Case Law Alerts
Under Delaware law, the employer is prohibited from asserting a credit for workers’ compensation benefits against an underinsured motorist recovery made by the claimant even where the employer had purchased that policy.
After the decedent died in an automobile accident in New Jersey while driving a tractor-trailer owned and operated by the employer, the Board determined the decedent was an employee at the time of the accident and that the claimant was entitled to death benefits.
The claimant also filed a lawsuit in New Jersey against the third-party tortfeasor, which was settled with payment of the policy limits of $15,000. At that time, the employer had paid the claimant $55,382.77 in death benefits and was paying ongoing benefits at the rate of $333.35 per week. The parties did agree that the employer was entitled to a proportionate reimbursement from the $15,000 third-party recovery ($9,474.74) pursuant to 19 Del. C § 2363 (e).
The claimant also pursued a UIM claim against the carrier that insured the vehicle the decedent had been operating. This UIM policy had been paid for by the employer. After the claimant recovered the UIM policy limit of $300,000, the employer asserted a credit against the recovery, which the claimant opposed. The Board denied the employer’s request for a credit or lien in connection with the UIM recovery.
The employer appealed to the Superior Court, arguing that the Board erred as a matter of law in denying the employer a future credit. The court denied the appeal and held that, under Delaware law, the employer was prohibited from asserting a credit for future workers’ compensation benefits against the UIM recovery even where the employer had purchased the policy. The court relied on Simendinger v. National Union Fire Ins. Co., 74 A.3d 609 (Del. 2013), in which the Delaware Supreme Court noted that, prior to 1993, the subrogation provision—Section 2363 (e)—provided a right of reimbursement from UIM benefits received by the claimant if the policy was purchased solely by the employer. The Simendinger court determined that the 1993 amendment to that statute eliminated any distinction between UIM coverage purchased by an employee versus UIM coverage solely paid for by the employer. As such, an employer can no longer assert a lien against any UIM policy for reimbursement.
The employer’s appeal in the instant case made the further argument that they were not seeking reimbursement for a lien but, rather, a credit for future death benefits to be paid. The employer contended that a credit is different from reimbursement, but the court rejected this argument out of hand. The court stated that this difference is merely a matter of timing since reimbursement applies to workers’ compensation benefits already received whereas a credit applies to benefits that will be received in the future.
Finally, the employer contended that Delaware law generally disfavors allowing a double recovery in personal injury cases. The court responded that the General Assembly has made it clear that UIM benefits are an exception to that general rule.
Case Law Alerts, 1st Quarter, January 2020 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2020 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.