Can the UM Insurer Reduce/Offset Payments Made by Workers Compensation Insurer When Settling With a Plaintiff/Employee?
In the odd circumstances when an employee is injured on the job and the other vehicle does not have adequate insurance, the employee may seek compensation from his employer’s UM insurer.
Let’s not address the issue waiver of UM coverage for a moment and just focus on offsetting the workers compensation payments made against the UM settlement amount.
In Cutsinger v. Redfern, 2008-2607 (La. 5/22/09), 12 So. 3d 945, an uninsured motorist carrier was allowed to reduce its payments by the amounts paid to or on behalf of plaintiff by the workers’ compensation insurer.
In Redfern, the insurance policy specifically mentioned that any amount payable under the policy shall be reduced by any amount paid or payable to or for the insured under any workers’ compensation, disability benefits, or similar law. The plaintiff tried to argue that this was in derogation of state law, because it allegedly reduced the liability of uninsured motorist coverage. The Supreme Court of Louisiana rejected that argument and reversed the trial and appellate court’s holding that the UM coverage could not be reduced.
The Redfern Court pointed out that in Bellard v. American Central Ins. Co., 07–1335 (La.4/18/08), 980 So.2d 654, an employer’s uninsured motorist carrier was entitled to a credit for medical and disability wage benefits paid on behalf of or to the plaintiff by the workers’ compensation insurer. That ruling came despite that the uninsured motorist insurance policy did NOT contain language dictating the reduction in coverage for benefits paid under workers’ compensation insurance. The Bellard court held the employer’s uninsured motorist carrier was entitled to the credit based on principles of solidarity and the inapplicability of the collateral source doctrine.
The Redfern court applied those same principles of solidary obligations and a finding that the collateral source doctrine did not apply, as well as the purpose underlying the law governing uninsured motorist coverage, and found the language contained in the insurance policy relating to the reduction in uninsured motorist payments for any workers’ compensation benefits paid to the insured was not against public policy and was therefore enforceable.
Under the rulings from Redfern and Bellard, it is apparent that Louisiana law allows for an uninsured motorist carrier to be given a credit for medical and disability wage benefits paid to an injured employee/plaintiff by a worker’s compensation insurer, regardless of whether the insurance policy specifically states as much or not.
This should be evaluated in light of the McDill v. Utica Mut. Ins. Co., 475 So. 2d 1085, 1092 (La. 1985), in which the main issue was whether the plaintiff was entitled to penalty fees and attorney’s fees under the statute that granted an additional award when an insurance company failed to pay claims on a timely basis when it was apparent that the claim was valid. Typically, attorneys in tort cases are allowed “McDill fees” from the tort claim when it also resolves the workers compensation claim.
The Louisiana Supreme Court found that the uninsured motorist carrier was arbitrary and capricious in its refusal to pay a reasonable amount over the $10,000 claim. The UM carrier should have paid a reasonable amount over the $10,000 claim. There was absolutely no discussion of what the court meant by this, but it could be interpreted to mean that the Court automatically assumed that it was proper to deduct the $10,000 the plaintiff had already received from the amount that the uninsured motorist carrier was obligated to pay.
Based on McDill, Redfern, and Bellard, there is no reason to believe that a UM carrier should not deduct from their payments to an insured/plaintiff the worker’s comp benefits already paid to that insured/plaintiff. In fact, the Redfern and Bellard cases say that is the proper action to take. Under Louisiana law, a UM carrier may offset what has been paid by a workers compensation insurer for indemnity and medical expense.
Whatever amount was paid in worker’s compensation benefits should be subtracted from the uninsured settlement; however, how much is a reasonable settlement in in uninsured claim?
How much is the plaintiff’s attorney entitled in McDill fees?
Remember a UM insurer MUST make an unconditional tender when there is sufficient evidence to prove the injury.
So the yes, is YES, but….