Roe v. Workmen's Compensation Appeals Bd.
| Decision Date | 07 February 1974 |
| Citation | 112 Cal.Rptr. 220,37 Cal.App.3d 184 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Harold H. ROE, Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD, Respondent, and Aerojet General Corporation, and Transport Indemnity Company, Real Parties in Interest. Civ. 14018. |
William H. Whittington, Jr., Sacramento, for petitioner.
Sheldon St. Clair, and William J. O'Neil, Jr., San Francisco, Cal., for respondent Workmen's Compensation Appeals Board.
Mullen & Filippi, Sacramento, for real parties in interests.
Roe, an employee, received severe industrial injuries in an accident featured by the negligence of a third party. He received temporary disability workmen's compensation benefits and also filed a damage action against the third party. The employer/carrier knew of the lawsuit but stayed out of it. Roe and the third party settled the lawsuit without reference to the employer's status. Roe's net recovery was over $16,000.
Roe then applied to the Workmen's Compensation Appeals Board for permanent disability benefits. The compensation insurance carrier asserted that Roe's net settlement should be credited against its own liability for permanent disability. Roe's attorney sought to raise the employer's concurrent negligence as a bar to the credit. The referee to inquire into the employer's concurrent negligence, awarded Roe a permanent disability rating of 96 1/2 percent and ordered that Roe's net settlement be credited against the insurance carrier's liability for permanent disability. The Workmen's Compensation Appeals Board refuses reconsideration. Roe is here on a writ of review.
Various provisions of the Labor Code 1 subrogate an employer (or his workmen's compensation insurer) to the common law tort recovery of an injured employee, permitting the employer/carrier to recover its workmen's compensation outlays from a negligent third party through an independent, lawsuit, or by joining the employee's lawsuit or by claiming a lien on the employee's recovery. (§§ 3852, 3853, 3854, 3856, subd. (b).) Witt v. Jackson (1961) 57 Cal.2d 57, 17 Cal.Rptr. 369, 366 P.2d 641, attaches a substantive condition to the employer's recovery; holds that the employer may not recover from the third party if his own negligence has contributed to the accident; reduces the employee's recovery of third party damages by the amount of workmen's compensation payments he has received from the employer/carrier.
The Witt v. Jackson indemnification cycle requires the settlement or adjudication of claims in two forums--the Workmen's Compensation Appeals Board and the courts. Workmen's compensation benefits which have been paid before resolution of the lawsuit provide a mathematical factor for allocating monetary responsibility. Accidental or manipulated time relationships may obstruct fulfillment of the indemnification cycle. Quantification is not possible when the lawsuit culminates in a settlement or award before the workmen's compensation benefits are fixed, or when the lawsuit is concluded without resolving the issue of employer negligence.
In This case the employee had received only temporary disability benefits benefits before settlement of the lawsuit; the employer/carrier stayed out of the litigation; the third party settled without asserting any deduction for employer negligence; the employer/carrier then turned to the appeals board, seeking to deduct the settlement from future workmen's compensation benefits. The board's grant of credit was based on section 3861, which declares: 'The appeals board is empowered to and shall allow, as a credit to the employer to be applied against his liability for compensation, such amount of any recovery by the employee for his injury, either by settlement of after judgment, as has not theretofore been applied to the payment of expenses or attorneys' fees, pursuant to the provisions of Sections 3856, 3858, and 3860 of this code, or has not been applied to reimburse the employer.'
In Nelsen v. Workmen's Comp. Appeals Board (1971) 11 Cal.App.3d 472, 89 Cal.Rptr. 638, this court held that the subrogation provisions of the Labor Code (including section 3861) were not designed to permit a negligent employer to take advantage of his own wrong; hence, where the employer's negligence had been established in a prior lawsuit, the employee could assert this adjudication as a bar to the employer's claim of credit before the appeals board. 2 Other courts have followed suit. (Serrano v. Workmen's Comp. Appeals Board (1971) 16 Cal.App.3d 787, 94 Cal.Rptr. 511; Maillet v. Workmen's Comp. of Appeal, Fourth District, Division Two. 99 Cal.Rptr. 925.)
In fairly direct conflict with these decisions is Corley v. Workmen's Comp. Appeals Board (1971) 22 Cal.App.3d 447, 99 Cal.Rptr. 242, a split decision of the Court of Appeal, Fourth District, Division Two. In Corley, as here the lawsuit culminated in damage recovery from the third party without inquiry into the employer's concurrent negligence. The court sustained the appeals board, which had credited the employee's third party damage recovery against the employer's compensation liability without inquiry into the employer's negligence. By dictum, the majority opinion in Corley expressed doubt that the appeals board could decide the issue of employer negligence consistently with the constitutional provision for establishment of a workmen's compensation system irrespective of fault. (Cal.Const., art, XX, § 21.)
In Witt v. Jackson, denial of the concurrently negligence employer's recover from the third party was premised on the law's policy to prevent the former from taking advantage of his own wrong; while the latter's credit for workmen's compensation payments against his own tort liability was grounded on the policy of denying the employee double recovery. (57 Cal.2d at pp. 72-73, 17 Cal.Rptr. 369, 366 P.2d 641.) Cases like this require selection or reconciliation between these policies. In Nelsen this court implied that the policy of preventing the employer from reaping financial benefit from his own negligence outweighed the policy against the employee's double recovery. (11 Cal.App.3d at pp. 476-479, 89 Cal.Rptr. 638.) In Corley the court embraced the inhibition against double recovery even at the cost of permitting a negligent employer to reduce his workmen's compensation liability. (22 Cal.App.3d at pp. 453-454, 99 Cal.Rptr. 242.) The State Supreme Court denied petitions for hearing in both Nelsen and Corley.
We continue in our preference for the Nelsen rationale. The majority opinion in Corley overemphasizes the employer's interest in preventing the employee's double recovery. The policy against double recovery primarily protects the third party tort-feasor, not the employer. In De Cruz v. Reid (1968) 69 Cal.2d 217, 225, 70 Cal.Rptr. 550, 555, 444 P.2d 342, 347, the Supreme Court declared that Witt v. Jackson was not 'a sweeping interdict against double recovery . . ..' It explained that the inhibition against double recovery is designed to allow the third party a protanto reduction of a liability which he shares with a concurrently negligent employer. (Cf. Sanstad v. Industrial Acc. Comm. (1959) 171 Cal.App.2d 32, 39, 339 P.2d 943.) Nelsen too points to the third party, rather than the employer, an beneficiary of the policy against double recovery. (11 Cal.App.3d at pp. 479-480, 89 Cal.Rptr. 638.)
Especially if he is vulnerable to the charge of negligence, the employer may avoid participation in the third party lawsuit; the third party, as defendant, may litigate or settle seeking credit for the workmen's compensation payments. When the employer/carrier then goes before the appeals board protesting the employee's double recovery, one asks: 'What's Hecuba to him or he to Hecuba, that he should weep for her?' If the employer's negligence contributed to the accident, the double recovery was gained not from him but from the third party, who did not claim a deduction for employer negligence. If the employer was free of negligence, he gained (but did not assert) a subrogated right to recover his compensation payment as damages. It is doubtful, in any event, whether a double recovery is created by a settlement which does not cover the totality of claims, including those of the employer. (Van Nuis v. Los Angeles Soap Co. (1973) 36 Cal.App.3d 222, 230, 111 Cal.Rptr. 398; LaBorde v. McKesson & Robbins, Inc. (1968) 264 Cal.App.2d 363, 370, 70 Cal.Rptr. 726, approved in Brown v. Superior Court (1970) 3 Cal.3d 427, 432, 90 Cal.Rptr. 737, 476 P.2d 105, and disapproved in unspecified respects, id., at p. 433.)
Opportunities for conceptual error multiply by exaggerating the substantive effect of the Labor Code subrogation provisions. These are primarily procedural, substantive only in isolated aspects. (Van Nuis v. Los Angeles Soap Co., supra, 36 Cal.App.3d et p. 228, fn. 2, 111 Cal.Rptr. 398.) Literally, section 3852 declares that the employee's compensation claim shall not affect his damage action against a third person; yet decisional law, primarily Witt v. Jackson, imposes a substantive limitation on his double recovery of damages and workmen's compensation. literally, sections 3852, 3854, and 3860, subdivision (b), permit the employer's unqualified recovery of compensation payments from the negligence third party; yet substantive law rejects his claim if he has been concurrently negligent.
Section 3858, relieving the employer from 'further compensation' up to the amount of the employee's damage recovery, is more substantive than procedural. 3 It is qualified by Civil Code section 3517, which provides that 'No one can take advantage of his own wrong.' (Witt v. Jackson, supra, 57 Cal.2d at p. 72, 17 Cal.Rptr. at p. 377, 366 P.2d at p. 649.) Its procedural implementation is section 3861, which designates the appeals board as a forum for...
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