Interplay Between a Workers'compensation Case and a Personal Injury Case
| Publication year | 2020 |
| Author | Alan B. Snitzer, Esq. |
Alan B. Snitzer, Esq.
Pasadena, California
Many workers' compensation cases in California arise from situations that also involve potential personal injury cases in the civil arena. This article looks at both third- and first-party cases, how to spot— and avoid legal malpractice claims for missing—a potential personal injury case that arises from an industrial injury, and how the issues of subrogation and credit affect the rights and duties of the respective parties to the workers' compensation case.
First, though, it is worthwhile to examine the basics.
Workers' compensation is based on a no-fault system of delivering benefits to injured workers (where the sole threshold legal question is one of compensability—whether the injury occurred AOE/COE). Personal injury and wrongful death cases in the civil system, in contrast, are based on, and require, a finding of negligence or fault on the part of the tortfeasor, a notion foreign to most workers' compensation practitioners on either side, as well as to most workers' compensation judges.
Fault is a relative term; before 1975, the concept of contributory negligence ruled personal injury cases in California. In other words, if the injured plaintiff was even 1 percent at fault for their own injuries, they recovered nothing at all (and thus the concept was known as the "all or nothing" rule). Recognizing the inherent unfairness in this system, the California Supreme Court in its landmark ruling in Li v. Yellow Cab (1975) 13 Cal.3d 804 held that liability could be apportioned between the parties. This meant that a plaintiff who was partly at fault could still recover the percentage of their damages they were not at fault for; thus was born comparative negligence in California. Most other states now have some form of this concept.
Interestingly, though, many states have a somewhat arbitrary limit to their comparative negligence scheme. In these states the injured party still recovers nothing unless they were no more than 50 percent at fault for their own injuries. California and some other states, however, have what is known as a "pure" form of comparative negligence, where the injured party still recovers the percentage of their damages they were not at fault for, even if it is only a very small slice of the overall negligence "pie." For example, a worker who has a case worth $1 million and was 90 percent at fault for their own injuries would still recover the 10 percent ($100,000) of their damages they were not at fault for. Even a small portion of the damages, then, can be substantial, especially in six- or seven-figure cases.
The burden of proof in a civil/personal injury case is the same as in workers' compensation: a preponderance of the evidence (51 percent, or more likely than not).
The same basic principles of negligence law apply whether dealing with a third-party or first-party personal injury case, as discussed in the next section.
In the field of workers' compensation, injuries that occur within the scope of employment that are caused by an outside party are commonly referred to as "third-party" cases. The injured worker is the first party, the employer is the second party, and the negligent outside party who caused the accident (typically but not always in the form of a motor vehicle collision) is the third party. In the personal injury field, though, they're simply called "PI," or "personal injury," cases. These also include claims for wrongful death.
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But there is a distinction: when the negligent third party is either an uninsured motorist (UM) or underinsured motorist (UIM), the injured worker can proceed directly against their own automobile liability insurance company, with certain limitations. (In California, beginning in the early 1990s, UM coverage automatically also includes UIM coverage, subject to the rules discussed in the following paragraphs.) Making a claim for UM or UIM benefits against the injured worker's (IW's) own auto insurance carrier can no longer be a basis for dropping them as insureds, increasing their premiums, or otherwise penalizing them for what is, by definition, a non-chargeable accident (Cal. Ins. Code §491, effective Jan. 1, 1987).
UM/UIM insurance coverage is a legal fiction, meaning the injured worker's auto insurance carrier basically stands in for the negligent party's carrier (if that party had had any, or enough, liability coverage themselves). For this reason, the viability of the claim depends on, and is subject to the same principles of negligence as, any personal injury case. The same defenses are available to the UM/UIM carrier as in a third-party case.
An injured worker may bring a claim for UM/UIM damages against their own carrier if the worker is the named insured on the insurance policy, the worker's spouse, or a relative of either who resides in the same household. Injuries an uninsured or underinsured motorist caused may be the basis of a claim and can be covered whether the claimant is in the insured vehicle under the policy or in their employer's vehicle, is a pedestrian, is riding in a public means of conveyance (bus, taxi, train, and so on), or even is a hit-and-run victim, as long as there was physical contact with the hit-and-run vehicle.
An uninsured motorist is someone without any applicable auto liability insurance, whereas an under-insured motorist is a driver who has some insurance but maybe not enough to cover all the claimant's damages. The negligent party's liability insurance coverage must first be exhausted (paid out in full) before any UIM damages are payable. In a case with a limits problem (where there is insufficient coverage to fully compensate multiple claimants, so the policy limits had to be prorated), if the policy limits were fully paid out, even if they didn't all go to the claimant/insured, that is sufficient to trigger the UIM coverage.
If the injured worker has enough UM/UIM insurance to cover the value of their claim, California Insurance Code section 11580.2 allows them to proceed against their own carrier. However, the UIM coverage applies only if the claimant's policy limit for UM/UIM is greater than the liability limits the negligent party carries. This is because of an anti-stacking law in...
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