(a)(1)Except as provided in paragraph (2), a release or settlement under this chapter, with or without suit, is not valid or binding as to any party thereto without notice to both the employer and the employee, with opportunity to the employer to recover the amount of compensation the employer has paid or become obligated to pay and any special damages to which the employer may be entitled under Section 3852, and opportunity to the employee to recover all damages the employee has suffered and with provision for determination of expenses and attorney’s fees as herein provided.
(2)If the employee is a peace officer, as defined in
Chapter 4.5 (commencing with Section 830) of Title 3 of Part 2 of the Penal
Code, or a firefighter, a release or settlement, with or without suit, subject to subdivision (b) of Section 3852, is not valid or binding unless it provides that the employer shall not receive more than one-third of the third-party insurance limits.
(b)(1)Except as provided in paragraph (2) and Section 3859, the entire amount of the settlement, with or without suit, is subject to the employer’s full claim for reimbursement for compensation the employer has paid or become obligated to pay and any special damages to which the employer may be entitled under Section 3852, together with expenses
and attorney’s fees, if any, subject to the limitations in this section set forth.
(2)Pursuant to subdivision (b) of Section 3852, the employer’s claim for reimbursement shall be limited to the portion of the settlement allocated to the employer. The employer shall have no right to assert any credit or offset against future workers’ compensation benefits.
(c)If settlement is effected, with or without suit, solely through the efforts of the employee’s attorney, then prior to the reimbursement of the employer, as provided in subdivision (b) hereof, there shall be deducted from the amount of the settlement the reasonable expenses incurred in effecting settlement, including costs of suit, if any, together with reasonable attorney’s fees to be paid to the employee’s attorney, for services rendered in securing and effecting settlement for the benefit of both the employer and the employee.
(d)If settlement is effected, with or without suit, solely through the efforts of the employer’s attorney, then, prior to the reimbursement of the employer as provided in subdivision (b) hereof, there shall be deducted from the amount of the settlement the reasonable expenses incurred in effecting settlement, including costs of suit, if any, together with reasonable attorney’s fees to be paid to the employer’s attorney, for services rendered in securing and effecting settlement for the benefit of both the employer and the employee.
(e)If both the employer and the employee are represented by the same agreed attorney or by separate attorneys in effecting a settlement, with or without suit, prior to reimbursement of the employer, as provided in subdivision (b) hereof, there shall be deducted
from the amount of the settlement the reasonable expenses incurred by both the employer and the employee or on behalf of either, including costs of suit, if any, together with reasonable attorney’s fees to be paid to the respective attorneys for the employer and the employee, based upon the respective services rendered in securing and effecting settlement for the benefit of the party represented. If both parties are represented by the same attorney, by agreement, the attorney’s fees shall be based on the services rendered for the benefit of both.
(f)The amount of expenses and attorney’s fees referred to in this section shall, on settlement of suit, or on any settlement requiring court approval, be set by the court. In all other cases these amounts shall be set by the appeals board. If the employer and the employee are represented by separate
attorneys they may propose to the court or the appeals board, for consideration and determination, the amount and division of those expenses and fees.
Notes of Decisions
Cited in
21
cases (
2 in the last 5 years), 1954–2024 · leading case:
Draper v. Aceto, 33 P.3d 479 (Cal. 2001).
Draper v. Aceto, 33 P.3d 479 (Cal. 2001).
· cites it 6× “The result reached by the majority defeats the priority given by Labor Code section 3860, subdivision (e), to the payment of an employee's attorney fees, when attorneys for both the employer and the employee actively participate in obtaining a recovery against a negligent third…”
Hunley v. Silver Furniture Mfg. Co., 38 S.W.3d 555 (Tenn. 2001).
“) (requiring notice, cooperation of parties, and court approval of settlements); Cal. Labor Code § 3860 (West, WESTLAW through 1999 portion of 1999-2000 Legis.”
San Diego Unified Port Dist. v. Superior Court, 197 Cal. App. 3d 843 (Cal. Ct. App. 1988).
· cites it 2× “(Lab. Code, § 3860, subd. (b).) In this scenario the need for the carrier to have filed a written claim under the Act simply does not arise.”
Dairyland Ins. v. Herman, 1998-NMSC-005, 954 P.2d 56.
“Code § 3859 (West 1971) (as amended 1971) (right to reimbursement); Cal. Lab.Code § 3860 (West 1971) (as amended 1971) (same concept); Cal.”
Neil D. Reid, Inc. v. Dep't of Health Care Servs., 55 Cal. App. 3d 418 (Cal. Ct. App. 1976).
· cites it 2× “Code, § 3856) or settlement (Lab. Code, § 3860). The Supreme Court thereafter granted a hearing in this case, and remanded it to us for consideration in the light of Quinn .”
ITT Specialty Risk Servs. v. Avis Rent a Car Sys., Inc., 985 P.2d 43 (Colo. Ct. App. 1998).
“74 (1972); Cal. Lab.Code § 3860(b) (West 1989). We thus conclude that California has a more substantial relationship than Colorado to the dispute between ITT and Hardesty over Hardesty’s settlement proceeds, and that application of California law to this issue would not be…”
Correll v. Clark Equip. Co., 76 Cal. App. 3d 548 (Cal. Ct. App. 1978).
· cites it 2× “Jackson, supra, does not apply, Labor Code section 3860 by its terms requires that plaintiffs’ attorney be reimbursed out of settlement proceeds for his reasonable expenses, costs and fees before that fund may be applied to satisfy Employers’ lien.”
Associated Constr. & Eng'g Co. v. Workers' Comp. Appeals Bd., 587 P.2d 684 (Cal. 1978).
“) Labor Code section 3860, subdivision (b), was amended to read: “(b) Except as provided in Section 3859, the entire amount of such settlement, with or without suit, is subject to the employer’s full claim for reimbursement for compensation he has paid- or become obligated to…”
Pac. Tel. & Tel. Co. v. Pac. Gas & Elec. Co., 338 P.2d 984 (Cal. Ct. App. 1959).
“Coast Counties asserted the statutory lien of an employee because of death benefits paid (Lab. Code, § 3860) against this sum and received $5,264.”
R. E. Spriggs, Inc. v. Indus. Accident Comm'n, 269 P.2d 876 (Cal. 1954).
“Code, § 3856) and where a settlement was effected (Lab. Code, § 3860) the “entire amount” of such judgment or settlement was subject to the employer’s full claim for reimbursement for his com *788 pensatiou expenditures and liability.”
Bailey v. Reliance Ins., 79 Cal. App. 4th 449 (Cal. Ct. App. 2000).
“” Labor Code section 3860, subdivision (a) provides: “No release or settlement under this chapter, with or without suit, is valid or binding as to any patty thereto without notice to both the employer and the employee, with opportunity to the employer to recover the amount of…”
Eldridge v. Truck Ins. Exch., 253 Cal. App. 2d 365 (Cal. Ct. App. 1967).
“) There is a clear distinction between services rendered by counsel for either employer or employee, proceeding alone but necessarily benefiting both, and those rendered by separate attorneys representing employee and employer in asserting the related claims of their clients in…”
Cal. Labor Code § 3860(b): 1 case
ITT Specialty Risk Servs. v. Avis Rent a Car Sys., Inc., 985 P.2d 43 (Colo. Ct. App. 1998).
“74 (1972); Cal. Lab.Code § 3860(b) (West 1989). We thus conclude that California has a more substantial relationship than Colorado to the dispute between ITT and Hardesty over Hardesty’s settlement proceeds, and that application of California law to this issue would not be…”
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