California public entities — cities, counties, school districts, and the joint powers authorities that insure them — carry significant workers’ compensation exposure, and most are not pursuing subrogation for governmental entities in California to recover it. Capalbo Daniel, PC is a California subrogation law firm headquartered in San Diego, with offices in Los Angeles and San Francisco, that represents public-sector employers and risk pools in recovering workers’ compensation dollars from negligent third parties. When a public employee is hurt by someone other than the employer, the entity that paid the benefits usually has a right to get that money back. The recovery is often missed.
The start of a public-sector fiscal year on July 1 is the right moment to look at this. Budgets are being set, loss runs are being reviewed, and risk managers are asking where the money went. Subrogation is one of the few line items that can put cash back without raising a tax or a premium.
Why Public Entities Leave Recovery Dollars on the Table
Most public agencies do not have a dedicated subrogation program. A claim comes in, benefits get paid, and the file closes when the employee returns to work or settles. No one asks whether a third party caused the injury — a contractor, a product manufacturer, another driver, a property owner.
That gap is expensive. A workers’ comp file that paid out six figures in medical and indemnity can carry a third-party recovery worth a large share of that total. When the agency never investigates, the negligent party keeps the benefit and the public fund absorbs the loss. Over a portfolio, the unrecovered total adds up fast.
The Subrogation Right Public Entities Already Have
Public employers hold the same statutory recovery right as private carriers. Under California Labor Code section 3852, an employer that pays workers’ compensation may bring an action against the third party who caused the injury. There is no exception for governmental entities. A school district that pays benefits to a custodian injured by defective equipment can pursue the manufacturer the same way a private insurer would.
The mechanics mirror standard workers’ compensation subrogation: identify the third party, preserve the lien, and coordinate recovery with the underlying comp claim. What changes for public entities is the procedural layer on top.
The Government Claims Act Cuts Both Ways
When the negligent third party is itself a public entity — another agency, a transit district, a utility with public ties — the recovery has to clear the Government Claims Act first. Under California Government Code section 911.2, a claim for personal injury against a public entity must be presented within six months of when the cause of action accrued. Miss that window and the right to sue can be lost before the comp file is even reviewed for recovery.
Six months is far shorter than the two-year tort deadline that applies to most private defendants. For a public-sector risk manager, that compressed timeline is the single strongest argument for screening claims for subrogation early rather than at closure.
Risk Pools and JPAs: Shared Risk, Shared Recovery
California’s municipalities, school districts, and special districts commonly pool their workers’ comp risk through joint powers authorities. A JPA spreads loss across members, which means a recovery benefits every member’s experience rating, not just the entity where the injury happened. Strong subrogation for risk pools California programs lower the pooled loss fund and, over time, the contribution each member pays in.
Yet pooled programs are where recovery most often slips. Files are administered across many member agencies, third-party investigation is inconsistent, and no single person owns the recovery question. A pool that builds one consistent referral protocol across all members captures dollars that scattered handling leaves behind. Our lien management approach was built for exactly this kind of portfolio-level recovery.
What a Public-Sector Recovery Program Looks Like
Setting one up is less work than most risk managers expect. The core is a referral rule: every claim with any sign of third-party involvement gets flagged for review at intake, not at closure. From there, counsel investigates liability, files the lien, and pursues recovery while the comp case proceeds.
This is the same structure that makes TPA recovery programs perform — written rules, early action, and clear reporting. A workable program has three parts:
- A written referral protocol so adjusters know which files to send and when.
- Early third-party investigation, before evidence and the six-month public-entity deadline disappear.
- Clear reporting so the agency sees recovery status and dollars returned each quarter.
If you want to know whether your current setup is capturing what it should, request a portfolio review and we will tell you straight where the gaps are.
What It Costs to Do Nothing
The cost of skipping subrogation is invisible until you measure it, which is why it survives in public budgets. There is no invoice for a recovery you never pursued. But a single missed third-party claim on a serious injury can mean a public fund eats a loss a negligent contractor or manufacturer should have paid.
Capalbo Daniel’s attorneys have recovered and saved more than $40 million for California carriers and employers. Public entities sit on the same recoverable exposure private carriers do — they just rarely have anyone looking for it. Reviewing the subrogation services available to your agency is a low-risk way to find out what is recoverable.
Frequently Asked Questions
Do California public entities really have subrogation rights?
Yes. Labor Code section 3852 gives any employer that pays workers’ compensation the right to recover from the responsible third party, and public employers are not excluded. The right is the same one private carriers use.
What is the deadline to pursue a public-entity recovery?
It depends on who the third party is. Against a private defendant, the underlying tort deadline is generally two years. Against another public entity, a government claim must be presented within six months under Government Code 911.2 — so early screening matters.
How do I start a subrogation program for our agency or risk pool?
Start with a portfolio review. We look at recent closed and open claims for third-party involvement, identify recoverable files, and help you put a referral protocol in place. You can contact our office to schedule one.
Does Capalbo Daniel work with agencies outside San Diego?
Yes. The firm handles matters in all 58 California counties. See our service areas for coverage across the state.
The Bottom Line for Public-Sector Risk Managers
Public entities and risk pools carry real subrogation potential and rarely pursue it. The statutory right is already yours; the obstacle is process, not law. A simple referral protocol, early third-party investigation, and a partner who knows the public-entity deadlines turn an ignored line item into recovered cash. As you set this year’s budget, it is worth asking what your loss fund is owed. Our team also offers subrogation training to help claims staff spot recoverable files from day one.
Ready to Get Started?
If your agency or risk pool isn’t actively pursuing third-party recovery, you’re likely leaving money in the loss fund. Let’s review your portfolio and find it.
Request a portfolio review or call us at (619) 485-5960.