Estate of Worker Can Recover UM/UIM in Addition to Workers Comp
In State Farm Mut. Auto. Ins. Co. v. Slusher, 2009 WL 485027 (Ky.App.), State Farm appealed a judgment of the circuit court finding that the Appellee, Carlene Slusher, as Administratrix of the estate of Donald Slusher, was entitled to receive uninsured motorist benefits from a policy which it issued to Donald Slusher.
In 2005, Donald Slusher was working at a coal plant where he was a truck driver employed by James Long Trucking when Arlie Napier, also an employee of James Long Trucking, parked his coal truck on the haul road in front of the building occupied by Slusher. After Napier left the truck, it rolled down the hill and hit the building Slusher was occupying, killing him. The Mine Safety and Health Administration conducted an investigation and determined the accident occurred because Napier negligently failed to apply the parking brake before exiting the truck.
Slusher's estate received workers compensation benefits from the employer under the Kentucky Workers' Compensation Act. In addition, the coal truck was insured for liability by a policy with Progressive Insurance Company issued to its owner, James Long Trucking. Slusher also had in effect an auto insurance policy through State Farm which covered a vehicle which he owned. The policy included $50,000 of UIM coverage. The parties agreed that if the UIM coverage applied, the amount of damages sustained by the estate met the $50,000 limit for UIM coverage under his policy. Slusher's policy also provided $50,000 in UM coverage.
In 2006, the estate filed the initial complaint against State Farm seeking benefits under the UIM portions of Slusher's policy. Subsequently, the estate filed an amended complaint seeking benefits under the UM portion of Slusher's policy, as well as UIM benefits. The estate then filed a motion for summary judgment for recovery of UIM benefits, which the trial court denied, finding that there was an issue of fact as to whether Napier was negligent in engaging the truck's parking brake before he left the truck. The court did not address the issue of UM or UIM benefits under Slusher's policy.
The estate then filed a motion for partial summary judgment seeking a ruling solely on the insurance coverage issue, including both UM and UIM benefits. The trial court granted the estate partial summary judgment , finding that Slusher was an insured under the UM/UIM policy provided by State Farm and that the exclusive remedy provision of the Workers' Compensation Act did not prevent Slusher's estate from recovering the State Farm policy benefits.
On remand, the parties entered an agreed stipulation of facts. Again, however, only the UM benefits were referenced. The trial court ordered damages totaling $50,000 for uninsured coverage. Neither party asked the trial court to make any additional findings as to the applicability of UIM coverage under these circumstances.
On appeal, State Farm argued Slusher's policy did not provide UM coverage to his estate because of the exclusive remedy under the Kentucky Workers' Compensation statutes. The court explained that the employer's exemption from liability extended to co-employees whose negligent acts within the scope of their employment caused the injury or death. State Farm argued that Napier's immunity under this section would also preclude recovery under the UM or UIM provisions of Slusher's State Farm policy.
The parties agreed that Slusher's death occurred during the course and scope of his employment and was a result of the negligent actions of co-employee Napier, acting in the scope of his employment, and using instrumentality owned by Slusher's employer. Furthermore, Slusher was clearly covered by and received benefits under the Workers' Compensation Act. As such, State Farm asserted that KRS 342.690(1) made the Workers' Compensation Act the exclusive remedy for Slusher's estate, and barred any action against either James Long Trucking or Napier. Since Napier could not be found liable for the injury, State Farm contended that the estate could never be “legally entitled to collect” damages from him. Consequently, State Farm argued that the estate was also barred from recovering benefits under the UM or UIM provisions of Slusher's policy.
The trial court found that the exclusivity provision of the workers compensation statutory scheme did not bar the way for an employee who sought underinsured motorist benefits that exceeded his workers compensation award, even when the tortfeasor was a co-employee. The appeals court recognized that many other jurisdictions had considered this matter and the majority had found that an employee was not entitled to uninsured motorist benefits under his or her own automobile insurance policy for injuries resulting from a co-employee's negligent operation of a motor vehicle, because an uninsured motorist carrier is liable only for the damages which an insured is “legally entitled to recover” from owners or operators of uninsured motor vehicles, and the workers compensation law grants immunity from suit to a co-employee for injuries compensable by workers' compensation benefits.
The court agreed with the trial court that the phrase “legally entitled to recover” was ambiguous when considered in the context of a statutory immunity from liability as provided by KRS 342.690(1), as it was well established that exclusionary or limiting language in policies of automobile insurance must be clear and unequivocal and such policy language was to be strictly construed against the insurance company and in favor of the extension of coverage. In general, when interpreting the policy language “legally entitled to recover,” the “essential facts” approach was the appropriate method of interpreting ambiguous policy language when an insured is not capable of obtaining a judgment against the tortfeasor. Pursuant to the essential facts approach, an insured must prove the fault of the uninsured motorist and the extent of damages caused by the uninsured motorist.
Applying the essential facts approach to this case, the court agreed with the trial court that the estate was entitled to recover UM or UIM benefits from State Farm as the parties had stipulated that it was Napier's negligence that caused the accident and also that Slusher's damages not only exceeded the workers compensation limits but were at least $50,000, the policy limits for either UM or UIM benefits under the State Farm policy. Having satisfied the two prongs of the essential facts approach, the court determined that recovery of UM or UIM benefits was appropriate. Further, when an insured purchases additional coverage such as UIM, there was a “reasonable expectation” that he would receive all the coverage he may reasonably expect to be provided according to the terms of the policy.
According to the court, the clear intent of the UIM statute was to allow an insured to purchase additional coverage so as to be fully compensated for damages when injured by the fault of another individual, and the inability of a tortfeasor to respond in damages for whatever reason is of no consequence. Thus, the court affirmed the circuit court judgment holding that the estate was entitled to recover UM or UIM benefits in addition to workers compensation benefits.