ADJ11880536 · August 1, 2025

The WCAB found the WCJ's Findings and Order lacked sufficient findings on key issues such as the size of the recovery, amount of credit, and whether the credit is immediately allowable, and found the WCJ's reliance on the defense expert's comparative negligence report flawed. The WCAB rescinded the F&O and remanded for further proceedings to clarify these issues and develop the record further.

From the decision · page 1OPINION AND ORDER GRANTING PETITION FOR RECONSIDERATION AND DECISION AFTER RECONSIDERATION

WCJ's Findings and Order lacked findings on size of recovery, amount of credit, and timing of credit award.

Favours Applicant prevailed

This lack of findings made the F&O unenforceable and required remand for clarification and further proceedings.

From the decision · page 9As a preliminary matter, we note that while the WCJ's Opinion on Decision in this case is admirably thorough with regard to the evidence cited, the F&O itself lacks findings of fact on several key issues necessary to the determination of the Labor Code section 3861 credit. Specifically, the F&O orders that "defendants are entitled to a credit from the 3rd party settlement less their proportional share of liability, as detailed in the opinion below." (F&O, at p. 1.) Although the meaning of this order can be more-or-less pieced together by review of the Opinion on Decision, the Opinion on Decision is an explanation for how the WCJ arrived at their conclusion, not that conclusion itself. Here, the F&O itself contains no findings as to the size of the recovery against which the credit is to be allowed, the amount of such credit, or whether the credit is immediately allowable, or only allowable after a certain amount of further benefits have been paid. To the extent that the F&O itself does not provide for an award of a sufficiently definite nature to be calculable without regard to the Opinion on Decision, it does not constitute an enforceable award and would need to be amended even if we agreed with the WCJ in all other respects.

WCJ relied on defense expert's comparative negligence report despite fundamental flaws and failure to assess third party negligence.

Favours Applicant prevailed

This flawed reliance undermined the credit determination and required remand for further record development.

From the decision · page 11To be sure, a WCJ need not fully endorse the analysis of either expert, nor must a WCJ necessarily find comparative negligence in line with one report or the other; splitting the baby is, when supported by substantial evidence, a reasonable course of action. Nor are we suggesting that applicant's expert's report was itself necessarily without its flaws. However, when, as here, ACS' expert report appears to suffer from several rather fundamental flaws particularly the failure to assess negligence against third parties we cannot endorse the WCJ's apparent reliance on it.

Applicant's additional evidence on third party contribution and total damages was improperly excluded by WCJ.

Favours Applicant prevailed

Exclusion of relevant evidence prevented proper credit calculation and required remand.

From the decision · page 12This evidence was found inadmissible by the WCJ on the basis that was "not necessary to the proceedings." However, the presence of another third party who contributed to the settlement is certainly relevant to the analysis required to determine ACS' share of comparative negligence. We therefore cannot agree with the WCJ's stated rationale for refusing to admit this evidence.

No evidence was submitted on benefits paid by ACS, making credit award premature.

Favours Applicant prevailed

Without proof of benefits paid, credit cannot be properly awarded, necessitating further proceedings.

From the decision · page 12Finally, the WCJ noted that no evidence was submitted as to the actual extent of benefits already paid by ACS. In the absence of such evidence, award of a credit was premature, as a credit is only awardable once the defendant has paid more in benefits than its comparative share of the negligence. Although it appears that substantial payments have been made in this case thus far, proof of those payments must actually be submitted before defendant can be found entitled to a credit. (See Cole, supra, 22 Cal.3d 829 at 834.)

Labor Code section 3861

Labor Code Section 3861 authorizes credit to employer against compensation liability for employee's third party recovery, less expenses and attorneys' fees.

Applied to determine employer's right to credit against compensation liability.

From the decision · page 6Proceeding to the merits, Labor Code Section 3861 authorizes the Appeals Board to "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, either by settlement or after judgment, as has not theretofore been applied to the payment of expenses or attorneys' fees, pursuant to the provisions

Associated Construction & Engineering Co. v. Workers' Comp. Appeals Bd. (Cole) (1978) 22 Cal.3d 829

Concurrent negligence bars employer's right to credit; Board must determine employer's fault degree and total damages to apply credit proportionally.

Applied to require Board to determine employer's fault and total damages before awarding credit.

From the decision · page 7In Associated Construction & Engineering Co. v. Workers' Comp. Appeals Bd. (Cole) (1978) 22 Cal.3d 829, the California Supreme Court observed "that the concurrent negligence of the employer bars his right to a credit against his liability for compensation for the amount of any recovery for his injury obtained by the employee by settlement of his cause of action against third parties; and [] that where the employer's negligence has not been adjudicated in such third party action, the applicant is entitled to have it adjudicated before the Board." (Id. at p. 835.) Accordingly, "[w]hen the issue of an employer's concurrent negligence arises in the context of his credit claim based on a third party settlement, the board must determine the appropriate contribution of the employer since the employee's recovery does not represent a judicial determination of tort damages. Specifically, the board must determine (1) the degree of fault of the employer, and (2) the total damages to which the employee is entitled. The board must then deny the employer credit until the ratio of his contribution to the employee's damages corresponds to his proportional share of fault." (Id. at p. 843.)

Martinez v. Associated Engineering and Construction Co. (1979) 44 Cal.Comp.Cases 1012

Shifting burdens of proof for credit claim: defendant must show third party settlement and benefits paid; applicant must prove employer negligence; then applicant must prove total damages.

Applied to outline burdens of proof for credit claim under Labor Code section 3861.

From the decision · page 7One year later, we issued our en banc decision in Martinez v. Associated Engineering and Construction Co. (1979) 44 Cal.Comp.Cases 1012, wherein we described the shifting burdens of proof necessary to effectuate the analysis described in Cole, supra:

Hamilton v. Lockheed Corporation (2001) 66 Cal.Comp.Cases 473 (Appeals Board en banc)

Decisions must be based on admitted evidence and supported by substantial evidence; WCJ must clearly designate evidence basis in opinion on decision.

Applied to require WCJ to clearly designate evidence basis for decision to allow meaningful reconsideration.

From the decision · page 8reconsideration is sought, to ascertain the basis for the decision, and makes the right of seeking reconsideration more meaningful." (Hamilton v. Lockheed Corporation (Hamilton) (2001) 66 Cal.Comp.Cases 473, 476 (Appeals Board en banc), citing Evans v. Workmen's Comp. Appeals Bd. (1968) 68 Cal.2d 753, 755 [33 Cal.Comp.Cases 350, 351].) A decision "must be based on admitted evidence in the record" (Hamilton, supra, at p. 478), and must be supported by substantial evidence. (Lab. Code, § 5903, 5952, subd. (d); Lamb v. Workmen's Comp. Appeals Bd. (1974) 11 Cal.3d 274 [39 Cal.Comp.Cases 310]; Garza v. Workmen's Comp. Appeals Bd. (1970) 3 Cal.3d 312 [35 Cal.Comp.Cases 500]; LeVesque v. Workers' Comp. Appeals Bd.

Rejection of additional exhibits related to third party contribution and total damages as not necessary, which the WCAB found relevant and improperly excluded.

From the decision · page 12This evidence was found inadmissible by the WCJ on the basis that was "not necessary to the proceedings." However, the presence of another third party who contributed to the settlement is certainly relevant to the analysis required to determine ACS' share of comparative negligence. We therefore cannot agree with the WCJ's stated rationale for refusing to admit this evidence.

WCJ's decision to discount applicant's expert and endorse ACS' expert on comparative negligence, despite flaws in ACS' expert report.

From the decision · page 9Turning to the specific legal standard governing the credit claim, we note that there are gaps in the evidence, of varying degrees of seriousness, with regard to the first, third and fourth prongs of the Martinez test. At a more basic level, the WCJ's decision to discount the conclusions of applicant's comparative negligence expert and endorse those of ACS' does not appear to align with the WCJ's actual findings as to comparative negligence, which if anything seem to endorse the reasoning of applicant's expert more than ACS', albeit while finding a much lower level of negligence than advocated for by applicant's expert.

Evidence of net recovery amount and issues regarding allocation of recovery between applicant and his wife affecting credit calculation.

Lack of evidence on benefits paid by ACS making credit award premature.

From the decision · page 12Finally, the WCJ noted that no evidence was submitted as to the actual extent of benefits already paid by ACS. In the absence of such evidence, award of a credit was premature, as a credit is only awardable once the defendant has paid more in benefits than its comparative share of the negligence. Although it appears that substantial payments have been made in this case thus far, proof of those payments must actually be submitted before defendant can be found entitled to a credit. (See Cole, supra, 22 Cal.3d 829 at 834.)