Third-party suits

• Pages: 1389-1432
• Author: David L. Pollak,Roger A. Tolman, Jr.,Monika R. Reyes

THIRD-PARTY SUITS

24-1

CHAPTER 24

THIRDPARTY SUITS

I. EMPLOYEE’S RIGHT TO SUE THIRD PARTY

A. In General

§24:01 Job Site Injuries; Product Liability, Negligence Suits

§24:02 Medical and Legal Malpractice Suits

§24:03 Joint Tortfeasors; Impact of Proposition 51

§24:04 Exception: The Firefighter’s Rule

§24:05 Notice Required

§24:06 Civil Claims Brought Directly Against Employer

§24:07 Primar y Assumption of Risk

§24:08 Dut y of Care Limitations

B. Right of Employee to Set tle With Third Party Without Notice to Employer

§24:10 Employer’s Consent Not Required

§24:11 Right of Employer to a Lien Against the Settlement Proceeds

C. Effect of Pre -Trial Settlement Offer and/or Arbitration Award on Liability for Litigation Costs

§24:20 Civil Suit Set tlement Offer

§24:21 Arbitration Award

II. EMPLOYER OR CARRIER’S RIGHTS WITH RESPECT TO THE THIRD PARTY

A. Right to Sue Directly or to Join in Employee’s Suit

§24:30 “Employer ” = “Carrier”

§24:31 Employer Rights

§24:32 Recover y of “Death Without Dependents” Payments to State

§24:33 Ef fect of Employee or Employer Fault

§24:34 Damages Recoverable by Employer

§24:35 No Small Claims Cour t Jurisdiction in Subrogation Cases

§24:36 No Employer Wrongful Death Suit or Recovery for Incidental Damage

§24:37 No Defense to Third Party That Benefits Paid to One Without “Wrongful Death” Standing

§24:38 Medical Malpractice Litigation

§24:39 Ef fect of Barred Employee (or Employer) Suit

§24:40 Appor tionment of Fees and Costs

§24:41 No Carrier Suit Against CIGA

§24:42 Right to Sue Directly or to Join in an Employee Suit; CIGA Rights; CIGA Right to Subrogation

§24:43 No Employer Suit Against Carrier

§24:44 Cit y Employer Is Not “Victim” of Third-Party Crime Against City Employee Police Officer

§24:45 Lack of Coverage Not Necessarily Defense to Carrier’s Third-Party Subrogation Suit

B. Carrier/Employer Lien Rights

§24:50 Existence of Lien Right

§24:51 Extent of Credit or Lien Right

C. Employer/Carrier’s Right to Credit in Compensation Proceedings

§24:60 Credit Despite Lack of Employer Involvement in Third-Party Suit

§24:61 Preserving WCAB Credit Claims in Civil Cases

THIRD-PARTY SUITS

California Workers’ Compensation 24-2

§24:62 Type of Recovery May Af fect Credit Rights

§24:63 No Credit for Uninsured Motorists’ Recovery

§24:64 No Credit for Recovery Against Co-Employee

§24:65 Credit for Recovery Less Fees and Costs

§24:66 Full Credit Applies to Third-Party Settlements Paid by CIGA

§24:67 Credit Allowed Despite Waiver of Subrogation Rights

D. Against What Compensation Is Credit Applicable?

§24:70 Against Paid or Unpaid F&A’s; Must a Credit Petition Be Filed?

§24:71 Further Medical Treatment

§24:72 Against Rehabilitation Benefits

§24:73 Credit Applies Against LC §132a Discrimination Benefits

§24:74 Credit Applies Against LC §5814 Unreasonable Delay Benefits

§24:75 Against Attorney’s Fees

§24:76 Other Indemnity Due; Overpayment Credits

E. Effect of Other Third-Party Settlements

§24:80 Credit Depends on Wording of Settlement

§24:81 Settlements With No Bearing on Claim

§24:82 Lien Recover y Does Not Waive Credit Rights

III. EFFECT OF EMPLOYER’S ALLEGED FAULT ON RECOVERY AGAINST THIRD PARTY

§24:90 Background: Comparative Negligence

§24:91 Procedure of Determining Comparative Fault in Civil Proceedings

§24:92 Ef fect of Fault on Employer’s Lien Rights in the Employee’s Third-Party Action

IV. EFFECT OF EMPLOYER’S ALLEGED FAULT ON RIGHT TO CREDIT IN THE COMPENSATION PROCEEDINGS

§24:100 Credit in Compensation Proceedings

§24:101 Employer Fault Found in Civil Court

§24:102 WCAB Decisions on Employer Negligence Issue

§24:103 Procedures Dictated Associated Engineering (Cole) Case

§24:104 Ef fect of Employee Fault Contributing to Injury

§24:105 Ef fect of Employer Fault Upon Subrogation & Credit Rights of UEF

§24:106 Maneuvering for Larger Recoveries

§24:107 Third-Party Compromise and Release Agreements

V. RIGHTS OF THIRD PARTY AGAINST EMPLOYER FOR EMPLOYEE JUDGMENT

§24:120 No Liabilit y Absent Pre-Injury Indemnit y Agreement

§24:121 Exception: Pre-Injury Executed Written Indemnity Agreement

§24:122 Indemnit y Agreement Must Be Written, Executed by Both Parties and Pre-Date the Injury

§24:123 Employer Promise to Insure Third Party

§24:124 “Active” vs. “Passive” Employer/Third-Party Negligence

FORM (ON DIGITAL ACCESS ONLY)

24.1 Third Party Compromise and Release (DWC-CA Form 10214(e))

THIRD-PARTY SUITS

24-3 Third-Party Suits §24:02

I. EMPLOYEE’S RIGHT TO SUE THIRD PARTY

A. In General

§24:01 Job Site Injuries; Product Liability, Negligence Suits

The fact that an employee’s injury arises out of and in the course of employment does not preclude the employee from proceed-

ing by way of civil suit against a third party whose fault has allegedly caused the industrial injury. LC §3852 states in part that “The

claim of an employee… for compensation does not aect his or her claim or right of action for all damages proximately resulting

from the injury or death against any person other than the employer.” This chapter covers the rights and responsibilities of parties

to a workers’ compensation claim in connection with any third-party litigation that may arise from the same incident or injury.

Such third-party claims may be asserted by the employee against any person other than the employer whose alleged

negligence or fault has caused or contributed to the employee’s injury. [See Chapter 2, Jurisdiction, especially §§2:92 – 2.95.]

Such third-party suits include the “job site” variety, where the employee alleges that his injury was caused by the fault of an

entity other than his employer on the job site, such as a subcontractor, the general contractor, or the owner of the premises

where the injury occurred. The employee has the right to sue the manufacturer of an allegedly defective product causing

injury during its use in the course of employment. Regardless of where an industrial injury occurs, if the employee can

establish that the injury was caused by the negligence or wrongdoing of a third party other than the employer, the employee

may have a right to pursue recovery under LC §3852.

In general, the hirer of an independent contractor or subcontractor is exempt from liability for injuries caused by the

negligence of the subcontractor. (The subcontractor, of course, is also ordinarily exempt from a civil lawsuit because of the

exclusive remedy of workers’ compensation.) However, abundant exceptions exist to this rule, which have given rise to a

complex and ever-evolving series of court decisions on the issue. Known as the Privette doctrine after Privette v. Superior

Court (S.Ct., 1993) 5 Cal. 4th 689; 21 Cal.Rptr 2d 72; 58 CCC 420, this doctrine excludes many general contractors in

construction and other cases. [See also Khosh v. Staples Construction Co. (2d Dist., 2016) 4 Cal.App 5th 712; 208 Cal.

Rptr 699; 81 CCC 1160.] [See Chapter 2, Jurisdiction, especially §2:92. See also Seabright Ins. Co v. U.S. Airways (Lujan)

(S.Ct. 2011) 52 Cal.4th 590; 129 Cal. Rptr. 3d 601; 76 CCC 728 and Perez-Zepeda v. WCAB, (2015) 80 CCC 1217.]

The Privette Doctrine envisions a system where the courts recognize that the subcontractors are primarily responsible

for the safety of their employees and so should bear the burden of providing the workers’ compensation insurance but have

the benet of insulation from liability under the exclusive remedy doctrine (see Chapter 2, §§2:10 through 2:16 ). By insu-

lating the general contractor from civil liability, the Privette Doctrine reduces the costs of construction and other activities

so that the worker at a location involving multiple contractors may not sue either the general contractor or his employer in

civil court. There are many exceptions to the Privette doctrine.

These ever-evolving cases are numerous and largely beyond the scope of this chapter. Generally, they come to the Courts

of Appeal after summary judgment has dispensed with the plainti—worker’s third-party case. See, for example, Degala

v. John Steward Company, (1st Dist Ct Ap. 2023) 88 Cal.App 5th 158; 88 CCC 113; 51 CWCR 17. The plainti sought

to invoke one of the exceptions to the Privette Doctrine, that of the ultimate hirer (in this case the owner and the general

contractor lled that role) retaining control over safety at the site. The Court of Appeal reversed the summary judgment

based on the plainti showing evidence that required a trial.

Also, although an employee has a general right to sue a third party for injuries caused by the third party’s negligence

even though the employee is in the course of his employment, if the third party happens to be the State of California, ques-

tions of governmental immunity may arise. In Soto v. State of California, 56 CA4th 196 (1997), the court held that a county

employee could not sue the State of California for subjecting the employee to a training program under the Emergency

Services Act [Gov C §§8550 et seq.]. Gov C §8655 expressly precludes such an action. The court noted that the employee

was not without remedy since he still had his rights to pension and workers’ compensation.

§24:02 Medical and Legal Malpractice Suits

Another area of potential civil recovery for an injured worker is a medical malpractice suit involving alleged negligence

subsequent to the industrial accident causing further injury directly related to the industrial event. However, the collateral

benets rule imposed under CC §3333.1 will typically severely limit any third-party recovery arising from sums paid to

the injured worker in connection with the medical malpractice case. This is because the law ordinarily assumes that before

any malpractice judgment or settlement is paid, the responsible party has already been allowed to subtract out any workers’

compensation benets that were paid or might be paid in the future. The rights of workers’ compensation litigants in medical

malpractice claims are discussed in more detail in §24:38.

An additional source of recovery for an injured employee may arise from an attorney’s malpractice in handling a

workers’ compensation case. In Nichols v. Keller, 15 CA4th 1672, 58 CCC 251 (W/D-1993), the court held that plainti’s