Prudential Insurance of America v. Workers' Compensation Appeals Board

CLARK, J.

I dissent.

I agree Prudential is entitled to no lien pursuant to provisions of Labor Code section 4903. (See Rowland v. Workers’ Comp. Appeals Bd. (1977) 66 Cal.App.3d 448 [136 Cal.Rptr. 1].) However, this does not mean Prudential is not entitled to a statutory lien pursuant to section 4903.1, subdivision (b), for its excess payments under the policy. In concluding no lien is available, the majority ignore a literal reading of the statute to reach a result they believe desirable. As will be demonstrated, the meaning they give the statute is not only contrary to established rules of law but fails to accomplish the happy solution they envision.

As the majority acknowledge, Thomas Wright contracted—and his group disability insurance premiums were so adjusted—to receive in the event of his disability insurance benefits reduced by what he could recover in workers’ compensation benefits for that same disability. (See Lab. Code, § 3750 et seq.) However, Prudential paid Wright his full insurance benefits. When Wright applied for workers’ compensation benefits, Prudential sought to recover its overpayments. The challenge is *785not to Wright’s acknowledged liability to Prudential for overpayments, but rather to Prudential’s assertion of a lien in effecting its rightful recovery.

The majority seek to avoid the clear language of section 4903.1 based on their version of legislative intent arising from circumstances before and prevailing at the time of its 1975 enactment. (Stats. 1975, ch. 1109, § 1.) They rely on two decisions of this court which they claim are relevant to an understanding of section 4903.1.

Prior to 1974 WCAB had developed a practice of reducing for “equitable reasons” otherwise proper medical and hospital liens claimed pursuant to section 4903, subdivision (b), in order to facilitate or accommodate compromises and releases in those cases where the industrial nature of the claim was in dispute. In Kaiser Foundation Hosp. v. Workmen’s Comp. Appeals Bd. (Keifer) (1974) 13 Cal.3d 20 [117 Cal.Rptr. 678, 528 P.2d 766], however, we held the WCAB lacked authority to reduce the size of such claims in lack of a lienholder’s consent and upon prima facie proof the treatment rendered by the lienholder was for injury allegedly received in the course of employment. (Id., at p. 23.)

The impediment imposed by Keifer to compromises of disputed industrial injuries is claimed to have been, rectified by enactment of section 4903.1. (Stats. 1975, ch. 1109, § 1.) Authority to reduce the size of an otherwise proper lien is provided in subdivision (c): “When the parties proposed that the case be disposed of by way of a compromise and release agreement, in the event the lien claimant does not agree to the amount allocated to it, then the referee shall determine the potential recovery and reduce the amount of the lien in the ratio of the applicant’s recovery to the potential recovery in full satisfaction of its lien claim.” As will be seen Keifer and the subsequent enactment of subdivision (c) of section 4903.1 has little or no relevance to the question in issue—the legislative intent to afford to a group disability insurer a claim of lien.

The second decision of this court which is claimed to bear on legislative intent in enacting section 4903.1 is Silberg v. California Life Ins. Co. (1974) 11 Cal.3d 452 [113 Cal.Rptr. 711, 521 P.2d 1103]. In that case a carrier had issued a policy providing for payment for medical and hospital care resulting from injuries suffered by the insured, excluding medical and hospital care expense resulting from injuries for which *786workers’ compensation benefits were available. When the insured was injured in an accident of a disputed industrial nature, the insurer refused to make payments pending resolution of the insured’s claim for workers’ compensation benefits. Two years later a compromise was effected in which there was a partial allowance of a hospital’s claim of lien. A majority of this court held the insurer had exercised bad faith in withholding payment of medical benefits pending resolution of the industrial nature of the injury, stating: “There is no question that if [insurer] had paid the hospital charges and it was ultimately determined workmen’s compensation covered the injury, [insurer] could have asserted a lien in the workmen’s compensation proceeding to recover the payments it had made and it would have been entitled to payment from the proceeds of the award. (Lab. Code, § 4903, subd. (b); . . .)” (Id., at p. 461.) Judgment for the insured was affirmed insofar as it awarded full medical expenses under the policy ($4,900), and compensatory damages ($75,000).

Following Silberg insurers complained of the dilemma of being required to furnish benefits to avoid liability for potential compensatory damages while their claims of lien under section 4903, subdivision (b), were later routinely denied or reduced. According to the majority, subdivisions (a) and (b) of section 4903.1 were designed by the Legislature to remedy the insurer’s plight, but only insofar as liability for medical and hospital payments were involved.1 Both subdivisions provide for lien claims by those who furnish medical and hospital services, but the right to lien is not limited to such claimants. Others who are granted an express right of lien are those who have paid benefits or provided services “for the effects of the industrial injury or illness” including benefits paid pursuant to “a group disability policy.”2

*787We are unable to discern anything in Keifer or in subdivision (c) of section 4903.1 which aids the majority holding that group disability insurers are intended to be excluded from the provisions of section 4903.1. Although Keifer dealt with WCAB authority to reduce claims of liens for medical and hospital treatment, subdivision (c), which is claimed to restore to the WCAB that which was denied in Keifer, deals with compromise and release of lien claimants generally—not specifically with lien claimants for only medical and hospital treatment. If we are to gather any intelligence from subdivision (c) it must be that the Legislature rejected the narrow application of section 4903.1 and broadened application of subdivision (c) to accommodate compromise and release agreements affecting lien claimant mentioned in subdivisions (a) and (b).

Subdivisions (a) and (b), notwithstanding the argument that these subdivisions were adopted solely to relieve difficult situations in which medical and hospital hen claimants were placed, are even more explicit than subdivision (c) in extending the right to claim a lien to others than medical and hospital lien claimants. Both subdivisions (a) and (b), as well as the preamble portion of section 4903.1, expressly provide for filing claim of lien for benefits paid pursuant to “a group disability policy.” It is argued the Legislature, in attempting to assure WCAB the power to adjust lien claims for medical and hospital insurance (see § 4903.1, subd. (c)), and knowledgeable that such policies are written by carriers also writing disability policies, intended to include as lienable payments made pursuant to any such policies only those made for medical and hospital costs.

The difficulty in stating the proposition demonstrates its absurdity. What is suggested is that we substitute the words “a medical and hospital expense policy” for the words “a group disability policy” in the statute. Even if we were authorized to make such an arrogant substitution it would render the substituted language a complete nullity, as a lien for *788medical or hospital expenses is otherwise provided for, if not in subdivisions (a) and (b) for benefits paid pursuant to “a health care service plan” or “a hospital service contract,” then certainly in section 4903, subdivision (b). (See Silberg v. California Life Ins. Co., supra, 11 Cal.3d 452, 461.)

The main thrust of the majority opinion is that subdivision (a) provides for a lien only when an employee has been denied reimbursement for self-procured medical costs solely because of lack of notice to his employer, and subdivision (b) provides for a lien only when an award of self-procured medical costs has been made, thus conditioning the operation of subdivisions (a) and (b) to only those cases when the employee has himself procured medical assistance for which he was or could have been reimbursed. In the instant case respondent Wright incurred medical costs for which he was reimbursed, thus invoking Prudential’s claim of lien pursuant to subdivision (b). The majority condemn a literal reading of the statute as unreasonable in view of the happenstance of self-procured medical costs triggering a lien for group disability payments which—they claim—have no relevancy to the self-procured medical costs.

The legislative reason for not providing for a lien in those instances when an employee does not himself procure medical assistance does not appear. The majority speculate, as suggested by their construction of section 4903.1, that liens are authorized only when medical and hospital expenses have been self-procured and then only in the amount of such expenses. We can further speculate that because payments made under a disability policy could be deemed to have provided a means—perhaps the only means—by which a disabled employee could procure medical assistance or hospital services, a lien is warranted. In any event, subdivisions (a) and (b) provide claims of liens for disability insurers and the fact disability payments may not be directly tied to medical or hospital expenses cannot be deemed to be a legislative inadvertence or oversight when the same claim of lien is provided for “a self-insured employee welfare benefit plan.” (See fn. 1.) Such a benefit plan, like a disability insurance plan, makes payments which are not directly related to an employee’s medical needs or costs. The majority fail to demonstrate the Legislature did not really intend to afford a right of lien in favor of either a disability insurer or a self-insured employee welfare plan, both of which are expressly provided for on three occasions in section 4903.1.3

*789Although WCAB might have anticipated in the circumstances prevailing in 1975 the enactment of remedial statutory provisions different from those appearing in section 4903.1, neither it nor this court can construe that section merely to fit the mold of what was anticipated. “ ‘While courts are no longer confined to the language [of the statute], they are still confined by it. Violence must not be done to the words chosen by the legislature.’ (Frankfurter, Some Reflections on the Reading of Statutes, 47 Columb.L.Rev. 527, 543.) A standard of conduct prescribed by a statute would hardly command acceptance if the statute were given an interpretation contrary to the interpretation ordinary men subject to the statute would give it. ‘After all, legislation when not expressed in technical terms is addressed to the common run of men and is therefore to be understood according to the sense of the thing, as the ordinary man has a right to rely on ordinary words addressed to him.’ [Citations.] If the words of the statute are clear, the court should not add to or alter them to accomplish a purpose that does not appear on the face of the statute or from its legislative history. [Citations.] Certainly the court is not at liberty to seek hidden meanings not suggested by the statute or by the available extrinsic aids. (In re Miller, 31 Cal.2d 191, 198-199 . . . and cases cited therein.)” (People v. Knowles (1950) 35 Cal.2d 175, 182-183 [217 P.2d 1].)

The majority’s narrow interpretations fail to take into account broad and unambiguous language of section 4903.1. The WCAB is first commanded to determine whether “any” benefits have been paid—a determination not limited to benefits for medical or hospital care—from sources, including group disability policies, not limited to health care plans and hospital service contracts. If conditions are satisfied authorizing *790recognition of any claim of lien, subdivisions (a) and (b) command WCAB to entertain liens filed by disability insurers or employee welfare benefit plans in the same manner as those filed by a health care service plan or a hospital service contract. Finally, liens are to be recognized for benefits paid or services provided for the “effects” of the industrial injury or illness—a broader concept than, as held by the majority, for benefits paid or services rendered merely for medical or hospital care.

The wholesale assault on clear and unambiguous language of section 4903.1 constitutes, in language of Justice Frankfurter, more violence than can be countenanced. The problem, if in fact there is one, must be addressed to the Legislature.

Finally, aside from the majority’s strained statutory construction to reach what it deems to be a desirable result, that result will not be achieved. The majority concern here is obviously to insure a disabled worker will be immediately protected by a disability insurance carrier in an instance when question might be raised as to the industrial nature of his disability. This court grappled with that problem in Silberg, concluding an insurer exposed itself to further liabilities if it failed to act in good faith in anticipation of escaping liability should the accident later be deemed to be industrial in nature. The court justified the imposition of responsibility to make immediate payment on the ground that had the insurer made payments it was later determined it was not required to make, it “could have asserted a lien in the workmen’s compensation proceeding . . . and it would have been entitled to payment from the proceeds of the award.” (Silberg v. California Life Ins. Co. (1974) supra, 11 Cal.3d 452, 461.)

The majority now hold the insurer is entitled to no lien, thus imposing on the insurer the same dilemma it faced prior to enactment of section 4903.1. Today’s decision, moreover, destroys what the majority sought to accomplish in Silberg—certainly we can no longer impose on an insurer a duty to make timely disability payments to a disabled employee pending resolution of an industrial award against which the insurer can assert no lien should it be determined the insurer had no liability.4 But the real loser, of course, is the disabled employee who must now look only to workers’ compensation benefits which, when the industrial nature of the injury is disputed, may be long delayed.

*791The order denying Prudential’s claim of lien should be reversed and the cause remanded for further proceedings.

Mosk, J., and Richardson, J., concurred.

Petitioner’s application for a rehearing was denied January 24, 1979. Mosk, J., Clark, J., and Richardson, J., were of the opinion that the application should be granted.

Subdivisions (a) and (b) of section 4903.1 provide: “(a) When the referee issues an award finding that an injury or illness arises out of and in the course of employment, but denies the applicant reimbursement for self-procured medical costs solely because of lack of notice to the applicant’s employer of his need for hospital, surgical, or medical care, the appeals board shall nevertheless award a lien against the employee’s recovery, to the extent of benefits paid or services provided, for the effects of the industrial injury or illness, by a health care service plan, a group disability policy, a self-insured employee welfare benefit plan, or a hospital service contract. [¶] (b) When the referee issues an award finding that an injury or illness arises out of and in the course of employment, and makes an award for reimbursement for self-procured medical costs, the appeals board shall allow a lien, to the extent of benefits paid or services provided, for the effects of the industrial injury or illness, by a health care service plan, a group disability policy, a self-insured employee welfare benefit plan, or a hospital service contract.”

Respondents appear to argue that before enactment of section 4903.1 a disability insurer was not entitled to lien because it did not qualify as having furnished medical or *787hospital treatment pursuant to section 4903, subdivision (b); that while insurers who provided medical and hospital treatment or reimbursement therefor were entitled to liens the WCAB had diluted such rights (e.g., Keifer) or rejected liens when questionable liability for payments had been resolved in favor of payment under threat of compensatory liability (e.g., Silberg)\ that section 4903.1 was enacted in response to those circumstances and therefore should be applicable only to those lien claimants caught up in the problems resulting in the enactment—those who might have claimed liens for medical and hospital treatment under section 4903, subdivision (b); that because payments of benefits pursuant to a group disability policy did not give rise to a lien claim prior to the enactment of section 4903.1, such payments do not give rise to a claim of lien after the enactment of section 4903.1 notwithstanding the clear language of that section.

The majority’s conclusion would further require a conclusion section 4903.1 does not authorize a claim of lien except when- a claimant can qualify under subdivisions (a) or (b). *789We do not here have to consider such issue, because Prudential’s claim qualifies as a lien pursuant to subdivision (b). However, the section read in its entirety does not provide as claimed by the majority. First, it authorizes claims of liens by those who have paid benefits or provided services, including benefits paid pursuant to a group disability policy. Then by the “as follows” language certain of such lien rights are qualified as provided in subdivisions (a), (b) and (c). Subdivision (a) qualifies lien rights when the employee is denied self-procured medical costs solely because of lack of notice to the employer. Subdivision (b) qualifies lien rights when an award for self-procured medical costs has been made. There is no basis for concluding there are no lien rights except when subdivisions (a) or (b) are operative as, for instance, when, the employee has no self-procured medical costs. If subdivisions (a) and (b) were intended to state the only conditions under which a lien could be asserted, then the first paragraph of sectioh 4903.1 serves absolutely no purpose. By eliminating it, subdivisions (a), (b) and (c) become jself-operative as held by the majority—deleting from each subdivision, of course, the language “a group disability policy” as further held by the majority. Surely we cannot conclude our Legislature is so inept a constructionist as is required by the majority holding.

If we would impose such a duty it must be obvious insurers could no longer afford to provide such policies.