California Workers' Compensation Subrogation

CALIFORNIA WORKERS' COMPENSATION SUBROGATION

AND EMPLOYER LIABILITYAT A GLANCE

Michael D. Carr Joseph M. Nemo

1.Third-party situations.

Every time a worker is injured at work, there are at least two parties, namely, the worker and the employer, for purposes of workers' compensation litigation. However, when the worker is injured through the fault or negligence of someone who is not an agent of his employer, issues of workers' compensation subrogation and employer liability arises as a result of claims that may be brought against the negligent third party. These situations typically arise in automobile accidents, construction accidents, product liability accidents, and premises accidents, but not medical malpractice claims. CA Civ Pro Code §3333.1; Miller v. Scaiaroni., 172 Cal.App.3d 306 (1st Dist.1985)(holding that statutory bar of malpractice claims trumps statutory grant of workers’ compensation subrogation). California is a pure comparative liability state.

2.Workers' compensation subrogation.

The employer by statute has an opportunity to separately pursue reimbursement of workers’ compensation benefits paid and payable, intervene in the injured worker’s action, or just sit back and let the injured worker prosecute the claim.CA Labor Code§3852.Otherwise, the employer can intervene in the injured worker’s action or assert a lien on any judgment. CA Labor Code §3862. The injured worker is required to give notice of suit. CA Labor Code §§ 3853, 3859, and 3860. The employer may be required to discount their lien by its pro-rata share of attorney fees and costs depending on whether the employer has retained its own counsel and whether that counsel has been active or passive as determined by the court or the appeals board. CA Labor Code §3860.

3.Workers' compensation as an exclusive remedy.

Under CA Labor Code §3601(a) an injured worker cannot sue his employer or a coworker for anything other than workers' compensation benefits, however, there are a number of statutory exceptions ranging from unprovoked acts of aggression to intoxication to tampering with the guard on a punch press, etc. It appears that some of these exceptions may create a right of subrogation by an employer against the offending coworker. CA Labor Code §3601(b).A third party may also be able to avoid liability to a worker if acting in a "loaned servant” type situation where a worker is leased to the employer under CA Labor Code §3602(d).

4.Employer liability and reduction for proportionate fault

In Californiaa third party tortfeasor can request that the employer fault be submitted to the jury and if there is a jury verdict finding actionable negligence there will be a discount to the employer’s lien for the employer’s fault based upon the discount for all damages in the verdict, not just the employer’s lien. Witt v. Jackson, 57 Cal.2d 57 (1961);Rooney v. U.S., F.Supp 766 (N.D. Cal. 1977), aff’d 634 F.2d 1238; Employers Mut. Liability Ins. Co. v. Tutor-Saliba Corp., 17 Cal.4th 632 (1998).

5.Statutory distribution

Upon a recovery from a third-party tortfeasor, Under CA Labor Code §§ 3856 and 3860, the attorney fees and costs that benefitted a recovery for both the employer and the injured worker are paid first to whatever party or parties commenced the action, next the employer receives their workers’ compensation lien less its proportionate share of costs if they did not initiate the suit, and the remainder is then given to the worker and is available as a credit against future workers' compensation benefits. Any future credit , allocation or fee disputes should be presented to the Workers’ Compensation Appeals Board unless the settlement needs to be court approved. CA Labor Code §3860(f). Generally, the party that passively benefits from the active participation of the other party’s attorney will pay its proportionate share of the cost of collection. Therefore, it is the employer who intervened has the burden to show its attorney “actively participated” in obtaining the recovery. Quinn v. State of Cal., 539 P.2d 761(Cal.1975); Luque v. Herrera, 81 Cal.App.4th 558 (Cal.App.2000). In addition the injured worker can settle with the negligent third party for their non-workers’ compensation damages as long as the employer’s claim for workers’ compensation damages is preserved. CA Labor Code §3859.

6.Uninsured and underinsured motor vehicle.

The employer has no right to recover workers= compensation paid and payable from an underinsured or uninsured motor vehicle policy. Rudd v. California Cas. General Ins. Co., 219 Cal.App.3d 948 (4th Dist.1990).

9.Statutes of Limitationsand Repose (Generally).

TYPE OF CLAIM / APPLICABLE LAW / TIME PERIOD
Personal injury / CA Civ Pro Code §335.1 / Two years
Wrongful death / CA Civ Pro Code §335.1 / Two years
Contract / CA Civ Pro Code §§337 and 339 / Two years (oral) or four years (written)
Medical malpractice / CA Civ Pro Code §340(5) / Three years from date injury or one year after injury was or should have been discovered.

10.Helpful Internet Links:

NAME/SUBJECT / WEB ADDRESS TO LINKS / NOTE
California Statutes and Legislative History / / Workers’ Compensation: § 3852
California State Legislature /
Department of Industrial Relations: Workers’ Compensation / / General Directory
The State Bar of California / / Attorney Resources
California Statutes and Legislative History / / Workers’ Compensation: § 3852
California State Legislature /

DISCLAIMER: This summary is intended as an educational resource and is not intended to provide definitive answers. Consultation with the applicable laws and/or competent counsel should always be obtained.

500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214, (612) 339-3500 FAX (612) 339-7655

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500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214, (612) 339-3500 FAX (612) 339-7655

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