After several years of working a difficult file you have finally reached a deal with the applicant. Just as you are putting the compromise and release together, up walks the EDD representative and he hands you an unexpected gift – his large lien. After reviewing his lien, the settlement is now in doubt. How could you prevent this from happening?
First, you should be aware of any notices EDD should have sent you regarding payment of benefits. Next, you should also be wary of any gaps in payments you have made to the applicant. If there are gaps, ask yourself why. What was the applicant doing? Was he working? If he was not working, chances are he was collecting EDD benefits.
If EDD has failed to provide notice to you of the payments, you can try to use that as a tool to leverage their lien. However in these difficult budget times, EDD has been less willing to walk away from a lien. They usually look to either you or the applicant to pay back the money. This can jeopardize your settlement if the applicant now has to pay EDD or if you are now over you authority level.
If EDD has sent out their required notice to you, mark it in your file. Be very careful in making a retroactive TD or PD payment. This happens all the time as most would like to issue PD payments as soon as an AME or QME report comes in with a PD finding. However you must be wary of possibility of duplicate payments. Most of the time you are more likely to have to absorb that mistake. This can be very awkward and expensive for the claims representative. Thus, in short, review the file before making any retroactive payments to the injured worker.
Sometimes the fault is not yours. For example, the employer has offered suitable modified work and the injured worker fails to take advantage of this. EDD may still pay. But when the time comes to settle up, EDD will want their money from the injured worker. Be aware of this in negotiating your settlement.
Avoid this problem by checking with EDD prior to settlement negotiations. Look for the notices or unpaid periods of time to see if there is EDD involvement. Call the local EDD office to confirm any lien status. In these tight budget times an EDD lien can be very difficult to get rid of, so use prior planning to prevent them from upsetting your well negotiated settlement.