Source: https://law.justia.com/cases/california/supreme-court/3d/9/859.html
Timestamp: 2019-06-17 22:46:05
Document Index: 541542485

Matched Legal Cases: ['§ 386', '§ 14117', '§ 3850', '§ 11580', '§ 14117', '§ 3853', '§ 3856', '§ 11580', '§ 11580', '§ 14117', '§ 14000', '§ 14062', '§ 562', '§ 14061', '§ 14063', '§ 14000', '§ 14000', '§ 916', '§ 121', '§ 133', 'art 3', 'art 1', 'art 1', '§ 3852', '§ 3853', '§ 3856', '§ 1', '§ 1', '§ 2', '§ 24', '§ 1', '§ 2', '§ 11580']

California State Auto. Assn. Inter-Ins. Bureau v. Jackson :: :: Supreme Court of California Decisions :: California Case Law :: California Law :: US Law :: Justia
Justia › US Law › Case Law › California Case Law › Cal. 3d › Volume 9 › California State Auto. Assn. Inter-Ins. Bureau v. Jackson
In bank. (Opinion by Sullivan, J., expressing the unanimous view of the court.) [9 Cal. 3d 860]
The automobile liability policy issued to Sanders by plaintiff California State Automobile Association Inter-Insurance Bureau contained an uninsured motorist clause, as required by Insurance Code section 11580.2, with maximum coverage of $15,000 for injury to each person, not to exceed $30,000 for each accident. Plaintiff brought the instant interpleader action, [9 Cal. 3d 862] naming as defendants, Sanders, Jackson, and the other occupants of the vehicle and deposited with the clerk of the court (see Code Civ. Proc., § 386), the sum of $30,000 which was its maximum liability under the policy. The Department, represented by the Attorney General, filed in the action a notice of lien claiming a first lien of $9,833.39 against any judgment rendered in favor of Jackson.
As a result we are confronted at the start with the Department's contention that Jackson waived his right of appeal and that his appeal should [9 Cal. 3d 863] be dismissed. The Department argues that when the interpleading plaintiff deposited in court the $30,000 representing its limit of liability and was discharged from further liability, plaintiff ceased to be a party in the case and thereupon Jackson and the other defendants became the adversaries. (See 3 Witkin, Cal. Procedure (2d ed. 1971) p. 1899.) The agreement entered into by such adversaries, so the argument runs, was an "arms-length transaction," was approved by Jackson's attorney and was submitted to the court, and therefore constituted a waiver of appeal not only as to the parties thereto but also as to Department. In response Jackson asserts (1) that the waiver was intended to relate only to the apportionment of the funds among defendants and not to the validity of the Department's lien; and (2) that assuming arguendo that it did relate to the validity of the lien, it was ineffective because Jackson's counsel could not validly waive his client's right to appeal without the latter's consent. Since we are of the opinion that Jackson's first point has merit, we deem it unnecessary to reach the second. fn. 6
We turn to the merits. [2a] Essentially the main issue of the appeal is this: May the Department recover the amounts paid by it for hospital [9 Cal. 3d 864] and medical services fn. 7 required by Jackson for the treatment of injuries sustained in an automobile collision with an uninsured motorist by filing a lien against a judgment awarding Jackson a portion of the proceeds paid under the uninsured motorist coverage of an automobile liability policy? Jackson contends that the Department is not entitled to a lien for two reasons: First, he argues section 14117 fn. 8 and Labor Code section 3852, fn. 9 to [9 Cal. 3d 865] which the former section refers, construed together, permit recovery by the Department for Medi-Cal outlays only from the third-party tortfeasor, that is, from "the third person who is liable for the injury" (§ 14117, subd. (a)) but not from the insurance company affording uninsured motorist coverage or the beneficiary (e.g., Jackson) of such coverage; and, secondly, he urges, since section 14117 likens recovery by the Department under the Medi-Cal Act to recovery by an employer or the latter's compensation carrier under the workmen's compensation laws (see Lab. Code, § 3850 et seq.), the Department is barred by an exclusion in Insurance Code section 11580.2, subdivision (c)(4), disallowing recovery from the proceeds of uninsured motorist coverage "where it would inure directly or indirectly to the benefit of any workmen's compensation carrier or to any person qualified as a self-insurer under any workmen's compensation law."
[3] The point of Jackson's first argument is simply that section 14117 permits the Department to recover from "another person ... civilly liable" but not from Jackson himself. However, as we explain infra, an analysis [9 Cal. 3d 866] of the facts of the instant case demonstrates that the Department's lien falls properly within the statutory provisions.
In the instant case, Jackson after being injured by an uninsured motorist, received hospitalization and medical care under the Medi-Cal program. Thereafter he sought to recover damages not only by resorting to the $30,000 deposited in court by plaintiff insurance company as the full amount provided by the uninsured motorist coverage of the Sanders policy but also by bringing an independent action against the uninsured motorist. Under Insurance Code section 11580.2, subdivision (a), his right of recovery under uninsured motorist coverage allowed him to obtain "all [9 Cal. 3d 867] sums [he] shall be legally entitled to recover as damages for bodily injury or wrongful death from the owner or operator of an uninsured motor vehicle." As previously stated, in the instant interpleader action judgment was rendered in his favor in the sum of $11,000. His recovery from the money deposited in court by the interpleading plaintiff insurer is based on the latter's derivative liability under uninsured motorist coverage to Jackson and the other occupants of the insured vehicle for damages for the injuries caused by the uninsured third party tortfeasor. (See Firemen's Ins. Co. v. Diskin (1967) 255 Cal. App. 2d 502, 505-506 [63 Cal. Rptr. 177].) In short, the insurer's liability under uninsured motorist coverage stands in the place of the third-party tortfeasor's liability, at least in part. Indeed, it is significant that the insurer paying a claim under uninsured motorist coverage becomes subrogated to the rights of the insured to whom the claim was paid against the uninsured motorist causing the injury. (Ins. Code, § 11580.2, subd. (g); see Firemen's Ins. Co. v. Diskin, supra.) Recovery by the injured party under uninsured motorist coverage is, therefore, in effect a recovery from the uninsured tortfeasor of damages for the bodily injuries negligently caused by the latter.
[2b] Under section 14117 and the enforcement procedures which it incorporates from the Labor Code, the Department in enforcing its right of recovery may either bring a legal action against the third person liable for the injury or allow the injured party to do so. (§ 14117; see fn. 10, ante.) Clearly in an action for damages brought directly by Jackson against the negligent third-party motorist, the Department could have joined as a party plaintiff or intervened (Lab. Code, § 3853) or could have applied for a first lien against the amount of Jackson's judgment (Lab. Code, § 3856, subd. (b).) fn. 11 In the situation before us, however, Jackson has [9 Cal. 3d 868] obtained a judgment for the recovery of money deposited in court which money represents damages for the negligence of the third party motorist (Ins. Code, § 11580.2, subd. (a)). We think that the Department is as clearly entitled to apply for a first lien against this judgment in Jackson's favor as it would have been against a judgment rendered in an action brought by Jackson directly against the negligent motorist. In the latter situation, Jackson would recover damages directly; in the situation at bench Jackson has recovered damages through a payment into court of uninsured motorist coverage and the insurer will in turn be entitled to recover from the third party to the extent of such payment. (See Ins. Code, § 11580.2, subd. (g).) The two situations differ only in form but not in substance or effect. As we have explained, the insurer's liability stands in the place of that of the negligent uninsured motorist. We conclude that under these circumstances the Department's lien was within the purpose and intent of section 14117 and was properly allowed against the judgment entered.
[4] We take up Jackson's second attack on the Department's lien. His argument proceeds as follows: First, since the Department is enforcing its right of recovery according to the procedures incorporated from the Labor Code, it is in effect acting in the role of an employer or compensation insurance carrier; and second, since it is pursuing its remedies in such a role and is in effect attempting to recover the proceeds of uninsured motorist coverage, it is barred from doing so by Insurance Code section 11580.2, subdivision (c)(4), which excludes employers and compensation carriers. The exclusion in effect at the time of Jackson's injuries and his receipt of Medi-Cal benefits provided that uninsured motorist coverage did not apply "[i]n any instance where it would inure directly or indirectly to the benefit of any workmen's compensation carrier or to any person qualified as a self-insurer under any workmen's compensation law." fn. 12 [9 Cal. 3d 869]
Finding in section 14117 no express statement or reasonable implication that the Department upon pursuing its right of recovery shall assume all the burdens and disabilities of an employer or employer's carrier, we consider the purpose and intent of the exclusion in Insurance Code section 11580.2, subdivision (c) (4). We think that its purpose is clearly to shift the cost of an industrial injury sustained by an employee, as the result of the negligence of an uninsured motorist, from the motoring public (who pay the premium for uninsured motorist coverage) to the employer or workmen's compensation carrier. In other words, the uninsured motorist coverage, the cost of which is borne by holders of automobile liability policies, is withheld and the burden of liability falls on the employer or his carrier at least to the extent of compensation provided under workmen's compensation law. fn. 13 We apprehend no similar purpose in section 14117. To the contrary, the Legislature has declared that the costs of benefits provided to an injured person under the California Medical Assistance Program shall be paid by any "person ... civilly liable" (§ 14117, subd. (a)) and that "[t]he benefits available ... shall not duplicate those provided ... under other contractual or legal entitlements ...." (§ 14000, subd. (c).) We conclude that Insurance Code [9 Cal. 3d 870] section 11580.2, subd. (c)(4) does not preclude recovery by the Department in the instant case.
FN 2. The Department of Health Care Services, now referred to as the "State Department of Health" (§ 14062; amended by Stats. 1971, ch. 1593, p. 3409, § 562), through its director (§ 14061) claimed a lien in order to recover the reasonable value of benefits provided under the California Medical Assistance Program (§ 14063) adopted pursuant to the Medi-Cal Act (§ 14000.4). (See generally Welf. & Inst. Code, div. 9, pt. 3, ch. 7, § 14000 et seq.)
FN 3. Judgment was entered on August 17, 1971. On September 20, 1971, a purported supplemental judgment was entered pursuant to a stipulation in which the Department agreed to reduce its lien claim to $4,916.69. This judgment awarded $6,083.31 to Jackson, or the difference between the total award of $11,000 and the amount of the reduced lien claim. Since notice of appeal was filed on September 16, 1971, the trial court was without jurisdiction to modify the judgment (see Code Civ. Proc., § 916); therefore, the supplemental judgment is void. Nevertheless, the parties do not contest the validity of their stipulation and have advanced arguments concerning the right of the Department to its reduced claim only. Moreover, the Department explains in its brief that the lien was reduced "because it would be unconscionable to take $10,000 of a personal injury award of $11,000."
FN 4. The stipulation declared as follows: "It is hereby stipulated by and between the parties defendant, by and through their respective counsel, that findings of fact, conclusions of law, notice of entry of judgment and right of appeal is waived by each of the respective parties."
FN 5. The Department also filed notice of appeal from the August 17 judgment on September 23, 1971, explaining in its reply brief that the cross-appeal is "precautionary" and intended only to allow a remand to the trial court for correction of the judgment if its language were found to be defective in some manner. Since we have concluded that the judgment of the trial court was correctly stated, the Department's appeal must be dismissed.
FN 6. Jackson's position is that the right to appeal is a substantial right which can be waived by counsel only if the express consent of his client is obtained. (See Linsk v. Linsk (1969) 70 Cal. 2d 272, 278 [74 Cal. Rptr. 544, 449 P.2d 760]; Wuest v. Wuest (1942) 53 Cal. App. 2d 339, 345 [127 P.2d 934]; 1 Witkin, Cal. Procedure (2d ed. 1970) Attorneys, § 121, pp. 131-133; 6 Witkin, Cal. Procedure (2d ed. 1971) Appeal, § 133, p. 4129.) The Department, citing Fowlkes v. Ingraham (1947) 81 Cal. App. 2d 745, 748 [185 P.2d 379], argues that an attorney has an "implied authority to waive his client's right of appeal."
FN 7. The notice of lien filed by the Department claimed a first lien of $9,833.39, said sum representing "payments by the Department ... for health care provided Joe Jackson, Jr., a beneficiary under Chapter 7 'Basic Health Care' of Part 3, Division 9 of the Welfare and Institutions Code." An attachment listed items of hospital and doctor bills. The notice stated that the lien was filed pursuant to section 14117.
FN 8. Section 14117 provides: "(a) When benefits are provided or will be provided to a beneficiary under this chapter because of an injury for which another person is civilly liable, the director shall have a right to recover from such person the reasonable value of the benefits so provided. The Attorney General, or counsel for the fiscal intermediary under the California Medical Assistance Program with the permission of the Attorney General, or a county through its civil legal adviser, may, to enforce such right, institute and prosecute legal proceedings against the third person who is liable for the injury in the appropriate court, either in the name of the director or in the name of the injured person, his guardian, personal representative, estate, or survivors. In enforcing such right the director may commence and prosecute actions, file liens, or intervene in court proceedings all in the same manner, with the same rights and authority as to notice, settlement and other matters, and to the same extent provided in Chapter 5 (commencing with Section 3850), Part 1, Division 4 of the Labor Code for an employer or workmen's compensation insurer where payments have been made or a liability incurred by an employer or an insurer under the workmen's compensation laws. In the event that the injured party beneficiary, his guardian, personal representative, estate or survivors or either of them brings an action for damages against the third person who is liable for the injury, notice of institution of legal proceedings, notice of settlement and all other notices required under Chapter 5 (commencing with Section 3850), Part 1, Division 4 of the Labor Code shall be given to the director in Sacramento except in cases where the director specifies that notice shall be given to the Attorney General.
FN 9. Labor Code section 3852 provides: "The claim of an employee for compensation does not affect his claim or right of action for all damages proximately resulting from such 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, may likewise make a claim or bring an action against such 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 was liable including all salary, wage, pension, or other emolument paid to the employee or to his dependents."
FN 10. "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, § 3856, subd. (b))." (Witt v. Jackson (1961) 57 Cal. 2d 57, 69 [17 Cal. Rptr. 369, 366 P.2d 641].) (Italics added.)
FN 11. In its original form (Stats. 1967, ch. 1424, p. 3351, § 1) section 14117, subdivision (a) stated that the Department shall have a "first lien against any judgment recovered by the injured person ... against the third person who is liable for the injury ...." Former section 14117 was repealed (Stats. 1969, ch. 1420, p. 2909, § 1) and the section as it now stands (added by Stats. 1969, ch. 1420, p. 2909, § 2) merely refers to a chapter of the Labor Code, including section 3856 providing for a "first lien," in describing the reimbursement remedies of the Department.
Labor Code section 3856, subdivision (b) states in part: "If the action is prosecuted by the employee alone, the court shall first order paid from any judgment for damages recovered the reasonable litigation expenses incurred ... together with a reasonable attorney's fee .... 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." (Italics added.) Section 3856, prior to 1959, provided that the employer's lien be effective as against the "entire amount" of a judgment in favor of the employee. This language was construed to mean that an employer's lien attached not only to that portion of the judgment attributable to special damages but also to pain and suffering in the form of general damages. (See Dodds v. Stellar (1947) 30 Cal. 2d 496, 504-505 [183 P.2d 658]; Heaton v. Kerlan (1946) 27 Cal. 2d 716, 723 [166 P.2d 857]; Pacific G. & E. Co. v. Indus. Acc. Com. (1935) 8 Cal. App. 2d 499, 504 [47 P.2d 783]; 2 Hanna, Cal. Law of Employee Injuries and Workmen's Compensation (2d ed. 1973) § 24.07[4] [c].) The present language allowing a "first lien against the amount of [the] judgment [in favor of the employee]" has been given a similar construction. (See Fuchs v. Western Oil Fields Supply (1972) 25 Cal. App. 3d 728, 738 [102 Cal. Rptr. 74].)
FN 12. The exclusion in Insurance Code section 11580.2, subd. (c) (4) was amended in 1972 (Stats. 1972, ch. 952, § 1, p. 1722) to disallow coverage not only to employers or carriers under the workmen's compensation laws, but also where recovery would inure "directly to the benefit of the United States, or any state or any political subdivision thereof." The effective date of this amendment was March 7, 1973 (Stats. 1972, ch. 952, § 2, p. 1728) and the amendment therefore is not applicable to this case.
FN 13. To prevent recovery by an injured employee out of both uninsured motorist coverage and workmen's compensation for the same loss, it is provided that uninsured motorist liability may be reduced to the extent paid and payable under any workmen's compensation law. (Ins. Code, § 11580.2, subd. (h)(1).) If the Department were considered an employer or workmen's compensation carrier for all purposes, as Jackson contends, it would seem appropriate that the insurer providing uninsured motorist protection would be entitled to a similar reduction.