Baur

Under Labor Code section 3861, the employer of an injured employee is entitled to a credit against the employer’s liability for future workers’ compensation benefits out of “any recovery” the employee receives for his injury, either by settlement or after judgment, from a third party tortfeasor.

In this case, petitioner Lance Baur, a police officer employed by respondent City of Stockton (the city), was injured on the job during an altercation with suspect Richard Thomas Beck. The city provided Baur workers’ compensation benefits. Baur then filed a lawsuit against Beck, but Beck’s insurance company was insolvent. As a result, Baur settled his lawsuit with the California Insurance Guarantee Association (CIGA). 1 The city then claimed a credit pursuant to Labor Code section 3861, up to the amount of the net settlement, against its liability for future workers’ compensation benefits. A workers’ compensation administrative law judge granted the credit.

Baur argues to this court that since CIGA is not permitted to pay for claims covered by other insurance (Ins. Code, §§ 1063.2, subd. (a), 1063.1, subd. (c)(9)), it was improper to grant the city a credit under Labor Code…

The result in this case does not seem fair. Police Officer Lance Baur filed a lawsuit against a suspect who injured him while Baur was acting in the line of duty. The suspect was insured by a company that had become insolvent. The California Insurance Guarantee Association (CIGA), standing in the shoes so to speak of the insolvent insurance company, agreed to settle the lawsuit. By statute, CIGA is not permitted to pay for any claims covered by workers’ compensation insurance. Thus, the $50,000 settlement paid by CIGA necessarily was for general damages only. Nevertheless, a decision upheld by the Workers’ Compensation Appeals Board, and now by this court, allows Baur’s employer to tap into the settlement to cover future expenses for medical services that may be provided to Baur as workers’ compensation benefits. In other words, the $50,000 received by Baur as general damages can be used by Baur’s employer to pay for special damages resulting from the tortfeasor’s conduct. This means, having agreed to the settlement to compensate him for his general damages, Baur could end up with no such compensation.

The result is compelled by Labor Code section 3861. The fact that the result…

No appearance by Respondent Workers' Compensation Appeals Board.

Law Office of Matthew Brueckner and Matthew Brueckner for Respondent City of Stockton.

ROBIE, J.—

Under Labor Code section 3861, the employer of an injured employee is entitled to a credit against the employer's liability for future workers' compensation benefits out of "any recovery" the employee receives for his injury, either by settlement or after judgment, from a third party tortfeasor.

In this case, petitioner Lance Baur, a police officer employed by respondent City of Stockton (the city), was injured on the job during an altercation with suspect Richard Thomas Beck. The city provided Baur workers' compensation benefits. Baur then filed a lawsuit against Beck, but Beck's insurance company was insolvent. As a result, Baur settled his lawsuit with the California Insurance Guarantee Association (CIGA). [1] The city then claimed a credit pursuant to Labor Code section 3861, up to the amount of the net settlement, against its liability for future workers' compensation benefits. A workers' compensation administrative law judge granted the credit.

Baur argues to this court that since CIGA is not permitted to pay…