION FEES (LAF) under Labor Code 4903.06 and CCR 10208 before the end of the year. The LAF injunction has been lifted and the new DEADLINE when all pre-2013 liens must be activated is 12/31/2015. If the provider fails to pay the fee on ANY pre-2013 filed liens, those liens become automatically EXTINGUISHED by operation of law on 1/1/2016, and are UNENFORCEABLE before any court. See CCR 10770(a)(3)(B).

The question is, once a Lien Fee is paid, how does the provider ensure the fee will eventually get REIMBURSED by the employer/carrier as provided by Labor Code 4903.07? While the situation is very similar for both ongoing lien FILING fees ($150 upon filing) and the ACTIVATION fees ($100) paid prior to the 12/31/2015 deadline, this post is more specific to the issue of the ACTIVATION fee reimbursement, because the provider has already MISSED the opportunity to send a LC 4903.07 Settlement Demand before the lien was FILED, or even before the activation fee was paid (the deadline is now only a month away). Providers need to act QUICKLY to protect their $100 investment if they already paid an activation fee, or intend to pay the activation fee before the end of this year.

(There is a flowchart LINK that describes all of this at the bottom of this post.)


Labor Code Section 4903.07 regulates the reimbursement of paid activation fees. The KEY to getting reimbursed is for the provider to SERVE a document CLEARLY TITLED  “LC 4903.07 Lien Settlement Demand” on the Payer for a single, clearly-stated SUM – which must be the value that the provider is CERTAIN they can prevail on at the appeals board. This critical document must be served PRIOR to filing a Lien DOR on the case, which is a statutory DEADLINE. The VALUE stated in this demand should include all penalties and interest the provider is SURE most judges would award1 at trial, but EXCLUDING the paid lien activation or filing fees. In other words, the provider should add2 up ALL the remaining receivables due under that lien claim, and come up with a value that is the very LOWEST they can imagine the average judge would award them for the lien at trial, and make a demand for THAT value in the letter.

Providers who are reading this post right now are likely thinking, “I am not going to give my bottom line offer in writing at this point, because I will never get the payer or a judge above that value, later.” Just hear me out on this for minute – I’ll get to that argument…


I suggest that providers DO NOT include the paid activation fees as part of the stated settlement demand value. In the demand letter, clearly state the demand for the paid fees SEPARATELY in the letter, so as not to confuse the issues when it comes time to seek reimbursement of the fees. When a judge determines if the activation fee is reimbursable to the provider or not, the judge will follow Labor Code 4903.07(a)(3), which states, “The amount of the interest and filing fee or lien activation fee shall not be considered in determining whether the award is equal to or greater than the demand.” Therefore, it is critical that the provider’s Settlement Demand Letter leave no room for misinterpretation of the value of the settlement demand, and that the value does NOT include the paid activation fees.


To ensure compliance with LC 4903.07 and set the provider demand value “in stone” for future reimbursement enforcement, the letter/demand should include these KEY COMPONENTS:

  • TITLE THE DOCUMENT: The TITLE of the document should clearly be “Demand For Settlement Of Lien Under LC 4903.07“. This is because the provider only wants to send their “lowest” offer ONE TIME, leaving it open for only the minimum 20 days required by statute, and for purposes of reimbursement issues in the future this correspondence needs to stand out and be unique from all other collection demand or offer letters from the provider.
  • USE THE STATUTORY PHRASE TO STATE THE VALUE: In the body of the document, it should state, “The value in this settlement demand is inclusive of all claims of debt, interest, penalty, or other claims potentially recoverable on the lien, but does not include the paid lien activation or filing fees, which are listed separately below.” This wording is suggested to leave as little room as possible for a judge or payer to misinterpret the language in Labor Code Section 4903.07(a)(1) and 4903.07(a)(3).
  • DO NOT INCLUDE THE PAID ACTIVATION FEES IN THE DEMAND VALUE: This is to ensure there is NO CONFUSION when it comes time for a judge to interpret Labor Code Section 4903.07(a)(3)3 and figure out if the paid fees are reimbursable or not.
  • USE A CLEARLY STATED SUM: The term “Settlement Demand Value: $___________” should be clearly stated in the letter and in bold fontfollowed by the amount of the demand. Again, I suggest that this demand does NOT include the paid activation or filing fees, but that those are listed separately in the letter.  
  • EXPIRATION DATE: The letter should state something to the effect of “This settlement offer and demand EXPIRES on _____________, at which time the settlement offer in this demand is no longer valid.” Insert a date that is 254 days from the date you plan to mail the letter, if the letter will be mailed by postal mail, or it can be 20 days if the letters is going to be faxed or emailed. (Providers should strongly consider following proper proof of service procedures in CCR 10505 for this step, which means NOT emailing or faxing unless the provider has written agreement with the payer to serve by that method.)
  • STATE THE PAID ACTIVATION FEES SEPARATELY: Separately, below the settlement demand value that is in bold, the demand letter must state that lien activation or lien filing fees were paid, and state the value of the paid fees ($100). This should not be bold or formatted in any way to be confused with the statutory settlement demand value, stated earlier in the correspondence.
  • PROOF OF SERVICE: Use a Proof of Service when delivering this important document to the payer, so the provider can PROVE to the judge later that the demand was actually delivered, and the payer failed to respond timely according to statute. Author’s Plug: Consider using DocuCents, a third party mailing and DOCUMENT SERVICE company that will provide a proof of service for your records, and save your staff considerable time and money when mailing out documents. (I am a principle of DocuCents.)


Providers should only send ONE of these specific “LC 4903.07 Settlement Demand” letters for the life of the lien negotiations/settlement. The goal of this step is to SET “in stone” a demand value to ensure reimbursement under LC 4903.07. Therefore, every other settlement demand correspondence (writing) must be formatted and worded carefully not to compete or be confused with the ONE “LC 4903.07 Settlement Demand.”


As provided in Labor Code Section 4903.07(a)(2), the Payer has only 20-days from this DEMAND letter to either accept the demand in writing (agree to pay that value), or actually PAY the lien at this value. If the payer fails to either accept the demand in writing or pay the lien within 25 days5, THEN the paid lien filing or activation fees are subject to reimbursement. The only question at THAT point is if the judge ultimately AWARDS the provider the demanded value in the settlement offer letter (or higher).

Thus… providers need to make sure they can fully support their demanded value under the black letter of the law. Make sure that demanded value is the lowest possible value the provider can expect a judge to award. Copy Services click on the hidden section below about Copy Service and other providers that had fee schedule changes since 2012.


Twenty-five days after service of the LC 4903.07 Settlement Demand, if the payer has not paid or accepted that offer in writing, providers should SERVE a Follow Up letter titled “Expiration Of LC 4903.07 Settlement Demand Notice“. In this letter, put the payer on notice that the previous settlement demand is no longer available, and provide a new demand value, which includes all possible fees and costs, plus penalties, interest, and reimbursement of the paid activation fees.

This written correspondence cancels out the providers “lowest offer” in the Settlement Demand, and RESETS the value of the lien for settlement purposes. The provider is no longer hampered by the LC 4903.07 requirement of using their “best” offer value for the lien. The provider has executed the procedure in LC 4903.07 and can continue with “normal” settlement procedures and tactic to conclude the lien with the payer.

There is no need for a proof of service with this letter, as their WAS with the LC 4903.7 Settlement Demand, above.


Earlier in this post I mentioned that some providers reading this might be thinking they DON’T want to make their “best offer” or provide their lowest settlement value THIS early in the lien negotiation phase. The theory is that once you come down to a value and mention it in a demand, that becomes the “floor” settlement value from that point on, and the provider can never expect to get MORE than that stated value. That position is understandable, and if the $100 activation fee investment is disposable in comparison to the total value of the lien, then there is no need to follow what I’ve suggested in today’s blog post. The point of this post is for small value lien providers ($500 and under) to make sure their activation fees are reimbursable.

The point of the EXPIRATION DATE in the Settlement Demand, and the follow up letter 25 days later that extinguishes that demand is to RESET the lien negotiations at a higher value based on the payer’s failure to take the demand seriously, and act timely. The success of this “LC 4903.07 Dance” depends on the provider’s ability to negotiate with the payer and get the value they truly deserve out of the lien.

The follow up letter should ADD-ON penalties, interest, activation/filing fees, and any other additional fees and costs that were on the original lien to begin with. This sends a clear message to the payer (and in the future to the judge) that the provider expects to settle at a value somewhere between their expired settlement demand and the higher follow-up demand.


Click HERE for a discussion of what to do in this situation...

If the payer pays (or agree in writing to pay) the LC 4903.07 Settlement Demand value within the 20-day period, and does not include reimbursement of the lien filing/activation fees, the provider must point out to the payer that the Settlement Demand stated the paid fees separately on the demand as suggested by LC 4903.07(a)(3) – last sentence. Therefore, the payer should have included the paid activation fee in their decision to settle the lien. If the provider cannot settle the NEW dispute with the payer over reimbursement of the fees, THEN the provider may need to serve an Amended Lien just for the paid fees (and interest), and then FILE a Declaration of Readiness To Proceed (DOR) and go before the appeals board to obtain an Order for reimbursement separately. See the flowchart linked at the bottom of this post for the complete workflow.

If the payer forces the provider to file a DOR and go before the appeals board simply to enforce the clear provisions of LC 4903.07 and get reimbursed for their paid activation/filing fees, THAT sort of frivolous activity would likely result in the judge awarding the provider their attorney fees and costs as LC 5813 sanctions against the payer.



Once the LC 4903.07 Settlement Demand has been properly served, the statutory time period in LC 4903.07 has elapsed (20 days, plus 5 for mailing), and the follow-up new demand letter has gone out, wait another 30 days and consider serving an AMENDED LIEN. Service of Amended liens are “required” by CCR 10770(f) anytime there is a CHANGE in the lien value. Amended liens are NOT to be FILED into EAMS under CCR 10770(c)(2), but ARE required to be SERVED on the payer and all parties under CCR 10770(f) and (d). Therefore, sending out an Amended Lien 25-30 days after the completion of the Settlement Demand process suggested here, including the Follow Up letter with the new demand value, caps off the whole process with solid PROCEDURE in a way that judges will appreciate, and fully supports both the reimbursement of the paid lien fees, AND a solid foundation for future settlement of the lien. Again, see the LINK at the bottom of this post to a FLOWCHART that diagrams out this whole process. In fact, failure to serve an Amended Lien under CCR 10770(f) COULD be used as grounds by the payer to delay or deny the lien. I’m not saying it’s a very threatening or solid objection, but providers should dot every “i” and cross every “t” to get the best value for their lien.


The point of this blog post is to make sure providers make every effort to get their paid ACTIVATION fees reimbursed. It’s clear that to do this, the provider must serve a proper demand – for the right value – and do so before they or any other provider files a Lien Declaration Of Readiness. I suggest THE SOONER THE BETTER. Just get this out of the way.

One challenge in all this is that no single lien claimant can control WHEN a Lien DOR might get filed on the case, and the Demand letter must be served prior to a Lien DOR filing. The appeals board would frown upon a lien claimant who filed a Lien DOR after another Lien Claimant or the defendant had already filed a Lien DOR6. Therefore, we can assume only ONE Lien DOR may be filed on every case… and ALL providers better have made their LC 4903.07 Demand at least 25-days prior to that ONE Lien DOR getting filed. The Best Practice for providers would be to send the LC 4903.07 Settlement Demand letter – with Proof of Service – as soon as possible on every file where they have paid (or intend to pay) an activation or filing fee.


Click HERE if you are a Copy Service or had a Fee Schedule change since 2012

If a provider was not on a Fee Schedule back when the receivables that are the subject of the lien were accrued, but a Fee Schedule has SINCE been enacted, the “right value” for the SETTLEMENT DEMAND is going to be tricky. While most fee schedules are prospective in nature – meaning they only apply to invoices accrued after the fee schedule was enacted – many judges are likely to use the new fee schedule VALUES as their OPINION of what the reasonable value of the services were even PRIOR to the fee schedule. In other words, the provider is very likely to only receive an Award from a judge at the new FEE SCHEDULE value.

What this means is that copy services and other providers who recently were subject to fee schedule changes should seriously consider making their LC 4903.07 Settlement Demand value a re-calculation under the fee schedule of ALL INVOICES that continued to be outstanding (not paid) on that case. The paid invoices are settled and should not be affected, but any still outstanding invoices will likely be awarded only at the fee schedule value, so this must be considered when sending the LC 4903.07 Settlement Demand.

It’s doubtful a payer will respond to this demand letter in the statutory 20-days, so the copy service should not be overly concerned about NOT being able to negotiate the original billed value to settle the lien. Just send the demand, wait the twenty (five) days, and then send a follow up demand for the full amount again.

The goal of this is to protect the $100 Activation Fee investment on that lien.



I urge all providers to follow the workflow I’ve suggested in this post, and do so NOW. The urgency is that most providers are so concerned about getting their activation fees paid that they aren’t paying enough attention to making sure those fees are reimbursable. If the provider doesn’t get this procedure completed BEFORE a lien DOR is filed – by ANY provider – then the opportunity has been lost, and the paid activation fee is likely not going to get ordered reimbursed (because the last demand was too high).

In my experience, it’s not often a judge awards a lien in the FULL amount originally billed. In other words, the judge will usually makes a few adjustments because he/she doesn’t want every lien claim going to trial. Judges want to make BOTH sides hurt a little bit in the end, so they will keep their disputes out of the appeals boards. Therefore, if a provider never made a LC 4903.07 Settlement Demand for a LOWER amount than all their “standard” invoices and liens, and other standard settlement correspondence, THEN that provider risks losing out on the reimbursement of fees issue.

This will be a big problem in the future, when all the paid lien activation fees that occurred this year become the number one dispute in the whole lien collection industry over the next few years.

Click HERE for a FLOWCHART of the steps and procedures that are described in this blog post.



  1. I’ve personally found it rare that judges will award penalties and interest… even when it would appear that the penalties and interest are legally and procedurally warranted. Therefore, providers should consider if they REALLY want to include penalties and interest in this demand letter. Remember, if the payer fails to pay or agree to pay the demand value within 30 days, the provider can go back to demanding the penalties and interest.
  2. Payments should be subtracted from the total invoices on the lien claim.
  3.  Labor Code Section 4903.07(a)(3) states, “The amount of the interest and filing fee or lien activation fee shall not be considered in determining whether the award is equal to or greater than the demand.” Therefore, just to keep things very simple and easy for the judge to understand, the provider should list the LOWEST possible value as the demand in this correspondence, and that means leaving OUT the paid activation fees.
  4. When mailing by postal mail, five extra days must be added to allow for delivery. See CCR 10507(a)(1).
  5. LC 4903.07 provides the payer with 20 days to respond, but providers must add the 5-day mailing provision under CCR 10507(a)(1)
  6. CCR 10770.1(e) states that ALL lien claimants must appear at any Lien Hearing, so all providers on a case are handled at the same time.

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About the Author

Stephen Schneider, principal at ScanFiles, Inc. and DocuCents

Stephen rode the wave of microcomputers in the early 1980's when he founded a software development company, creating Legal Assistant, an MS-DOS based law office management program. He also released a complete software management system for SAK Photocopy Service in 1983. He then founded Med-Legal in 1986 with his father, Warren. Stephen continued to write software to help law offices during his 26 years at Med-Legal, including NetLaw on MS-DOS, QuickLaw on Windows in 1993, WorkComp Toolbox, ML Rating software, Auto Impairment Rating (AIR), tools, and more. Stephen pushed Med-Legal off microfilm and on to scanners in the early 1990s - a first in the copy service industry, and then delivered searchable PDFs on CD with every order.

In 2005 Stephen pioneered the delivery of excerpts/reviews built into every set of records produced by Med-Legal, and even obtained several patents on the technology. Med-Legal pioneered the automation of the EAMS system in 2009 and was the first to be certified as a Third Party e-Filer. Stephen has been an expert witness in the area of copy service collection and deposition law, and served on the Board and as the Legislative Chair for the California Workers Compensation Services Association (CWCSA), where he worked closely with the DIR and the Berkeley Research Group in development of the copy service fee schedule. Stephen authored the Lien Collection and Discovery chapters of the Med-Legal Quick Reference book, as well as co-authoring the Med-Legal PD Chart, WC Tables book and WC Phonebook.

The Schneiders sold Med-Legal in 2012 and no longer have any interest in Med-Legal or any other copy service. Stephen is now focussing on automated document delivery at, where he again co-authored a patent on the technology. Stephen is also owner and CEO of ScanFiles, Inc., focussing on document scanning, daily mail scanning, and "data scraping" for EDI with the most popular case management programs.