Opinion
No. CV 03-0475791
December 8, 2005
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT #113
On November 3, 2004, the plaintiff Victor Fuentes, filed a two-count amended complaint against defendants, city of New Haven (city) and GEICO Insurance Company (GEICO). Therein, Fuentes alleges the following facts. On January 13, 2002, Fuentes, a police officer employed with the city, while acting within the scope of his employment, and while operating a motor vehicle owned by the city, was struck from behind by an uninsured motorist, Carlos Diaz. Carlos Diaz was driving an uninsured motor vehicle owned by Jesus Diaz. Due to this collision, caused by Carlos Diaz' negligence, Fuentes suffered injuries and losses. Fuentes received $22,922.37 in workers' compensation benefits for his losses. At the time of the collision, the city was self-insured relative to uninsured motorist benefits pertaining to accidents involving its motor vehicle. Fuentes claims that he is entitled to uninsured motorist benefits from the city by reason of his operation of a motor vehicle owned by the city on the date of the accident pursuant to General Statutes § 38a-336. Fuentes also held a policy of automobile insurance through his personal insurer, GEICO, which provided for uninsured and underinsured motorist benefits.
On March 28, 2003, Fuentes filed a complaint that named only one defendant, the city of New Haven. On September 28, 2004 Fuentes cited in his personal insurer GEICO as a co-defendant.
On February 9, 2005, the city filed a motion for summary judgment on the ground that it is permitted, pursuant to section 38a-334-6(d)(1)(B) of the Regulations of Connecticut State Agencies, to reduce its uninsured and underinsured coverage limits to the extent that damages have been paid or are payable under any workers' compensation law, which in this case would reduce its liability to zero. The city has submitted a memorandum of law, as well as a supplemental memorandum of law, in support of this motion. On July 7, 2005, Fuentes filed a memorandum of law in opposition. The matter was heard on the short calendar on August 15, 2005.
On August 8, 2005, GEICO filed a motion for, and a memorandum in support of, summary judgment on grounds different from those of the city. This memorandum will not address GEICO's motion for summary judgment.
"Summary judgment is a method of resolving litigation when pleadings, affidavits, and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." (Citations omitted.) Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). "Practice Book [§ 17-49] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Larobina v. McDonald, 274 Conn. 394, 399, 876 A.2d 522 (2005). "[S]ince litigants ordinarily have a constitutional right to have issues of fact decided by a jury . . . the moving party for summary judgment is held to a strict standard . . . of demonstrating his entitlement to summary judgment." (Citation omitted; internal quotation marks omitted.) Kakadelis v. DeFabritis, 191 Conn. 276, 282, 464 A.2d 57 (1983). "The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law." (Internal quotation marks omitted.) Martel v. Metropolitan District Commission, 275 Conn. 38, 46, 881 A.2d 194 (2005).
The city argues that under § 38a-334-6(d)(1)(B) it is entitled to reduce its uninsured and underinsured liability coverage by the amount of workers' compensation benefits a plaintiff receives or is entitled to receive. Section 3.2 of the city's notice of uninsured and underinsured coverage incorporates this regulation and states that the city's uninsured and underinsured motorist coverage is limited to the statutory minimum of $20,000 per person, and $40,000 per accident or occurrence. Fuentes received $22,922.37 in workers' compensation benefits. The city argues that as the primary insurer it is entitled to a complete set-off under both § 38a-334-6(d)(1)(B) and Connecticut case law. Therefore its liability is reduced to zero, and it is entitled to judgment as a matter of law.
Fuentes admits that his workers' compensation benefits must be offset against any uninsured and underinsured insurance coverage benefits he receives, but argues that because he is claiming benefits from both the city and his personal insurer GEICO, there is a question as to whether the city is entitled to a complete set-off or whether the set-off must be pro-rated between the two defendants. He argues that though the priority of coverages established by § 38a-336 deem the city the primary insurer, and GEICO the secondary insurer, the statute is silent as to whether the workers' compensation benefit should be accorded to the primary insurer first or be pro-rated between the primary and secondary insurers. Fuentes argues that there is a split in Superior Court authority, and while some cases support the city's position that the primary insurer is entitled to a complete set-off, other cases advocate a pro rata set-off, and there is no appellate authority on point. Therefore, although the facts are not in dispute, he argues that the city is not entitled to judgment as a matter of law, and the motion for summary judgment must be denied.
It is undisputed that an insurance policy limit may be further reduced to the extent of workers' compensation awarded to a claimant. Section 38a-334-6(d)(1)(B) provides "[an insurance policy] may provide for the reduction of limits to the extent that damages have been . . . paid or are payable under any workers' compensation law . . ." Regs., Conn. State Agencies § 38a-334-6(d)(1)(B). Likewise, under the city's notice section 3.2., paragraph 3.2.3 "[t]he city will reduce [its liability limits] to the extent of any amount(s) . . . paid or payable from any source for medical expense, for workers' compensation, for disability benefits, or for any other type of compensation." "If damages are paid pursuant to the workers' compensation law, the uninsured motorist coverage may be reduced accordingly." (Internal quotation marks omitted.) Vitti v. Allstate Ins. Co., 245 Conn. 169, 193, 713 A.2d 1269 (1998). The issue presented in this matter, however, is whether the primary insurer, the city, is entitled to the entire reduction or if the reduction must be shared or pro-rated with the secondary insurer, GEICO.
In Englehardt v. New Hampshire Ins. Group, 36 Conn.Sup. 256, 257, 417 A.2d 366 (1980), a Superior Court dealt for the first time with the issue of how a workers' compensation benefit should be credited when there are two insurance policies that provide uninsured motorist coverage. The facts in Englehardt are virtually the same as those in the present case. In Englehardt, as in the present case, both parties acknowledged that one insurer was primary. Id., 261. The court held the primary insurer "has first access to the workmen's compensation set-off" Id. Several years later, the Supreme Court of Connecticut, in Aetna Casualty Surety Co. v. CNA Ins. Co., 221 Conn. 779, 606 A.2d 990 (1992), implicitly addressed the issue of credit allocations. That case dealt primarily with "other insurance" clauses and how they impact priority of coverage. Id. An arbitration panel in that case found that Aetna was the primary insurer, and awarded it a complete set-off for a payment by a tortfeasor. Id., 782. On motions to confirm or to vacate the award, the trial court found that because both policies contained "other insurance" clauses, it would treat both policies as primary, and pro-rate the credit according to the limits of their liability. Id., 782-83. The Supreme Court reversed, and reinstated the arbitration award. Therefore, Aetna was the primary insurer, and was entitled to a complete set-off of the tortfeasor's payment. Id., 787-88. Although the Supreme Court did not expressly address the issue of allocation of the set-off among insurers, it let stand the order giving the entire credit to the primary insurer.
Under the law at that time, however, the plaintiff was potentially entitled to the aggregate coverage provided under both policies under the doctrine of "stacking." Englehardt v. New Hampshire Ins. Group, supra, 36 Conn.Sup. 258. Under the current law, the plaintiff's recovery "is limited to the highest amount recoverable under the primary policy, the secondary policy or any one of the excess policies." General Statutes § 38-a-336(d).
Following Englehardt, several Superior Court cases have addressed this issue. In Loika v. Aetna Casualty Surety Co., 44 Conn.Sup. 59, 62, 667 A.2d 1308 (1994), aff'd, 39 Conn.App. 714, 667 A.2d 78 (1995), cert. denied, 236 Conn. 902, 670 A.2d 322 (1996), the defendants raised the issue of amount and allocation of credits to which each claimed entitlement. While one insurer argued that the court should either allocate the full credit to both carriers, or divide the sum equally between them, the other argued that as primary insurer it was entitled to the full credit. Id., 69. The court held that "[i]t is generally recognized that when one policy is primary and one is excess . . . [a] primary carrier has the first claim to certain available reductions, which could completely offset the primary uninsured motorist carrier's obligation to pay benefits." (Internal quotation marks omitted.) Id., 70. A secondary insurer's liability "attaches only to the extent of the excess loss above the primary insurer's uninsured coverage." Id. Therefore a "pro rata division of deductions would be inconsistent with [the secondary carrier's] role." Id. Similarly, in Aetna Life Casualty Co. v. Pederson, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 95 0143910 (September 27, 1995, D'Andrea, J.) ( 15 Conn. L. Rptr. 147), the defendants sought to overturn an arbitration award that credited one of two insurance carriers with the entire workers' compensation benefit. Since the plaintiff had not argued that it was the primary insurer, the court pro-rated the workers' compensation benefit between the two insurers. Id., see also Progressive Ins. Co. v. Benoit, Superior Court, judicial district of New London, Docket No. CV 96 538470 (December 18, 1996, Hurley, J.T.R.) ("Because both [insurance clauses] are in total conflict the best solution is to treat both as primary and pro-rate the loss." (Internal quotation marks omitted.)). Therefore, in these cases the court awarded the complete set-off to the primary insurer unless it could not determine which company was, in fact, the primary insurer.
Young v. Metropolitan Property Casualty Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV 95 0380614 (March 5, 1998, Hartmere, J.) ( 21 Conn. L. Rptr. 447), aff'd, 60 Conn.App. 107, 758 A.2d 452, cert. denied, 255 Conn. 906, 762 A.2d 911 (2000), has similar facts as the present case. In Young, the plaintiff was involved in an auto accident while operating a motor vehicle owned by his employer. Id. The employer's vehicle was insured by a policy providing uninsured and underinsured motorist benefits, and the plaintiff also possessed a policy that provided uninsured and underinsured benefits. Id. The plaintiff moved for summary judgment against its own insurance company on the grounds that the arbitration panel had "correctly allocated the total set offs and credit amounts to [his employer's insurance company] as the primary insurer . . ." Id. The court in Young relied on the reasoning of the arbitration panel in Aetna Casualty and Surety Co. v. CNA Ins. Co., supra, 221 Conn. 779, to find that the primary insurer was correctly allocated full credit. "As a matter of law, the primary insurer's coverage should be exhausted before the excess carrier should be obligated to pay [uninsured motorist] benefits; the primary insurer's coverage is exhausted when it is required to pay benefits up to its policy limits less full credit for available set offs." (Emphasis added.) Id.
See also Fusco v. Allstate Ins. Co., Superior Court, judicial district of Fairfield, Docket No. 377108 (December 12, 2003, Levin, J.) (Court held that the primary insurer was entitled to deduct from its policy limit the entire amount paid to the plaintiff on behalf of the tortfeasor.).
The above cases support the proposition that credits, such as for workers' compensation payments, should be used to offset the liability of the primary insurer. Other cases support apportionment of the credit among insurers.
In Covenant Ins. Co. v. Coon, Superior Court, judicial district of Hartford-New Britain at New Britain, Docket No. CV 90 0442665 (January 15, 1991, Allen, J.) ( 3 Conn. L. Rptr. 142), rev'd, 220 Conn. 30, 594 A.2d 977 (1991), the court found "the arbitrators were correct in prorating between the two companies the [credit] awarded to the [plaintiff]." "Where two policies contemplate the particular risk equally, liability will be pro-rated based upon the policy limits." (Internal quotation marks omitted.) Id. Similarly, in Dunlop v. Government Employees Ins. Co., Superior. Court, judicial district of New Haven, Docket No. 322973 (February 3, 1993, Hodgson, J.) ( 8 Conn. L. Rptr. 347), the court had to determine how to allocate liability payments between two insurers. The defendant cited Aetna Casualty Surety v. CNA Ins. Co., supra, 221 Conn. 779, for the proposition that since it had conceded its coverage was primary, it was entitled to a complete offset of certain credits against its liability. The court rejected this argument and held that since the allocation of credit for certain payments in Aetna "was [not] an issue either before the trial court or on appeal . . . the Supreme Court's silence on that allocation [did] not establish approval of the method used, especially since . . . the sole issue in [that] appeal [concerned] the validity of `other insurance' clauses." (Internal quotation marks omitted.) Id. The court was unable to locate other Connecticut appellate decisions that established how credits were to be allocated where there were two uninsured motorist policies. Id. It determined that since it could not allow both carriers to deduct the credit in full it was "consonant with the provisions of regulations 38-175a-6(d) to pro-rate the allowable reductions between two insurers equally entitled to claim them." Id.
In deciding that the policies contemplated the risk equally, the court did not discuss whether one policy was primary and the other policy was secondary.
A few appellate cases imply that credit may be pro-rated among the various policies that provide coverage for a claimant. "In Chmielewski v. Aetna Casualty Surety Co. . . . [t]he arbitrators decided that the two insurance companies would share the tortfeasor's credit proportionately to their coverage . . . This decision was upheld by the trial court, and was not disputed on appeal." (Citation omitted.) Allstate Ins. Co. v. Link, 35 Conn.App. 338, 348, 645 A.2d 1052, cert. denied, 231 Conn. 924, 648 A.2d 161 (1994). "Similarly, in Stephan v. Pennsylvania General Ins. Co. . . . the parties agreed at arbitration that the award would be pro-rated between the two insurance companies. This again was not disputed upon appeal." (Citation omitted.) Id. None of these decisions, however, deal with the allocation of a credit between a primary and a secondary insurer.
The court did not discuss the allocation of set offs when one policy was primary and the other was secondary.
In the present case, the facts are undisputed. Both parties agree that Fuentes is entitled to uninsured and underinsured motorist benefits under the city's insurance policy. They also agree that a workers' compensation benefit entitles an insurer to offset its liability. At issue is whether a primary insurer is entitled to a complete set-off of a workers' compensation benefit awarded to a claimant, or whether this credit must be pro-rated between a primary and a secondary insurer. The majority of Superior Court cases hold that the primary insurer is entitled to a complete set-off, leaving the secondary insurer with any remaining credit. Generally, the reasoning is that the primary insurer has primary liability, therefore any credit should be allocated to it first. Since the secondary insurer is required to pay a claimant only that amount which is in excess of the primary policy's liability limit, it would be inconsistent to pro-rate credit equally between the two, as it would be inequitable to accord the same benefit to insurers who do not carry the same liability. If one insurer is primary, and thus primarily liable, the more reasoned and fair approach appears to be to allocate the credit to it entirely. No appellate court decision has addressed the issue directly, and the few that have are unclear.
For the forgoing reasons because the city, the primary insurer, has the primary liability, it must be accorded the full credit for workers' compensation benefits paid to the claimant. Therefore, the city's motion for summary judgment is granted.