How To Avoid Lien Fees and Deferral of Medical-Legal Expenses

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

PAY 10[Authors note: I am not an attorney and cannot give legal advice. This is an opinion piece only, so consult your attorney before making any changes to your processes based on this post. Also, note the colored text below are LINKS to the Code Section or Regulation referenced.]


If you are paying LIEN FILING FEES on your medical-legal expenses I think you are: (a) wasting your money, and (b) causing unnecessary DEFERRAL of your receivable until AFTER the case in chief gets resolved.

The WCAB has given clear regulations instructing providers on how to get their non-IBR collection issues resolved through a petition and DOR WITHOUT filing a lien, yet so many providers that I talk to continue to believe they should file a lien.


In January 2013, SB863 went into effect and radically altered how medical and medical-legal expenses were managed in the California Workers Compensation system. Among the sweeping changes were lien filing fees ($150 each), lien activation fees ($100 each), an Independent Bill Review process ($195 each), much shorter lien filing statute of limitations, and a more defined PROCESS for the collection of medical and medical-legal expenses. While all the changes were deeply concerning for medical-legal providers (copy services, interpreters, etc.), the part that really interested me was the REMOVAL of medical-legal expenses from Labor Code Section 4903, Liens Against Compensation.


Labor Code Section 4903 defines the types of expenses that the appeals board may determine as allowed against the applicant’s compensation. SB 863 specifically REMOVED the following part of Section 4903(b): and to the extent the employee is entitled to reimbursement under Section 4621, medical-legal expenses as provided by Article 2.5 (commencing with Section 4620) of Chapter 2 of Part 2. It changed the section to simply state, “(b) The reasonable expense incurred by or on behalf of the injured employee, as provided by Article 2 (commencing with Section 4600), except those disputes subject to independent medical review or independent bill review.”  Article 2 is the section dealing with medical TREATMENT, while Article 2.5 defines medical-legal expenses.

The deletion of medical-legal costs from LC 4903 did not eliminate the ability for a medical-legal provider to file a claim of lien, it only cleared up the previous confusion about such costs being allowed against the applicant’s compensation. The actual lien FILING authority was added by SB 863 as Section 4903.05, which allows liens to be filed “for claims for expenses under subdivision (b) of Section 4903 or for claims of costs.” The addition of the phrase “or for claims of costs” provides legislative authority to file a lien for medical-legal costs, even though such costs would not be allowable against the applicant’s compensation under LC 4903 [See CCR Section 10770((a)(3)].

The point I’m making here is that SB 863 very clearly carved medical-legal costs OUT of 4903 – which is liens against compensation – and THAT caused the WCAB and DWC to redefine their regulations and requirements regarding the filing of such liens. In so doing, the WCAB made filing liens for medical-legal expenses incurred after January 2013 OPTIONAL in CCR Section 10451.1(c)(3)(D).


In addition to making lien filing OPTIONAL for for medical-legal costs, SB 863 gave providers and payers the added benefit of well-defined COLLECTION PROCEDURES and statutory DEADLINES added to Labor Code Section 4622. Section (c) of Labor Code 4622 lays out the PROCEDURES and TIME LIMITS for Payers and Providers to settle disputes that are not just billing or coding disputes under a fee schedule (IBR). The procedures define a standard workflow: Invoice –> explanation of review (EOR) –> object to EOR process… and then it says the EMPLOYER “shall” file a PETITION with declaration of readiness to proceed (DOR) with the appeals board.

In October of 2013 the WCAB put into effect a slew of new regulations, including CCR Section 10451.1 – Determination Of Medical Legal Disputes. This section of the WCAB Policies and Procedures interprets the workflow in LC 4622 and provides authority for medical-legal providers to file their own petition and DOR at CCR 10451.1(c)(3). The petition is titled “Petition For Determination Of Non-IBR Medical Legal Dispute.”  What’s even more important is this regulation provides authority for filing that petition and DOR WITHOUT filing a lien. 


CCR Section 10451.1(c)(3)(D) reads:  “A medical-legal provider is not required to file a claim of costs in the form of a lien in conjunction with the petition or DOR. However, if the provider elects to file such a lien, it must pay a lien filing fee, if applicable.”

CCR Section 10770(a)(3) reads: “a claim for medical-legal costs or other claims of costs may be filed as a lien claim.” The point is the DWC does not state the medical-legal provider SHALL file a lien, or in any way indicate that a claim of lien is required for medical-legal expenses to be otherwise enforced.

This is black-letter authority that medical-legal providers are NOT required to file liens to get their receivable adjudicated before the appeals board.


You might be thinking, “so are TREATMENT liens also OPTIONAL?”, and the answer is NO. Treatment liens MUST be filed in order to enforce the receivable before the appeals board because that is how the WCAB defined those regulations. CCR Section 10451.2(c)(2)(B) – Determination Of Medical Treatment Disputes states : “If the dispute is between a medical treatment provider and a defendant, the procedures applicable to lien claims shall be utilized, including the filing of a lien claim under Labor Code section 4903(b) and the payment of a lien filing fee or lien activation fee, if applicable.” The word SHALL in that sentence makes all the difference.


What’s also significant about CCR Section 10451.1 is the medical-legal provider can file a DOR before the case in chief has concluded, and without WAITING for the commencement of separate lien proceedings – as long as he/she does NOT file a lien. There is a “deferral” section at CCR 10451.1(c)(4) that states the Judge may defer the petition/DOR, but only for certain narrowly defined issues (employment, SOL, coverage, and jurisdiction). Therefore, the language of the WCAB’s regulation indicates that Judges should rule on a provider’s petition without deferral or delay. That’s a HUGE benefit to the system, as it eliminates the build-up of pending hearings and lien filings. It’s also a huge benefit to the provider’s cashflow, assuming they can successfully manage these regulations (and get Judges to cooperate).


Okay… so after we FINALLY got medical-legal expenses removed from liens “against compensation” in LC 4903, and AFTER the hard working folks at the WCAB and DWC finally got all the SB 863 changes reconciled and worked out so that everything actually FIT together into a cohesive system, somebody slipped through some “cleanup legislation” that put medical-legal expenses BACK into Labor Code Section 4903(b) as of January 1, 2015. Medical-legal expenses are once again listed as one of the costs “allowable” against compensation. Ugh. All I can say is, seriously…?

AB 2732 changed LC Section 4903(b) to again read: “The reasonable expense incurred by or on behalf of the injured employee, as provided by Article 2 (commencing with Section 4600), and to the extent the employee is entitled to reimbursement under Section 4621, medical-legal expenses as provided by Article 2.5 (commencing with Section 4620) of Chapter 2 of Part 2, except those disputes subject to independent medical review or independent bill review.


My position is that this does NOT change the current regulation  procedures, and here’s why: As of TODAY, we have solid regulations from the WCAB stating unequivocally that medical-legal providers may file a petition and DOR without filing a lien. The re-inclusion of medical-legal expenses into LC Section 4903(b) simply states that such expenses are “allowable as a lien against compensation.” Labor Code Section 4620 et. seq. (and a myriad of cases) tells us that medical-legal expenses are paid exclusively by the employer, thus such an expense would never be paid out of the compensation of the applicant.

The inclusion of medical-legal expenses as the subject of an allowable lien did not add anything new that must be re-interpreted into regulation: Labor code Section 4903.05(b) and all the regulations interpreting SB 863’s lien changes already allowed medical-legal providers to file liens if they elected to do so. Adding a provision that such costs may also be allowable against compensation doesn’t do much but cause medical-legal liens to be subject to the lien filing statute of limitations and failure to prosecute provisions.


Unless CCR Section 10451.1 is CHANGED to reflect a requirement of a lien before a medical-legal provider may file a petition and DOR to get their issue adjudicated by the appeals board, providers are clear to continue this enforcement procedure WITHOUT filing liens.

Or, providers can take the “conservative approach” and file a lien anyway,  paying the $150 fee and HOPE they can later jump through the hoops required to get an order for REIMBURSEMENT for that filing fee. Good luck with that.  Just keep in mind that when you file a LIEN the STANDARD PROCEDURE in this system is to DELAY and DEFER your issue until AFTER the case in chief has concluded… and that can be several years.

Being able to enforce and adjudicate a medical-legal receivable QUICKLY and without a lien fee seems like a huge efficiency gain for everybody involved, but particularly the providers. Yet, most providers I talk to say they intend to file liens for their outstanding receivables. At $150 per filing and the prospect of getting that fee reimbursed a big question mark, filing liens for medical-legal expenses seems like throwing your money away, to me.

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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.