Miss. Ins. Guar. Ass'n v. Blakeney
| Docket Number: | 2008-CT-01840-SCT Linked Case(s): 2008-WC-01840-COA ; 2008-WC-01840-COA ; 2008-CT-01840-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 01-13-2011 Opinion Author: Dickinson, J. Holding: Reversed and rendered. |
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| Additional Case Information: |
Topic: Workers' compensation - Mississippi Insurance Guaranty Association Act - Insolvent insurer's obligations - Section 83-23-123(1) - Exhaustion provision - Covered claim - Reduction of costs - Section 71-3-71 Judge(s) Concurring: Carlson, P.J., Randolph, Lamar and Chandler, JJ. Dissenting Author : Waller, C.J. Dissent Joined By : Graves, P.J., Kitchens and Pierce, JJ. Procedural History: Admin or Agency Judgment Nature of the Case: CIVIL - WORKERS' COMPENSATION |
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| Trial Court: |
Date of Trial Judgment: 10-27-2008 Appealed from: Jones County Circuit Court Judge: Billy Joe Landrum Disposition: The ALJ held that, rather than a credit for the full policy limits, MIGA was entitled to offset the $70,000 actually paid, but the full Commission reversed, holding that MIGA was entitled to full credit for the $10,000 paid by the liability policy (less $4,000 in collection costs), but it was not entitled to any credit for the UM policy. Both the circuit court and Court of Appeals affirmed the Commission's order. Case Number: 2008-942-CV08 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Mississippi Insurance Guaranty Association |
CLIFFORD C. WHITNEY, III |
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| Appellee: | Bridgette Blakeney | S. WAYNE EASTERLING, JOHN RAYMOND TULLOS |
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| Topic: | Workers' compensation - Mississippi Insurance Guaranty Association Act - Insolvent insurer's obligations - Section 83-23-123(1) - Exhaustion provision - Covered claim - Reduction of costs - Section 71-3-71 |
| Summary of the Facts: | When the workers’ compensation carrier making payments to Bridgette Blakeney was declared insolvent, its claims were transferred to the Mississippi Insurance Guaranty Association which, upon discovering Blakeney had received a settlement of $60,000 from her employer’s uninsured motorist carrier, petitioned the Workers’ Compensation Commission for an offset of $100,000 – the full UM policy limits. The workers’ compensation administrative law judge found MIGA’s credit was limited to the $60,000 actually paid, but the full Commission noted that MIGA stood in the shoes of a compensation carrier, relied on caselaw that exempts UM benefits from a compensation carrier’s subrogation rights, and held that MIGA was entitled to no credit. The circuit court and the Court of Appeals affirmed the Commission. The Supreme Court granted certiorari. |
| Summary of Opinion Analysis: | As noted by the Commission and the Court of Appeals, the MIGA Act provides that MIGA shall be deemed the insurer to the extent of the obligation on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent. This “deemed the insurer” language has produced the aphorism: “MIGA stands in the shoes of an insolvent insurer.” But an insolvent insurer’s shoes are not always a perfect fit. Just as surely as the insolvent insurer’s “duties and obligations” pass to MIGA under one subsection of the statute, they are limited under another subsection that says MIGA may pay covered claims only “to the extent of the association’s obligation.” The “association’s obligation” often does not equal the insolvent insurer’s obligations under the policy. Section 83-23-123(1) of the Act - often called MIGA’s “exhaustion provision” – seems clear enough: “any person having a claim against an insurer under any provision in an insurance policy other than a policy of an insolvent insurer, which is also a covered claim” defines the policyholders to whom the statute applies; “shall be required to exhaust first his right under such policy” defines the policyholder’s duty; and “any amount payable on a covered claim under this article shall be reduced by the amount of any recovery under such insurance policy” establishes MIGA’s duty when the statute applies. Blakeney had a claim against her employer’s solvent UM carrier for the same loss (the damages she suffered from the automobile accident) being paid by MIGA; she was required to “exhaust” her right under the UM policy – which she did by settling for $60,000 and signing a release; and MIGA was required to reduce its “amount payable” on Blakeney’s claim “by the amount of [Blakeney’s] recovery” under the UM policy which, as correctly concluded by the ALJ, was the $60,000 actually recovered, not the $100,000 policy limits demanded by MIGA. The statute’s clear meaning is that MIGA may reduce its obligation to pay a “covered claim” (which must have come from an insolvent insurer) where the beneficiary recovers on the same claim from a solvent insurer. Here, the “claim” is for injuries and lost wages caused by an accident; so the claim against the workers’ compensation carrier (for reimbursement of those losses) was the same legal claim as the one against the UM carrier. In its order, the Commission stated: “We do not for a second deny that MIGA, under § 83-23-123(1) is entitled to have “any amount payable [by it to Blakeney] on a covered claim under this article . . . Reduced by the amount of any recovery” which Blakeney obtains from a liable third party.” It appears the Commission reached its mistaken conclusion by ending its quote too quickly, and completing the sentence using its own language. The statute actually says – and the Commission’s order should have said: “any amount payable [by it to Blakeney] on a covered claim under this article . . . Reduced by the amount of any recovery under such insurance policy.” While a UM carrier “is not a ‘third party’ within the meaning of the [workers’ compensation] statute,” it unquestionably is an “insurer” within the meaning of the MIGA statute. In essence, by changing the statute’s language to label UM carriers as “third parties,” the Commission brought MIGA’s exhaustion provision under the purview of section 71-3-71 – a statute that allows comp carriers to recover their payments from third parties. The Commission’s interpretation and application of section 83-23-123(1) was clearly erroneous; section 71-3-71 is not applicable to the calculation of MIGA’s credit under section 83-23-123(1); and when MIGA assumes the claims of a comp carrier, section 71-3-71 does not deprive it of credit for payments made by UM carriers. MIGA argues that, even though Blakeney settled with the UM carrier for $60,000, it nevertheless is entitled to credit for the entire $100,000 policy limits. Blakeney settled with the UM carrier for $60,000, and there is no evidence or suggestion that the settlement involved fraud or bad faith. MIGA’s argument on this issue is without merit. The Commission held that MIGA was entitled to credit for the $10,000 liability policy under section 83-23-123(1), filtered through section 71-3-71's cost-deduction provision, resulting in “net proceeds” to MIGA of $6,000. When a comp carrier exercises its subrogation rights under the workers’ comp statutes, the following language from section 71-3-71 comes into play: “any amount recovered by the injured employee . . . From a third party shall be applied as follows: reasonable costs of collection as approved and allowed . . . By the commission . . . Shall be deducted. . . .” This subrogation statute clearly allows the Commission to award costs. Had MIGA pursued the liability policy proceeds under the subrogation statute, the Commission would have been justified in deducting costs under the provision. But the Commission, MIGA, and Blakeney agree that MIGA’s claim is properly analyzed under section 83-23-123(1), which has no cost-reduction provision. And other than the cost-reduction provision of the workers’ comp subrogation statute, Blakeney advanced no theory or argument that she was entitled to recover her attorney fees. Since section 83-23-123(1) controls, there is no authority for the Commission’s reduction of costs. |
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