Legal Memorandum: Compensation Recovery and Third-Party Liability

Issue: Under California law, what effect does a plaintiff’s workers’ compensation recovery have on the liability of a third-party tortfeasor?

Area of Law: Employee Law, Litigation & Procedure, Workers Compensation Insurance
Keywords: Workers' compensation recovery; Liability of a third-party tortfeasor
Jurisdiction: California
Cited Cases: 104 P.2d 507; 172 Cal. App. 3d 211; 38 Cal. Rptr. 2d 121; 218 Cal. Rptr. 170; 57 Cal. Rptr. 2d 711; 56 Cal. Rptr. 2d 455
Cited Statutes: Cal. Lab. Code § 3852, § 3856(b), § 3600(a); Cal. Civ. Code § 1431.2
Date: 09/01/2005

  In the tort context, “liability” implies fault or breach of some kind of duty to an injured person and a resulting obligation to remedy that fault through damages or otherwise, imposed by law.  See Ellingson v. Walsh, O’Connor & Barneson, 95 P.2d 185, 187 (Cal. App. 2d Dist. 1939) (“The terms, obligation and liability are practically synonymous.”), aff’d, 15 Cal. 2d 673, 104 P.2d 507 (1940). 

For purposes of this discussion, the “amount of the lien” referred to is understood to mean the total dollar amount of an employer’s obligation imposed on the employer and payable to an employee as a result of the workers’ compensation laws and proceedings. Such a lien may be imposed on behalf of the employer pursuant to Cal. Lab. Code §§ 3852 and 3856(b), which recognize that an employer may make a claim for reimbursement of workers’ compensation benefits paid to the employee against an award the employee receives against a culpable third party.   Kindt v. Otis Elevator Co., 32 Cal. App. 4th 452, 38 Cal. Rptr. 2d 121 (4th Dist. 1995); see Scalice v. Performance Cleaning Sys., 50 Cal. App. 4th 221, 57 Cal. Rptr. 2d 711, 714 (1st Dist. 1996).

No California law was found that stated or suggested that because of the employer’s lien, the interplay of the workers’ compensation scheme with third-party actions or otherwise, the amount of the lien provides any kind […]

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