| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
This site is possible because of the following site sponsors. Please support them with your business.
|
| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
|
|
This site is possible because of the following site sponsors. Please support them with your business.
|
You can search the entire site. or go to the recent opinions, or the chronological or subject indices. State Farm Mutual Automobile Co. v. Wilson (12/31/2008) sp-6331
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| STATE FARM MUTUAL AUTOMOBILE | ) |
| INSURANCE COMPANY, | ) Supreme Court No. S- 12779 |
| ) | |
| Appellant, | ) Superior Court No. 3AN-06-12145 CI |
| ) | |
| v. | ) O P I N I O N |
| ) | |
| BRENDA A. WILSON, in her capacity | ) No. 6331 December 31, 2008 |
| as Special Administrator of the Estate of | ) |
| William D. Wilson, | ) |
| ) | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Craig F. Stowers, Judge.
Appearances: David S. Carter, Hughes,
Pfiffner, Gorski, Seedorf & Odsen, LLC,
Anchorage, for Appellant. Howard J. Meyer,
Jr., Michael W. Flanigan, Walther & Flanigan,
Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Carpeneti, and Winfree, Justices.
MATTHEWS, Justice.
At issue in this case is the application of a statute
that provides that underinsured motorist (UIM) coverage is excess
to and may not duplicate payments made under liability or medical
payment policies or workers compensation benefits. The statute,
AS 28.20.445(b), provides:
An amount payable under the uninsured
and underinsured motorist coverage shall be
excess to an amount payable under automobile
bodily injury, death, or medical payments
coverage, or as workers compensation benefits
and may not duplicate amounts paid or payable
under valid and collectible automobile bodily
injury, death, or medical payments coverage,
or as workers compensation benefits.
Facts
William Wilson was injured in an automobile accident
while in the course of his employment with Austin Industrial
Company. At the time of the accident Wilson was a passenger in
an automobile driven by Lisa Grubb. Grubb was also an employee
of Austin and was also on the job when the accident occurred.
Grubb lost control of her vehicle and crashed while attempting to
avoid a head-on collision with an automobile driven by Jo Lynn
Sauve. Sauve had driven into Grubbs lane of travel to avoid
hitting a moose.
A subsequent arbitration proceeding determined that
Wilson suffered $210,000 in damages, consisting of lost wages of
$75,000 and general damages of $135,000. The arbitrators also
determined that Sauve bore responsibility for sixty percent of
the total fault of the accident. Grubbs responsibility was forty
percent of the total fault. These damages and percentages are
accepted as controlling for the purposes of this case.
Prior to the arbitration, Wilson sued Sauve. Sauve had
liability insurance of $50,000. Wilson settled with Sauve for
this amount plus interest, fees, and costs. Wilson could not sue
Grubb because as a co-employee she had the same immunity from
suit as their mutual employer, Austin.1 As a trade-off for its
immunity from suit, Austin, through its workers compensation
insurer, was responsible for the payment of workers compensation
benefits. Austin discharged this responsibility by paying Wilson
$52,000 in benefits.2 It is undisputed that at least $44,000 of
this sum was for lost wages. The remaining $8,000 was for an
unallocated mix of anticipated future losses, including lost
wages.
Grubb had three personal automobile policies issued by
State Farm. Each had UIM provisions with limits of $50,000.
These provisions covered Wilson as an additional insured because
he was occupying a vehicle driven by Grubb at the time of the
accident. Under the UIM provisions, State Farm agreed to pay an
insured, such as Wilson, damages for injuries the insured would
be entitled to collect from the driver of an underinsured
vehicle, such as Sauve.
Wilson, as might be expected, claimed that Sauve was
underinsured and sought damages from State Farm. Sauves
liability and Wilsons damages were disputed. These disputes were
arbitrated. The arbitrators decided, as indicated above, that
Sauve was sixty percent responsible for the accident and that
Wilson suffered lost wages of $75,000 and general damages of
$135,000, for total damages of $210,000.3
After the arbitration decision, Wilsons personal
representative4 (Wilson) and State Farm disagreed with respect to
how the prior payment of $50,000 made by Sauves insurer and the
$52,000 in workers compensation benefits should be handled in
light of AS 28.20.445(b). Wilson contended that State Farm
should pay $76,000.5 She reasoned that Sauves liability was
$126,000 (sixty percent of the total damages of $210,000). From
this she would have deducted the $50,000 paid by Sauves insurer,
leaving $76,000 due from State Farm under its UIM policies.
State Farm initially contended that it should pay
$31,000, but later decided to pay $54,000. It argued that the
lost wage and general damage components of Wilsons damages should
be treated separately.
At first State Farm contended that Sauves liability
before deductions should be $45,000 for past wage loss (sixty
percent of $75,000) plus $81,000 for general damages (sixty
percent of $135,000). State Farm contended that the $50,000 paid
by Sauves insurer should be deducted from $81,000, leaving
$31,000 to be paid under the UIM policies as general damages. As
to lost wages, State Farm initially contended that the $52,000
received as workers compensation benefits should be deducted from
the amount of lost wages that would otherwise be owed by Sauve
($45,000) resulting in a negative amount and therefore leaving
nothing owed by State Farm for lost wages.
Later State Farm decided to pay $23,000 for lost wages.
It arrived at this amount by deducting from Wilsons total wage
loss ($75,000) the compensation benefits he had received
($52,000) without making any reduction for the fact that Sauve
was only sixty percent at fault. Thus State Farm ultimately
agreed to pay, and paid, $31,000 for general damages and $23,000
for lost wages, for a total of $54,000.6
Proceedings
Wilson filed suit against State Farm seeking to
enforce the arbitration award with a deduction only for the
$50,000 paid by Sauves insurer. After State Farm answered it
moved for summary judgment, claiming that it owed nothing in
addition to the payments it had already made. Wilson opposed
State Farms motion and moved for summary judgment on her claim.
After further replies by both parties, the superior court granted
Wilsons motion and denied State Farms. The court stated:
Pursuant to Alaskas laws applicable to
interpretation of insurance policies, the UIM
coverage under the applicable State Farm
policy provides for plaintiff to recover 100%
of the damages allocated to the underinsured
driver by the Arbitration Panel in this
matter. From that sum should then be
deducted the policy limits under the
tortfeasors liability policy without any
further reduction for amounts received by Mr.
Wilson in workers compensation benefits,
where as here, the reduction of Wilsons
damages attributable to the fault of his
employer exceeds the amount of workers
compensation benefits that he received.
Further, this result is consistent with
AS 09.17.080(c), AS 23.30.015(g) and AS
28.20.445(b), when those statutes are
harmonized.
The court denied State Farms request for
reconsideration, and State Farm now appeals.
Contentions on Appeal
State Farms general position on appeal is that the
position it ultimately took following the arbitration award that
is described above is legally correct. In particular, it argues
that the general damage and lost wage components of the
arbitrators decision should be treated separately. As to general
damages, it would reduce the award of $135,000 to $81,000 to
reflect Sauves sixty percent share of fault, and then deduct
$50,000 to reflect the payment made by Sauves insurer, leaving
$31,000 due under the UIM policies. As to lost wages, State Farm
would not reduce the amount of $75,000 to reflect Sauves share of
fault, but would deduct the compensation benefits of $52,000 from
$75,000, leaving $23,000 due from State Farm. State Farm
contends that Wilson is attempting to double recover $22,000 in
lost wages the difference between the $76,000 that Wilson claims
was due and the $54,000 that State Farm paid. State Farm claims
that the $22,000 in dispute is prohibited by the excess to and
may not duplicate language of AS 28.20.445(b).
Wilson contends that the damages she recovered should
not be parsed. She notes that the language of subsection
.445(b), and the State Farm policies, refer only to amount or
amounts payable or paid, rather than to elements of loss as do
some policies with similar purposes. Her basic contention is
that the amount of damages that were reduced because of Grubbs
fault for which Austin is responsible under respondeat superior
principles should be compared with the benefits paid by Austin.
Because the benefits do not exceed the reductions, there is no
duplication of benefits and no adjustments are called for under
subsection .445(b).7
As noted earlier Wilson did not seek medical expense
damages at the arbitration. State Farm does not argue that it is
entitled to a credit for the workers compensation insurers
payment of Wilsons medical expenses. The parties reciprocal
conduct reflects at least an implicit agreement that the workers
compensation insurers payment of Wilsons medical expenses
extinguished that aspect of Wilsons claim without impact on the
current dispute. We will follow the parties convention and
ignore whether or how Wilsons medical expenses and the workers
compensation insurers payment of those expenses might affect our
resolution of the parties dispute.
Discussion
Purposes of UIM Coverage Alaska Statutes and Cases
The idea underlying underinsured motorist coverage is
that the insured purchases coverage to benefit herself in case
she is injured by a motorist whose liability insurance is
insufficient to cover her injuries. UIM coverage thus is meant
to stand as supplemental liability insurance covering an
underinsured motorist for the benefit of the insured: The basic
public policy behind mandatory uninsured or underinsured motorist
schemes in various states is generally to ensure that the insured
recovers the damages he or she would have been able to recover if
the insured motorist had maintained a (sufficient) policy of
liability insurance.8
Although UIM coverage seems simple in concept, a number
of difficulties in application have arisen. Initially, our
statutes permitted a definition of underinsured motor vehicle
that compared the liability coverage for the vehicle in question
with the UIM limits available to the insured, rather than with
her total damages.9 Further, under the former statutory system,
it was thought that amounts paid from other sources could be
deducted from UIM limits, regardless of the damages suffered by
an insured.10 In 1990 the statutes were amended, changing this so-
called reduction system to one in which UIM coverage adds to
available coverage from other sources.11
The new statutory system, referred to as an excess
approach, still sought to ensure that UIM coverage was secondary
to other sources of coverage and that it not be available to make
duplicative payments. This may be seen by comparing the new
version of AS 28.20.445(b) with the subsection it replaced. The
current version of AS 28.20.445(b) provides:
An amount payable under the uninsured
and underinsured motorist coverage shall be
excess to an amount payable under automobile
bodily injury, death, or medical payments
coverage, or as workers compensation benefits
and may not duplicate amounts paid or payable
under valid and collectible automobile bodily
injury, death, or medical payments coverage,
or as workers compensation benefits.
(Emphasis added.) Subsection .445(b) formerly provided, in
accordance with the reduction approach:
Amounts payable under the uninsured
motorists and underinsured motorists coverage
may be reduced by
(1) amounts paid or to be paid
under any workers compensation law;
(2) amounts paid or payable under
valid and collectible automobile medical
payments insurance or bodily injury or death
liability insurance; and
(3) amounts paid by or on behalf
of the uninsured or underinsured motorist.
(Emphasis added.) Reflecting in part the shift in statutory
purpose from a reduction approach to an excess approach, the UIM
policies in this case contain clauses that may reflect both
approaches.12
In Victor v. State Farm Fire & Casualty Co.13 we were
presented with the question of whether a reduction clause, which
was nearly identical to the clause in the current policies quoted
in note 12, required a reduction from policy limits or from the
total damages suffered by the insured. We held that the phrase
any amount payable referred to the total damages suffered by the
insured rather than to the policy limits. We reasoned that the
underlying purpose of reduction clauses . . . is to prevent
double recoveries and that [t]his purpose is furthered by our
interpretation of the reduction clause and would not be furthered
by an interpretation requiring a reduction from policy limits
where total damages exceed policy limits.14
In Curran v. Progressive Northwestern Insurance Co.15
we summarized the purpose of UIM coverage under the current
system in contrast to the former reduction approach:
In 1990 the legislature changed Alaskas
UIM statutes from a reduction approach to an
excess approach. Under the reduction
approach, UIM coverage protected an insured
person only to the extent that the UIM limits
exceeded the limits of available liability
coverage. This approach attempted to put the
insured in the same position he or she would
have occupied had the tortfeasors liability
insurance limits been the same as the
underinsured motorist coverage limits
purchased by the insured. It reduced an
insureds amount of UIM protection by
subtracting from the UIM policy limits any
amount paid or payable to the insured from
other sources, including liability coverage.
In contrast, under Alaskas current
excess approach, an underinsured driver is
one whose liability limits are insufficient
to cover the injured persons actual damages.
Under this approach, UIM coverage
is premised upon the idea
that the injured person
is entitled to recover
under his or her own
underinsured motorist
coverage to the extent
that the tortfeasors
liability insurance
coverage is insufficient
to compensate the injured
person fully for his or
her loss, subject only to
the limits of the
underinsured motorist
coverage.
Excess coverage thus strives to provide
additional coverage, as needed to fully
compensate injured motorists, after available
liability coverage has been completely
exhausted.[16]
The Intuitive Result
In light of the purposes of Alaskas UIM system, how
should this case be decided? This question lends itself to an
intuitive answer that can serve as a check on the more detailed
explanation that we offer later in this opinion.
Wilson has received $102,000. The UIM policies stand
for additional liability insurance for Sauve of $150,000. Sauve,
according to the arbitrators, is liable for $126,000 (.6 x
$210,000). Because Sauve has already paid $50,000, which she
should get credit for (the liability policy settlement), she
should be liable for another $76,000. This is the amount that
should be due under the UIM policies, which conceptually provide
additional liability insurance for Sauve that Wilson, as an
insured, may draw upon.
Requiring State Farm to pay another $76,000 under its
UIM policies is not a double recovery for Wilson. Wilson will
receive $50,000 plus $76,000 due to Sauves responsibility, and
another $52,000 from his employers workers compensation insurer.
This adds up to $178,000. Wilson will not be doubly compensated
because his loss was $210,000.
Subsection .445(b) Considered Aggregate Damages
Alaska Statute 28.20.445(b) contains two imperatives.
UIM payments are to be excess to the other benefits specified in
the statute and may not duplicate the other benefits. Excess in
this context seems to mean that benefits payable from the other
sources designated in the statute must be taken into account when
calculating the amount due under UIM coverage.17 The requirement
that UIM payments may not duplicate other benefits paid or
payable seems to be a mandate that UIM coverage may not be called
upon to pay for damages that have been or will be fully paid for
from the other designated sources.
These concepts should be easy enough to apply in cases
where the underinsured motorist is the only tortfeasor and he is
fully responsible for the accident. But complexities arise when
there are two tortfeasors who share responsibility for the
accident, and one is underinsured and the other settles with the
insured. Moreover, additional complexities are at least
potentially present where, as here, one of the tortfeasors is
immune from liability under the Workers Compensation Act. In the
discussion that follows, we assume that compensatory damages are
treated in the aggregate rather than separately separate
treatment would add a further complexity, and we conclude in a
later section of this opinion that it is not required. We also
assume that only the anti-duplication requirement of .445(b) is
involved because the parties do not suggest that benefits from
any of the other sources designated in the statute remain
payable.
How We Determine a Duplicate Recovery.
Under subsection .445(b) automobile bodily injury
coverage and workers compensation benefits are parallel in the
sense that UIM coverage may not duplicate amounts paid under
either of these alternative sources of benefits. To simplify our
analysis, it seems useful to consider how .445(b) would be
applied if Wilson and Grubb were not in the course of their
employment at the time of the accident, and Grubb settled with
Wilson for $52,000 from her liability coverage before the
arbitration decision. How should this $52,000 payment be
treated, assuming that all the other facts are unchanged?
To determine if there is a duplicate recovery, it is
useful to create separate columns for each of the tortfeasors and
for the insured.18 Each tortfeasors share of the insureds damages
should be entered at the top of each tortfeasors column, and the
insureds total damages should be entered at the top of her
column. Then the credits that each tortfeasor is entitled to
should be entered in the respective columns of each. Here the
credits are $50,000 for the liability insurance settlement made
for Sauve and $52,000 for the liability insurance settlement made
for Grubb. In the insureds column the total of the credits
should be entered. Then the credits should be subtracted from
the damages figure in each column.
The result in the underinsured motorists column is the
amount due unless there is a double recovery. The result in the
insureds column is the additional amount that she can receive
without obtaining a double recovery. In our example the
additional amount that the insured can receive without obtaining
a double recovery is $108,000. Because this is greater than the
amount tentatively due from the underinsured motorist, it can be
readily seen that there is no double recovery. The result in the
column of the settling tortfeasor is $32,000. Under our
hypothetical this amount is irrelevant. Grubb would not be
required to pay more; she has made what turned out for her to be
a good settlement, and the settlement controls.
But consider what would happen if Grubb had settled
with Wilson for $100,000 from her liability insurance and the
facts were otherwise the same.19 In this case the result in
Grubbs underpayment column would be a negative in other words, a
$16,000 overpayment. The result in the insureds column would be
$60,000. Because $60,000 is less than $76,000, Wilson may not
receive more than an additional $60,000 from Sauves UIM coverage
without violating the double recovery prohibition of subsection
.445(b). The negative $16,000 result in Grubbs column does not,
of course, mean that her liability insurer is entitled to a
$16,000 refund on the settlement. The settlement has turned out
to be somewhat unfavorable from her liability insurers
standpoint, but again, it controls.20
This discussion confirms that there would be no
duplicate recovery if Grubbs liability insurer, rather than her
employers workers compensation carrier, made a $52,000 settlement
with Wilson. The question becomes whether a different result
should follow given that the actual $52,000 settlement consisted
of workers compensation benefits.
Workers compensation insurers generally have a right to
recover benefits that they have paid when an injured worker
obtains a recovery in an action against a third party who is
responsible for the workers injury.21 But if the employer is
partly responsible for the injury, the amount that would
otherwise be due the employer from the third-party action must be
reduced by an amount equal to what the employers share of damages
would have been if the employer were not immune from suit.22 Here
the reduction would be $84,000, calculated by multiplying Wilsons
total damages by Grubbs percentage of fault. Because this
exceeds the $52,000 actually paid in workers compensation
benefits, no recovery would be available to Austins workers
compensation carrier.
The result in this case is therefore exactly the same
as in the hypothetical situation discussed earlier, in which we
assumed that Grubbs liability insurer settled with Wilson for
$52,000. This example verifies the accuracy of the superior
courts observation that where . . . the reduction of Wilsons
damages attributable to the fault of his employer exceeds the
amount of workers compensation benefits that he received, no
reduction for workers compensation benefits under subsection .445
(b) is required.23
Should the Damage Elements Be Considered Separately?
The discussion so far assumes that the damage elements
of Wilsons claim should be considered in the aggregate rather
than separately. When they are considered in the aggregate,
.445(b), as we have shown, is not violated. But when they are
considered separately a different picture emerges.
If separate calculations are made for Wilsons wage loss
and general damages under the method that we have used, and
assuming that all of the $52,000 workers compensation settlement
was for wage loss and that all of the $50,000 paid by Sauves
insurance was for general damages, then the maximum additional
amount that Wilson could receive for wage loss without receiving
a double recovery would be $23,000.24
A second calculation would have to be made for general
damages. The upshot of that calculation would be that although
Wilson could receive an additional $85,000 for general damages
without receiving a double recovery, he can actually receive only
an additional $31,000 in UIM proceeds because Sauves maximum
liability for general damages is $81,000 and $50,000 on account
of that liability that has already been paid.25 The total
additional amount Wilson could receive using separate
calculations would be $54,000 ($23,000 + $31,000), in contrast to
the total additional recovery of $76,000 when damage elements are
considered in the aggregate.26
The question is whether subsection .445(b) requires
that damages be separated into their component parts when
determining whether there is a double recovery. A leading text,
Larsons Workers Compensation Law, has examined the general
question of double recoveries and advocates considering damages
in the aggregate:
The legislative purpose of helping the
injured person is subject, however, to one
crucial limitation: there must not be double
recovery. The problem thus narrows down to
the question of what is meant by double
recovery. Double recovery can mean two
different things, and it is a failure to
recognize this primary fact that accounts for
much of the confusion that has been evident
in this field. It can mean recovering from
two sources a combined amount that is greater
than the plaintiffs actual total damages.
Or, it can mean getting recoveries from two
sources, whether or not the aggregate amount
equals or exceeds actual damages.[27]
After discussing the two types of double recovery, Larsons
concludes that the aggregate approach is clearly preferable on
policy grounds:
We are now ready to ask: is the second sort
of double recovery obnoxious to the policies
of compensation acts or uninsured motorist
acts, or to public policy in general? The
question almost answers itself. There can be
no conceivable policy objection to allowing
an injured person to retain two recoveries
that, when combined, still do not make him or
her whole.[28]
We agree with Larsons policy judgment and believe that
an insureds damages should be considered in the aggregate under
subsection .445(b) unless there are compelling reasons to do
otherwise.
State Farm argues that considering damages separately is
required by AS 09.17.040(a). This statute provides:
(a) In every case where damages
for personal injury are awarded by the court
or jury, the verdict shall be itemized
between economic loss and noneconomic loss,
if any, as follows: (1) past economic loss;
(2) past noneconomic loss; (3) future
economic loss; (4) future noneconomic loss;
and (5) punitive damages.
But State Farm does not connect the requirement of itemization in
AS 09.17.040(a) with its contention that damages may not be
treated in the aggregate under subsection .445(b).
We do not think that a connection exists. The
itemization required by AS 09.17.040(a) is primarily designed to
ensure that future losses are identified so that they can be
reduced to present value. Reduction to present value is the
subject of subsections (b) and (c) of .040. Another reason to
itemize is apparent from subsections (d) through (g). These
subsections are concerned with providing for the payment of
future damages, at the option of an injured party, through
periodic payments. These purposes bear little or no relationship
to the anti-duplicate recovery purpose of .445(b).
The purpose of .445(b) would not be furthered by making
separate calculations for each component of damages. This is
especially true when the general purposes of the 1990 reforms to
Alaskas UIM law are considered. Adopting the separate component
method advocated by State Farm would amount to a partial
reintroduction of the reduction method that the legislature
intended to replace with the excess approach. The objective of
the excess approach, as we have seen, was to maximize UIM
coverage, reducing policy limits only as necessary to avoid a
double recovery.29 State Farms method would result in greater
reductions than necessary to achieve this goal. As we indicated
in Victor, where the underlying purpose of a provision is to
prevent double recoveries, a method that achieves no more than
that is to be preferred to one that cuts more deeply into an
insureds recovery.30
For the reasons stated, the judgment of the superior
court is AFFIRMED.
_______________________________
1 AS 23.30.055.
2 All figures used in this opinion have been rounded to
the nearest thousand.
3 Medical expenses were not submitted as part of Wilsons
claim.
4 William Wilson died while arbitration was pending, and
his widow, Brenda Wilson, continued to maintain his claim on
behalf of his estate.
5 This and all amounts hereafter mentioned are principal
sums. Wilson also sought add-ons of interest, fees, and costs.
6 Just as Wilson ignored medical expenses when presenting
his damages at the arbitration, State Farm ignored the workers
compensation insurers payment of Wilsons medical expenses when
determining the amount owed to Wilson.
7 Wilson also makes some very complicated arguments
concerning the interaction of amendments to AS 09.17.080(c) and
AS 23.30.015(g), passed in 1997 (relating to reducing an
employers third-party claim by the employers share of fault),
with subsection .445(b). Insofar as these arguments suggest that
the 1997 amendments changed the meaning of subsection .445(b),
which was enacted in 1990, they are rejected.
8 12 Couch on Insurance 171:2, at 171-7 (2006).
9 Former AS 28.20.445(h) defined underinsured motor
vehicle as a vehicle with liability coverage for bodily injury in
an amount that
(1) is less than the limit for . . .
underinsured motorists coverage under the
insureds policy; or
(2) has been reduced by payments to
persons other than an insured, injured in an
accident, to less than the limit for . . .
underinsured motorists coverage under the
insureds policy.
See Progressive Ins. Co. v. Simmons, 953 P.2d 510, 513 (Alaska
1998).
10 Id. at 514. But see Victor v. State Farm Fire & Cas.
Co., 908 P.2d 1043 (Alaska 1996), discussed infra p. 10.
11 Simmons, 953 P.2d at 514. In Simmons we quoted the
following example given by Representative Donley, the chief
sponsor of the 1990 amendments:
[T]he bill is aimed at underinsured or
uninsured automobile insurance. The consumer
thinks they are buying a certain amount of
insurance coverage, for example $100,000. In
fact, what they are buying is protection up
to $100,000. If they were hit by someone
with $25,000 insurance, their own insurance
company would only pay $75,000. Most people
dont realize this when they purchase
insurance. [The bill] is an attempt to
better compensate consumers for their actual
damages.
Id.
12 The following clause, applicable only to uninsured, not
underinsured, motor vehicles, appears to take a reduction
approach:
2. If the damages are caused by an
uninsured motor vehicle, any amount
payable under this coverage shall be
reduced by any amount paid or payable to
or for the insured by or for any person
or organization who is or may be held
legally liable for bodily injury to the
insured.
The excess approach is reflected by a clause that is similar to
current AS 28.20.445(b):
1. Any amount payable under these coverages
for bodily injury shall be excess over
and shall not duplicate any amounts paid
or payable to or for the insured under:
a. the liability
coverage;
b. the medical payments
coverage;
c. the death,
dismemberment and
loss of sight
coverage;
d. any workers
compensation law.
13 908 P.2d 1043 (Alaska 1996).
14 Id. at 1046.
15 29 P.3d 829, 832 (Alaska 2001).
16 Id. (citations omitted) (quoting Simmons, 953 P.2d at
514, 517 n.6).
17 Excess coverage . . . strives to provide additional
coverage, as needed to fully compensate injured motorists, after
available liability coverage has been completely exhausted.
Curran, 29 P.3d at 832. We recently re-affirmed this
understanding of UIM coverage in Sidney v. Allstate Ins. Co., 187
P.3d 443 (Alaska 2008), citing the above explanation from Curran
to support our finding that [i]t would be unreasonable to
conclude that [the insured] incurred damages of $118,432, but
that upon exhausting $50,000 policy limits she was entitled to a
UIM award that failed to reflect her receipt of the underlying
benefits. It would also run counter to Alaskas excess approach
to UIM coverage. Sidney, 187 P.3d at 450.
18 For ease of understanding, the three columns are set
out here:
Underinsured Motorist
(Sauve)
Settling Tortfeasor
(Grubb)
Insured
(Wilson)
Share of damages
$126,000
$84,000
Total damages $210,000
Credits
liability insurance payment $50,000
liability insurance payment $52,000
Total credits $102,000
Result: underpayment
tentative amount due
$76,000
$32,000
Result:
amount that can be received without double recovery
$108,000
19 In that event, the three columns would look like this:
Underinsured Motorist
(Sauve)
Settling Tortfeasor
(Grubb)
Insured
(Wilson)
Share of damages
$126,000
$84,000
Total damages $210,000
Credits
liability insurance payment $50,000
liability insurance payment $100,000
Total credits $150,000
Result: underpayment
tentative amount due $76,000
-$16,000
Result:
amount that can be received without double recovery
$60,000
20 This method of calculating a duplicate recovery draws
on the method suggested by Justice Eastaugh in his dissent in
Petrolane Inc. v. Robles. 154 P.3d 1014, 1030-32 (Alaska 2007).
The issue in Petrolane was whether a duplicate recovery was
permissible under Alaskas several liability system when a
plaintiff settles with one tortfeasor and later obtains a
judgment against another, and where the amount of the settlement
exceeds the settling tortfeasors share of damages as ultimately
determined by the verdict. The court held that a duplicate
recovery was permissible and therefore had no occasion to explore
how to calculate a duplicate recovery. Justice Eastaugh
disagreed that a duplicate recovery should be allowed and
explained how a duplication should be calculated. Our use of
Justice Eastaughs method does not indicate backtracking on the
result in Petrolane, which this court unanimously reaffirmed in
Diggins v. Jackson, 164 P.3d 647 (Alaska 2007). But the
legislature in enacting subsection .445(b) has mandated that UIM
coverage may not be used to make duplicate payments and thus a
method for determining duplication is needed. For this purpose
the court finds that an adaptation of the method suggested by
Justice Eastaugh in his Petrolane dissent is appropriate.
21 See AS 23.30.015.
22 AS 23.30.015(g) provides:
If the employee or the employees
representative recovers damages from the
third person, the employee or representative
shall promptly pay to the employer the total
amounts paid by the employer under
(e)(1)(A)-(C) of this section insofar as the
recovery is sufficient after deducting all
litigation costs and expenses. Any excess
recovery by the employee or representative
shall be credited against any amount payable
by the employer thereafter. If the employer
is allocated a percentage of fault under AS
09.17.080, the amount due the employer under
this subsection shall be reduced by an amount
equal to the employers equitable share of
damages assessed under AS 09.17.080(c).
The underlined language was added by amendment in 1997. Ch. 26
36 SLA 1997.
23 What if the workers compensation carrier had settled
with Wilson for $100,000? After the $84,000 reduction required
by AS 23.30.015(g), the carrier would be entitled to recover
$16,000 from the proceeds of Wilsons third-party action against
Sauve. Wilsons credits would thus be reduced from $150,000 to
$134,000, and the maximum additional amount that Wilson could
recover from the underinsured motorist without receiving a double
recovery would be $76,000. Because this equals the tentative
amount due in Sauves column, $76,000 would be the amount payable
under the UIM policies. The three columns would look like this:
Underinsured Motorist
(Sauve)
Settling W/C Insurer
(Austin/Grubb)
Insured
(Wilson)
Share of damages
$126,000
$84,000
$210,000
Credits
liability insurance payment: $50,000
W/C settlement $100,000
- $16,000 recovery from insured:
$84,000
$150,000
- $16,000 to
W/C carrier:
$134,000
Result: underpayment
tentative amount due
$76,000
$0
Result:
amount that can be received without double recovery
$76,000
24 The three-column calculations explaining this
conclusion are set out below:
Lost Wages
Underinsured Motorist
(Sauve)
Settling W/C Insurer (Austin/Grubb)
Insured
(Wilson)
Share of wage loss damages
$45,000
$30,000
$75,000
Credits
no credits
$52,000
$52,000
Result:
underpayment
tentative amount due
$45,000
- $22,000*
Result:
amount that can be received without double recovery $23,000
*The parties have agreed that the workers compensation insurer
has no claim on any proceeds in this case.
25 The three-column calculations are set out below:
General Damages
Underinsured Motorist
(Sauve)
Settling W/C Insurer
(Austin/Grubb)
Insured
(Wilson)
Share of general damages
$81,000
$54,000
$135,000
Credits
$50,000
no credits
$50,000
Result:
underpayment
tentative amount due
$31,000
$54,000
Result:
amount that can be received without double recovery
$85,000
26 Of course, if the $50,000 paid by Sauves insurance were
split between lost wages and general damages, the amount payable
to Wilson could be different, depending on the particular
allocation.
27 6 Arthur Larson & Lex K. Larson, Larsons Workers
Compensation Law 110.05[8], at 110-23 (2008).
28 Id.
29 See supra pp. 8-12.
30 See supra p. 10.
 |
| Case Law Statutes, Regs & Rules Constitutions Miscellaneous |
|
