Low, Ball & Lynch’s

WEEKLY LAW RESUME

August 19, 2004 Issue      By: Raymond Coates

Workers' Compensation Subrogation - Wrongful Death Actions

Fremont Compensation Insurance Company v. Sierra Pine, Ltd.

Court of Appeal, Third District

(August 4, 2026)

The wrongful death statutes set forth who is entitled to sue for wrongful death.  This case concerns the subrogation rights of a workers' compensation carrier who paid benefits to one not eligible to sue for wrongful death.

Fred Manning was killed at work allegedly due to the negligence of Sierra Pine, Ltd., and others.  Fremont Compensation Insurance Company paid Cynthia Nesmith benefits pursuant to a board order.  Nesmith was divorced from Manning, but lived in his household and was dependent upon him at the time of his death.  There were no other heirs.  After paying Nesmith, Fremont sued Sierra Pine to recover the benefits paid.  Sierra Pine demurred, arguing that Nesmith was not allowed to sue for wrongful death, and thus Fremont could not subrogate for the payment made to her.  The trial court sustained the demurrer without leave to amend.

The Court of Appeal reversed.  Pursuant to Labor Code section 3852, the workers' compensation carrier is subrogated to the rights of the injured employee against the third party.  This right is usually asserted by intervention, an independent action or the assertion of a lien.  The compensation carrier in a subrogation action may recover, in addition to the compensation paid, any other damages for which it is liable for benefits paid to the employee or his dependents.  The Court stated the rights conferred by Labor Code section 3852 control and not the wrongful death statute with its limited standing provisions.  Under the Labor Code, the compensation carrier has subrogation rights of both the employee and the employer.  Thus, the fact that Nesmith was not a surviving spouse or putative spouse and thus had no standing to sue for Manning's death was irrelevant.

Under the workers' compensation system, a third party tortfeasor is liable for all damages caused by his acts.  This includes any amounts which the employer or their insurer is obligated to pay.  This allows the compensation carrier to recoup benefits paid due to the negligence of third parties.  The fact that Fremont paid Nesmith death benefits was irrelevant to their right of recovery.  If they had not been paid to her, they would have been paid to someone else or to the State.  Under this situation, Fremont should not be denied recovery.  Thus, the Court should have allowed the subrogation action to proceed.

The judgment was reversed, with directions to the trial court to overrule the demurrer.

COMMENT

This case is an anomaly in that it allows the compensation carrier to recover in a situation where the former wife would not have been allowed to sue.  The Court felt that the subrogation rights of the compensation carrier should override the provisions of the wrongful death statute.

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