Abdala v. Aziz

• Decision Date: 04 February 1992
• Docket Number: No. B052910,B052910
• Citation: 3 Cal.App.4th 369,4 Cal.Rptr.2d 130
• Court: California Court of Appeals Court of Appeals
• Parties: Fadia ABDALA, Plaintiff and Respondent, v. Fawzia AZIZ, Defendant and Respondent; Aetna Casualty & Surety Company, Intervenor and Appellant.

Page 130

4 Cal.Rptr.2d 130

3 Cal.App.4th 369

Fadia ABDALA, Plaintiff and Respondent, v. Fawzia AZIZ, Defendant and Respondent Aetna Casualty & Surety Company, Intervenor and Appellant.

No. B052910.

Court of Appeal, Second District, Division 2, California.

Feb. 4, 1992.

Review Denied April 23, 1992.

Charles J. Fleishman, Beverly Hills, for plaintiff and respondent Fadia Abdala.

Knapp, Petersen & Clarke, Kevin J. Stack, Glendale, for defendant, defendant-in-intervention and respondent Fawzia Aziz.

Molfetta & Raymond, Alan L. Hershfield, Glendale, for plaintiff-in-intervention and appellant Aetna Cas. & Sur. Co.

HART, Associate Justice, Assigned. ^*

On this appeal we must determine whether an employer ¹ is entitled to reimbursement for workers' compensation benefits paid to its employee from a personal injury settlement between the employee and a third party tortfeasor.

I.

On June 19, 1987, Fadia Abdala (plaintiff), an employee of Foodmaker, Inc. (doing business as "Jack-in-the-Box"), sustained a back injury in an industrial related accident. Aetna Casualty & Surety Company (Aetna), the workers' compensation carrier for Foodmaker, thereafter provided medical and other benefits to her under its policy. Some fourteen weeks later, on October 1, 1987, plaintiff was involved in an automobile collision unrelated to her employment which allegedly aggravated her pre-existing injuries. She subsequently brought suit against Fawzia Aziz (defendant), one of the persons purportedly at fault in the collision, ² and made written demand on Aetna for payment of additional medical benefits. The basis of that latter claim was set forth in a letter from plaintiff's counsel to Aetna in July 1988: "The industrial accident may not be the exclusive cause of her present back condition and the medical bills which she incurred but as long as it is a proximate or legal cause, the insurance company and/or employer is responsible for all of the bills." Acquiescing to the request, Aetna commenced paying additional benefits for the aggravation of plaintiff's pre-existing injuries caused by the collision.

When defendant failed to answer the complaint in the personal injury action, a default was taken against her. A subsequently filed motion to be relieved from default was denied. On May 17, 1990, the date set for a hearing on defendant's motion for reconsideration, her counsel informed the court that a settlement had been reached with plaintiff and requested the matter be taken off calendar. Aetna, having no independent knowledge of the settlement, did not participate in the negotiations which preceded it. Similarly, at the time of settlement, neither defendant nor her insurance carrier knew of plaintiff's claim for workers' compensation benefits or, therefore, of the possibility that Aetna or any other party would have a claim for reimbursement against any of the settlement proceeds. Defendant and her carrier apparently entered into the settlement in good faith, believing that they had effected a full and final resolution of all claims arising out of the collision.

After learning that plaintiff had settled the suit for $50,000, Aetna, on June 4, 1990, filed a petition to intervene in the action. Accompanying that petition was a complaint in intervention, an application for a first lien in the amount of $32,000, and a motion to set aside the settlement. By those pleadings Aetna essentially sought to recoup the additional compensation benefits it had paid plaintiff because of the injuries she incurred in the automobile collision. Although the trial court initially granted the petition to intervene, it subsequently denied the request to set aside the settlement.

Sometime after the filing of a first amended complaint in intervention, defendant demurred, contending that Aetna had no right to seek reimbursement from her for any workers' compensation benefits paid plaintiff as a result of the automobile accident. The trial court eventually sustained the demurrer without leave to amend, struck the application for a lien, and denied Aetna's renewed request to set aside the settlement. ³ Before these orders became final, defendant apparently paid the settlement proceeds to plaintiff and then filed a satisfaction of judgment. The court thereafter entered a judgment dismissing the amended complaint in intervention, and Aetna filed this appeal. ⁴

II.

Under the workers' compensation statutes, an employee who suffers an industrial injury may recover compensation benefits from his or her employer without regard to the negligence of either party. (§ 3600.) With certain specified exceptions, an injured employee's compensation claim against the employer constitutes an exclusive remedy. (§§ 3601, 3602.) Where the tort of a third party causes injury to an employee, however, section 3852 permits the employee to sue the tortfeasor for all damages proximately resulting from the injury even though he or she has received from an employer workers' compensation benefits covering some of the same injuries and resulting disability. ⁵

To prevent an employee from retaining both third party damages and workers' compensation benefits for the same injuries and disabilities, the Labor Code permits an employer to recover workers' compensation benefits it has become obligated to pay and/or has paid by (1) bringing an action directly against the tortfeasor (§ 3852), (2) joining as a party plaintiff or intervening in an action brought by the employee (§ 3853) ⁶, or (3) allowing the employee to prosecute the action and then applying for a first lien against the resulting judgment or settlement. (§ 3856, subd. (b).) ⁷

We must determine here whether any of the foregoing alternatives are available to an employer who pays additional compensation benefits to an injured employee because of a subsequent nonindustrial accident caused by a negligent third party. The trial court essentially reasoned that an employer's subrogation rights under sections 3852, 3853, and 3856 arise only in cases of industrial injury, i.e., an injury arising out of and in the course of employment. In support of that interpretation, plaintiff and defendant (hereinafter sometimes referred to as "respondents") argue that had the Legislature intended otherwise it would not have limited the definition of the term "injury," as used in the Labor Code, to "an injury or disease arising out of the employment." (§ 3208; emphasis added.) Aetna counters that the plain language of section 3852, providing that "any employer who pays, or becomes obligated to pay compensation [may exercise subrogation rights]," (emphasis added) is clearly not limited to "industrial" injuries.

Our analysis of the applicable law convinces us that respondents' position is inconsistent with the principles of equitable subrogation which underlie the workers' compensation scheme in this state. We conclude that sections 3852, et seq. must be interpreted to allow employers subrogation rights whenever, and to whatever extent, an employee suffers a subsequent tortious injury which also increases the employers liability for compensation. This is true whether or not that subsequent injury is industrial in nature.

We start with the basic issue as framed by the pleadings in the underlying case: an automobile collision, assertedly the fault of defendant, aggravated industrial injuries plaintiff earlier had incurred during the course of her employment. Viewed in that context, defendant's liability extended solely to plaintiff and consisted of damages for personal injuries proximately caused by her wrong. The context of the action inexorably changed, however, when, as a result of the earlier industrial injury, plaintiff's employer became obligated to pay the expense of all treatment "reasonably required to cure or relieve from the effects of the injury." (§ 4600)

The employer's obligation to pay plaintiff additional compensation for the injuries she sustained in the automobile collision arose because of the well-established rule prohibiting apportionment of liability for temporary disability and medical benefits. Where the need for either or both is caused partly by industrial and partly by nonindustrial factors, the employer is liable for all of such costs, including those related to the nonindustrial incident if needed to cure the industrial condition. (See Braewood Convalescent Hospital v. Workers' Comp. Appeals Bd. (1983) 34 Cal.3d 159, 165-166, 193 Cal.Rptr. 157, 666 P.2d 14; Granado v. Workmen's Comp. App. Bd. (1968) 69 Cal.2d 399, 405-406, 71 Cal.Rptr. 678, 445 P.2d 294; Vela v. Workmen's Comp. Appeals Bd. (1971) 22 Cal.App.3d 513, 99 Cal.Rptr. 387.)

Although the employer's payment of benefits for the cumulative injuries served to reduce the losses plaintiff incurred as a result of the nonindustrial accident, that reduction was not meant to absolve the third party tortfeasor from full or partial liability in damages due to her wrongful conduct. Under present tort theory the wrongdoer still bears the ultimate loss. Thus, "one who bears the costs of personal injuries inflicted by a wrongdoer may be subrogated pro tanto to the injured person's claims against the wrongdoer for damages." (Ventura County Employees' Retirement Association v. Pope (1978) 87 Cal.App.3d 938, 951, 151 Cal.Rptr. 695.) Section 3852, granting employers the right to proceed against third parties in such circumstances, is merely a legislative recognition of this equitable doctrine of subrogation. (Breese v. Price (1981) 29 Cal.3d 923, 929, 176 Cal.Rptr. 791, 633 P.2d 987; County of San Diego v. Sanfax (1977) 19 Cal.3d 862, 874, 140 Cal.Rptr. 638, 568 P.2d 363.)

The policy underlying section 3852 is avoidance of double recovery by the employee who elects to claim benefits under the Labor Code and also seeks compensation for his or her injuries from a negligent third party. (County of San Diego v. Sanfax, supra, 19 Cal.3d at p. 873, fn. 6, 140 Cal.Rptr. 638, ...