Switch back to WCC classic look

WorkCompCentral – Workers' Compensation Education, Courses, News and Information

Call or email us anytime
(805) 484-0333
Search Guide
Today is Wednesday, May 22, 2019 -

Columns

Fitzpatrick: Petition for Credit: the Easy Part and the Hard Part

  • State: California
  • -  314 views
  • -  1 share

After settlement or judgment of a third-party civil case, the employer is entitled to a credit based on the employee’s net recovery in the civil action.

Peter V. Fitzpatrick

Peter V. Fitzpatrick

The easy part

The defense attorney in the workers’ compensation case can simply contact the applicant’s attorney or civil attorney and request a breakdown of the third-party civil settlement. The breakdown should include attorney’s fees, costs and net recovery to applicant. Then a petition for credit is filed with the board requesting credit based upon the net recovery of applicant/plaintiff in the civil action.

The hard part: employer negligence

One of the biggest problem areas in asserting a petition for credit is the issue of employer negligence. The applicable law is Arbaugh vs. Procter & Gamble Manufacturing Co. This provides a formula to determine the recovery amount to the carrier.

First, determine the value of the third-party case (individual applicant/plaintiff) plus the carrier’s case. There are many ways to do this (amount of settlement, medical costs, testimony of experts in civil case).

Second, determine the percentage of employer negligence. Third, multiply the employer negligence times the case value. This figure becomes the “threshold.”

Example: civil case is worth $100,000. The employer negligence is 25%. The carrier cannot collect any money below their payout of $25,000 (which is 25% of $100,000). This avoids a double recovery for a negligent employer. In other words, defense can collect only money spent above $25,000.

Burden of proof

To establish the credit, a mini-civil trial is conducted at the board, something workers' compensation judges do not often do.

Defendant has the burden of showing there has been a settlement between the applicant and a third-party tortfeasor entitling it to a credit, and the comparative negligence of the injured employee or the third-party tortfeasor.

The applicant has the burden of establishing the total amount of his damages and
the employer’s negligence.

Conclusion

The easy part is obtaining applicant’s/plaintiff’s net recovery information. The hard part is conducting a mini-civil trial at the board to determine the amount of the credit.

Peter Fitzpatrick is a partner at Bradford & Barthel. This entry from Bradford & Barthel's blog appears with permission.

One Comment

Log in to post a comment

Close


Do not post libelous remarks. You are solely responsible for the postings you input. By posting here you agree to hold harmless and indemnify WorkCompCentral for any damages and actions your post may cause.
James Witkop Jan 5, 2019 a 11:01 am PST

This analysis does not take into consideration that economic damages are not reduced by employer negligence pursuant to Prop 51. The 25% employer negligence only affects the non-economic damages. So, if $50,000.00 of the damages is economic loss and $50,000.00 is non-economic loss, then the credit threshold would be $12,500.00 - the amount of the civil recovery lost due to the employer's negligence. It is very important that defense attorneys recognize this distinction. The entire civil award or settlement is not reduced proportionate to the percentage of employer negligence unless the damages are entirely non-economic, which is rarely the case.

Featured Video

Upcoming Events

Workers' Compensation Events

Social Media Links


WorkCompCentral Workers' Compensation
News and Education
4081 Mission Oaks Blvd
Camarillo, CA 93012
(805) 484-0333