Workers’ Compensation: 4th District, Division 2 Explains How Attorney’s Fees Come Out Of Lien First

Trial Court Did Not Err In Reducing Worker’s Compensation Lien To Pay Attorney’s Fees

     Plaintiff Collins was an employee of the crew of Hulcher Services, Inc., a contractor hired by railroads to clear tracks and rerail train cars following derailments.  He was severely injured when a block from a Hulcher crane fell on his head, after Hulcher responded to the derailment of a Union Pacific train.  A jury awarded significant damages against Union Pacific, finding Collins to be a “special employee” of the railroad.  Union Pacific appealed, arguing, among other things, that the trial court erred in reducing the worker’s compensation lien to pay attorney’s fees.  Collins v. Union Pacific Railroad Company, E051218 (4th Dist. Div. 2 July 11, 2012) (Ramirez, P.J., author) (certified for publication).

     East bound Union Pacific RR. March, 1943.  Jack Delano, photographer.  Library of Congress.

     Affirming the judgment in full, the Court of Appeal explained, as to the attorney’s fees issue, that the trial court properly reduced the workers’ compensation lien to pay for attorney’s fees. 

     Labor Code section 3856 allows the employer to seek recoupment for benefits paid or owed to the employee, by suing the third party tortfeasor directly, or by asserting a lien against the employee’s tort recovery.  The rationale is that this prevents the employee from obtaining a double recovery by retaining the third party damages and workers’ compensation benefits for the same injuries.  The employer may then assign its right to reimbursement of workers’ compensation benefits paid to plaintiff to the defendant.  Presumably, this occurred here, explaining why Union Pacific did not want attorney’s fees paid from the lien.

     If the employee prosecutes the action alone, then the employee is entitled to reasonable attorney’s fees based upon services rendered by the employee’s attorney in effecting recovery for the benefit of the employee and the employer.  “The trial court did not err in awarding attorney’s fees, payable out of the lien amount.”  

     Practice Tip:  If you have a workers’ comp attorney’s fees issue, we recommend reading the statutes and cases.  Facts, such as the employer’s fault for the injury, will affect recoupment.