A recent writ denied opinion highlights an important tool that is often neglected in curbing the costs of lien negotiation and settlement.  In Escamilla v. WCAB (2011 Cal. Wrk. Comp. Lexis 67; behind a Lexis pay wall), the Workers Compensation Judge’s award of sanctions and costs against a lien claimant and its hearing representative was upheld.

The essential facts are that the lien claimant was forced to wait for the lien hearing to begin, roughly 90 minutes, because the defense attorney was in a trial.  Ultimately the parties settled, including in the settlement all claims to penalties and interest.   A year later, the lien claimant filed a petition for cost and sanctions for that 90 minute wait.  After arriving late for a trial date, requesting and receiving a continuance, and arriving late for the second trial date, the WCJ denied the lien claimant’s petition, while also awarding almost $2,500 in costs to the defense attorney (pursuant to the defense attorney’s Labor Code § 5813 petition, among other penalties.

In this case, the attorney pursued a § 5813 petition and recouped the costs of his billed hours for his client.  But too often the remedy of § 5813 is not invoked.  Lien claimants have a very low operating cost, while defendants have to pay their adjusters and their attorneys.  This is effectively leveraged by lien claimants threatening “scorched earth” against defendants – pay us our Danegeld, even on an unreasonable claim, or we’ll cripple you with attorney fees.

§ 5813 gives defendants a chance to fight back, and to raise the cost of doing business on the lien claimants.  Without § 5813, the operating costs are limited to small amounts of time and boiler plate pleadings used repeatedly.  With § 5813, the lien claimant and its hearing representative suddenly find themselves paying the defendant’s attorney fees.  If used judiciously, § 5813 can stem the flow of unreasonable lien claims and provide some real leverage in negotiating a token settlement.

But, just like peeking inside a van parked by the river to claim the “free candy” promised in spray-paint on the van’s side, § 5813 comes with its own dangers.  A careless and knee-jerk habit of sanction filing will eventually get an attorney or even a defendant on the “ignore” list of the WCJ.