ADJ10981839 · February 4, 2022

The court found that defendant was on notice of applicant's attorney's representation and was required to withhold funds for attorney's fees from permanent disability advancements. The court awarded 12% attorney's fees based on the total permanent disability advancements paid to applicant, rejecting defendant's argument that fees are only payable after an award is issued. Public policy supports payment of fees on advancements to encourage retention of cases.

From the decision · page 2In this case, as in Lewis, it is undisputed that defendant issued applicant's permanent disability benefits without withholding funds sufficient to pay the attorney's fee. It is also clear that for the entire pendency of this action defendant has been on notice that applicant was represented by an attorney because the Application for Adjudication of Claim indicates that applicant is represented and identifies that applicant's attorney by name. The Application for Adjudication of Claim was served on defendant by proof of service dated August 10, 2017. Consequently, pursuant to Lewis, defendant was required to withhold funds to pay applicant's attorney's fees and is therefore subject to liability for failing to do so.

Defendant issued permanent disability benefits without withholding funds for attorney's fees despite being on notice of attorney's representation.

Favours Applicant prevailed

This established defendant's liability for attorney's fees under Labor Code section 4905 and case law requiring withholding when on notice.

From the decision · page 2In this case, as in Lewis, it is undisputed that defendant issued applicant's permanent disability benefits without withholding funds sufficient to pay the attorney's fee. It is also clear that for the entire pendency of this action defendant has been on notice that applicant was represented by an attorney because the Application for Adjudication of Claim indicates that applicant is represented and identifies that applicant's attorney by name. The Application for Adjudication of Claim was served on defendant by proof of service dated August 10, 2017. Consequently, pursuant to Lewis, defendant was required to withhold funds to pay applicant's attorney's fees and is therefore subject to liability for failing to do so.

Labor Code section 4905

Labor Code section 4905 allows the appeals board to order payment of a lien even if not duly requested, treating the award as a lien against unpaid compensation.

The court applied this to hold defendant liable for attorney's fees despite no formal lien request, as defendant was on notice of attorney's representation.

From the decision · page 1Except with regard to liens as permitted by subdivision (b) of Section 4903, if it appears in any proceeding pending before the appeals board that a lien should be allowed if it had been duly requested by the party entitled thereto, the appeals board may, without any request for such lien having been made, order the payment of the claim to be made directly to the person entitled, in the same manner and with the same effect as though the lien had been regularly requested, and the award to such person shall constitute a lien against unpaid compensation due at the time of service of the award. (Lab. Code, § 4905.)

Lewis, supra, 44 Cal.Comp.Cases 573

Attorney's fees are a lien on benefits and must be paid by defendant if on notice of attorney's appearance, even if this results in double liability.

The court relied on Lewis to require defendant to withhold funds for attorney's fees from permanent disability benefits paid without withholding.

From the decision · page 2In Lewis, supra, defendant advanced applicant's permanent disability benefits without withholding monies for applicant's attorney's fee. When the court determined that defendant had overpaid applicant's permanent disability benefits, the WCJ opined that applicant's attorney could bill his client to collect his fee as a result of the overpayment. However, the Appeals Board rescinded the WCJ's decision, concluding that because defendant was on notice of the attorney's appearance in the case and hence on notice of the attorney's lien, defendant was required to pay the attorney's fees even though this would result in double liability. (Lewis, supra, at p. 574.) The Appeals Board reasoned that, having been put on notice of the attorney's appearance, defendant had a duty to withhold funds sufficient to pay the lien that would follow - and the appeals court denied review. (Id.)

Defendant was on notice of applicant's attorney's representation throughout the case, as shown by the Application for Adjudication of Claim served on August 10, 2017.

From the decision · page 2In this case, as in Lewis, it is undisputed that defendant issued applicant's permanent disability benefits without withholding funds sufficient to pay the attorney's fee. It is also clear that for the entire pendency of this action defendant has been on notice that applicant was represented by an attorney because the Application for Adjudication of Claim indicates that applicant is represented and identifies that applicant's attorney by name. The Application for Adjudication of Claim was served on defendant by proof of service dated August 10, 2017. Consequently, pursuant to Lewis, defendant was required to withhold funds to pay applicant's attorney's fees and is therefore subject to liability for failing to do so.