Court Opinion

ID: 9614719
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:27:37.652444+00
Date Added: 2024-06-11T18:03:38.412422
License: Public Domain

BURKE, J.*
I dissent. The majority’s holding results in an inequitable and wholly unjustified double recovery by the employee who, for the first time since the adoption of our “no fault” workmen’s compensation system, is permitted to retain both his compensation award and his recovery from the third party tortfeasor, solely by reason of his employer’s concurrent negligence. In my view, such a result promotes no valid public purpose, and in fact contravenes the mandatory language (e.g., Lab. Code, § 3861) insuring the employer a credit in third-party recovery situations.
*893Specifically, the majority holds that the concurrent ¿egligence of an employer bars him from receiving a credit against the employee’s third-party recovery (by settlement or judgment), to'be applied to future permanent disability payments. As a corollary of this holding, the majority also holds that the Workmen’s Compensation Appeals'Board has the jurisdiction and authority to adjudicate the issue of the employer’s concurrent negligence even though that issue has not been previously determined by a court.
As I explain below, the disposition reached by the majority confuses the employer’s right to a credit with his right to reimbursement, gives an unwarranted extension to this court’s decision in Witt v. Jackson, 57 Cal.2d 57 [17 Cal.Rptr. 369, 366 P.2d 641], and unnecessarily injects the issue of fault into workmen’s compensation proceedings.
The events in the present case exemplify the procedures typically followed when an employee seeks both workmen’s compensation and a third party recovery. First, the injured employee applies for temporary disability and receives an award of weekly disability indemnity for a given period of time. Subsequently, the employee brings an action against the third party, which may be settled, as in the present case, or go to judgment. The employee then receives, in a subsequent workmen’s compensation proceeding, an award for permanent disability.
The Labor Code specifies three judicial procedures for obtaining reimbursement of amounts previously paid to the employee. The employer may bring a direct action against the third party (Lab. Code, § 3852), join as a party plaintiff in a suit brought by the employee (Lab. Code, § 3853), or apply to the court for a first lien on the judgment recovered by the employee (Lab. Code, § 3856, subd. (b)). In most cases, the employer’s recovery is limited to the amounts paid from time of injury until trial because the employee has not yet received his permanent disability award; and the extent of the employer’s liability has not yet been determined. (See Slayton v. Wright, 271 Cal.App.2d 219 [76 Cal.Rptr. 494]; Castro v. Fowler Equipment Co., 233 Cal.App.2d 416 [43 Cal.Rptr. 589]; Conner v. Utah Constr. & Mining Co., 231 Cal.App.2d 263 [41 Cal.Rptr. 728].)
The employer’s separate and distinct right to a credit for future payments is provided for by Labor Code sections 38581 and 3861.2 This credit con*894stitutes a set-off, applied to the employee’s third party recovery, against the employer’s total future liability for compensation (Lab. Code, § 3861), and usually arises when the employee, after judgment, petitions the Workmen’s Compensation Appeals Board for a permanent disability award. Thus, the right of reimbursement ordinarily applies to the compensation benefits received by the employee prior to his third party recovery, while the right to a credit applies to benefits to be received thereafter.
In Witt v. Jackson, supra, 57 Cal.2d 57, 72, this court held that the employer’s concurrent negligence barred his statutory right of reimbursement. This conclusion was founded on the principle, enunciated in Civil Code section 3517, that one may not profit from his own wrong. However, because the barring of reimbursement would otherwise give the employee a double recovery, this court reduced the employee’s judgment against the third party by the amount of workmen’s compensation received from injury to trial. (Id. at p. 73.)3
The result of the rule promulgated in Witt is a proper allocation of the rights and liabilities of the parties. The employer is barred from “profiting” from his own wrong since he is denied reimbursement out of the third party recovery; the third.party receives contribution from his joint tortfeasor (the employer) in the form of a reduction of the judgment against him; and the employee recovers full compensation for his injuries without receiving a double recovery.
To extend the rule of Witt v. Jackson, supra, 57 Cal.2d 57, to bar the employer’s credit for future payments without a corresponding reduction in the amount received from the third party upsets the relative balance of equities among the parties and does disservice to the principles enunciated in Witt. Under the majority’s holding the employee recovers both the full amount of the judgment against (or settlement with) the third party, and the full disability award of the Workmen’s Compensation Appeals Board without any reduction whatever to eliminate duplicative payments. To the extent that the amount of the judgment or settlement overlaps the employee’s compensation award the employee recovers double compensation for the same injury, a result expressly interdicted by this court in Witt. (P. 73.)
*895Nor does this ruling truly advance the principle of Civil Code section 3517 that one (here the employer) should not profit from his own wrong.4 When the employer’s credit is barred, he is not merely denied a “profit” from his own wrong, he is unduly punished. The employer has already been amply penalized by barring his right to reimbursement. To bar in addition his right to a credit for future payments of compensation serves no purpose other than to subsidize the employee’s double recovery.5 More*896over, I have difficulty understanding why section 3517 operates to bar the negligent employer of his statutory right to a credit yet permits the negligent third party tortfeasor to exercise his statutory right to contribution. If indeed it may be said that one “profits” from a wrong by being allowed to share his liability with another, then seemingly section 3517 should bar the third party’s contribution rights.
If the employer were allowed a credit regardless of his concurrent negligence the balance of the equities would remain intact. The employer would continue to lose his right of reimbursement with respect to compensation paid prior to the third party recovery. The employee would receive full and fair compensation without recovering twice for the same injury. And the third party would receive a contribution from his joint tortfeasor in the form of a reduction in the amount of the judgment against him.6
When the distinction between the employer’s reimbursement and credit rights is properly understood it becomes apparent that it is unnecessary to inject the issue of fault into workmen’s compensation proceedings. The employer’s claim to a reimbursement, under the statutory scheme, is always presented to a court, not to the Workmen’s Compensation Appeals Board. If the employer brings an action against the third party (Lab. Code, § 3852) or joins as a party plaintiff in the employee’s action (Lab. Code, § 3853) the issue of concurrent negligence is determined by a court. If the employer applies for a first lien on the employee’s recovery, he must apply to the court, not the Workmen’s Compensation Appeals Board (Lab. Code, § 3856, subd. (b)). Nor can the employer avoid adjudication of concurrent negligence by declining to join in the employee’s suit or to bring an independent action, for the defense may be raised by the third party without joining the employer (Serrano v. Workmen’s Comp. Appeals Bd., 16 Cal. App.3d 787,790 [94 Cal.Rptr. 511]; Tate v. Superior Court, 213 Cal.App. 2d 238, 247 [28 Cal.Rptr. 548]), or the third party may bring the employer into the suit by a cross-complaint (City of Sacramento v. Superior Court, 205 Cal.App.2d 398, 405 [23 Cal.Rptr. 43]). It is therefore clear that when*897ever the issue of concurrent negligence is raised as a bar to the employer’s reimbursement, the adjudication of fault will be made by a judicial body.
Nothing in this court’s decision in Witt v. Jackson, supra, 57 Cal.2d 57, contemplated or foreshadowed the introduction of fault determinations into workmen’s compensation procedures. Witt itself was a reimbursement case in which the employer intervened in the employee’s civil action against a third party. Since, as indicated above, the employer may seek reimbursement only in a judicial proceeding (under Lab. Code, §§ 3852, 3853, and 3856, subd. (b)), nothing in Witt requires an administrative determination regarding negligence. Moreover, Witt was concerned only with adjusting the respective liabilities of the employer and the third party, not those of the employer vis-a-vis the employee, and changed the prior law only because of the adoption of new legislation allowing contribution among joint tortfeasors.7 (Code Civ. Proc., §§ 875-880; Witt, supra, at pp. 69-71.)
On the other hand, the employer’s right to a credit is determined in proceedings before the appeals board. (Lab. Code, § 3861.) In cases such as the instant one, in which there has never been an adjudication of the employer’s concurrent negligence, the majority’s holding compels the Workmen’s Compensation Appeals Board to determine this issue.
As Justice Kaufman’s excellent opinion in Corley v. Workmen’s Comp. Appeals Bd., 22 Cal.App.3d 447, 459-460 [99 Cal.Rptr. 242], correctly points out, it is highly questionable whether the issue of fault may be injected into workmen’s compensation proceedings consistent with the California Constitution. “The Workmen’s Compensation Appeals Board is a tribunal of limited jurisdiction and has no power beyond that given it by section 21 of article XX of the California Constitution as implemented by the workmen’s compensation law. [Citations.] Of course, Labor Code section 3861 . . . expressly empowers the Board to grant an employer the credit here claimed. . . . [N]either Labor Code section 3864 nor any other provision of the constitutional and statutory scheme condition the employer’s right to credit on the absence of negligence. Indeed . . . article XX, section 21 of the California Constitution expressly provides for the establishment of a compensation system ‘irrespective of the fault of any *898party,’ which mandate is expressly made binding on all the departments of government. Thus, a holding that the Board has jurisdiction to try and adjudicate negligence on the part of the employer and, based thereon, to deny the employer the statutorily prescribed credit would raise serious constitutional questions.
“. . . Although article XX, section 21 of the California Constitution and Labor Code section 3601 suggest the absence of jurisdiction, they are not conclusive. Under these circumstances, the rule should be adopted which best serves the efficient and proper administration of justice. [Citation.] Since a holding in favor of the existence of jurisdiction would lead to the several substantial problems of administration of justice ... in addition to introducing into workmen’s compensation proceedings the issue of negligence contrary to sound principles of workmen’s compensation and contrary to the express mandate of article XX, section 21 of the California Constitution, we should be inclined to hold, were it necessary, that the Board is without jurisdiction to try and adjudicate the issue of the concurrent negligence of an employer.” (Fns. omitted.)
To conclude, I would retain our holding in Witt v. Jackson, supra, 57 Cal.2d 57, to the effect that the concurrently negligent employer should be denied his right of reimbursement; that rule does not result in double recovery to the employee, for his third party recovery is reduced by the amount of compensation benefits he has already received. However, in the absence of some workable means of reducing that recovery further to reflect the right to receive future disability payments, I would permit the employer to exercise his statutory right to a credit against such payments, to the extent of the third party recovery, without regard to his concurrent negligence.
Clark, J., concurred.

 Retired Associate Justice of the Supreme Court sitting under assignment by the Chairman of the Judicial Council.

 Section 3858 states that after litigation expenses, attorney’s fees, and the employer's lien for prior payments are subtracted from the amount of the judgment against the third party, “the employer shall be relieved from the obligation to pay further compensation to or on behalf of the employee under this division up to the entire amount of the balance of the judgment, if satisfied, without any deduction.”

 Section 3861 provides that “The appeals board is empowered to and shall allow, as a credit to the employer to be applied against his liability for compensation, such. *894amount of any recovery by the employee for his injury, either by settlement or after judgment, as has not theretofore been applied to the payment of expenses or attorney’s fees . . . .” (Italics added.)

 As discussed infra, the judgment against the third party may not be reduced by the future compensation payments the employer may become liable for since such amounts are not ordinarily ascertainable at the time of judgment.

 As one leading authority has pointed out, the principle that one should not profit from his own wrong is of dubious validity when applied to the employer in workmen’s compensation cases. “[I]t is admittedly rather an odd spectacle to see a negligent employer reimbursing himself at the expense of a third party; and several courts have barred the employer’s recovery on these facts. There is, however, one oversight in most of the latter cases: they have a tendency to speak of the ‘en> ployer’s’ negligence when what they really mean is the negligence of some co-employee of the injured employee. Once this is held firm,ly in. mind, the picture changes in two ways. First, one’s moral indignation evaporates since one no longer has the prospect of a personally guilty plaintiff claiming damages. Second, it becomes even legally inaccurate to speak of the ‘employer’s’ negligence in such circumstances, since the employer who assumes compensation coverage is in law not liable for the negligent harms wrought by one employee on another.” (Fns. omitted; 2 Larson, Workmen’s Compensation Law (1974) § 75.23, pp. 226.147-226.149.)

 The double recovery resulting from the majority’s holding may be illustrated as follows: An employee is injured and receives temporary disability in the amount of $5,000 from the time of injury until judgment against a third party. The employee then receives a $10,000 verdict against the third party. The employer is denied his reimbursement because of his concurrent negligence and the judgment against the third party is reduced by the amount of the compensation already paid. (Witt v. Jackson, supra, 57 Cal.2d 57, 73.) At this point the employee has recovered the sum of $10,000 ($5,000 from the third party plus $5,000 from the employer).. The employer has been denied any “profit” from his own wrong since he has been denied his right of reimbursement. The third party has, in effect, received contribution from the joint tortfeasor since the judgment against him has been reduced by the amount of the compensation paid.
The employee next seeks permanent disability and is awarded $20,000. Prior to the decision herein, the $20,000 award would be reduced (the employer’s credit) by the net amount of the judgment against the third party. The result of this reduction is to give the employee the full amount of compensation determined by the Workmen’s Compensation. Appeals Board ($5,000 judgment, plus $5,000 temporary disability, plus $10,000 permanent compensation award to be paid by the employer). Under the majority’s ruling, however, the employee will recover not only the judgment and the temporary disability, but also the full amount of the permanent disability award (in this example a total of $30,000). The result is that the employee has received $10,000 more than the permanent disability award. This $10,000 excess represents the extent of the double recovery (which will always be the amount of the judgment) since the award is a determination of the total amount necessary to compensate the employee. The principle that the employer should not profit from his own wrong is more than amply fulfilled since the employer will be liable for 83.3 percent ($25,000 out of $30,000) of the employee’s compensation. If the credit were allowed the employer would be responsible, in the example given, for 75 percent ($5,000 lost reimbursement plus $10,000 Workmen’s Compensation Appeals Board award equals $15,000 out of $20,000) of the employee’s compensation. This example *896points out one further anomaly of the majority’s holding. A court has adjudicated that $10,000 will fully compensate the employee, the Workmen’s Compensation Appeals Board has determined that the employee is entitled to $20,000, yet this court’s ruling gives the employee $30,000, $20,000 more than the judicial award and $10,000 more than the Workmen’s Compensation Appeals Board decision.

 In the situation where the employee receives his permanent disability award prior to the rendering of judgment against the third party, the balance of equities achieved in Witt v. Jackson, supra, 57 Cal.2d 57, could be maintained simply by confining the amount of reimbursement to the sum of the compensation paid from time of injury to time of judgment.

 Prior to our decision in Witt v. Jackson, supra, 57 Cal.2d 57, this court had held that the employer could assert his right to reimbursement even though the employer was concurrently negligent. (Finnegan v. Royal Realty Co., 35 Cal.2d 409 [218 P.2d 17].) This rule was based on the California law at that time denying contribution between joint tortfeasors. With the enactment of Code of Civil Procedure sections 875-880 in 1957, allowing contribution, the rule of the Finnegan case became obsolete. (Witt, supra, at pp. 69-70.)