Menu Close

In August 2012, Denise Michelle Duncan was acting within the course and scope of her employment with Acosta Inc. when she fell and injured herself on a Wal-Mart Stores, Inc. premises.

Hartford Accident & Indemnity Company was Acosta’s workers’ compensation insurer and paid Duncan more than $152,000 in benefits, including more than $115,000 in medical expenses and roughly $37,000 in temporary disability indemnity for Duncan’s lost wages.

Duncan sued Wal-Mart Stores, Inc. for personal injuries. The trial court entered judgment finding Wal-Mart liable for Duncan’s injuries.

Under Labor Code sections 3852 and 3856, appellant Hartford Accident & Indemnity Company applied for a lien on Duncan’s judgment to obtain reimbursement for the workers’ compensation benefits it paid Duncan, including medical expenses and temporary disability payments for lost wages.

Since the judgment she received did not include compensation for Duncan’s lost wages (because she did not seek those damages at trial), the trial court granted Hartford a lien on Duncan’s judgment, but reduced the lien amount to exclude the indemnity payments for lost wages.

Hartford appealed the trial court’s postjudgment order, arguing the court exceeded its authority by reducing the lien amount for any item other than reasonable attorney fees and costs. The court of appeal agreed in the unpublished case of Duncan v. Wal-Mart Stores.

The Labor Code permits an employer to recover workers’ compensation benefits it has become obligated to pay in three ways: (1) bringing an action directly against the tortfeasor (§ 3852), (2) joining as a party plaintiff or intervening in an action brought by the employee (§ 3853), or (3) allowing the employee to prosecute the action and then applying for a first lien against the resulting judgment or settlement. (§ 3856(b).)

“All benefits required to be paid by the employer, even though . . . in excess of those ordinarily enjoined by the Workmen’s Compensation Act, are deemed the ‘compensation’ and ‘special damages’ of section 3856[(b)] and are subject to the employer’s lien. Thus, continued salary paid the workman during disability as required by ordinance [citations], or municipal charter [citation], or statute [citations], is subject to the employer’s lien. Such salary, for which the employee renders no services, is deemed to be ‘compensation’ for which, under sections 3852 and 3856[(b)] the employer is given the right of reimbursement.” (Harvey v. Boysen (1975) 50 Cal.App.3d 756, 761 (Harvey).)”

The Labor Codes plain language and the case law applying it grant Hartford a first lien on the judgment in the amount it paid Duncan for worker’s compensation benefits. Duncan’s choice not to seek lost wages at trial does not diminish Hartford’s lien rights under the workers’ compensation statutory scheme.