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Defendant Liable for Post-C&R EDD Lien

Happy Friday, dear readers!

Your humble blogger brings you a cautionary tale – one which is a good reminder of all of us on the defense side: the dreaded EDD lien.

Often enough, applicants will receive money from EDD and will decline to tell the defendant about this.  Sometimes they’ll get it at the same time as they’re getting TTD benefits… sometimes at the same time as PDAs, or sometimes they’ll get EDD benefits after one or another specie of benefits is exhausted.

In any case, EDD is supposed to let you know about this.  California Code of Regulations section 10770(d)(1) tells us that “[a]ll original and amended lien claims, and all related documents, including supporting documentation and any document listed in subdivision (c)(4) shall be served on: (B) any employer(s) or insurance carrier(s) that are parties to the case and, if represented, their attorney(s) or other agent(s) of record.”

My reading of this is that EDD is required to SERVE (not just mail) notice of EDD’s interest in a case to the employer, the insurer, the TPA, and the attorney.  Of course, EDD has sometimes taken the position that automated mailing is sufficient, and that only the employer or the insurer need to advised of the lien.

But you know all this already, so why do I mention it?

In the case of Borbeck v. ACE Building Maintenance, the WCAB denied reconsideration of the WCJ’s ruling that defendant must pay EDD the lien amount of $33,921.68.  There was an overlap in TD and EDD benefits, but defendant argued that, as EDD was advised of the benefits, EDD should have stopped paying the supplemental amounts.

Although the WCAB panel opinion gave some discussion to whether notice was sufficiently provided to EDD, the WCAB ultimately ruled that, because defendant agreed to pay, adjust, or litigate any liens of record, it could ultimately be found liable for EDD’s lien.

The commissioners admonished defendants to make specific provisions for how EDD’s lien would be resolved before the settlement was paid out.

So, here are your humble blogger’s thoughts:

EDD is right in that, if the lien is meritorious, defendant should be liable for a legally supportable sum to satisfy the lien.

However, EDD continued to pay benefits when it had been advised that benefits were already being paid, and disregarded this notice to continue paying benefits.  After all, don’t we tell medical treatment providers to blame themselves when they have been served with MPN based objections to treatment and bills?

Furthermore, EDD provided defective service.  Even though defendant had actual notice of the lien, the same section, 10770, provides that “any violation of the provisions of this section may give rise to monetary sanctions, attorney’s fees, and costs under Labor Code section 5813 and Rule 10561.”  (Subdivision k).  And if you think EDD is somehow exempt, take a look at subdivision (l).  Shouldn’t the defective and informal service by EDD negated the lien, or at least mitigated its total value for the additional costs incurred by the defendant?

We also have to remember what EDD is: applicant paid into the EDD account, and now will have the EDD account replenished to use again.  He’s already gotten the benefits from this account and should look to himself to replenish it.

But, of course, this only goes to the question of whether the lien is meritorious, and not to the question of whether or not defendant agreed to defend the lien.

If a file has been flagged for an EDD lien, we should take precautions of course, but, ultimately, we have to come to grips with the fact that an EDD lien may sink a C&R, and applicants (and their attorneys) should devote their own energy into making sure that EDD liens are resolved.

Let this be a warning to us all, dear readers – leave no EDD lien unresolved before seeking that Order Approving C&R!

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