California-Western States Life Ins. Co. v. Industrial Acc. Commission

• Court: California Supreme Court
• Writing for the Court: ROBRINER; GIBSON
• Citation: California-Western States Life Ins. Co. v. Industrial Acc. Commission, 28 Cal.Rptr. 872, 59 Cal.2d 257, 379 P.2d 328 (Cal. 1963)
• Decision Date: 07 March 1963
• Docket Number: CALIFORNIA-WESTERN
• Parties: , 379 P.2d 328 STATES LIFE INSURANCE COMPANY, Petitioner, v. INDUSTRIAL ACCIDENT COMMISSION, Viola B. Baird, Benton Plating Co., Inc., et al., Respondents. Sac. 7402

Page 872

28 Cal.Rptr. 872

59 Cal.2d 257, 379 P.2d 328

CALIFORNIA-WESTERN STATES LIFE INSURANCE COMPANY, Petitioner, v. INDUSTRIAL ACCIDENT COMMISSION, Viola B. Baird, Benton Plating Co., Inc., et al., Respondents.

Sac. 7402.

Supreme Court of California

March 7, 1963.

Rehearing Denied April 3, 1963.

Downey, Brand, Seymour & Rohwer, John F. Downey and Howard L. Jeske, Sacramento, for petitioner.

Everett A. Corten, Emily B. Johnson, Rupert A. Pedrin, San Francisco, Weingand, Tipton, Kendig & Stockwell, Los Angeles, Jaffe, Mallery & Thompson, Pomona, and Herlihy & Herlihy, Los Angeles, for respondents.

Barry Satzman, Ellsworth H. Kendig, Jr., and Barry F. Evans, Los Angeles, as amici curiae on behalf of respondents.

ROBRINER, Justice.

California-Western States Life Insurance Company (hereinafter called petitioner) seeks review of an order of the Industrial Accident Commission which, approving a compromise agreement between the employee, the employer and the latter's workmen's compensation insurance carriers, awarded petitioner $250 in full satisfaction of its lien claim for $1,105. We shall explain why petitioner's objection to the order of the commission on the ground that it failed to render findings cannot stand; the contention conflicts with the express statutory scheme for compromise and settlement. We shall likewise set forth the reasons for our rejection of petitioner's further objection to the formula of settlement.

In 1953 Viola B. Baird was employed by Virgil K. Benton as an accountant and general office manager. The business rapidly expanded, and, with its growth, Mrs. Baird's responsibilities increased. Mrs. Baird did not take regular vacations but at spasmodic intervals only a few days' leave, which on no occasion composed a full two weeks for the year; in 1959, because of the heavy workload, she took no vacation at all. She worked almost every Saturday and some Sundays; she often took work home.

In March, 1960, Mr. Benton hired a controller who became Mrs. Baird's supervisor. The controller moved Mrs. Baird out of her private office and into the general office area. Immediately thereafter, during 'a heated discussion' with Mr. Benton, Mrs. Baird collapsed and was taken to a hospital for treatment.

Mrs. Baird applied to her employer's workmen's compensation insurance carrier for temporary disability benefits under the Workmen's Compensation Act; the commission denied her claim. She thereupon properly filed for unemployment compensation disability (hereinafter termed U.C.D.) benefits; accordingly petitioner paid to Mrs. Baird $65 per week for the period April 17 to August 13, 1960, computing a total of $1,105. (Unemp.Ins.Code, §§ 3251-3271.) Mrs. Baird consented to the allowance of a lien to petitioner against any recovery of workmen's compensation benefits that she might receive as the result of her claim against her employer and his workmen's compensation insurance carriers.

On December 2, 1960, Mrs. Baird entered into a compromise and release agreement with her employer and his workmen's compensation insurance carriers settling her claim for the lump sum of $8,500. The compromise agreement proposed that Mrs. Baird's attorneys receive $850 for their services, and that petitioner's lien claim in the sum of $1,105 be reduced to $200 by a formula which the commission had previously used in Davis v. Blaser (1958) 24 Cal.Comp. Cases 100. Petitioner neither became a party to this agreement nor did it participate in any of the negotiations that culminated in the compromise.

Applying the Davis formula the parties to the settlement computed the total value of Mrs. Baird's claim as if she were to prevail in all her contentions:

    Permanent Disability (based upon a rating of 72% as
                adjusted for age and salary) ............................... $15,120.00
                    Life Pension (based upon $14.52 per week for the life
                expectancy of Mrs. Baird, which was 12 years) ................ 9,060.48
                    Temporary Disability from March 17, 1960 to March 17
                1961 ......................................................... 3,380.00
                    Past Medical Treatment ................................... 1,000.00
                    Estimated Future Medical Treatment ....................... 2,000.00
                                                                             ----------
                                                                             $30,560.48
                

In the compromise agreement the parties deducted $3,000, the amount of the past and future medical treatment, from the lump sum settlement of $8,500, leaving $5,500. The agreement then proposed that petitioner's lien be allowed only in an amount that would bear the same ratio to the net lump sum of $5,500 that the total lien claim ($1,105) bore to the total sum claimed by Mrs. Baird ($30,560.48). By this formula petitioner's lien claim was reduced to 1/29th of the $5,500 lump sum payment or $200.

On December 14, 1960, the porposed compromise agreement was filed with the commission. Petitioner received a copy; on December 20 it filed objections to the compromise. The commission held a hearing on the matter; petitioner did not appear but agreed to submit, on the evidence already introduced, its lien claim and its written comments. On February 9, 1961, the commission approved the compromise and release, ordering that Liberty Mutual Insurance Company pay to Mrs. Baird the sum of $4,085, that Industrial Indemnity Company pay to Mrs. Baird the sum of $2,460 and to her attorneys $850; and that Liberty Mutual withhold the sum of $1,105 pending further order.

Upon further consideration of the pending lien claim and determination that the original reduction was not 'reasonable,' the commission, still relying on the basic Davis formula, rendered, on March 27, 1961, its order allowing petitioner's lien claim in the sum of $250 rather than the suggested $200. The commission based its decision on the 'material uncertainty as to whether [Mrs. Baird's] disability was industrial or whether her disability would have occurred in any event.' It further ordered the balance of the sum withheld, $855, paid to Mrs. Baird.

Petitioner then requested that the commission reconsider its lien claim. It asserted that the filing of the compromise and release agreement did not relieve the commission from making a finding as to the right of Mrs. Baird to receive temporary disability compensation for the purpose of determining the extent of California-Western's lien recovery (Lab.Code, § 4904); it questioned the propriety of use of the Davis formula because it allowed medical costs in full but reduced other claims on a proportional basis. On May 4, 1961, the commission denied the petition for reconsideration.

As we have stated, petitioner presents for our consideration two questions: (1) whether jurisdiction was vested in the commission to approve the compromise and release agreement in the absence of its rendition of a specific finding as to Mrs. Baird's right to temporary disability benefits and the period of such disability; and (2) whether the commission could properly reduce petitioner's lien by application of a formula that allowed other liens in full. We first undertake to explain why we have concluded that the statute, as amended by the Legislature in 1957, in a case such as this, involving a compromise and release agreement, does not impose the requirement of findings.

The history of the decisions and the legislation, as we shall point out, confirms our interpretation. The pertinent legislation consists of the general and introductory section 4903 of the Labor Code and the more specific section 4904. Section 4903 reads: 'The commission may determine, and allow as a lien against any amount to be paid as compensation: * * * (f) the amount of unemployment compensation disability benefits which have been paid under or pursuant to the Unemployment Insurance Code in those cases where, pending a determination under Division 4 of this code, there was uncertainty whether such benefits were payable under the Unemployment Insurance Code or payable hereunder; provided, however, that any lien under this subdivision shall be allowed and paid as provided in Section 4904.'

Section 4904 of the Labor Code was amended in 1957; the amendment basically changed the rulings of this court in Bryant v. Industrial Acc. Comm. (1951), 37 Cal.2d 215, 231 P.2d 32 and Aetna Life Insurance Co. v. Industrial Acc. Comm. (1952), 38 Cal.2d 599, 241 P.2d 530, which analyzed the previous statutory provisions. Prior to 1957, section 4904 of the Labor Code provided as follows: 'If notice in writing is given to the insurer, or to the employer if uninsured, setting forth the nature and extent of any claim that is allowable as a lien, the claim is a lien against any amount thereafter payable as compensation, subject to the determination of the amount and approval of the lien by the commission. The commission may order the amount of such claim as determined and allowed by it, to be paid directly to the person entitled, either in a lump sum or in installments.' (Emphasis added.)

Pursuant to this section we held in Bryant v. Industrial Acc. Comm., supra, a case involving an award after findings of the commission as contrasted with an approval of a compromise and settlement agreement as in the present case, that the U.C.D. lien covered both the temporary and permanent disability allowance of the award. Since that lien applied against amounts paid as 'compensation,' and since 'compensation' included permanent disability payments, the lien properly attached to the entire workmen's compensation award for disability benefits paid during the uncertain period pending final determination by the Industrial Accident Commission.

In Aetna Life Insurance Co. v. Industrial Acc. Comm., supra, the commission, while the Bryant case was pending before this court, denied the U.C.D. lien, stating that the amount payable under a compromise agreement to the disabled employee was...