Underinsured Motorist Coverage and WC
May 16, 2016
The plaintiff seeks underinsured motorist coverage from her employer, the State of Delaware and her personal insurance carrier, GEICO for injuries sustained in the course of her employment in a motor vehicle accident. This case is Simpson v. State of Delaware, 2016 WL 425010.
Simpson was injured in an auto collision caused by Ricks. Ricks was insured by USAA with a policy limit of $15,000 per person. Simpson was driving a state-owned vehicle as authorized by virtue of her employment. All state-owned vehicle had uninsured/underinsured motorist (UM/UIM) coverage with limits of $25,000 per accident. Simpson also had a personal auto policy with GEICO and she had purchased UIM coverage.
Simpson did receive workers compensation benefits from the state and she also received the policy limits from the Ricks' policy. However due to her serious injuries, Simpson also requested UIM coverage under the state's auto policy. The state insurer, GEICO, denied coverage.
Simpson filed a lawsuit seeking UIM benefits. The State of Delaware responded that the WC benefits were the exclusive remedy for Simpson and that she was not legally entitled to recover UIM benefits.
The Superior Court of Delaware noted that it had to decide whether Simpson may pursue a UIM claim against the state for essentially the same injuries for which she received WC benefits in light of the exclusivity clause in the WC policy. The courts said that, in the case involving third party tortfeasors, the state WC law allows employees to recover against the tortfeasor when the third party is other than a natural person in the same employ Delaware courts have also allowed employees to collect both WC and UIM benefits in cases where the employee purchased his or her own personal UIM policy. However, the court pointed out, the issue presently before the court was whether state law precludes an employee's recovery of UIM benefits from a self-insured employer in addition to WC paid by the employer.
The court decided that the initial consideration here is whether the plaintiff's injury was even covered by the state's policy in the first place. The policy expressly lists as an exclusion bodily injury to any employee of the insured arising out of and in the course of employment by the insured. In addition, the court pointed out that the basic tenant of UM/UIM coverage is to insure that individuals have the ability to be compensated for their injuries beyond what may be available from a negligent tortfeasor's policy. For those that have access to WC, that is what is occurring by the benefits they receive. As long as the employee's injuries remain, WC will pay to compensate for the injury. So, in essence, WC is playing the same role that the UIM benefits would provide for an individual that has access to them.
In this context, the court found that the exclusivity provision makes sense. If not there, the injured party would in effect be compensated twice for the same injury. The court ruled that the phrase “exclusion of all rights and remedies” in the WC law prohibits the plaintiff from gaining access to the state's UM/UIM policy. As such, the summary judgment motion of the state is granted.
Editor's Note: The Superior Court of Delaware examines the exclusivity clause in the WC law and finds that the clause prohibits an injured employee from receiving both WC benefits and UIM benefits. To allow such a recovery would allow the injured person to be compensated twice for the same injury and this the court would not allow.