The Supreme Court of North Carolina has determined that an insurer that paid death benefits on behalf of an employer to the family of a South Carolina-based driver who was killed in a car accident in his home state can't recover the proceeds from a wrongful death lawsuit, because South Carolina prohibits such a recovery. The case is Walker v. K&W Cafeterias, No. 99PA19, 2020 N.C. Lexis 692 (Aug. 14, 2020).
In May 2012, Robert Lee Walker was killed in a work-related accident, while working for K&W Cafeterias. Walker lived in South Carolina and the company he worked for, K&W Cafeterias, was based in North Carolina. After his death, his widow filed a workers' compensation claim with the North Carolina Industrial Commission for medical expenses and death benefits. She was awarded $333,763.
In 2014 the widow filed a new, separate, civil action for wrongful death in South Carolina. The suit sought damages from the driver of the vehicle at-fault in the accident that resulted in Walker's death. In 2016, she was awarded $962,500 in a settlement, which the workers' compensation insurer attempted to access as a part of a lien.
In 2018, the North Carolina Court of Appeals affirmed a Workers' Compensation Commission decision and found that the uninsured/underinsured motorists received through the settlement of the wrongful death lawsuit filed in South Carolina were subject to the subrogation lien under North Carolina law.
The Supreme Court of North Carolina disagreed, deciding that because the uninsured motorist policy that covered the vehicle that Walker was driving when he was killed, South Carolina law applies in this situation, and South Carolina bars subrogation of this type of proceeds. The vehicle was registered, garaged, and driven in South Carolina.
Under South Carolina uninsured motorists law, an insurer is barred from seeking to be reimbursed with UIM proceeds for benefits it has previously paid.
The court stated that the proceeds the plaintiff recovered from the wrongful death suit cannot be used to satisfy the workers' compensation lien of the defendant under North Carolina law.
Editors Note: Most personal and commercial auto policies include a provision that stipulates what state law should apply if and when an accident occurs. Although the accident in this case happened in South Carolina, the court decided that North Carolina law applies.