Nelsen v. Workmen's Comp. App. Bd.

• Decision Date: 22 September 1970
• Citation: 89 Cal.Rptr. 638,11 Cal.App.3d 472
• Parties: Oswald N. NELSEN, Petitioner, v. WORKMAN'S COMPENSATION APPEALS BOARD of the State of California et al., Respondents. James H. SMITH, Jr., Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD of the State of California et al., Respondents. Frederick N. MYERS, Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD of the State of California et al., Respondents. Earl MARGLON, Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD of the State of California et al., Respondents. Civ. 12319, 12397--12399.
• Court: California Court of Appeals Court of Appeals

Page 638

89 Cal.Rptr. 638

11 Cal.App.3d 472

Oswald N. NELSEN, Petitioner, v. WORKMAN'S COMPENSATION APPEALS BOARD of the State of California et al., Respondents.

James H. SMITH, Jr., Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD of the State of California et al., Respondents.

Frederick N. MYERS, Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD of the State of California et al., Respondents.

Earl MARGLON, Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD of the State of California et al., Respondents.

Civ. 12319, 12397--12399.

Court of Appeal, Third District, California.

Sept. 22, 1970.

As Modified Oct. 8, 1970.

Hearing Denied Nov. 18, 1970.

Richard J. Asbill, Redding, for Nelsen.

Kenneth B. Cavocca, Sacramento, J. Adrian Palmquist and Daniel L. Mitchell, by Robert Hall, Alameda, for Smith.

Garry, Dreyfus, McTernan & Brotsky, by David Pesonen, San Francisco, for Myers.

Condon, Dolgin, Kully & Jameson, by David A. Dolgin, Martinez, for Marglon.

Jon L. Gately, San Francisco, for W.C.A.B.

Mullen & Filippi, by Frank Filippi, San Francisco, for AeroJet.

Hanna & Brophy, by Albert Sennett, San Francisco, for Argonaut Ins. Co.

Kiernan & Misciagna, San Francisco, for Capitol Roof Structures etc.

T. Groezinger, Loton Wells, by Herbert Lasky, San Francisco, for A/C.

JANES, Associate Justice.

Each of these four workmen's compensation cases involves facts of which the following pattern is typical: The employee had been furnished benefits by his employer's workmen's compensation carrier. The carrier later intervened or filed a lien claim in the employee's civil action against an alleged third party tort-feasor for the same injuries. In that action, the court or jury found that the employer's concurrent negligence was a proximate cause of the injuries. The employee recovered from the third party by judgment or by settlement made at or after trial. Then the employee sought an award of further workmen's compensation benefits. Upon petition for reconsideration, respondent Workmen's Compensation Appeals Board (hereinafter, 'board' or 'WCAB') held that the employer's laibility for further benefits should be credited with the amount of the employee's net recovery from the third party after deduction of the employee's expenses and attorneys' fees in the civil action.

Upon application by the four employees, writs of review were issued and the cases were consolidated for our determination whether it was proper for the board to allow the credits. We hold that it was not.

In Witt v. Jackson (1961) 57 Cal.2d 57, 69, 17 Cal.Rptr. 369, 376, 366 P.2d 641, 648, the court pointed out that 'There are three ways in which an employer who becomes obligated to pay compensation to an employee may recover the amount so expended against a negligent third party. He may bring an action directly against the third party (Lab.Code, § 3852), join as a party plaintiff or intervene in an action brought by the employee (Lab.Code, § 3853), or allow the employee to prosecute the action himself and subsequently apply for a first lien against the amount of the employee's judgment, less an allowance for litigation expenses and attorney's fees (Lab.Code, Code, § 3856, subd. (b)).' Witt held, however, that 'the employer's right to recover against the third party tortfeasor is defeated when the employee's injuries are caused by the concurring negligence of the employer and that in such circumstances, whether the action is brought against him by the employer or the employee, the third party, upon establishing such concurrent negligence, is entitled to have the judgment against him reduced by the amount of compensation paid to the injured employee. (Witt v. Jackson, Supra, pp. 71--73, 17 Cal.Rptr. 369, 366 P.2d 641.)' (De Cruz v. Reid (1968) 69 Cal.2d 217, 222--223, 70 Cal.Rptr. 550, 554, 444 P.2d 342, 346.)

In the civil actions which preceded three of the cases at bench, the judgment against the third parties were arrived at by applying such reduction. In one of those three cases (Marglon v. WCAB), the civil judgment was followed by a settlement with the third party pending appeal. The forth case at bench (Smith v. WCAB) was preceded by a civil action in which the third party defendant settled during trial. The employer's concurrent negligence was found in the latter action upon a separate trial of the compensation carrier's complaint in intervention.

The third party's right to defeat the negligent employer's resort to the Labor Code reimbursement remedies was based in Witt on the policy that such employer should not be allowed to profit by his own wrong. (De Cruz v. Reid, supra, 69 Cal.2d at p. 225, 70 Cal.Rptr. 550, 444 P.2d 342; Witt v. Jackson, supra, 57 Cal.2d at pp. 72--73, 17 Cal.Rptr. 369, 366 P.2d 641.) The rule announced in Witt is a rule of decisional law. Although Witt cited Code of Civil Procedure sections 875--880 (which abrogated the rule of noncontribution between joint tortfeasors), it did so merely to demonstrate that the rationale of prior decisions was no longer applicable. (Chick v. Superior Court (1962) 209 Cal.App.2d 201, 204, 25 Cal.Rptr. 725.) 'The decision in Witt is in terms not made to depend upon these sections (875--880), which have, in fact, no direct bearing on the question decided in the Witt case.' (Id., p. 205, 25 Cal.Rptr. p. 727.)

Witt's requirement that the employee's judgment against the third party must be reduced by the amount of workmen's compensation received from the negligent employer is founded on the concept that 'the injured employee may not be allowed double recovery * * *.' (Witt v. Jackson, supra, 57 Cal.2d at p. 73, 17 Cal.Rptr. at p. 378, 366 P.2d at p. 650.) The Supreme Court has explained, however, that Witt's prohibition of double recovery 'is nothing more than a reference to the usual rule of law existing in negligence actions generally, that a partial satisfaction of the liability by a Joint or concurrent tortfeasor will result in a Pro tanto reduction of the liability of the other tortfeasors' (De Cruz v. Reid, supra, 69 Cal.2d at pp. 225--226, 70 Cal.Rptr. at p. 556, 444 P.2d at p. 348.) (original italics), and the court has clearly indicated that the collateral source rule of damages is inapplicable when workmen's compensation payments are received from an employer whose causative negligence is concurrent with that of a third party tortfeasor. ¹ (Id., pp. 223--227, 70 Cal.Rptr. 550, 444 P.2d 342; Compare, Slayton v. Wright (1969) 271 Cal.App.2d 219, 232, fn. 1, 76 Cal.Rptr. 494 (dictum).)

Although an employer's right to recover against a negligent third party, or to lien the employee's judgment against that party, is a legislative recognition of the equitable doctrine of subrogation (De Cruz v. Reid, supra, 69 Cal.2d at p. 222, 70 Cal.Rptr. 550, 444 P.2d 342), those rights are wholly statutory. (See, Heaton v. Kerlan (1946) 27 Cal.2d 716, 723, 166 P.2d 857; Jacobsen v. Industrial Acc. Com. (1931) 212 Cal. 440, 446--448, 299 P. 66; Limited Mutual etc. Ins. Co. v. Billings (1946) 74 Cal.App.2d 881, 169 P.2d 673.) Likewise, except in unusual circumstances not here present, the board's authority to allow employers a credit is derived solely from statute. (See, San Bernardino County v. Industrial Acc. Com. (1933) 217 Cal. 618, 625--628, 20 P.2d 673.)

In allowing credits to respondent employers in the present cases, the board purported to act under Labor Code sections 3858 ² and 3861. ³ The effect of these two sections 'is to vest in the commission and to continue in the commission, exclusive jurisdiction to determine compensation, even though the third party action is brought before the jurisdiction of the commission has been invoked.' (Sanstad v. Industrial Acc. Com. (1959) 171 Cal.App.2d 32, 39, 339 P.2d 943, 947.) Thus, where particular workmen's compensation benefits have not been awarded by the board by the time a third party tortfeasor satisfies the injured employee's judgment against him, but an award of such benefits is later sought, sections 3858 and 3861 permit the employer to achieve the same result (in terms of net compensation outlay) as would have been possible by the employer's joinder, intervention or lien if the payment of such benefits had been made before the third party suit. (See, Sanstad v. Industrial Acc. Com., supra, pp. 39--40, 339 P.2d pp. 946-947; Lab.Code, § 3857.)

In San Bernardino County v. Industrial Acc. Com., supra, 217 Cal. at p. 628, 20 P.2d at p. 677, in comparing the court's lien power in third party actions with the statutory predecessor (Stats.1931, ch. 1119, pp. 2370--2371) of Labor Code sections 3858 and 3861 (under which the board allows credits), the Supreme Court said: 'The amendment was designed to permit the commission to do What the court theretofore alone could do--prevent double recovery by crediting the employer with the employee's recovery against the third party.' (Italics ours.) ⁴ Witt clearly indicates, however, and the rule has been applied, that 'an employer, or his compensation carrier, seeking the recovery of workmen's compensation paid to the employee by the imposition of a lien under Labor Code, § 3856, cannot do so where it is found that the concurrent negligence of the employer contributed to the employee's injuries.' (Harness v. Pacific Curtainwall Co. (1965) 235 Cal.App.2d 485, 490, 45 Cal.Rptr. 454, 457; see, Witt v. Jackson, supra, 57 Cal.2d at pp. 69--73, 17 Cal.Rptr. 369, 366 P.2d 641; LaBorde v. McKesson & Robbins, Inc. (1968) 264 Cal.App.2d 363, 367, 70 Cal.Rptr. 726; Tate v. Superior Court (1963) 213 Cal.App.2d 238, 246--248, 28 Cal.Rptr. 548.)

The Supreme Court has emphasized in Witt that 'there is nothing in the Labor Code to suggest that the Legislature contemplated that a negligent employer could take advantage of the Reimbursement remedies that those sections provide. In the absence of express terms to the contrary, these provisions must be deemed to be qualified by Civil Code, section 3517...