there's a single issue the result of this case the question is when deerbrook was presented with an opportunity to settle this case within the policy limits was it reasonable for them to require the consent of the employer where the employer had paid no money to date it was unreasonable to require that employers consent because deerbrook they could only require consent or was it ten percent or proof that there was not going to be any payment from the employer no it was consent they said we know the employer has paid zero that was agreed and no they may ask for proof of that i thought there were actually once a month until they said can you show us the denial and then there was no no they are they did early in the process said can you send us the letter in november twentieth and this is all in the record november twentieth there was a phone call between the attorneys for the door rose and the attorney for the mr kennedy the adjuster and there it was discussed that the employer had denied the claim and mr kennedy said i understand that it doesn't matter we must put the employers consent it doesn't matter whether they've paid zero there must be their consent and that is deposition he again i would not have sent the money if they sent me the letter the letter was something that was only brought up as a reason to not do it nine years after after the events if your position that there was no potential liability in terms of an employer if this if they had said accepted the settlement the lien would have been capped at zero dollars and that's expressly that's the statute says it expressly section thirty thirty eight fifty nine b was added in one nine hundred seventy one prior to that date you the statute said no employee can ever settle without the employer's consen there are been a number of work arounds people have tried to do to be able to settle without the employer's consent in one nine hundred seventy the california supreme court decided brown be superior court and said no these workarounds are not they don't work the language is unambiguous you need the employer's consent the legislature then added thirty eight fifty nine b to reverse the unfair and brown recognize that it's unfair to i'm looking at the text of subsection be so help me understand surely it supports your position sure so the first question is could the door rows have settled without the consent of the employer they first  sentence in thirty eight fifty nine b notwithstanding anything to the contrary contained in this chapter and the contrary thing is section a that says you always need employer's consent so notwithstanding section a an employee may settle may settle and release any claim he may have against a third party without the consent of the employer but that doesn't say the insurer hostage right how do we know that the insurer has to do that without some release from the employer that the employer isn't going to go after that insurer again for money to compensate them for workers compensation because the statute gives the door rose the ability to release except for monies paid as of that date and that's what the sec remember so it says we may settle and we may release the claim the second sentence says such settlement or release shelby subject so there is a limitation on the ability to release what is the limitation on the ability  zero liability so why were why were the why would the insurer why would they reluctant to give the denial letter then i don't get that there was no reluctance and had they accepted a settlement when we made it the employer once they were held liable their sole remedy is to do what they use a credit but what is what in the statute says that the sole remedy so it says it's a remedy but how do we know it's the only remedy how do we know the employer can't go after the insurer of the person who caused the accident because there's a release and that's the key there is that the employee can give the release or the release is subject says it in thirty eight fifty nine but who's is released the employee can release the employer and can release the third party for everything all claims arising out of the accident except money that has already been paid that doesn't bind anyone else that's the difficulty of the lease is only for the employer you know the release is for the employee and the employer for future benefits and that was that because because it says so in section be ok where it says again the employee may said don't release any claim but that release is subject to the employer being able to pursue for past benefits and  more employee right and so it doesn't say anything about the employer going after the person who caused the and he didn't insure no this is absolutely as to the third party and there's four cases there are four cases the lien rights are limited to what has been paid as of the time of the settlement or judgment i have four cases on point that directly state exactly what i'm saying that the limit is only to past we have graham versus workers compensation appeals board to ten third four nine nine and explains that there's a credit and lien provisions and it says the reimbursement provisions provide several methods for the recovery for the employer or its carrier to recover from a third party toward fee users workers compensation benefits with your very it was which the employer has already paid to the injury to employ the the right for the the employer to sue is limited to what has already been paid the credit provisions allow the employer to discontinue workers comp  the they only can go for what's already been paid in nelson v workman's compensation benefits the us this is a page for seventy eight the us where particular work and comp benefits have not been awarded by the board by the time the third party tortfeasor satisfies the injured employees judgment against them but award of such benefits is later sought sections thirty eight fifty eight and thirty eight sixty one permit the employer to achieve the same result here's the difficulty i'm having with your argument is that you are presenting this as the only way that the employer can resolve the issue and these cases and the statute seem to give the import that this is a per miscible way to do it but the employer is not obligated to do it that way no they tell me what  gray am you're relying upon to support the proposition that the employer is obligated to proceed in this manner that they give me the language in the case that the employer is obligated to proceed in this way in this way along what we don't understand is you know what i don't understand i will speak for my colleagues what i don't understand is your argument that the employer is obligated and it's limited to proceeding in only the way only way that can be done and the statute thirty eight fifty nine also supports this and i'll get into that but the only way that can be done is let's say the employer is paid five thousand dollars and the parties want to settle and the employer says you know what i'm only can going to consent if you give me thirty thousand dollars right the third party isn't going to you know that the employer is not going to do it the in third party is going to say i'm not going to do it without the employer's consent you need to go get that and county of san diego warned this is the county's construction of section this is in eighty three the counties construction of section thirty eight fifty nine subdivision b would to some extent attempt to restore the inequity which section thirty eight fifty nine and its amended form appears to be designed to remove if an employer need not file an action against a third party until after the third party settles with the employee the when it has and here's the key again under their interpretation let's say one they even say it expressly in there and then moving papers in summary judgment they give an example of superior national had paid nine thousand dollars in benefits to deerbrook they could have settled they could have written a check to deerbrook for nine thousand and eight check to us for six thousand they don't need the employer's consent they need they agree that once the employers paid money they're limited to that and so the only way to enforce what the legislature did in one thousand nine hundred seventy one is to interpret the plain language that you can release all claims except for what has been paid at that date so in my example if ten thousand ha been paid at that date the employer says look i'm only going to agree for thirty thousand what the parties can do is say without the employer's consent we're going to settle whatever would sell and we're going to save ten thousand dollars we're going to can only pursue it for some certain and that's expressively stated in thirty eight fifty nine two because here's something significant thirty eight fifty nine refers to thirty eight fifty two the labor code section thirty eight fifty t labor code section thirty fifty two says in the absence of a suit by an employee the employer can sue for both money that they have paid and money they become obligated to pay in the future that's the potential claims the employer has now we look at the language of thirty eight fifty nine b and it says such settlement release shall be subject to the employer's right to proceed to recover compensation he has paid in accordance with section thirty eight fifty two counsel i think you so help me understand this scenario the same facts as in our case but let's say the superior national is at the name of the carrier has not denied they claim they just haven't paid any money yet but everyone of and so on day one we're going to settle and no money has been paid you're saying that under your reading of thirty eight fifty nine b the employer's ability to recover the money that it pays in the future is limited to taking the credit under thirty sixty one against whatever the employee whatever the employee receive and say i am and that gives them the full benefit that they would have had if they got it would join in the said ok but hang on so let's say that the policy  limits here were one hundred thousand instead of fifteen and let's say the employee you were contemplating settling with the third party for only twenty five thousand right under your reading what would happen is that the employer and let's say that two years later the employer actually pays out two hundred thousand dollars in benefits you're saying that the employer's ability to recover against the third party towards her has been extinguished and it's now limited to getting a credit of only twenty five thousand dollars right when in fact at least the policy limits were far in excess of that so why wouldn't the legislature have one of the employer to have a say in whether that settlement should be struck well because they expressly said we don't want to ever give the employer veto power we wan be balanced equity is to allow an employee veto in this situation the employee could settle if the third party insure agrees but they might not agree because they might know the employer is going to come after them but that's exactly what county of san diego says we can't put them in a position where we're worried that the employer is going to come after him afterwards so the only way to give them certainty is to limit it to what has been paid as of that day and why would the legislature have wanted the insurer of the person who caused the accident to not pay the full policy when it makes no sense that that's what they did well several things make no sense about the example for  what you're talking about and i'm sorry if it's not a realistic example because if what you're saying is there were such huge damages the employed and there was one hundred thousand in policy the employee is not going to settle for twenty five but we're only ever in that position if the employer has a fuse to pay any benefits but we're only in the position when the workers comp insurer even though they're supposed to pay on day one without any you're supposed to just send them your bill and they're supposed to pay it there is never any there only occurs when there's no money paid but thirty eight fifty nine b i mean teams the employers right under thirty eight fifty two to sue for what it has paid but it's silent on what it has become obligated to pay counsel we understand your position perhaps not your argument but your position all right thank you thank you thank your honour's may please the court like to begin by addressing what my opposing counsel is characterized as the single issue in the case and show that it is inconsistent both with the purpose of the subrogation provisions in the labor code the subrogation provisions of the labor code should be interpreted in a way that protects the rights of both the employer and the employee to full recovery of their expenditures or recovery of their damages the plaintiff is arguing is that a unilateral early settlement by an employee can cut off an employer's right to recoupment reimbursement of later compensation expenditures that is made p there was a settlement by the employee prior to any payment of benefits by the employer was a settlement in january nine hundred seventy three a month and a half later there was an award and the employer first pa benefits if the rule was as my opponent suggests then the answer in the glover case by the supreme court would have been because the employee settled before any money had been paid by the employer or the competition carrier game over there be nothing left to talk about but that's not the analysis of the california supreme court provided instead the california supreme court expressly said that that settlement in that case even though the settlement was reached before any money was paid just like in this case was not an appropriate segregated settlement because it did not protect the employer's rights to pursue reimbursement and therefore the exception to the consent requirement did not apply that was the what california from court had to say likewise in this case because the settlement that was proposed in this case by the plaintiff's lawyers was clearly not a segregated settlement in the january thirty one two thousand and one letter said this is a settlement of all clans arising by mr doro or anybody claiming through him which would include the employer and the care clearly not a segregated settlement under the same independently would have had liability for ignoring the slain in the pope case the court said that even when consent is not required notice to the carrier the worker's comp care is required and if the insurance company for tortfeasor proceeds with a settlement and doesn't provide that notice it will be liable to the ok in this situation where money has already been paid out and so the lien who's in this in effect been like has actually come into existence right i think that's what your opponent is saying that those cases you're right that if superior national had paid out some amount of money already and had given notice of the lien and you just basically paid all all the money over to the in the future i might decide that i want to i'm going to pay out some money i let you know that i'm you know i might have a lien in the future do we have cases that say that that's enough to impose liability and you're in the insurance company of the existence of a of a right or potential right of reimbursement by the carrier and ignores it as opposed to being a good faith settle or without knowledge then it is liable  on the client it is not exempt from the employer's reimbursement claim directly against it even if no money had been paid out to to sort of perfect the lien right because the lien is effective  to the lien can be established can be given when there is a prospect of payment to insure that the carrier has got its or in the water if there's ongoing litigation for example to make a claim against the ultimate recovery in that because there may be payments by that carrier that haven't happened yet but they will happen prior to the judgment or the settlement in the case so there's no bar against asserting action under thirty eight fifty two by the carrier against the tortfeasor that action can be an issue dated prior to any payment being made that's why that language thirty fifty two says when benefits have been paid or are obligated is that when the insurance when the worker's compensation care is suing the tortfeasor directly even though it can file suit before it's made payments the only money can recover alternately at the time of judgement is the money that is paid prior to the judgment but the point of statutory argument is that injects next to those words has paid in thirty eight fifty nine b words that aren't there has paid at the time of the employee's settlement but that's those words aren't there and it's not the proper way to read it the has paid language in thirty eight fifty nine b refers to has paid as of the time of the judgment in favor of the worker's comp carrier against the tortfeasor and that interpretation i've just given you is not just my interpretation in the phelps vs sto stad case i think i may have said this wrong i think it's false for sto stat it's in the papers the california supreme court interprets the statutory scheme to limit what the employer can recover when it suits the tortfeasor directly to the amounts that have been paid as of the time of the judgement and any excess then goes to the employee one more piece of answer your question about the  what how good is that what is it worth an offer of indemnity is only as good as the you know credit of the person standing behind it and i don't know i don't think that matters i mean if you would if your client paid out the full policy limits your i mean that's it right you don't have any further obligation to indemnify him for any losses he's in for that i actually think the offer was a dumb one frankly given especially given how much we know it was a totally paid out and workers comp that's but i think your your point as i understand it is that deerbrook itself had its own independent liability to be concerned about totally separate from its obligation to them if i was right there are two parts to it that are similar but deserve to be separated ok the first is that an insurance company must ensure that it gets full pace for its insured must ensure that it buys full peace for mr warren it's got to make sure that it's settling the claims of all potential claimants against mr ward including in this case superior national for the reasons that have been discussed in the papers accepting this and segregated settlement without a notice and consent notice to a consent of superior national would not have done that and would have left mr warren exposed to claims by superior national that ultimately reached almost eight hundred thousand dollars but he could i mean you i  that because you should have at least notified him of the what was on the table as i understand you don't even bother to consult with warren if i'm in worn shoes i am saying pay them the fifteen thousand right this second are you crazy i'm going to otherwise be exposed to this judgement that's really an excess of that everyone knows it's not going to be right i need to correct a misunderstanding of the record reflected in your arse question ok mr warren did testify that he was aware of what was going on contemporaneously with  dispute about whether the whether the spirit national should be named on the check this is reflected both in his own declaration which is in the record as well as in his deposition testimony and he also says that he approved of also your are the evidence in the record is not that he was in the dark about it deerbrook had hired an attorney gary gallo for mr warren at the time that the first lawyer for mr doro had asked for a declaration as to certain things the information that was being given to mister warren about his rights was coming from mr gala so even though it's true there's testimony that the adjuster himself did not communicate directly with warren about his rights and his options the communication was coming from mr gala that's in the record as is what i described about mr lawrence own declaration mr warren's father's own decoration which is to the same effect that they want to deerbrook to protect them against the potential of liability speer national i would like to with the time i have remaining address the three independent grounds for a ferment even if the court were ultimately to disagree  position on the proper interpretation of the labor code the first is the issue of waiver of an independent ground of the district court's decision the district court in its motion deer brook argued for independent grounds for summary judgment one was the rule in the case called boy court in the case called graziano that when an insurance company has offered its full policy limits prior to the expiration of a deadline given by the by the claimants counsel that that establishes good faith as a matter of law and is independent of whether there's any mistake that subsequently happened so even assuming argue window that their books position visa v putting superior national was it was in the state of of law the fact that the company has proven through its conduct that it is not trying to save a buck on the climb but it is put its full amount with these facts establishes that even if you assume that after doing that deerbrook made a mistake in how to analyze the spirit national issue that it's good faith has been established as a matter of law because it's shown that it's willing to put every penny it's got on the table to try to protect its insured i know this isn't directly an issue but why is this policy so low i mean of course they're putting every penny on the table this is a ridiculous policy i don't understand how we have a policy that's fifteen thousand dollars in california the statutory minimum coverage for a driver is fifteen thousand dollars per person injured thirty thousand dollars for accident it's been that way since one thousand nine hundred sixty eight it made a lot more sense in one thousand sixty eight than it does now but that's still the law partly because i suppose insurance would get a lot more expensive if people were made to carry higher limits and some people can't afford it so the legislature has decided it's going to keep fifteen thirty fifteen thousand per person thirty thousand dollars for accident as a statutory minimum so mr warren was complying with his obligations under the vehicle code by carrying that amount of insurance but getting back to the waiver issue any second ok so there's the waiver issue  independent ground clearly articulated the such by the court independent of whether the superior national issue was rightly or wrongly analyzed ignored in the opening brief therefore waived there's also the issue that the this area of law is been described by the courts as a thicket it's not easy at the time back in two thousand there was no discussion of this thirty fifty nine b issue just this misleading half truth about it and i'll it can i would submit that under the circumstances here for an insurance adjuster to play that the thing he needed to do to protect his insured as well as his company from liability but superior national the check as it is at a minimum reasonable in fact it falls directly within the protective umbrella of this own course decision in mercado versus all state which says it's appropriate for the insurance company to put a lien holders and potentially holders name federation person center for medical progress