Intent to provide dual insurance coverage needs clarification
Baker v. St. Paul Travelers Insurance Co., No. 09-1239 (1st Cir. 02/17/10).
The 1st U.S. Circuit Court of Appeals vacated summary judgment for a motor vehicle liability carrier and remanded the case to determine whether the employer intended to provide underinsured motorist coverage to its employees injured in the course of their employment.
What it means: Massachusetts law provides a carve-out provision to the workers' compensation exclusivity bar. Under the carve-out provision, the bar does not apply to underinsured motorist or other coverage that the employer purchased to provide employees with additional protection for damages caused by underinsured drivers.
Summary: An employee was seriously injured while driving an employer-owned vehicle. The other driver's insurance was insufficient to cover the employee's damages. The employee received workers' compensation benefits but also sought to recover under her employer's underinsured motorist policy. The carrier denied the claim, citing a Massachusetts law that says employees cannot recover for work-related injuries under both workers' compensation and the employer's underinsured motorist coverage. However, in Massachusetts, an exception has been carved out of the general bar on an employee's recovery when "an employer explicitly purchased [underinsured motorist coverage] for the purpose of providing coverage . . . to employees injured in the course of their employment."
The employee argued Rhode Island law should apply but that even under Massachusetts law, the bar on recovery did not apply where the underinsured motorist insurance was a bargained-for provision. The 1st Circuit determined the District Court incorrectly granted summary judgment to the carrier, noting it did not properly address preliminary questions regarding the carve-out provision. It noted the court failed to address whether the underinsurance coverage purchased by the employer was a bargained-for provision intended to provide the employees with additional protection from underinsured motorists.
The carrier argued that the carve-out provision only applies to "non-standard" policies, which the carrier defined as policies that do not use standard forms issued by the Massachusetts insurance commissioner. The 1st Circuit disagreed, stating that the language of the carve-out exception suggests a broader exclusion of coverage explicitly provided to give the employer's workers additional protection. It remanded the case for a factual determination as to whether the coverage was elected and paid for by the employer in order to further protect its employees.
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April 5, 2010
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