When an employee is involved in a motor vehicle accident while in the course and scope of his employment and the at-fault tortfeasor is uninsured or underinsured, the question arises as to whether the employee can recover under his employer’s uninsured or underinsured motorist (UM/UIM) policy as well as recover workers’ compensation benefits. We recently received a question via our “Ask A Question” feature on our website from an Atlanta-based company which read: “Can an employee receive worker’s comp and UM benefits at the same time? Is that considered a double recovery?” You might think that the answer is clear and that making a double recovery should be prohibited. However, depending on the state involved, the answer might surprise you.
Maryland law allows UM and PIP benefits to be reduced in the amount of unreimbursed workers’ compensation benefits paid. Section 19–513(e) of the Maryland Insurance Article provides as follows:
§ 19-513. Limitations on recovery of benefits.
(e) Reduction due to workers’ compensation benefits. Benefits payable under the coverages described in §§ 19-505 and 19-509 of this subtitle shall be reduced to the extent that the recipient has recovered benefits under the workers’ compensation laws of a state or the federal government for which the provider of the workers’ compensation benefits has not been reimbursed.
The sections referenced within § 19-513(e) above refer to PIP benefits and UM benefits. Still, Maryland law is unsettled regarding how § 19-513(e) reductions for workers’ compensation benefits is to be calculated. Maryland law does not clearly provide whether § 19-513(e) UM reductions for workers’ compensation benefits are to be set off from the plaintiff’s judgment (in other words, the value of a plaintiff’s injuries and damages) or from the UM policy limits. Rather, one Court of Special Appeals’ decision could be interpreted to require that the reduction is to be calculated with regard to “limits.” Blackburn v. Erie, 971 A.2d 368 (Md. App. 2009). In Blackburn, the Court stated:
For the reasons set forth above, we hold that the plain language of section 19-513(e) allowed Erie to calculate the benefits payable under the underinsured motorist provisions of its policy by deducting from its $250,000 limits: (1) the amount that the Blackburns received from State Farm, and (2) the monies paid out by the federal government as workers’ compensation benefits that Mr. Blackburn did not repay the government (over $218,000).
This decision appears to announce that the reduction is to be calculated with reference to the UM insurer’s UM “limits”. However, the issue being decided in Blackburn was not whether the reduction is to be calculated by reference to the “limits” or by reference to the verdict. That issue was not litigated in Blackburn. Moreover, the Court stated that Erie was “allowed” to calculate the reduction with reference to the UM limit, but the Court did not specifically state that Erie was “required” to calculate the reduction in that manner.
Conversely, the Court of Appeals has opined that the trial judge in that case correctly applied this UM reduction for workers’ compensation benefits after the verdict by subtracting the amount of the unreimbursed workers’ compensation payments from the amount of the verdict. State Farm v. Hill, 775 A.2d 476 (Md. App. 2001). The Hill decision seems to require that the reduction be calculated not with reference to UM limits, but rather with reference to the value of a plaintiff’s injuries and damages. However, in Hill, the plaintiff did not argue for a reduction with reference to the UM limit as opposed to the verdict. Instead, the plaintiff merely argued that the reduction should not be in an amount greater than Maryland’s UM minimum limit of $20,000. Therefore, in both Hill and Blackburn, the issue of whether the § 19-513(e) reduction of UM benefits in the amount of workers’ compensation benefits paid is to be set off against the UM limit or the verdict was not addressed and the issue remains undecided in Maryland.
On February 25, 2013, the Maryland Court of Appeals was asked to determine whether the § 19-513(e) reduction applies when the insured/employee has not reimbursed the workers’ compensation carrier, even though he intends to. Travco Ins. Co. v. Crystal Williams, 2013 WL 656615 (Md. App. 2013). The Court also addressed whether § 19–513(e) permits a UM insurer to reduce its benefits payable for medical bill “write-downs,” assuming that the “write-downs” are considered a benefit under workers’ compensation law. The Court held that under the plain meaning of the statute, the “reimbursement” to the worker’s compensation carrier must have actually occurred in order for the previously-compensated insured to avoid the statutory PIP and/or UM reduction by the insurer. Also, as a result of the “ambiguous language of the statute”, the Court held that the amount of the “write-downs” under worker’s compensation law are also considered to be “benefits” and UM benefits should be reduced by the amount of such write-downs. Unfortunately, the Williams decision did not clarify the issue left unresolved by Blackburn and Hill.
In Louisiana, the answer used to depend on whether the UM policy was purchased by the employee or the employer. In Bellard v. Am. Cen. Ins. Co., 980 So.2d 654 (La. 2008), the Louisiana Supreme Court held that an employer’s UM carrier is entitled to a credit in the amount of payments made by the employer and/or its workers’ compensation insurer to or on behalf of plaintiff. It arrived at this decision by finding that the employer’s UM carrier and the employer and/or its workers’ compensation insurer were solidary obligors (meaning both were bound to the same obligation) as to lost wages and medical expenses and, moreover, that the Collateral Source Doctrine did not apply to prevent the credit. Because the UM carrier and the workers’ compensation carrier are solidary obligors, payment by one obligor relieves the other obligor of liability toward the obligee. Shortly thereafter, the Supreme Court decided Cutsinger v. Redfern, 12 So.3d 945 (La. 2009) clarifying that this rule applied even when the UM policy was purchased by the employee.
Like many states, Florida provides that a UM carrier is entitled to set off the payments made by a workers’ compensation carrier from the damages to be paid by the UM carrier. Fla. Stat. § 627.727. However, the method for determining the amount of that setoff is critical in order to ensure that the UM carrier is not duplicating these workers’ compensation benefits. By adding a provision to the UM policy that they will not compensate the claimant for injuries that were compensated or could have been compensated by workers’ compensation, the UM carrier should be in a better position to set off payments to their insured by the amount of compensation benefits paid to the insured/employee rather than simply what the plaintiff did, in fact, recover. Although many UM policies contain a clause that they will not pay for any element of loss if a person is (in the future) entitled to receive payment for that loss by a workers’ compensation carrier, this clause may not be broad enough to cover elements of loss for which a person had been (in the past) entitled to receive workers’ compensation benefits.
An employee/insured may have received less than the amount to which he was entitled because he may have settled his compensation claim quickly or because he decided to be treated by a non-workers’ compensation doctor. He even may have planned all along that the UM carrier pick up the uncovered portion of his damages up to the UM limits of coverage.
The relationship between UM coverage and workers’ compensation insurance is governed by Fla. Stat. § 627.727(1) which provides, in part:
The coverage described under this section shall be over and above, but shall not duplicate, the benefits available to an insured under any workers’ compensation law, personal injury protection benefits, disability benefits law, or similar law; under any automobile medical expense coverage; under any motor vehicle liability insurance coverage; or from the owner or operator of the uninsured motor vehicle or any other person or organization jointly or severally liable together with such owner or operator for the accident; and such coverage shall cover the difference, if any, between the sum of such benefits and the damages sustained, up to the maximum amount of such coverage provided under this section.
Florida case law has confirmed that UM payments may be set off by workers’ compensation benefits that have been paid or are due and payable. National Union Fire Ins. Co. of Pittsburgh v. Blackmon, 754 So.2d 840 (Fla. App. 2000). In practice, therefore, an employee can settle his comp claim on a discount in order to receive a settlement quicker and, thereafter, seek full damages from the UM carrier. Or, the employee could seek medical treatment from a non-workers’ compensation doctor and simply require the UM carrier to cover those costs, despite the fact that he could have been treated by a doctor who would have been paid for by the compensation carrier. The employee simply argues that only the amount of comp benefits actually paid, rather than the much larger amount that could have been paid, should be set off as the higher dollar amount is no longer “available” under § 627.727, despite the fact that it had been available. The Florida Court of Appeals has held that a UM carrier is not entitled to a setoff for workers’ compensation benefits that were likely payable to the employee in the future. USAA Cas. Ins. Co. v. McDermott, 929 So.2d 1114 (2nd DCA 2006).
What happens if a claimant simply doesn’t make a workers’ compensation claim? In Dwight v. Tennessee Farmers Mutual Ins. Co., 701 S.W.2d 621 (Tenn. Ct. App. 1985), the plaintiff made a UM claim even though she had opted not to pursue a workers’ compensation claim. The UM policy provided that compensation under that policy would be reduced by the amount paid or payable under any workers’ compensation law. Even though the plaintiff had already waived her workers’ compensation claim by the time of the ruling, the Court permitted a setoff for the workers’ compensation benefits she could have received. The Court explained that an employee’s unilateral waiver of compensation benefits shouldn’t operate to increase the financial obligation of the UM carrier.
Public policy tends to support the right of UM carriers to set off their damages by the amount that could and should have been paid by workers’ compensation, because the alternative would force UM underwriters to increase premiums out of concern that they would be required to cover expenses and risks that should be covered by workers’ compensation. Such a rule would thereby increase the cost of UM coverage, and decrease the availability of UM insurance for those individuals who truly need coverage for the expenses it was designed to cover. UM carriers should not be required to cover losses appropriately covered by workers’ compensation coverage. Employees should be required to seek the most workers’ compensation benefits possible before being entitled to UM benefits. To make this happen, UM carriers must utilize clear policy terms which allow for a setoff of workers’ compensation benefits that both are available and were available in order maximize any possible setoff.
As can be seen, a survey of even a handful of states reveals that the handling of this issue depends greatly on the state being looked at. Of course, the setoff of UM/UIM benefits is often, but not always, closely related to the ability of a workers’ compensation carrier to subrogate against benefits paid by the UM/UIM carrier of either the employee or employer. For a comprehensive article on that subject, see our firm’s published article entitled, “Can Workers’ Compensation Carriers Subrogate Against UM Benefits,” which can be viewed by clicking HERE.
For questions regarding this article or subrogation in general, please contact Gary Wickert at [email protected].