Duncan v. Wal-Mart, DCA4/3, 12/13/17
When an employee is injured on the job, the injury is sometimes caused by a third party not associated with the employer. In that case, the employee is entitled to seek worker’s comp benefits against the employer and bring a civil action against the third party. The worker’s comp carrier who pays benefits to the employee can then place a lien on any recovery the employee obtains in the civil action. The question, of course, is for how much.
The issue in this case was perhaps caused the employee’s civil attorney: As part of the worker’s comp settlement, the carrier, Hartford, paid employee $37,000 in lost wages. In the civil action, Plaintiff took the matter to trial against Wal-Mart and won. However, Plaintiff apparently forgot to present evidence of her lost wages claim at trial. Hartford asserted its full lien against employee’s civil recovery, including for the payment it made for lost wages. Plaintiff asked the trial court to reduce Hartford’s lien by the $37,000, and the trial court agreed. When Hartford appealed, the appellate court agreed with Hartford.
This case is all about Labor Code 3856, which provides in part: “After the payment of such expenses and attorney’s fee the court shall, on application of the employer, allow as a first lien against the amount of such judgment for damages, 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.”
The statute doesn’t authorize the trial court to reduce Hartford’s lien where the employee abandons or forgets to present evidence on a portion of his/her claim.
The outcome works, at least for this case. For reasons unknown, plaintiff chose not to present evidence of her lost wages claim at trial. The court noted that “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.”
But the outcome is certainly not perfect for every case. In some cases a carrier will pay a greater sum in damages than are available in the civil action, perhaps because insurance coverage is limited or because the jury awards a lower amount in damages than the carrier paid in worker comp. In those cases, allowing the carrier to collect a disproportionate amount against the judgment may line up with what the statute says, but it certainly doesn’t feel like justice.