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Worker's Compensation and Uninsured Motorist Carriers Collide
(June, 2009) By Greg Arbogast, Summer Associate.
For more information, contact Paul Farquharson.
This is a case of statutory interpretation that concerns
automobile insurance carriers. In Blackburn v. Erie Ins. Group, the Maryland
Court of Special Appeals defined the word "unreimbursed" as it appears in Md.
Code. Ann., Ins. § 19-513(e) (West 2009). Ins. § 19-503(e) permits automobile
insurance companies to deduct unreimbursed worker's compensation benefits from
the total claim. The issue presented in this case is whether the provider of
worker's compensation benefits is reimbursed in full if the provider settles its
claim for less than the full amount of the benefit conferred.
This case arises out of injuries that Michael Blackburn
sustained in an automobile accident with Patrick Quinn. Michael Blackburn was
working at the time of the accident. Quinn, the driver who negligently caused
the accident, carried an insurance policy for personal injuries up to $100,000.
Quinn's insurance company paid Blackburn the policy maximum of $100,000.
Blackburn also received $246,305.66 in worker's compensation benefits from the
United States Department of Labor. The Department of Labor obtained a lien
against Blackburn in the same amount. However, Blackburn settled that lien with
the Department of Labor for $27,396.28. Blackburn also carried uninsured
motorist coverage with Erie Insurance Exchange ("Erie") in the amount of
$250,000. It is uncontroverted that Erie is entitled to deduct the $100,000 that
Quinn paid from the uninsured motorist coverage, leaving $150,000. This appeal
resolves the question of how much of the remaining $150,000 Erie owes Blackburn.
The court ruled that "reimbursed," as it appears in Ins. §
19-503(e), means the amount that the claimant actually gave the worker's
compensation provider and not the total value of the released lien. Otherwise,
the claimant would receive double benefits and a windfall. The Court of Special
Appeals found that the legislature intended the word "unreimbursed" to mean any
amount that the claimant had not repaid the worker's compensation provider.
Therefore, Blackburn had unreimbursed worker's compensation benefits of
$218,909.38, which exceeded $150,000. As such, Erie did not owe Blackburn any of
the $150,000 remaining on the uninsured motorist policy.
This case provides the formula by which an uninsured
motorist carrier can determine a payout when the injured party has already
received worker's compensation benefits. The uninsured motorist carrier can
deduct any money received from the negligent party and any money that the
injured party has not repaid to a worker's compensation provider. This case
limits the exposure of automobile insurance carriers and helps prevent injured
parties from receiving windfalls.
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