278 Conn. 77 | Conn. | 2006
Opinion
It is well settled that the plaintiff, the Connecticut Insurance Guaranty Association (association), is not obligated to pay claims that are asserted for the benefit of an insurer, because such unpaid claims are not “covered claims” under the Connecticut Insurance Guaranty Association Act (act), General Statutes § 38a-836 et seq. See, e.g., Doucette v. Pomes, 247 Conn. 442, 454-55, 724 A.2d 481 (1999). The association appeals
The record reveals the following undisputed facts and procedural history. On April 10,1997, Traci Carello, who had been discharged that day as a patient from the Elmcrest Psychiatric Institute (Elmcrest), and Karen Gagliardi, a state employee, were involved in an automobile accident. Both Carello and Gagliardi were Con
Due to Credit General’s insolvency, the association became obliged to pay “covered claims” under Elm-crest’s policy pursuant to General Statutes § 38a-841.
The parties filed a statement of stipulated facts, and the case was tried to the court, which concluded that, because of the waiver, the funds at issue were not for the benefit of an insurer and were, therefore, recoverable under the act. This appeal followed.
On appeal, the association claims, inter alia, that the trial court improperly concluded that, because of the waiver, it was obligated to pay the state’s claim, arguing that: (1) in asserting its claim for reimbursement, the state is standing in Illinois Union’s shoes and, therefore, is asserting a barred claim on behalf of its insurer; (2) construction of the act as allowing the state’s claim contravenes its legislative histoiy and purpose; and (3) cases from other jurisdictions support its position that waivers like the one herein do not restore a claim’s compensable status. The state, in response, contends that the waiver restored the status of its claim as a
At the outset, we set forth the applicable standard of review. Because the association and the state have stipulated to the relevant facts, the question before us solely is one of statutory interpretation and “our review is plenary and we must determine whether the trial court’s conclusions of law are legally and logically correct and find support in the stipulated facts.” (Internal quotation marks omitted.) Doucette v. Pomes, supra, 247 Conn. 453.
“When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature. ... In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply. ... In seeking to determine that meaning, General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered. . . . When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter . . . .” (Citation omitted; internal quotation marks omitted.) Cogan v. Chase Manhattan Auto Financial Corp., 276 Conn. 1, 7, 882 A.2d 597 (2005).
Accordingly, we begin our inquiry with the language of the applicable statutes. Section 38a-841 (1) (a) pro
Resolution of the present case, therefore, turns on the meaning of the statutory phrase “for the benefit of [an] . . . insurer”; General Statutes § 38a-838 (5) (B) (i); which is ambiguous as to the effect of waivers on the status of a claim. Although the word “benefit” is not defined in the act, it is axiomatic that “[i]n the construction of the statutes, words and phrases shall be construed according to the commonly approved usage of the language; and technical words and phrases, and such as have acquired a peculiar and appropriate meaning in the law, shall be construed and understood accordingly . . . .” General Statutes § 1-1 (a). Accord
The American Heritage Dictionary (4th Ed. 2000) defines “benefit” as “[something that promotes or enhances well-being; an advantage . . . .” Similarly, Black’s Law Dictionary (6th Ed. 1990) defines the word “benefit” as an “[advantage; profit; fruit; privilege; gain; interest. The receiving as the exchange for promise some performance or forbearance which promisor was not previously entitled to receive.” Plainly, since the execution of the waiver, Illinois Union does not stand to receive any benefit in the present case. Furthermore, at the time the state intervened in the underlying action to recoup the funds it had paid in workers’ compensation benefits, it was self-insured.
Accordingly, the association’s argument that, upon execution, the state’s agreement with Illinois Union took on the immutable characteristic of being for the benefit of an insurer stands at odds with Connecticut’s strong public policy favoring freedom of contract. “It is established well beyond the need for citation that parties are free to contract for whatever terms on which
The association also contends that giving the waiver this effect contravenes the legislature’s intent to conserve the association’s limited resources. In support of this contention, the association relies on General Statutes §§ 38a-841 and 38a-845, which provide, inter alia, that: (1) the association obtains its operating budget by making assessments on firms that provide insurance within Connecticut; General Statutes § 38a-841 (1) (c); (2) an insurer against which an assessment is made may offset the assessment against its tax liability to the state; General Statutes § 38a-841 (3) (A); and (3) persons having claims for reimbursement must exhaust their rights under solvent insurance policies before pursuing their claim against the association. General Statutes § 38a-845 (1). The association’s argument, however, recognizes only one side of the coin.
Although the association correctly states that it is a nonprofit entity whose resources are to be distributed carefully, this court previously has recognized that “[t]he association was established for the purpose of providing a limited form of protection for policyholders and claimants in the event of insurer insolvency.” Hunnihan v. Mattatuck Mfg. Co., 243 Conn. 438, 451, 705
The association further argues that the trial court’s conclusion lacks support in the act’s legislative history. We disagree. Although the act is ambiguous as to the effect of the waiver in the present case, the act’s legislative history reveals its protective nature and supports our conclusion that the trial court properly concluded that the waiver had restored the status of the state’s claim as a “covered claim.” The act was enacted in response to a growing national problem of insurer insolvency, which had caused great hardship for many peo
Finally, the association urges us to follow several cases from other jurisdictions that it contends stand for the proposition that waivers, like the one in the present case, cannot have an effect on the association’s obligations. Citing Besack v. Rouselle Corp., 706 F. Sup. 385 (E.D. Pa. 1989), the association contends that, in the present case, the state, by virtue of the waiver, is, in essence, asserting the rights of an insurer to association reimbursement in violation of § 38a-838 (5). In Besack, the plaintiff, a factory worker and Pennsylvania resident, was injured while using a punch press machine
The plaintiff brought an action against the Pennsylvania association, claiming that it was not entitled to offset its payment to him by the $68,374.93 that he had received from his employer’s insurance company; rather, he claimed, it was required to pay him a total of $149,900.
The present case, unlike Besack, involves no attempt to exercise an insurer’s claim for reimbursement. Illinois Union has made no claim for reimbursement from the association, nor has it sought to transfer such a claim. Rather, its sole claim was to payment from the state. Accordingly, the state has not, as the association contends, “ ‘assert[ed], in effect, [the insurer’s] subrogation claim,’ ” but merely has altered its obligations with respect to the proceeds of its own proper claim for reimbursement from the association.
The association also relies heavily on three sister state cases that it contends stand for the proposition that waivers such as the one in the present case impermissibly circumvent statutory provisions intended to safeguard insurance guaranty association funds, namely, Ventulett v. Maine Ins. Guaranty Assn., 583 A.2d 1022, 1024 (Me. 1990), Ferrari v. Toto, 9 Mass. App. 483, 484, 402 N.E.2d 107 (1980), aff'd, 383 Mass. 36, 39, 417 N.E.2d 427 (1981), and Proios v. Bokeir, 72 Wash. App. 193, 203, 863 P.2d 1363 (1993). All three cases are distinguishable from the present case.
In Ferrari, the court concluded that a litigant could not bring a claim against the Massachusetts Insurer’s
In Proios, the plaintiff was involved in an automobile accident and sued the defendant for personal injuries that she had sustained. Proios v. Bokeir, supra, 72 Wash. App. 195-96. The defendant’s insurer was declared insolvent, so the plaintiff recovered a portion of her damages from her own underinsured motorist policy and sought further recovery from the Washington Insurance Guaranty Association (Washington association). Id. Because the Washington statute, like our act, prohibits insurers from recovering under it, the plaintiffs insurer waived its right to subrogation. Id., 196. Nevertheless, the Washington association offset the benefits it had paid the plaintiff by the amount she recovered from her own insurer. Id. The court in Proios, construing the Washington statute’s nonduplication of recovery provision; Wash. Rev. Code Ann. § 48.32.100 (1); concluded that the Washington association’s offset was proper and prevented the plaintiff from being doubly compensated for her injuries.
Accordingly, because, following execution of the waiver, the state’s claim squarely fits within the act’s definition of the term “ ‘[c]overed claim’ ”; General Statutes § 38a-838 (5); and, because nothing in the act’s text or history prohibits the state and Illinois Union from modifying their private obligations, the trial court properly concluded that the waiver restored the status of the state’s claim as a “covered claim” and rendered a declaratory judgment in the state’s favor.
The judgment is affirmed.
In this opinion the other justices concurred.
The association appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-1.
“ ‘Covered claim’ means an unpaid claim, including, but not limited to, one for unearned premiums, which arises out of and is within the coverage and subject to the applicable limits of an insurance policy to which sections 38a-836 to 38a-853, inclusive, apply issued by an insurer, if such insurer becomes an insolvent insurer after October 1, 1971, and . . . the term ‘covered claim’ shall not include . . . any claim by or for the benefit of any reinsurer, insurer, insurance pool, or underwriting association . . . .” General Statutes § 38a-838 (5) (B) (i).
General Statutes § 31-293 (a) provides in relevant part: “[A]ny employer . . . having paid, or having become obligated to pay, compensation under the provisions of this chapter may bring an action against [a tortfeasor who had injured an employee] to recover any amount that he has paid or has become obligated to pay as compensation to the injured employee. . . .”
General Statutes § 38a-841 (1) (a) provides in relevant part: “[The] association shall . . . [b]e obligated to the extent of the covered claims existing prior to the determination of insolvency and arising within thirty days after the determination of insolvency . . . .”
The waiver provides in relevant part: “[Illinois Union] on behalf of itself and the member companies of the ACE Group of [ijnsurance and [Reinsurance [companies hereby irrevocably waives any claim for subrogation recovery or reimbursement from [the state] from sums it may receive from [the association] in connection with [the underlying action]. Per agreement of the parties . . . this waiver shall constitute an amendment to the [pjolicy [effective the policy’s effective date].”
This court previously has concluded, and the parties do not dispute, that a self-insurer is not an “insurer” for the purposes of the act and may, therefore, recover from the association. Doucette v. Pomes, supra, 247 Conn. 474.
We note that $149,900 represented the total amount of the settlement less a $100 deductible, and the $150,000 contributed by the Illinois Insurance Guaranty Fund. Besack v. Rouselle Corp., supra, 706 F. Sup. 386.
The court in Besack also concluded that the plaintiffs claim did not meet the definition of a covered claim because it was not an unpaid claim arising from the insurance policy of an insolvent insurer. Besack v. Rouselle Corp., supra, 706 F. Sup. 386.
The association also relies on the per curiam opinion of the Massachusetts Appeals Court in Kinney v. Leaman, 14 Mass. App. 926, 926-27, 436 N.E.2d 996 (1982), concluding that an assignee of an insurer’s subrogation claim had no rights against the Massachusetts Insurer’s Insolvency Fund because he merely was asserting an insurer’s barred claim. This case, like Besack, also clearly is distinguishable from the present matter.
Although the plaintiff in Proios also argued that she did not seek double recovery because, had the defendant’s insurer been solvent and her insurer still waived subrogation, she would be entitled to collect the full amount of her damages from the defendant’s insurer, the court disagreed. Proios v. Bokeir, supra, 72 Wash. App. 202-204. It reasoned that, had the Washington association not been involved in the case, the plaintiffs insurer would not have waived its right to subrogation and, accordingly, concluded that the plaintiff was put in no worse a position than she would have been in had the defendant’s insurer been solvent. Id., 204.
The association also raises two other claims, which we do not reach because they are meritless. Indeed, we find puzzling the association’s contention that “[t]here was nothing for Illinois Union to waive when it executed the purported waiver on September 30,2002,” because it possessed no right, to any moneys received from the association. If, as the association contends, Illinois Union could not waive its right to the funds because it, never possessed the right in the first place, then the original provision in the policy calling for payment to Illinois Union is void ab initio. This circular argument mischaracterizes the nature of the waiver. Illinois Union itself did not assert a claim against the association, nor did it purport to waive any claim against it. Rather, Illinois Union waived its valid contractual right to recover claim reimbursement funds from the state in the event that the state received them. The fact that, in the present case, the value of such reimbursement would be zero is immaterial.