Pay me once, pay me twice, pay me thrice?
December 10, 2012
On November 15th the Supreme Court of Appeals of West Virginia issued the opinion of Jeffery Jenkins, et ux. v. City of Elkins, et al. (No. 11-1059). Factually, Mr. Jenkins was an employee of Bombardier Aerospace driving a company vehicle, within the course and scope of his employment, when he was struck by another vehicle owned by the City of Elkins and driven by its employee Stephen Stanton, likewise in the course and scope of his employment. Because Mr. Jenkins was on the job at the time, he received workers compensation benefits for his injuries. Mr. Jenkins sought to pursue a claim against the City of Elkins and Mr. Stanton. However, the City informed Mr. Jenkins that because he was covered by workers’ compensation, the City had statutory immunity under W. Va. Code § 29-12A-1 et seq. (aka the “Tort Reform Act”). The City’s insurer, National Union, likewise asserted its immunity as the City’s immunity was preserved in a provision of National Union’s policy. This immunity has been previously recognized in the longstanding holding of O’Dell v. Town of Gauley Bridge, 188 W. Va. 596, 425 S.E.2d 551 (1992). Suit was filed against the City and Mr. Stanton. Mr. Jenkins also filed suit against his employer’s insurer (Greenwich), as well as his personal insurer (Westfield), seeking either Under or Uninsured (UM/UIM) coverage. Greenwich and Westfield asserted exclusions of coverage under their policies because of a “governmental vehicle” exclusion. Greenwich also asserted that Jenkins was not entitled to the Medical Payments coverage under his policy based upon an exclusion for injuries arising out of and in the course of employment.
As there were no facts in dispute, the case was briefed for summary judgment before the Circuit Court of Harrison County. Judge Bedell found in favor of the City and National Union’s assertion of immunity. He found that the “governmental vehicle exclusion” as asserted by Greenwich and Westfield, were valid exclusions, but only for amounts over and above the State’s mandatory minimum coverage ($20K/$40K/$10K). Finally, he found that Greenwich’s “workers compensation” exclusion in its medical payments coverage section was valid. Mr. Jenkins appealed from this ruling.
After review by the Supreme Court of West Virginia, the Court significantly upheld the immunity of the City (and thus its insurer) and reaffirmed its longstanding holding in O’Dell (Syl pt. 1); that if an individual is injured by a tortfeasor who is immune from liability, underinsured motorist coverage is triggered for the limits in place (Syl pt. 2); that the “government owned vehicle” exclusion is against the public policy of this State and is unenforceable; and, of most significance to those involved with workers compensation, held in Syllabus point 5:
5. An employer’s insurance policy that excludes coverage for auto medical payment benefits to an employee who sustained an injury arising out of and in the course of employment is only enforceable to exclude medical payment coverage for that part of a claim that exceeds the amount subrogated by the employer’s workers’ compensation carrier. (Emphasis added.)
The Court, in reaching this holding, noted that it has previously held that:
“an employee who receives workers’ compensation benefits for injuries that result from a motor vehicle collision with a third-party which occurs in the course and scope of the employee’s employment is entitled to assert, against his/her employer’s motor vehicle insurance carrier, a claim for underinsured motorist benefits, where the employee’s employer has in effect motor vehicle insurance providing underinsured motorist coverage and where the employee’s recovery against the third-party activates such underinsurance coverage.” Syl. pt. 4, Henry v. Benyo, 203 W. Va. 172, 506 S.E.2d 615 (1998).
This Court looked at Greenwich’s medical payment exclusion as essentially being a workers’ compensation exclusion. The Court noted that a majority of courts have upheld similar exclusions, but that “some courts have invalidated this exclusion when a workers compensation insurer successfully asserts its subrogation on third-party proceeds.” [Citation omitted]. Therefore, our Court determined, both in reliance on its prior holding in Benyo and for public policy considerations, an employee should have equal application to the recovery of medical payment benefits under the employer’s policy. Statutory subrogation rights for workers’ compensation payments are still in place for employers’ workers’ compensation insurers as provided under W. Va. Code § 23-2A-1(b)(1), but as for the employers’ auto insurers, they can now only exclude medical payments coverage under their policies for the amount that exceeds the amount subrogated by the employers’ workers’ compensation carrier. Additionally, it must be remembered that W. Va. Code § 23-2A-1(e), in pertinent part, advises that the statutory subrogation described in this preceding section, “does not apply to uninsured and underinsured motorist coverage or any other insurance coverage purchased by the injured worker or on behalf of the injured worker.”(Emphasis added) Medical payments insurance is just such a coverage. This creates what appears to be an inconsistency which was noted by Justice Benjamin, of the Supreme Court of Appeals of West Virginia, in his dissent. He noted his displeasure with majority’s ruling and suggested that the majority misunderstood and misquoted Benyo by stating:
“[t]he actual effect of the law created in the majority opinion is that the plaintiff will receive a windfall by virtue of having his or her medical bills paid more than once. For example, in the instant case, Mr. Jenkins has had his medical bills paid by the workers' compensation provider. Also, he will be able to collect uninsured benefits from his employer's auto policy which sum will include medical costs. Pursuant to W. Va. Code § 23–2A–1(e) (2009), the workers' compensation provider's statutory subrogation right does not apply to the uninsured coverage so that Mr. Jenkins will receive his uninsured benefits free and clear. Finally, as a result of the majority opinion, Mr. Jenkins will receive auto medical payment benefits from his employer's policy despite the fact that his medical bills have already been paid by the workers' compensation provider. It is unclear under W. Va.Code § 23–2A–1(e), whether the workers' compensation provider will have subrogation rights against these auto medical payment benefits.” (Emphasis added)
Finally, Justice Benjamin stated that this ruling “potentially will have [Mr. Jenkin’s] medical bills paid three times over. Such a result is inexplicable to me and has no basis in law.”
The ramifications of any court’s ruling that eliminates an insurers exclusions and/or expands coverages, typically results in an insurers reevaluating the premium received for the risks that are written. Medical payments coverage is usually a rather inexpensive addition to coverage under personal and commercial policies. It is a no-fault insurance that covers medical bills related to an occurrence (usually for a fixed period of time). Employers who maintain medical payments coverage on their commercial insurance policies may want to talk to their commercial agents about their limits of coverage. Worker’s compensation insurers will need to give additional scrutiny to subrogation claims involving employees who are involved in motor vehicle accidents, especially so when the employers Under, Uninsured (UM/UIM) or Medical Payments coverage comes into play as, at least according to Justice Benjamin’s dissent, there may no longer be a right of subrogation by the workers’ compensation carrier.