Corley v. Workmen's Comp. Appeals Bd.

• Decision Date: 27 December 1971
• Citation: 99 Cal.Rptr. 242,22 Cal.App.3d 447
• Court: California Court of Appeals Court of Appeals
• Parties: Arlis CORLEY, Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD et al., Respondents. Civ. 11595.

Page 242

99 Cal.Rptr. 242

22 Cal.App.3d 447

Arlis CORLEY, Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD et al., Respondents.

Civ. 11595.

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

Dec. 27, 1971.

Hearing Denied Feb. 23, 1972.

[22 Cal.App.3d 449] Palmer, Baretta, Thordarson & Toomer and Ernest A. Palmer, Jr., Pasadena, for petitioner.

Rupert A. Pedrin and Jon L. Gateley, San Francisco, for respondent Workmen's Compensation Appeals Board.

T. Groezinger, James Vonk, and P. M. Miyamoto, San Francisco, for respondent State Compensation Insurance Fund.

No appearance for R. Bevan Mortensen and Jerry D. Mortensen, dba PI Land & Cattle Co.

OPINION

KAUFMAN, Associate Justice.

Petitioner (hereinafter Applicant) seeks review and annulment of an order granting reconsideration and decision after reconsideration by the Workmen's Compensation Appeals Board (hereinafter Board).

Applicant was an employee of PI Land & Cattle Company (hereinafter Employer). Employer's workmen's compensation carrier is State Compensation Insurance Fund (hereinafter Carrier). (For convenience, Employer and Carrier jointly will be herein referred to as defendants.) In the course and scope of his employment, Applicant was severely injured while working with machinery installed for Employer by Hay Machinery Company, Inc. (hereinafter Hay Machinery).

Applicant filed an action for negligence against Hay Machinery in the Riverside Superior Court. Carrier intervened in the action seeking recoupment in excess of $40,000 for expenses incurred for medical treatment and payment of temporary disability. The evidence before the Board and, thus, the record before us does not disclose whether Hay Machinery asserted defensively either Applicant's contributory negligence or Employer's concurrent negligence. The third party suit was settled by the parties in the following manner. Applicant received $40,000 and executed in favor of Hay Machinery and its insurer a document entitled 'RELEASE IN FULL SETTLEMENT AND COMPROMISE.' ¹ Carrier received $5,000 and it and Employer executed in favor of Hay Machinery and its insurer a release identical to that executed by Applicant except as to amount. A single 'REQUEST FOR ENTRY OF DISMISSAL' form was executed by the attorneys for Applicant and the attorney for Carrier as well as the attorney for Hay Machinery. This document was filed with the court and dismissal subsequently entered. These three documents, the two releases and the request for dismissal, constitute the only evidence before the Board as to the settlement of the lawsuit against Hay Machinery.

Thereafter, Applicant filed with the Board an application for adjudication of his rights under the workmen's compensation laws. Defensively, defendants asserted a right to credit against any workmen's compensation benefits payable the amount of Applicant's net recovery from Hay Machinery pursuant to Labor Code, sections 3858 and 3861. In response, Applicant proposed to prove in the compensation proceeding that his injury was caused by the concurrent negligence of Employer, urging that the Employer's concurrent negligence would bar defendants' right to any credit.

Over defendants' objections that the Board lacked jurisdiction to try and adjudicate the issue of the Employer's concurrent negligence and that, in any event, the Employer's concurrent negligence was irrelevant and immaterial to the question of credit, the trial referee permitted Applicant to introduce evidence of Employer's concurrent negligence, and, after submission of the matter, found Applicant 100 percent disabled; that the Board had jurisdiction to try and adjudicate Employer's concurrent negligence; and that Applicant's injury was caused by the concurrent negligence of Employer. Accordingly, defendants were denied credit for any part of the amount obtained by Applicant from Hay Machinery, and an award was issued in favor of Applicant.

Defendants filed a timely petition for reconsideration (Labor Code, § 5900 et seq.) on the grounds that the evidence did not justify the findings, the findings did not support the award and that by the award the Board acted without or in excess of its powers. Defendants' contentions were two: that the Referee erred in finding that the Board has jurisdiction to try and adjudicate the Employer's concurrent negligence and that, in any event, the Referee erred in denying defendants credit for Applicant's third party recovery.

Relying principally upon a prior En banc decision of the Board on legally indistinguishable facts in Pearce v. Blackwell and Sunde, 33 Cal.Comp.Cases 243, the Board rendered an opinion and order granting reconsideration and decision after reconsideration in which it determined that the Board had no jurisdiction to try and adjudicate the Employer's concurrent negligence and that where the Employer's concurrent negligence has not been adjudicated in the third party action, that issue is irrelevant to the issue of credit in a subsequent workmen's compensation proceeding. Accordingly, the Board made new findings of fact and issued a new award, both of which were substantially identical to those of the Referee except that defendants were granted a credit against benefits payable in the amount of $26,349.86, the amount of Applicant's net recovery from Hay Machinery.

Issues

Two issues are presented. First, does the concurrent negligence of an employer defeat the right of it and its workmen's compensation insurance carrier, as provided in Labor Code, sections 3858 and 3861, to credit against subsequently awarded compensation benefits the amount of the employee's net third party recovery? Second, if the employer's concurrent negligence does defeat the statutory right to credit, does the Board have jurisdiction to try and adjudicate the issue of the employer's concurrent negligence in the workmen's compensation proceeding when that issue has not been determined in the third party action?

Is the Right to Credit Defeated?

In the recent case of Nelsen v. Workmen's Comp. App. Bd., 11 Cal.App.3d 472, 479, 89 Cal.Rptr. 638, 641, it was held that, where the employer's concurrent negligence was adjudicated in a prior third party action, the credit provided for by Labor Code, sections 3858 and 3861 must be denied the employer and its compensation carrier in a subsequent workmen's compensation proceeding. It was there reasoned: 'If the Court cannot allow a lien where the employer was concurrently negligent (Witt v. Jackson, 57 Cal.2d 57, 73, 17 Cal.Rptr. 369, 366 P.2d 641), logic dictates that the Board cannot allow a credit where the employer's negligence has been previously determined in the employee's third party action . . .. (T)he employee may therefore assert the employer's adjudicated negligence 'defensively' against the employer's claim of credit, and the employer is collaterally estopped by the determination made against him on that issue in the third party action.' (11 Cal.App.3d at p. 479, 89 Cal.Rptr. at p. 641; original emphasis.)

The Nelsen decision was followed in Serrano v. Workmen's Comp. Appeals Bd., 16 Cal.App.3d 787, 789--792, 94 Cal.Rptr. 511 in which the court relied exclusively upon the holding and reasoning of Nelsen. We shall, therefore, hereinafter address ourselves to the Nelsen decision, albeit with the realization that our remarks are equally applicable to the decision in Serrano.

Although Nelsen is obviously distinguishable from the case under review in that here Employer's concurrent negligence was not adjudicated in the third party action, on the issue whether the right to credit is defeated by an employer's concurrent negligence, Nelsen holds squarely that it is. With this holding we respectfully disagree. Notwithstanding a denial of hearing by the California Supreme Court (11 Cal.App.3d at p. 480, 89 Cal.Rptr. 638), in our view the holding in Nelsen that the concurrent negligence of an employer defeats its right to credit pursuant to Labor Code, sections 3858 and 3861 fails to apprehend and carry out the purpose of Witt v. Jackson, Supra, is violative of certain fundamental principles of our constitutionally provided workmen's compensation scheme and results in an unhealthy situation that permits and, indeed, encourages the manipulation of legal processes.

When the tort of a third party has caused injury to an employee, the Labor Code gives to the employer and its insurance carrier essentially two rights: (1) the right, by various procedures, to obtain from the third party tortfeasor reimbursement for compensation benefits previously furnished the injured employee (Labor Code, §§ 3852, 3853 and 3856, subd. (b); see Witt v. Jackson, Supra, 57 Cal.2d at p. 69, 17 Cal.Rptr. 369, 366 P.2d 641); (2) the right to offset or credit against compensation benefits subsequently due the injured employee the net amount of the employee's recovery against the third party tortfeasor (Labor Code, §§ 3858 and 3861; see Nelsen v. Workmen's Comp. App. Bd., Supra, 11 Cal.App.3d at p. 479, 89 Cal.Rptr. 638).

While the injured employee's rights against a third party tortfeasor are fully preserved (Labor Code, § 3852), the manifest purpose of the statutory scheme of reimbursement and credit to the employer is that the employee shall not retain both third party damages and workmen's compensation benefits except to the extent his compensation benefits exceed his third party recovery. (Jacobsen v. Industrial Acc. Comm., 212 Cal. 440, 447--448, 299 P. 66; Sanstad v. Industrial Acc. Comm., 171 Cal.App.2d 32, 35, 339 P.2d 943; see also Witt v. Jackson, Supra, 57 Cal.2d at p. 73, 17 Cal.Rptr. 369, 366 P.2d 641; Pacific Gas & Electric Co. v. Industrial Acc. Comm., 8 Cal.App.2d 499, 503, 47 P.2d 783; 2 Hanna, California Law of Employee Injuries and Workmen's Compensation (2d ed.), § 24.04 (5)(a). ² ) This statutory scheme precluding the employee from obtaining compensation benefits to the extent of his net third party recovery is...