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Arasely Soto was injured during a routine medical procedure and had to retire from her job as a public school teacher. She sued her medical providers for medical malpractice and also sought disability retirement benefits from the California State Teachers’ Retirement System (CalSTRS).

The Sotos attended a CalSTRS benefits planning session in January 2018. CalSTRS gave them information and documents about applying for disability benefits. The documents explained CalSTRS’s “[r]ight of subrogation” as follows: “[I]f you pursue a claim against a third party for the same impairment that entitles you to a disability benefit from CalSTRS, you must notify us. This is true even if the claim has not yet resulted in a court action. [¶] CalSTRS has the right to participate in the claim by filing our own action against the responsible party, intervening in your claim, or filing a lien against any judgment you may recover. [¶] If you don’t notify CalSTRS and you recover – or have already recovered – a monetary sum from the third party, you may be required to reimburse CalSTRS for part of the costs of your disability benefit.”

One day after the Sotos’ benefits planning session with CalSTRS, they released their claims against Dr. Borna in exchange for a six-figure settlement. Ten days later, Arasely filled out an application for disability benefits. Her application stated that her injuries were caused by employees of the hospital, including Dr. Borna.CalSTRS acknowledged receipt of Arasely’s application for disability benefits in February 2018. That same day, the court in the malpractice action granted the Sotos’ request to dismiss Dr. Borna from the lawsuit.

In May 2018, the Sotos released their claims against the hospital in exchange for a seven-figure settlement. Eight days later, the Sotos dismissed the malpractice action with prejudice.

CalSTRS brought suit against the Sotos, seeking to enforce its right to subrogation or reimbursement. The complaint alleges that CalSTRS is entitled to be reimbursed for Arasely’s disability benefits from her settlement with the malpractice defendants.

CalSTRS moved for summary adjudication on its declaratory relief cause of action, and the Sotos moved for summary judgment. In connection with both motions, the Sotos argued that Civil Code section 3333.1 bars any subrogation claim that CalSTRS would have asserted against the malpractice defendants.

Subdivision (a) of section 3333.1 authorizes a defendant in a medical malpractice action to introduce evidence of a variety of ‘collateral source’ benefits – including health insurance, disability insurance or worker’s compensation benefits.” Subdivision (b) of the statute provides, in turn, that ‘[n]o source of collateral benefits introduced pursuant to subdivision (a) shall recover any amount against the plaintiff nor shall it be subrogated to the rights of a plaintiff against a defendant.”

In opposition, CalSTRS argues that (1) CalSTRS was not a source of collateral benefits for purposes of section 3333.1; (2) Arasely’s disability retirement benefits were never introduced as evidence in the malpractice action; and (3) the statutes governing CalSTRS’s right of subrogation were enacted after section 3333.1, and the later-enacted statutes prevailed.

The trial court ruled in favor of Cal/STERS. The Court of Appeal affirmed the trial court in the published case of Soto v. Super. Ct. -E081902 (May 2024). It expressed no opinion on the parties’ legal arguments concerning the applicability of section 3333.1 in general.

The Legislature enacted section 3333.1 in 1975 as part of the Medical Injury Compensation Reform Act (MICRA), a wide-ranging statutory scheme designed to reduce the cost of medical malpractice insurance ‘by limiting the amount and timing of recovery in cases of professional negligence. MICRA addressed the problem in numerous ways, including by revising certain legal rules applicable to medical malpractice litigation. (

Education Code section 24500 grants CalSTRS “a right of subrogation” for the amounts CalSTRS “paid and became obligated to pay as disability retirement allowances, disability allowances, family allowances, or survivor benefit allowances.” (Ed. Code, § 24500; see Ed. Code, § 22174.)

The Legislature enacted the statutes giving CalSTRS a right of subrogation in 1988. (Ed. Code, former §§ 23300-23305, added by Stats. 1988, ch. 380, § 1, pp. 1699-1700, repealed and reenacted as Ed. Code, §§ 24500-24505 by Stats. 1993, ch. 893, §§ 1-2, pp. 4867, 4973-4974.) According to the legislative history, the CalSTRS subrogation provisions were “patterned” on the subrogation provisions governing the California Public Employees’ Retirement System (CalPERS).

“The CalPERS provisions also incorporate the workers’ compensation statutes, and the pertinent language of the CalSTRS and CalPERS subrogation provisions is nearly identical.”

The workers’ compensation subrogation provisions bar double recovery by an employee who claims workers’ compensation benefits “and also seek[s] damages for the employee’s injury or death from negligent third parties.”

Section 3333.1, subdivision (a), does not specify how jurors should use the collateral source evidence, but “the Legislature apparently assumed that in most cases the jury would set plaintiff’s damages at a lower level because of its awareness of plaintiff’s ‘net’ collateral source benefits.

But the employer’s consent is not required if the settlement includes only the employee’s claim for damages that will not be paid by workers’ compensation benefits. (Lab. Code, § 3859, subd. (b); Marrujo, at p. 978.) That is, the employee may segregate their claim from that of the employer and settle it without the employer’s consent. (Board of Administration v. Glover (1983) 34 Cal.3d 906, 913 (Glover); Marrujo, at p. 978.)

If the employee segregates and settles their claim in that manner, then the settlement is not subject to the employer’s claim for reimbursement of workers’ compensation benefits, while the employer retains its subrogation right “against the alleged tortfeasor to recover payments it had made to its employee.” (Glover, at p. 914; Marrujo, at p. 978; Lab. Code, § 3860, subd. (b).) But if the employee settles an unsegregated claim (i.e., a claim that includes both the employer’s claim for reimbursement of benefits and the employee’s claim for damages not compensated by benefits), then the employer may seek reimbursement out of the settlement proceeds.

The Sotos did not offer any evidence that the malpractice defendants sought to introduce evidence of Arasely’s disability retirement benefits in the underlying action, so section 3333.1 was never triggered. In addition, if the Sotos had offered such evidence, then section 3333.1 would be irrelevant. The same evidence would tend to show that CalSTRS has no reimbursement claim against the Sotos for reasons independent of section 3333.1.

Bertha Perez sustained injury to her back while working for World Variety Produce as a produce packer on August 27, 2010. On May 1, 2011, she underwent surgery, and lien claimant, Monrovia Memorial Hospital, provided the employer’s carrier, Zurich North America, with an invoice for $67,497.95.

Pursuant to the recommendations made by its bill review company, Zurich paid $15,857.48. Monrovia Memorial Hospital filed its lien for the balance of its invoice.

On May 6, 2015, a WCJ ordered lien claimant and defendant to forward all relevant documentation and/or evidence as to the value of the lien claimant’s services to a jointly selected bill review expert, Stelzner and Kyle Consulting.

On March 14, 2016, the matter proceeded to a lien conference and the parties set the matter for trial. Over the next few years a number of hearings took place regarding the issues surrounding the lien of Monrovia Memorial Hospital.

On September 18, 2018, defendant filed a Petition for Restitution/Reimbursement in which it alleged that “[r]ather than provide the information to IBR as directed by the Court, the lien claimant submitted the billing again to defendant which accidentally paid it in full.” Zurich requested reimbursement for the $51,640.47 check issued to Monrovia Hospital on May 16, 2018 for unjust enrichment. On October 26, 2018, the matter proceeded to trial on defendant’s claim for restitution and defendant’s petitions for sanctions, costs and fees.

On January 3, 2019, the WCJ issued Amended Findings and Orders, ordering lien claimant to pay restitution in the sum of $51,640.00 as well as sanctions, costs and attorneys’ fees under section 5813 and WCAB Rule 10561. Lien claimant sought reconsideration of the WCJ’s January 3, 2019 Amended Findings and Orders. On March 25, 2019, the WCAB granted reconsideration based upon a lack of substantial evidence to support the WCJ’s findings.

Because the WCJ did not admit any exhibits or testimony during the October 26, 2018 trial, the WCAB panel was unable to determine whether lien claimant would be unjustly enriched if it retained the disputed payment or whether sanctions were justified. Thus it rescinded the WCJ’s decision and returned the matter to the trial level for further proceedings.

The matter appeared again for trial on September 23, 2019, at which time the parties submitted exhibits and testimony. On November 8, 2019, the WCJ issued the disputed F&O, finding that, pursuant to the IBR calculation issued on November 12, 2015, the reasonable value of lien claimant’s services was $15,857.48, which defendant had previously paid.

The WCJ also ordered that lien claimant pay defendant $51,640.00 in restitution as a result of unjust enrichment. The WCJ also found that lien claimant and its representative employed bad faith, frivolous litigation tactics in violation of section 5813 and WCAB Rule 10561 warranting sanctions in the amount of $2,500.00 payable to the WCAB. The WCJ also awarded defendant costs and fees to be determined by subsequent court order.

After this second Petition for Reconsideration was filed by Monrovia, the November 8, 2019 F&O was affirmed in the panel decision of Perez v World Variety Produce –ADJ7447035 (May 2024).

In its Petition for Reconsideration, lien claimant contends that the WCJ erred by 1) awarding restitution to defendant, as there is no evidence of unjust enrichment, and 2) awarding sanctions, costs, and fees, as there is no evidence that it engaged in bad faith or frivolous conduct in violation of section 5813 or WCAB Rule 10561. Both assertions were rejected by the WCAB panel.

“Restitution is an equitable remedy which has primarily been utilized by courts to prevent unjust enrichment. Under certain circumstances it has been held that administrative tribunals such as the [WCAB] may appropriately employ equitable remedies. Such use by the Board would seem particularly justified, for example, when fraud has been charged and proven.” (American Psychometric Consultants, Inc. v. Workers’ Comp. Appeals Bd. (Hurtado) (1995) 36 Cal.App.4th 1626, 1645-1646 [60 Cal.Comp.Cases 559], citations omitted.)

In this case, the WCJ found that lien claimant engaged in improper conduct leading to unjust enrichment, where it circumvented defendant’s typical processes for handling disputed lien claims. Specifically, the WCJ found that lien claimant intentionally bypassed defendant’s internal procedures by demanding payment from its medical review department, rather than its claims department, and that lien claimant knew or should have known that the resulting payment in full was made in error, particularly where the bill amount was still being litigated.

Here, the WCJ found that sanctions should issue as a result of lien claimant’s willful failure to comply with the court’s May 6, 2015 Findings and Order requiring it to forward all documentation showing the value of its services for IBR for roughly three years.

The California Department of Industrial Relations and the Labor Commissioner’s Office completed the first cycle of funding for the Workers’ Rights Enforcement Grant Program, which provides opportunities for public prosecutors in California to develop and implement wage theft enforcement programs in their regions.

This funding creates opportunities for public prosecutors in California to prosecute wage theft and deter employers from engaging in unlawful labor law practices in the workplace. The grants will enable prosecutors to address wage theft cases in their jurisdictions and provide resources so they can address exploitative labor industry trends, barriers workers confront in reporting violations and obstacles to holding perpetrators accountable within their respective communities.

Labor Commissioner Lilia García-Brower said “Wage theft is a persistent problem, and this funding helps address it in local communities across our state. The 17 applications we received demonstrate prosecutors’ commitment to curtail and eradicate this abusive behavior. We look forward to continuing our work with public prosecutors, community organizations and industry leaders to eliminate this serious and costly crime.”

The 17 public prosecutors who applied for the grant will receive awards as detailed below:

Alameda District Attorney – $335,935
Contra Costa District Attorney – $720,000
Fresno City Attorney – $720,000
Long Beach City Prosecutor – $414,392
Los Angeles City Attorney – $317,543
Los Angeles County Counsel – $475,000
Los Angeles District Attorney – $733,351
Napa District Attorney – $102,531
Oakland City Attorney – $425,655
Orange County District Attorney – $750,000
San Diego City Attorney – $669,251
San Diego District Attorney – $750,000
San Francisco City Attorney – $410,000
San Francisco District Attorney – $160,451
San Mateo District Attorney – $739,396
Santa Clara County Counsel – $679,220
Sonoma District Attorney – $147,275

The Department of Industrial Relations’ Division of Labor Standards Enforcement (California Labor Commissioner’s Office) combats wage theft and unfair competition by investigating allegations of illegal and unfair business practices.

The Labor Commissioner’s Office in 2020 launched an interdisciplinary outreach campaign, “Reaching Every Californian.” The campaign amplifies basic protections and builds pathways to affected populations, so workers and employers understand legal protections and obligations, as well as the Labor Commissioner’s enforcement procedures. Californians can follow the Labor Commissioner on Facebook and X (Twitter).

At the outset of the COVID-19 pandemic, and for some time thereafter, many businesses were forced to curtail their operations or close entirely. Some of these businesses sought coverage for their financial losses from their commercial property insurers under conventional first-party “all risk” or “open peril” insurance policies.These policies generally predicate coverage on “direct physical loss or damage” to the insured property or nearby property.

State and federal courts across the country have considered whether conventional property insurance policies provide coverage for pandemic-related losses, including whether the COVID-19 virus satisfies the threshold requirement of direct physical loss or damage to property. California courts have reached different conclusions on this issue,

The question arises in the context of a civil lawsuit filed by Another Planet Entertainment, LLC against its property insurer, Vigilant Insurance Company.

Another Planet operates venues for live entertainment. It suffered pandemic-related business losses when its venues closed, and Vigilant denied Another Planet’s subsequent claim for insurance coverage. Another Planet filed suit in federal district court, alleging that the actual or potential presence of the COVID-19 virus at its venues or nearby properties caused direct physical loss or damage to property and triggered coverage under its insurance policy.

The district court granted Vigilant’s motion to dismiss for failure to state a claim, and Another Planet appealed. According to the Ninth Circuit, the issue on appeal “is whether [Another Planet’s] allegations, if taken as true, were sufficient to show ‘direct physical loss or damage to property’ as defined by California law.” Because the Ninth Circuit concluded that resolution of this question of California law could determine the outcome of the case pending before it, the Ninth Circuit certified the question to the California Supreme Court.

The California Supreme Court concluded that “consistent with the vast majority of courts nationwide, that allegations of the actual or potential presence of COVID-19 on an insured’s premises do not, without more, establish direct physical loss or damage to property within the meaning of a commercial property insurance policy” in the published case of Another Planet Entertainment, LLC v. Vigilant Insurance Co -S277893 (May 2023).

Under California law, direct physical loss or damage to property requires a distinct, demonstrable, physical alteration to property. The physical alteration need not be visible to the naked eye, nor must it be structural, but it must result in some injury to or impairment of the property as property.

“The factual allegations of Another Planet’s complaint, which we accept as true for purposes of this proceeding, do not satisfy this standard. While Another Planet alleges that the COVID-19 virus alters property by bonding or interacting with it on a microscopic level, Another Planet does not allege that any such alteration results in injury to or impairment of the property itself. Its relevant physical characteristics are unaffected by the presence of the COVID-19 virus.”

“In rare situations, a property may suffer direct physical loss where it is not damaged in a conventional sense, including where a chemical contaminant or noxious odor infiltrates the property and renders it effectively unusable or uninhabitable. In such a case, the contaminant or odor may cause direct physical loss, but only where the source of the property’s unusability or uninhabitability is sufficiently connected to the property itself. This situation may arise when the effect of the contaminant or odor is so lasting and persistent that the risk of harm is inextricably linked or connected to the property.”

“While we conclude Another Planet’s allegations are insufficient, and it appears that such allegations represent the most common allegations in support of pandemic-related property insurance coverage, we cannot and do not in this proceeding determine that the COVID-19 virus can never cause direct physical loss or damage to property. Our contemplation of the virus and the affected property is necessarily limited by Another Planet’s factual allegations. ”

David A. Stallworth was an American professional basketball player. He played in the National Basketball Association (NBA) for eight seasons and was a member of the New York Knicks’ 1969-70 championship-winning team.

He filed an Application for Adjudication of Claim for an alleged CT injury to multiple areas while employed as a professional athlete by the Phoenix Suns, the Washington Capitols/Bullets/Wizards, and the New York Knicks, from July 1, 1965 to July 1, 1975. This Application was filed on September 6, 2013. However, he died during the course of litigation on March 16, 2017.

The parties proceeded to trial on November 29, 2018, and framed for decision issues including personal and subject matter jurisdiction, injury arising out of and in the course of employment (AOE/COE), and the running of the statute of limitations under Labor Code2 section 5405. The WCJ heard the testimony of applicant’s spouse and received other evidence including the deposition transcript of David Stallworth taken before he died. The case was submitted, and then further documentation was received,

Ultimately on May 30, 2019, the WCJ issued the F&O finding that “applicant’s contracts were entered into outside of the State of California.” and also found that “California does not have a legitimate and substantial interest in applicant’s claim to compel defendant to adjudicate the claim under the laws of California.”

The Opinion on Decision addressed the issue of personal jurisdiction over the defendants by explaining that “all teams involved have purposefully appeared in California by traveling to the state to participate in league games as well as scheduling future games in California.” The WCJ thus found personal jurisdiction over the party defendants.

Turning to the issue of subject matter jurisdiction, the Opinion on Decision observed that applicant’s spouse testified at trial that the applicant told her in 1995 that he had signed a contract in 1965 at his mother’s house in California. Applicant’s spouse further testified that applicant was in California to appear on the Glen Campbell show, and that he related to her that he signed the contract before making his appearance. However, applicant’s deposition testimony, taken prior to his passing, was that he had signed only two contracts over the course of his career, and that his contracts were signed in New York or Maryland.

The WCAB granted reconsideration to provide an opportunity to further study the legal and factual issues. Having completed it’s review, the WCAB issued a Decision After Reconsideration affirming the Findings and Order, issued on May 30, 2019 in the panel decision of Stallworth v Washington Capitols, Washington Bullets et., al, – ADJ9082985; ADJ10467720; ADJ10467734; ADJ10467683 (May 2024).

On reconsideration Applicant asserts that the testimony of applicant’s spouse is the more credible and supports a finding of contract formation in California in 1969 or 1970. Applicant also contends that irrespective of contract formation, subject matter jurisdiction is established by the fact that applicant sustained two heart attacks while playing in California, resulting in his hospitalization and missing the following two seasons.

Subject matter jurisdiction has been described as “the power of the court over a cause of action or to act in a particular way.” (Greener v. Workers Comp. Appeals Bd. (1993) 6 Cal.4th 1028 [58 Cal.Comp.Cases 793, 795].) Pursuant to Labor Code sections 3600.5(a) and 5305, a hiring in California provides this state with sufficient connection to the employment to support adjudication of a claim of industrial injury before the WCAB. (Alaska Packers Assn. v. Industrial Acc. Com. (Palma) (1934) 1 Cal.2d 250, affd. (1935) 294 U.S. 532 (Palma); Bowen v. Workers’ Comp. Appeals Bd. (1999) 73 Cal.App.4th 15, 27 [64 Cal.Comp.Cases 745] [‘an employee who is a professional athlete residing in California, such as Bowen, who signs a player’s contract in California furnished to the athlete here by an out-of-state team, is entitled to benefits under the act for injuries received while playing out of state under the contract’]; Johnson, supra, 221 Cal.App.4th at p. 1126].)

Here, the WCJ has identified two competing inferences regarding contract formation that may be drawn from the evidentiary record. Applicant’s Petition asserts the WCJ erred in weighing the evidence because applicant was not competent to testify at deposition. However, the WCJ’s Report identifies and addresses each of applicant’s contentions, offering specific excerpts of the transcript to provide context to the assertions contained in applicant’s Petition. The WCJ concludes that a careful review of the deposition testimony establishes that applicant was able to testify competently and respond to the questions posed.

The Report also notes that applicant offered no objection to moving ahead with testimony on the grounds of competency at the time the deposition was taken, and that applicant was represented by present counsel during the entirety of the deposition. In fact, applicant’s counsel interposed his own examination questions during the deposition. Nor was any objection to the admissibility or the veracity of the deposition testimony offered at the time the transcript was offered into evidence at trial.

In addition to the WCJ’s reasoning, the WCAB panel also note that the record is silent as to the actual contracts in question. Nor does the record establish the nature, number, or character of the contracts entered into, the parties thereto, or other evidence that would speak to the formation of a California contract of hire.

The WCAB said “we discern no evidence of considerable substantiality that would warrant disturbing the WCJ’s determinations as to the credibility of the witnesses or the relative weight of the evidence. Accordingly, we decline to disturb the WCJ’s determination that ‘applicant’s contracts were entered into outside of the State of California.’ “

In Federal Insurance Co. v. Workers’ Comp. Appeals Bd. (Johnson) (2013) 221 Cal.App.4th 1126 [78 Cal.Comp.Cases 1257] the court noted that Johnson played but one game in California out of 34 games played during the 2003 season, and that “a single basketball game played by a professional player does not create a legitimate interest in injury that cannot be traced factually to one game.” (Id. at p. 1130.)

Here, applicant avers that he played two games in California during which he sustained a cardiac infarction, and that the quality and severity of those instances were sufficient to warrant the Appeals Board’s exercise of subject matter jurisdiction over the claimed injury.

However, as the WCJ explains in his report, “Johnson involves a two-part test in determining if California has a legitimate interest in adjudicating an applicant’s claim of cumulative trauma where the cumulative trauma injury is the only connection with the State. This test considered the qualitative as well as quantitative nature of applicant’s exposure.”

The WCAB panel said it agrees with the WCJ’s analysis and conclusion that the evidentiary record does not establish, to a preponderance of the evidence, that the games applicant played in California were sufficient, under either a quantitative or qualitative analysis, to support the exercise of California’s subject matter jurisdiction over the claimed injury.