Majority
II
After a hearing, the trial court found the reasonable amount of attorney fees and costs Duncan incurred was roughly $63,000, and granted Hartford a lien on the judgment for nearly $53,000. The court provided no explanation on how it determined the amount of the lien, but the parties agree the court excluded from the lien the disability indemnity payments Hartford made because the amount Hartford sought ($152,489.99) minus both the reasonable attorney fees and costs the court found ($62,623.66) and the disability indemnity payments ($36,929.32) equals the amount of the lien allowed by the court ($52,937.01). This appeal followed.
DISCUSSION
A. Legal Background
Under the workers' compensation statutes (§ 3200, et seq.), an employee who suffers an injury during the course and scope of employment may recover compensation benefits from the employer without regard to the negligence of either the employee or the employer. (§ 3600; see Abdala v. Aziz (1992) 3 Cal.App.4th 369 , 374, 4 Cal.Rptr.2d 130 ( Abdala ).) With few exceptions, the employee's claim for compensation benefits is the employee's exclusive remedy against the employer; the employee generally may not sue the employer to recover in tort. (§§ 3601, 3602; see Abdala , at p. 374, 4 Cal.Rptr.2d 130 .)
"The policy [underlying this system] is that workers do not have to prove fault, adjudication is swift, but the benefits are smaller than might be obtained as tort damages. [Citations.] The law: (1) spreads the cost of industrial
"If the employee alone prosecutes the action against the third party, the employer may nevertheless recover what he has paid out by applying for a lien on the employee's judgment." ( Tate , supra , 213 Cal.App.2d at p. 244, 28 Cal.Rptr. 548 .) Specifically, section 3856, subdivision (b) ( section 3856(b) ), provides: "If the
3 The employer also must give the employee notice if it files a lawsuit against a third party tortfeasor who injured the employee, and the employee has an absolute right to join in the employer's lawsuit. (§ 3853.)
The chapter of the Labor Code establishing these employer remedies defines the term "employer" to include its insurer. (§ 3850, subd. (b).) The remedies available to the employer therefore are equally available to the insurer, and the insurer may sue in its own name without joining the employer as a party. ( Tate , supra , 213 Cal.App.2d at p. 244, 28 Cal.Rptr. 548 .)
Duncan fails to explain how equitable subrogation principles have any impact on an employer's section 3856(b) lien rights. In exercising those rights, an employer is not stepping into the employee's shoes to sue the third party tortfeasor, and the employer is not recovering more from the tortfeasor than the employee could. Rather, the employee is suing the tortfeasor directly to recover the damages the employee suffered, and the employer simply is exercising its statutory right to reimbursement from the employee's recovery for the compensation the employer paid the employee for the same injuries. Equitable subrogation does not apply here.
Moreover, our courts have rejected the contention that equitable subrogation principles allow trial courts to override an employer's statutory right to full reimbursement from an employee's recovery against a third party tortfeasor. In Gapusan , two police officers were seriously injured when a drunk driver collided with their patrol car. The officers sued the drunk driver and the city that employed the officers intervened. The officers and the city settled with the driver for his $200,000 policy limits, but could not agree on how to apportion the settlement proceeds because they were insufficient to reimburse the city for the workers' compensation benefits it paid and the officers for their pain, suffering, and other losses not covered by the workers' compensation system. ( Gapusan , supra , 66 Cal.App.4th at pp. 738-739, 78 Cal.Rptr.2d 250 .)
Next, relying on the underlying policy of preventing double recovery, Duncan contends the trial court properly excluded from the lien the payments Hartford made for lost wages because the court did not award the lost wages as part of Duncan's judgment against Wal-Mart. According to Duncan, Hartford is entitled to a lien only for those amounts she received both from Hartford as compensation benefits and Wal-Mart as damages under the judgment. Not so.
As explained above, section 3856(b)'s plain language grants an employer "a first lien" for "the amount of the employer's expenditure for compensation." ( § 3856(b).) The lien granted includes all expenditures the employer makes to provide the employee with workers' compensation benefits ( Heaton , supra , 27 Cal.2d at p. 719, 166 P.2d 857 ; Harvey , supra , 50 Cal.App.3d at p. 761, 123 Cal.Rptr. 740 ; see § 3207), and attaches to the entire amount of the judgment the employee recovers after litigation expenses regardless of whether the employee proves and recovers all her damages ( Tate , supra , 213 Cal.App.2d at p. 248, 28 Cal.Rptr. 548 ). Nothing in section 3856(b) requires the employer to show the employee recovered damages from the tortfeasor for all compensation benefits the employer paid the employee. The employer is entitled to full
WE CONCUR:
O'LEARY, P. J.
BEDSWORTH, J.
Hartford appeals the trial court's postjudgment order, arguing the court exceeded its authority by reducing the lien amount for any item other than reasonable attorney fees and costs. We agree because section 3856's plain language and the case law applying it grant Hartford a first lien on the judgment in the amount it paid Duncan for worker's compensation benefits. Duncan's choice not to seek lost wages at trial does not diminish Hartford's lien rights under the workers' compensation statutory scheme. We therefore modify the order granting the lien to include the amount of lost wages Hartford paid Duncan and affirm the postjudgment order as modified.
FACTS AND PROCEDURAL HISTORY
In August 2012, Duncan was acting within the course and scope of her employment with Acosta when she fell and injured herself on Wal-Mart's premises. Hartford was Acosta's workers' compensation insurer and paid Duncan more than $152,000 in benefits, including more than $115,000 in medical expenses and roughly $37,000 in temporary disability indemnity for Duncan's lost wages.
In July 2014, Duncan filed this lawsuit against Wal-Mart seeking recovery for her medical expenses, lost wages and earning capacity, and pain and suffering. Following a three-day bench trial, the court found Wal-Mart 100 percent at fault and entered judgment against Wal-Mart for $355,000, including $178,000 in past medical expenses, $102,000 in future medical expenses, and $75,000 in past and future pain and suffering. Although Duncan's complaint sought lost wages and earning capacity, the court did not award Duncan damages for these items because she did not ask for them at trial.
Hartford filed a notice and application for a lien on the judgment based on the workers' compensation benefits it paid Duncan. The trial court issued an
1 All statutory references are to the Labor Code.
The workers' compensation statutes, however, do not limit the injured employee's right of action for damages against any person other than his or her employer. ( Abdala , supra , 3 Cal.App.4th at p. 374, 4 Cal.Rptr.2d 130 ; Tate v. Superior Court (1963) 213 Cal.App.2d 238 , 243-244, 28 Cal.Rptr. 548 ( Tate ).) "Where the tort of a third party causes injury to an employee, ... 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." ( Abdala , at p. 374, 4 Cal.Rptr.2d 130 .) Section 3852 also provides that any employer who pays an employee compensation benefits may bring an action against the third party tortfeasor who injured the employee.[2] ( Tate , at pp. 243-244, 28 Cal.Rptr. 548 .)
2 Section 3852 provides, "The claim of an employee ... for compensation does not affect his or her claim or right of action for all damages proximately resulting from the injury or death against any person other than the employer. Any employer who pays, or becomes obligated to pay compensation, or who pays, or becomes obligated to pay salary in lieu of compensation, or who pays or becomes obligated to pay an amount to the Department of Industrial Relations pursuant to Section 4706.5, may likewise make a claim or bring an action against the third person. In the latter event the employer may recover in the same suit, in addition to the total amount of compensation, damages for which he or she was liable including all salary, wage, pension, or other emolument paid to the employee or to his or her dependents."
The Labor Code therefore permits an employer to recover workers' compensation benefits it has become obligated to pay in three ways: "(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), or (3) allowing the employee to prosecute the action and then applying for a first lien against the resulting judgment or settlement. ( § 3856(b).)"[4] ( Abdala , supra , 3 Cal.App.4th at pp. 374-375, 4 Cal.Rptr.2d 130 , fns. omitted; see Fremont , supra , 121 Cal.App.4th at p. 396, 17 Cal.Rptr.3d 80 .)
"The policy underlying [these statutory provisions] is avoidance of double recovery
4 The employer's right to reimbursement may be limited or denied if the employer's negligence contributed to or caused the employee's injuries. ( DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593 , 599, 7 Cal.Rptr.2d 238 , 828 P.2d 140 .) Here, neither Duncan nor Wal-Mart claimed Acosta or its other employees contributed to or caused Duncan's injuries.
Hartford contends the trial court exceeded its authority by excluding from Hartford's lien the undisputed amount Hartford paid Duncan as disability benefits for her lost wages. According to Hartford, section 3856(b) authorized the court to deduct from Hartford's lien only the reasonable amount of attorney fees and costs Duncan incurred for the benefit of Duncan and Hartford. We agree.
The interpretation of section 3856(b) is a question of law that we review de novo. ( Jarman v. HCR ManorCare, Inc. (2017) 9 Cal.App.5th 807 , 822, 215 Cal.Rptr.3d 231 .) "Our primary goal in construing a statute is to ascertain and effectuate the Legislature's intent. [Citation.] ' " ' " 'Because statutory language "generally provide[s] the most reliable indicator" of that intent [citations], we turn to the words themselves, giving them their "usual and ordinary meanings" and construing them in context [citation]. [Citation.] If the language contains no ambiguity, we presume the Legislature meant what it said, and the plain meaning of the statute governs.' " ' " ' [Citation.] If a statute is amenable to different interpretations, the interpretation that leads to the more reasonable result should be followed. [Citation.] We must construe the words of a statute in context, and harmonize the various parts of an enactment by considering the provision at issue in the context of the statutory framework as a whole." ( Baker v. Workers' Comp. Appeals Bd. (2017) 13 Cal.App.5th 1040 , 1046, 220 Cal.Rptr.3d 761 .)
When an injured employee alone prosecutes a lawsuit against a third party tortfeasor, section 3856(b)'s plain language grants the employee's employer "a first lien" against any judgment the employee obtains against the tortfeasor in "the amount of the employer's expenditure for compensation together with any amounts to which he may be entitled as special damages under Section 3852." ( § 3856(b) ; see Abdala , supra , 3 Cal.App.4th at p. 378, 4 Cal.Rptr.2d 130 [" Section 3856 [ (b) ] ... entitles the employer to a lien against his employee's judgment, or settlement, in 'the amount of the employer's expenditure for compensation' "].)
"The expenditures for 'compensation' for which a lien is allowed the employer or his
The lien includes all amounts the employer paid the employee regardless of whether the employee sought or recovered those amounts from the third party tortfeasor: "[U]nless the employer's recovery is barred by his contributory negligence, he will be entitled to a first lien on the entire amount the employee recovers after litigation expenses, regardless of what elements of damage the employee proves . [Citation.] If ... [the employee] does not intend in this action to recover any elements of damage which duplicate his compensation benefits, that fact will not prevent the employer from asserting the lien which sections 3856 and 3857 give him for benefits paid."[5] ( Tate , supra , 213 Cal.App.2d at p. 248, 28 Cal.Rptr. 548 , italics added.) Moreover, the employer's lien attaches to the entire judgment the employee obtained, including any award for pain and suffering or other damages that the employee cannot recover through the workers' compensation system. ( Heaton , supra , 27 Cal.2d at p. 723, 166 P.2d 857 ["it is clear that the employer's lien attaches to the entire judgment and that it is no[t] ... necessary to segregate the part thereof that represents damages for pain and suffering"].)
The only deduction section 3856(b) allows from the lien is for "the services rendered by the employee's attorney in effecting recovery both for the benefit of the employee and the employer." ( § 3856(b).) The statute makes clear that these fees and costs are deducted from the employer's lien and paid first. This ensures the employer shares in the expense of obtaining the judgment from which it benefits. ( Quinn v. State ofCalifornia (1975) 15 Cal.3d 162 , 169-170, 175-176, 124 Cal.Rptr. 1 , 539 P.2d 761 .) The statute does not authorize any other offset or deduction from the employer's lien.
Here, it is undisputed Hartford paid Duncan nearly $153,000 in compensation under the workers' compensation statutes based on the injuries she suffered on Wal-Mart's property. From that amount, the trial court deducted more than $62,000 as reasonable attorney fees and costs Duncan
5 Section 3857 provides, "The court shall, upon further application at any time before the judgment is satisfied, allow as a further lien the amount of any expenditures of the employer for compensation subsequent to the original order."
Hartford paid Duncan's lost wages because of her injuries, and therefore they constitute compensation that must be included in Hartford's lien under section 3856(b). ( Heaton , supra , 27 Cal.2d at p. 719, 166 P.2d 857 ; Harvey , supra , 50 Cal.App.3d at p. 761, 123 Cal.Rptr. 740 ; Tate , supra , 213 Cal.App.2d at p. 248, 28 Cal.Rptr. 548 .) It is irrelevant that the judgment Duncan obtained against Wal-Mart did not include the lost wages based on Duncan's failure to seek them as damages. ( Tate , p. 248, 28 Cal.Rptr. 548 .) The Legislature has declared that, after attorney fees and costs have been paid, the employer is entitled to full reimbursement for the compensation it paid to the employee, and the employee is entitled to the remaining portion of the judgment only after the employer has been fully reimbursed. ( Gapusan v. Jay (1998) 66 Cal.App.4th 734 , 741-742 & fn. 5, 78 Cal.Rptr.2d 250 ( Gapusan ); see Abdala , supra , 3 Cal.App.4th at p. 376, 4 Cal.Rptr.2d 130 .)
Ensuring the employer is fully reimbursed for the compensation it paid before the employee recoups anything other than attorney fees and costs is consistent with the overall purpose of the workers' compensation system, which guarantees employees prompt payment for industrial injuries without regard to fault in exchange for a smaller recovery than the employee may obtain through litigation. (See Fremont , supra , 121 Cal.App.4th at p. 395, 17 Cal.Rptr.3d 80 ; Abdala , supra , 3 Cal.App.4th at p. 376, 4 Cal.Rptr.2d 130 .) Allowing the employee to manipulate the employer's reimbursement rights by selectively seeking only certain items of damages from a third party tortfeasor would undermine the system created by the Legislature.[6]
Duncan does not contend section 3856(b) authorized the trial court to deduct the lost wages from Hartford's lien, nor does she offer an interpretation of that subdivision that would support the court's order. Ignoring section 3856(b) and its plain language, Duncan instead contends Hartford's lien and
6 In passing, Duncan suggests Hartford could have intervened in the lawsuit to ensure the payments for lost wages were recovered from Wal-Mart. As explained above, however, Hartford was not required to intervene and the statutory scheme expressly authorized Hartford to allow Duncan to prosecute the claim against Wal-Mart and then obtain a lien on the judgment for the compensation it paid. Duncan does not cite, and we have not found, any authority suggesting Hartford waived or forfeited any of its reimbursement rights by choosing not to intervene and ensure Duncan sought damages for the compensation she received from Hartford. We also note that Duncan's complaint sought damages for lost wages and earning capacity; she simply did not seek those items at trial.
The Court of Appeal reversed: "Where the Legislature has 'minutely described the limitations and exceptions dealing with a given subject matter,' we may assume it intended to supplant any relevant common law.
III
Duncan relies on three cases to support her argument. (See Sanfax , supra , 19 Cal.3d 862 , 140 Cal.Rptr. 638 , 568 P.2d 363 ; Woodcock v. Fontana Scaffolding & Equip. Co. (1968) 69 Cal.2d 452 , 72 Cal.Rptr. 217 , 445 P.2d 881 ; Soliz v. Spielman (1974) 44 Cal.App.3d 70 , 118 Cal.Rptr. 127 .) Duncan, however, provides only a general citation to each of these cases without identifying a specific page or passage that allegedly supports her contention. Moreover, Duncan provides no analysis or discussion of these cases. Our review reveals nothing that requires an employer to show an employee received a double recovery to obtain a lien on the employee's judgment against a third party tortfeasor.
Accordingly, the trial court properly granted Hartford a lien on Duncan's judgment against Wal-Mart and reduced that lien by the amount of reasonable attorney fees and costs the court found Duncan incurred. The court, however, exceeded its authority by also excluding from the lien the $36,929.32 in lost wages Hartford paid Duncan, but she did not attempt to recover from Wal-Mart. We therefore modify the trial court's order to include that sum and affirm the order as modified.
DISPOSITION
We modify the postjudgment order granting Hartford a lien on Duncan's judgment
Cases cited
- Abdala v. Aziz 3 Cal.App.4th 369 p. 303
- County of San Diego v. Sanfax Corp. 19 Cal.3d 862 p. 305, p. 475
- Heaton v. Kerlan 27 Cal.2d 716 p. 306
- Breese v. Price 29 Cal.3d 923 p. 308
- Fremont Compensation Insurance v. Sierra Pine, LTD. 121 Cal.App.4th 389 p. 468
- Tate v. Superior Court 213 Cal.App.2d 238 p. 468
- Jarman v. HCR ManorCare, Inc. 9 Cal.App.5th 807 p. 470
- Baker v. Workers' Comp. Appeals Bd. 13 Cal.App.5th 1040 p. 470
- Harvey v. Boysen 50 Cal.App.3d 756 p. 471
- Quinn v. State 15 Cal.3d 162 p. 471
- Gapusan v. Jay 66 Cal.App.4th 734 at 741-742 p. 472
- Woodcock v. Fontana Scaffolding & Equipment Co. 69 Cal.2d 452 p. 475
- Soliz v. Spielman 44 Cal.App.3d 70 p. 475