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Industry Insights

Grinberg: Third-Party Credit? Not So Fast.

  • State: California
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I breach no duty of confidentiality and betray no national secrets to disclose that I am a very big fan of "Seinfeld." One scene in particular comes to mind: the double dip.

Gregory Grinberg

Gregory Grinberg

In short, double dipping is bad. It’s so bad, in fact, that in workers’ compensation, we tend to discourage it by allowing for subrogation and third-party credit. Basically, whatever goes into the pocket of an applicant from a third-party civil suit, with some exceptions, can be the basis of a petition for credit before the Workers' Compensation Appeals Board. 

Labor Code Section 3861 provides that “[t]he appeals board … shall allow, as a credit to the employer to be applied against his liability for compensation, such amount of any recovery by the employee for his injury.” 

In a recent panel decision, Diaz v. Black Rock Milling Co., the WCAB had occasion to review the scope of the credit. Specifically, the workers' compensation judge had issued an allowance for third-party credit “against any and all indemnity workers’ compensation benefits due.” 

But what about non-indemnity costs such as medical, mileage, etc.? Well, defendant appealed this very deficit, and reconsideration was granted by the WCAB to further develop the record regarding the scope of the order granting credit.

But looking at the plain language of LC 3861, it appears that the Labor Code uses the term “shall” in directing the WCAB, meaning that this is not subject to discretion, and the credit is to apply “against (the employer’s) liability for compensation.”

Where is the authority to limit liability for compensation solely to indemnity?

Other cases have applied this credit to medical-legal costs (SCIF v. WCAB (76 Cal. App.3d 136)). In SCIF v. WCAB (Borges), a 1997 Court of Appeals decision, it was held that “[c]ompensation in this context, is given a broad, expansive meaning … every benefit payable to or on behalf of the employee that is enumerated in division 4 of the Labor Code is to be considered compensation liability which may be offset by the employer’s credit.”

So, what’s going on?

The WCAB is given a mandatory directive by the Labor Code to grant credit (LC 3861).  The Court of Appeal has already ruled that the credit is to be applied to all benefits (Borges). But now the defendant has to go through a reconsideration and a rehearing on this issue. 

What’s more, there is no apparent remedy to the delay in justice or the resources of litigation. Meanwhile, without an order to the effect of credit against all species of benefits, defendant is required to continue paying for medical benefits pending the determination of this issue.

Such is life, dear readers. Such is life.

Does this mean you should not seek credit? Of course not. But getting the credit you deserve may take longer than you would like, unfortunately.

Gregory Grinberg is managing partner of the Tobin Lucks office in Burlingame and a certified specialist in workers’ compensation law. This post is reprinted with permission from Grinberg’s WCDefenseCA blog.

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