Workers’ Compensation Reimbursement Excluded Under Uninsured Motorist Policy

Two parties, the Forgeys and Ms. Maynor, were involved in an automobile collision on approximately January 30, 2009. The Forgeys contended that the collision was the sole fault of Ms. Maynor and, on January 28, 2010, filed suit against Ms. Maynor, her automobile liability insurer, their automobile liability insurer, and the automobile liability insurer of Mr. Forgey’s employer. Shortly after initial motions were filed, Commerce, Mr. Forgey’s employer’s workers’ compensation insurer, filed a petition of intervention noting that because Mr. Forgey had sustained injuries which resulted in disability and payment of workers’ compensation benefits, Commerce was entitled to a portion of the proceeds awarded in a judgment. Commerce’s petition was met with denial on behalf of Mr. Forgey’s automobile liability insurer, Arch, and the Forgeys. Specifically, Arch contended that the plain language of the uninsured motorist policy and Louisiana law precluded any reimbursement for compensation benefits paid by Commerce.

In response, Commerce filed a memorandum in opposition stating that the Forgeys had reached a tentative settlement with Arch but that the agreement was contingent on the settlement of the workers’ compensation claim. As such, Commerce again contended that it was entitled to a credit for compensation benefits.  The district court heard arguments and granted motions for summary judgment in favor of Arch and the Forgeys. The court relied on a provision in the uninsured motorist policy which stated that “This insurance does not apply to direct or indirect benefit of any insurer or self-insurer under any worker’s compensation, disability benefits, or similar law.”

Commerce appealed the grant of summary judgment. The Forgeys contend that Commerce is not entitled to a credit due the exclusionary language within the uninsured motorist policy. While recognizing that Commerce might have a statutory right per La. R.S. 23:1101-1103, the Forgerys further contended that the policy language prevailed over any recognized statutory right.

The court examined prior precedent for guidance. In Tommie’s Novelty v. Velasco, the court specifically acknowledged the rights of a workers compensation insurer to assert a cause of action for reimbursement against an uninsured motorist insurer. However, in Travelers Insurance Compnay v. Joseph, the Supreme Court relied upon an individual’s freedom to contract and policy considerations to hold that there is no statutory prohibition against an employer contracting with its uninsured motorist insurer to exclude workers’ compensation reimbursement. Therefore, an uninsured motorist policy could validly exclude compensation reimbursement to a workers’ compensation insurer.

The Second Circuit Court of Appeals of Louisiana noted in the instant matter that the exclusionary language in the policy was identical to the language upheld in Travelers. Additionally, the exclusion applied if the compensation insurer filed suit against the uninsured motorist insurer directly, or if the compensation insurer intervened. The Court specified that this applied to any compensation already paid as well as to future compensation. Commerce was prohibited from recovering against Arch, the uninsured motorist insurer, for reimbursement of either past or future compensation payments made to Mr. Forgey. The Court upheld the District Court’s granting of the motion for summary judgment.

Forgey v. Maynor