Truck Insurance Exchange v. Rutherford
2017 UT 25
| Utah | 2017Background
- Danny Rutherford was injured while driving a company van; he received workers’ compensation benefits (Mid Century) and some recovery from the tortfeasor’s insurer.
- Rutherford also sought underinsured motorist (UIM) benefits from his employer’s insurer, Truck Insurance Exchange (TIE), up to TIE’s policy limits for overlapping damages (medical, wage loss, disability, future care, general damages).
- Mid Century paid substantial workers’ compensation benefits but did not cover all medical expenses; Rutherford also recovered from the tortfeasor’s insurer with partial subrogation by Mid Century.
- TIE argued its UIM coverage is secondary to workers’ compensation and should not pay amounts workers’ compensation has paid or should pay; Rutherford argued Utah Code §31A-22-305.3(4)(c)(iii) forbids reduction of UIM by workers’ compensation and invoked the collateral source rule.
- The district court granted summary judgment for Rutherford; TIE appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UIM may be reduced by workers’ compensation benefits | Rutherford: §31A-22-305.3(4)(c)(iii) forbids reduction of UIM by workers’ compensation; collateral source rule allows double recovery | TIE: §31A-22-305.3(4)(c)(i) makes UIM secondary; UIM should only cover damages in excess of workers’ comp and need not duplicate it | UIM is secondary (excess) and must pay damages in excess of workers’ compensation, but may not duplicate benefits already paid; policy limits are not reduced by workers’ comp amounts |
| Effect of term “secondary” in the statute | Rutherford: Emphasize §(iii) over §(i) to prevent offsets | TIE: “Secondary” means UIM liability is subject to primary workers’ comp coverage—UIM should account for workers’ comp payments | Court: “Secondary” is term of art meaning excess/secondary coverage—UIM provides recovery only after primary is exhausted |
| Whether collateral source rule entitles insured to double recovery | Rutherford: Collateral source prevents offset, so insured can get both full workers’ comp and full UIM payments | TIE: Collateral source not applicable where benefit holder is insured, not wrongdoer; statute modifies common-law rule | Court: Collateral source inapplicable here; statute harmonizes to prevent duplication of the same benefits |
| Whether liberal-construction rule requires reading ambiguities for insured’s benefit | Rutherford: Insurance code should be liberally construed to maximize insured recovery | TIE: Statute language and purpose control; liberal-construction is a tie-breaker only | Court: No ambiguity in statute’s text/structure; liberal-construction not applied to create double recovery |
Key Cases Cited
- Thamert v. Continental Casualty Co., 621 P.2d 702 (Utah 1980) (UIM recovery not barred by workers’ compensation exclusive-remedy argument)
- Lieber v. ITT Hartford Ins. Ctr., Inc., 15 P.3d 1030 (Utah 2000) (UIM and workers’ compensation recovery can both apply in appropriate cases)
- Lopez v. United Automobile Ins. Co., 274 P.3d 897 (Utah 2012) (interpreting UIM as secondary to other motorist liability; insured recovers only excess)
- Ohio Cas. Ins. Co. v. Brundage, 674 P.2d 101 (Utah 1983) (double recovery disfavored in insurance contexts)