Judge: Serena R. Murillo, Case: 19STCV36819, Date: 2023-05-17 Tentative Ruling

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Case Number: 19STCV36819    Hearing Date: May 17, 2023    Dept: 31

1) Motion to Expunge and Strike the Purported Lien of Klune Industries filed by Plaintiffs (Opposed)

2) Motion to Expunge and Strike the Purported Lien of the Rawlings Company filed by Plaintiffs (Unopposed)

TENTATIVE

Plaintiffs’ motion to expunge and strike the purported lien of Klune Industries is GRANTED. Additionally, Plaintiffs’ motion to expunge and strike the purported lien of the Rawlings Company is GRANTED.

Legal Standard

              Workers Compensation

              Under the workers' compensation statutes, an employee who suffers an industrial injury may recover compensation benefits from his or her employer without regard to the negligence of either party. (Labor Code § 3600.) With certain specified exceptions, an injured employee's compensation claim against the employer constitutes an exclusive remedy. (§§ 3601, 3602.) Where the tort of a third party causes injury to an employee, however, § 3852 permits the employee to sue the tortfeasor for all damages proximately resulting from the injury even though he or she has received from an employer workers' compensation benefits covering some of the same injuries and resulting disability.

              To prevent an employee from retaining both third party damages and workers compensation benefits for the same injuries and disabilities, the Labor Code permits an employer to recover workers' compensation benefits it has become obligated to pay and/or has paid by (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, subd. (b).)” (Abdala v. Aziz (1992) 3 Cal.App.4th 369, 374–375.)

              Under section 3859 and 3860, as amended, an employee may settle his [or her] claim against a third party tortfeasor without the consent of the employer; such a settlement is not subject to any lien based upon the employer's claim for reimbursement of compensation payments under such pleadings as here present; rather the employer must assert such claim by way of an action against the third party.” (Van Nuis v. Los Angeles Soap Co. (1973) 36 Cal.App.3d 222, 231–232.)

Discussion

1)         Motion to Expunge the Purported Lien of Klune Industries

              Service of Instant Motion

              Klune contends that service of the instant motion was insufficient. Plaintiffs’ counsel, Scott Brust, initially filed proof service that omitted Klune as a recipient, even though Klune and Sedgwick were both served on March 13, 2023. (Reply, Brust Declaration, ¶ 4.) On March 20, 2023, Brust realized the error and filed an amended Proof of Service which correctly identifies Klune and Sedgwick as recipients of the motion. (Id. at ¶ 5.)

              Accordingly, service of this motion was adequate.

              Notice to Klune Industries was Adequate

              Klune acknowledges that it was notified that a third party was asserting the affirmative defense of employer negligence, however, it contends that Plaintiffs should have notified Sedgwick Claims Management Services because Sedgwick was handling Plaintiffs’ claim.

              This argument is not persuasive. According to Labor Code § 3856, “If either the employee or the employer brings an action against such third person, he shall forthwith give to the other a copy of the complaint by personal service or certified mail. Proof of such service shall be filed in such action.” (Labor Code § 3856.) The plain language of the statute clearly instructs employee to notify the employer, not some other entity. Klune does not assert any authority to support its contention that notice to Klune was insufficient.

              Accordingly, Plaintiffs properly notified Klune, the employer, that the third party asserted the affirmative defense of employer negligence.

              Klune Forfeited its Lien Interest

              Plaintiffs contend that employer Klune forfeited its lien interest by failing to file a complaint in intervention in Plaintiffs’ third party action, which has reached a settlement. The court agrees.

              Plaintiffs notified Klune on June 11, 2020 that a third party had alleged employer negligence by Klune as an affirmative defense. (Motion, Declaration of Scott Brust, ¶ 6, Ex. B.) This notice expressly informed Klune and its workers’ compensation insurers “that Employer has been alleged by defendants in this action to have engaged in negligent conduct that caused or contributed to Decedent’s injuries. Hence, should Employer desire to assert any subrogation rights it may have, Employer must file a complaint in intervention in this case.” (Id.) However, Klune never filed a complaint in intervention. (Id. at ¶ 7.) Klune does not deny that it was on notice of the third party affirmative defense. However, Klune contends that notice was insufficient because Plaintiffs did not additionally file a notice of settlement.

              Aetna Casualty & Surety Co. v. Superior Court is on point. There, employee brought a third-party action and employer’s insurer paid workers' compensation benefits. (Aetna Casualty & Surety Co. v. Superior Court (1993) 20 Cal.App.4th 1502.) The insurer was notified of the third-party action and filed a notice of lien but did not otherwise participate in the action. (Id.) The third party alleged employer negligence in its answer to the complaint. (Id.) Employee and third party settled before trial, ninth months after being put on notice of the affirmative defense. (Id.) Prior to trial, employee's attorney called and wrote the insurer and informed it that it had to file a complaint in intervention to protect its interests. (Id.) It failed to do so, and settlement followed. (Id.) In Aetna, the court noted that the filing of a lien is insufficient protection to the employer when allegations of employer negligence are made. (Id. at 1507.) In that situation, a complaint in intervention must be filed. (Id.)

              Similarly, here, this is an employee-third party action in which the third party accused Klune of employer negligence. Klune and Sedgwick have done nothing to participate in this action other than providing the initial notice of lien in January 11, 2019. (Brust Decl. ¶ 4, Ex. A.) The chief issue in these circumstances is whether employer received  notice of the employer negligence affirmative defense. Here, it is clear that Klune was on notice. Yet, no complaint in intervention was filed. Accordingly, pursuant to Aetna, Klune is not entitled to relief from this court.

              Plaintiffs’ motion to expunge and strike Klune’s lien is granted.

2)         Motion to Expunge the Purported Lien of the Rawlings Company

              Plaintiffs seek to expunge and strike the purported lien of the Rawlings Company on the ground that neither Kaiser nor Rawlings has provided any documentation to establish the amount of Kaiser’s claimed legal right to a lien on Plaintiff’s recovery in this case, despite that Plaintiffs required complete itemized billing records in February, 2020.

              This motion is unopposed.

              Plaintiffs’ request is granted. On January 29, 2019, Plaintiffs’ counsel wrote to  the Kaiser Permanente Central ROI Unit, requesting “complete medical records pertaining to [Decedent].” (Motion, Declaration of Scott Brust, ¶ 4, Ex. A.) On July 11, 2019, Kaiser produced medical records only but no billing or coverage records. (Id. at ¶ 5.) Then, on February 21, 2020, Plaintiffs’ counsel wrote to Kaiser Permanente Central Support Services Revenue Cycle requesting “complete itemized billing statements pertaining to [Decedent].” (Id. at ¶ 6, Ex. B.) On April 9, 2020, The Rawlings Company, representing Kaiser, sent Plaintiffs’ counsel a letter stating that it received notice of [Decedent’s] claim for or legal action for damages, that it intended to assert “all available rights of recovery,” and that it “object[s] to the distribution of any funds by any party until the health plan’s interests are fully satisfied.” (Id. at ¶ 7, Ex. C.) To date, neither Kaiser nor The Rawlings Company has produced any of the billing documentation requested. (Id. at ¶ 8.)

              Trial courts possess the inherent power to fairly and efficiently administer the judicial proceedings before them so as to guard against inept procedures and unnecessary indulgences that tend to delay the conduct of their proceedings. (California Crane School, Inc. v. National Com. for Certification of Crane Operators (2014) 226 Cal.App.4th 12, 171.) Here, the Rawlings Company has for years ignored Plaintiffs’ efforts to obtain the exact amount of their lien. The Rawlings Company did not respond and has filed no opposition. Plaintiffs cannot disburse their settlement proceeds until the liens are dealt with. The Rawlings Company’s failure to respond has unnecessarily delayed the resolution of Plaintiffs case. Accordingly, the court finds that the Rawlings Company is not entitled to relief.

              Plaintiffs’ motion to expunge and strike the Rawlings Company’s lien is granted.

Conclusion

             Plaintiffs’ motion to expunge and strike the purported lien of Klune Industries is GRANTED. Additionally, Plaintiffs’ motion to expunge and strike the purported lien of the Rawlings Company is GRANTED.

              Plaintiffs to give notice.