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Recently, a panel of commissioners with the Workers’ Compensation Appeals Board (WCAB) addressed the question of whether a legal malpractice recovery against a civil attorney based on that attorney’s failure to timely file the civil complaint gave rise to a third party recovery in a Workers’ Compensation Case (Delores Escamilla v. Cacique, Inc.; Travelers Insurance Company ADJ7653984).
The panel in Escamilla concluded that the defendant was not entitled to a credit based on the legal malpractice recovery. Relying heavily on the Second District Court of Appeals’ decision in Soliz v. Spielman (1974) 44 Cal.App.3d 70, 40 Cal. Comp. Cases 130, the panel found that the employee’s civil attorney did not assume a duty to the employer or its carrier when they breached their legal duty to the employee. In short, if an employee fails to file a third party action, the employer’s remedy is to file its own action against the third party, not to seek a credit from the employee for what amounts to a “fourth-party” recovery.
Again, the fact that Soliz is the only reported case on the issue and the fact that there is no contrary published decision by the California Supreme Court or another Court of Appeal, carried a great deal of sway with the panel in Escamilla. Despite that fact, the panel also specifically addressed defendant’s argument that a credit applied to the legal malpractice recovery because such a credit has not been specifically excluded by statute like the medical malpractice recovery (Civil Code Section 3333.1) or the uninsured motorist recovery (Insurance Code Section 11580.2(c)(4). The panel, however, was unimpressed with this argument and found that an analogy simply could not be drawn between these clearly third party recoveries and a “fourth-party” recovery like a legal malpractice recovery.
In conclusion, Escamilla is a very thorough and well-reasoned panel decision. Escamilla provides very useful guidance not only in a case involving an employee’s legal malpractice recovery but in other cases where there may be a claim of credit pursuant to Labor Code Section 3861.
Read the Escamilla noteworthy panel decision.
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