Key Points

  • The Court of Appeal held that a trial court lacked jurisdiction to grant an employer's motion for reimbursement of workers' compensation benefits filed after the employee voluntarily dismissed the entire action with prejudice, and that the resulting order is void.
  • The court held that parties cannot confer or extend subject matter jurisdiction by assent, and that the record showed no express, clear and unambiguous predismissal request to retain jurisdiction under Code of Civil Procedure section 664.6.
  • The court held that an employer dismissed from the action with prejudice is a stranger to it and cannot use section 664.6, which only parties to the settlement may invoke.
  • The court held that section 664.6, subdivision (f)(1), operative Jan. 1, 2025, does not apply retroactively and in any event covers only dismissals without prejudice.
  • The court held that the Enforcement of Judgments Law did not help the employer because its lien was never allowed and perfected while the action was pending.

A California appeals court has thrown out an order requiring an injured worker and her co-plaintiff to repay workers' compensation benefits out of their settlement with a disinfectant manufacturer. The court held that the trial judge lost the power to act when the plaintiffs dismissed their lawsuit, more than eight months before her employer asked for the money.

A three-justice panel of the Court of Appeal's Fourth Appellate District, Division One, ruled unanimously for Jennifer and Christopher Slamer in an opinion by Justice Bermúdez, joined by Acting Presiding Justice Do and Justice Castillo. The panel filed the opinion Sept. 28 and certified it for publication Oct. 21.

The ruling reverses an April 18, 2025, order by San Bernardino County Superior Court Judge Thomas S. Garza, who had directed the Slamers to pay Southern California Permanente Medical Group, Jennifer Slamer's employer, the full amount of its lien plus interest. Under Labor Code section 3857, an employer seeking repayment from a worker's recovery against an outside party "must apply to the court for an order for payment of the lien amount before satisfaction of judgment or dismissal of the action," Justice Bermúdez wrote. The medical group filed its request after the dismissal.

California's workers' compensation system generally bars an injured employee from suing the employer, the opinion explains, but the employee may sue a third party whose wrongful conduct contributed to the injury. To prevent a double recovery, the employer may assert a lien, a legal claim against any judgment or settlement the employee obtains, for the benefits it has paid.

While working for the medical group in February 2016, Jennifer Slamer suffered "disabling injuries to her respiratory system from exposure to a disinfectant manufactured by Ecolab," according to the opinion. The medical group settled her workers' compensation claim in an administrative proceeding. As the lawsuit progressed, it paid her benefits and filed several notices of lien for the growing total.

The Slamers sued Ecolab Inc., the medical group and related entities in May 2017. The medical group and its affiliates were later dismissed with prejudice. The Slamers went to trial against Ecolab and reached a confidential settlement on April 19, 2023, before the case went to the jury. They dismissed the entire action with prejudice on June 1, 2023.

After the Slamers refused the medical group's requests for reimbursement and mediation failed, the medical group filed its motion on Feb. 16, 2024. The Slamers argued that the lien had to be reduced by the employer's own share of fault and by a share of the attorney fees and costs they spent obtaining the settlement. Judge Garza granted the motion in full.

On appeal, the panel raised a separate question itself and ordered supplemental briefs on the trial court's jurisdiction. The dismissal "terminated the action" and left the trial court without jurisdiction except for narrow matters such as costs and statutory attorney fees, the court held. "An order issued after a court loses jurisdiction is void," Justice Bermúdez wrote.

The panel rejected each of the medical group's four counterarguments. The medical group first contended that the Slamers had forfeited the timing objection by failing to raise it in the trial court. The panel held that a challenge to subject matter jurisdiction may be raised for the first time on appeal. "There was no forfeiture," the opinion states.

The medical group next argued that the Slamers had assented to the trial court's continued jurisdiction over the lien dispute. Quoting a 1989 appellate decision, the panel wrote, "Since subject matter jurisdiction cannot be conferred by consent, waiver, or estoppel, the court cannot 'retain' jurisdiction it has lost." The panel also held that Code of Civil Procedure section 664.6, subdivision (f)(1), which allows a motion to determine a lien after certain settlement dismissals, became operative Jan. 1, 2025, does not apply retroactively and covers only dismissals without prejudice.

Third, the medical group said Judge Garza had expressly retained jurisdiction under section 664.6, the statute that lets courts enforce settlements. A request to retain jurisdiction must come while the case is pending, and it "must be express, not implied from other language, and it must be clear and unambiguous," the court wrote, quoting a 2002 decision. On April 18, 2023, before any settlement existed, the judge said the court "could . . . and w[ould] retain jurisdiction" to effectuate one. The panel held that the April 2023 courtroom exchanges and "the vague entry" in May 19, 2023, hearing minutes mentioning the lien fell short of that standard.

The panel added that the medical group could not invoke section 664.6 at all. Its own dismissal from the case by judgment on April 11, 2022, made it "a stranger to the action" that "could not thereafter file pleadings or seek any relief," the opinion states, quoting a 1950 decision. The statute "may be used only by a party to the settlement," the court wrote.

Finally, the medical group invoked the Enforcement of Judgments Law, the statutes governing collection of money judgments, which bar a judgment debtor from dismissing a pending action without the judgment creditor's written consent or a court order authorizing the dismissal. The court held that an employer may use that law only for a lien the court has allowed, and "a lien is not 'allowed' until the employer applies for the lien and the court grants the application." Judge Garza allowed the lien more than 22 months after the dismissal. By then the action was no longer pending, because the time to appeal had expired on Nov. 28, 2023.

Because the jurisdictional ruling resolved the appeal, the panel did not decide the Slamers' arguments about comparative fault, fees or interest. "We express no opinion on what remedies, if any, SCPMG may pursue to obtain reimbursement," Justice Bermúdez wrote, using the medical group's initials.

Lawyers for the Slamers included Richard D. McCune of McCune Law Group. The medical group was represented by Fredrick W. Kosmo, Jr. of Wilson Turner Kosmo.

The appeals court remanded the case with directions for the trial court to enter a new order denying the reimbursement motion for lack of jurisdiction. The Slamers will recover their costs on appeal.