- There is No Lien Recovery against a UIM Policy Purchased by the Employer.
- July 2, 2013 | Authors: Jessica L. Julian; Paul V. Tatlow
- Law Firm: Marshall Dennehey Warner Coleman & Goggin, P.C. - Wilmington Office
Kingsley Simendinger v. Natl. Union Fire Ins. Co. and Philadelphia Indemnity Insurance, No. 553, 2011, DE Supreme (3/19/13)
Two employees were killed in a motor vehicle accident while in the course and scope of their employment. The employer provided workers' compensation coverage for the decedents' estates. The vehicle in which they were killed was owned by the employer, who also had an underinsured motorist policy [UIM] in effect at the time of the accident. The limits of the UIM policy were $1 million.
The decedents' estates filed suit against the UIM insurer, seeking benefits under the employer-purchased UIM policy. The employer's workers' compensation carrier intervened in the litigation, attempting to enforce their lien in the amount of the workers' compensation benefits paid. The UIM insurer's policy contained an exclusion stating that the [UIM] policy does not apply to benefits obtained through a workers' compensation insurer. The Superior Court held that the UIM exclusion was unenforceable as a matter of law. The Superior Court noted that "[employers] should not be penalized for their efforts to protect their employees." The Supreme Court disagreed and held that 19 Del C. §2363(e) does not permit reimbursement from a UIM carrier, even if the policy was paid for by the employer.
Under 19 Del C. §2363(e), workers' compensation carriers may enforce their liens against third party liability insurers. The same holds true in cases where the plaintiff pursues additional damages against the UIM insurer. In the past, the courts made a distinction that a workers' compensation lien recovery depended upon whether the employer or the employee purchased the coverage. However, that distinction ended in 1993 when the General Assembly changed §2363(e) to reflect, "[r]eimbursement shall be had only from the third party liability insurer and shall be limited to the maximum amounts of the third party's liability insurance coverage."
In 1995, the Supreme Court in Hurst v. Nationwide Mut. Ins. Co., 652 A.2d 10 (Del. 1995), held that §2363 did not apply to the employer's uninsured motorist coverage. The Supreme Court adopts the same interpretation of §2363 in this case. Workers' compensation insurers are not able to enforce their liens against a UIM policy, regardless who purchased the policy.
Once again, the court strictly adheres to the collateral source doctrine.