Litigating Third Party Credits at the Wcab

• Jurisdiction: California,United States
• Author: CHRISTOPHER A. VIADRO, ESQ.
• Publication year: 2022
• Citation: Vol. 35 No. 2

Litigating Third Party Credits at the WCAB

CHRISTOPHER A. VIADRO, ESQ.

OAKLAND, CALIFORNIA

INTRODUCTION

Barring unusual circumstances, workers' compensation benefits are available to an injured worker for an injury that arises out of and in the course of employment. (Lab. Code §3600.) While such benefits are ordinarily the exclusive remedy for an injured worker against their employer, the employee is not prohibited from bringing a lawsuit against any other person/entity that is at least partially responsible for causing the incident and injury. (Lab. Code §§3602(a), 3852.) Such other persons/entities are referred to as third parties, and a lawsuit against one is termed a third party lawsuit.

While an injured worker may submit a workers' compensation claim to their employer and also pursue a civil personal injury suit against a third party for the same injury, an injured worker is not entitled to double recovery for a workplace injury. For this reason, workers' compensation carriers often file a petition for third party credit. By doing so, the carrier seeks credit for monies the injured worker received in the third party case and relief from obligations to pay future workers' compensation benefits. Labor Code section 3858 provides for such relief.¹ However, a carrier's entitlement to such a credit is not automatic. In many instances, the carrier will have to continue paying benefits despite the injured worker's receipt of monies in the third party case.

This article focuses on two questions:

• When is the workers' compensation carrier entitled to such a credit and the right to terminate benefits?
• How are disputed issues regarding such credits addressed at the WCAB?

UNDERSTANDING CREDIT THRESHOLDS

When Is a Third Party Credit Permissible?

A workers' compensation carrier's entitlement to credit depends primarily on two factors. These are the nature and extent of employer fault and the nature and extent of overall civil damages. Why is this so? As to the former, it has long been the law that:

it is contrary to the policy of the law for the employer, or [their] subrogee, the [workers' compensation] insurance carrier, to profit by the wrong of the employer.

(Witt v. Jackson (1961) 57 Cal.2d 57, 72.) Said another way, neither the employer nor the workers' compensation carrier should be able to benefit via a credit and the ability to stop paying benefits when the employer was partially responsible for causing the injury. Thus, the concurrent negligence of the employer can be invoked to defeat the workers' compensation carrier's claim for credit for third party monies received.

How does this work in practice? Employer fault is only part of the equation. Assessment must also be made of the overall civil damages. These two elements are combined, and a workers' compensation carrier is not entitled to a credit until benefits paid are more than the employer's proportional share of fault vis à vis total damages. (Associated Const. & Eng. Co. v. WCAB (1978) 22 Cal.3d 829.) The following credit threshold equation illustrates this concept and the threshold at which a workers' compensation carrier is entitled to credit:

[Page 18]

(% Employer Negligence) x (Total PI Damages) = Threshold Number for Credit

Following...