Allstate Ins. Co. v. Welch

• Decision Date: 27 October 1986
• Docket Number: No. 17158-5-I,17158-5-I
• Court: Washington Court of Appeals
• Parties: ALLSTATE INSURANCE COMPANY, a foreign insurance company, Plaintiff, v. Jerry L. WELCH, Defendant.

Page 740

45 Wn.App. 740

727 P.2d 268

ALLSTATE INSURANCE COMPANY, a foreign insurance company, Plaintiff, v. Jerry L. WELCH, Defendant.

No. 17158-5-I.

Court of Appeals of Washington,

Division 1.

Oct. 27, 1986.

Roblin J. Williamson, Albert R. Johnson, Davies Roberts Reid & Wacker, Seattle, for Jerry L. Welch.

Pinckney M. Rohrback, Irene M. Hecht, Keller, Rohrback Waldo, Hiscock, Butterworth & Fardal, Seattle, for Allstate Ins. Co.

James M. MURPHY, Judge Pro. Tem. ^*

Appellant Jerry Welch appeals from an order of summary judgment enforcing a setoff provision in his insurance policy. We reverse.

On November 2, 1983, appellant was injured when his vehicle was struck by another vehicle driven by an uninsured motorist. Because appellant was acting within the scope of his employment at the time of the accident, he filed a worker's compensation claim with the Washington State Department of Labor and Industries. As a result of that claim, he has received and continues to receive both medical treatment and wage loss payments from the Department of Labor and Industries.

At the time of the accident, appellant was insured under an automobile liability policy issued by respondent Allstate Insurance Company. The policy provided underinsured motorist coverage with a bodily injury limit of $100,000.00 per individual, and $300,000.00 per accident. The policy also contained the following provision:

Damages payable will be reduced by:

(2) all amounts paid or payable under any workman's compensation, or similar disability benefits law, Personal Injury Protection Payments, Automobile Medical Payments, or any similar automobile medical payments coverage.

In August 1985, respondent moved for summary judgment seeking a declaration from the court that the above-mentioned policy provision was valid and enforceable as a matter of law. On August 30, 1985, the trial court granted the motion. This appeal followed.

The issue presented is whether, under Washington law, an insurer may enforce an underinsured motorist policy provision that permits the insurance company to reduce "damages payable" by the amount of any worker's compensation benefits received by the injured insured.

Appellant contends the trial court erred in granting summary judgment enforcing a setoff provision in his insurance policy. He argues that the provision is unenforceable because: (1) it is contrary to public policy; (2) the underinsured motorist act does not expressly permit such a setoff; and (3) the uninsured motorist carrier owes to its insured all damages which would be collectable from the tortfeasor.

On the other hand, respondent argues that the policy provision is enforceable because: (1) the setoff provision is not inconsistent with or contrary to the purpose of underinsured motorist coverage; and (2) the setoff provision is consistent with the public policy of preventing a double recovery.

Though the precise issue presented is one of first impression in Washington, a similar issue was recently addressed by the Washington State Supreme Court in Britton v. Safeco Ins. Co. of Am., 104 Wash.2d 518, 707 P.2d 125 (1985). In Britton, an on-duty sheriff of Columbia County was injured when his automobile was struck by another car. Claiming disability from his injuries, the sheriff retired and received benefits under the Washington Law Enforcement Officers and Firefighters Retirement System Act (LEOFF). He then initiated a declaratory judgment action against the county's insurer, Safeco, seeking coverage under the uninsured/underinsured motorists endorsement in the county's policy. The policy provided that the amount payable thereunder would be reduced by "[a]ll sums paid or payable under any workers' compensation, disability benefits or similar law, ..." Britton, at 520, 707 P.2d 125. Safeco took the position that it could reduce its uninsured/underinsured motorist benefits by the amount of LEOFF disability payments received by the sheriff. Britton argued, however, that the setoff clause was void as against public policy.

In holding that the setoff would be unenforceable under the underinsured motorist statute, RCW 48.22.030, the Britton court stated:

Accordingly, we construe the purpose of the underinsured motorist aspects of the new underinsured motorist statute as allowing an injured party to recover those damages which the injured party would have received had the responsible party been insured with liability limits as broad as the injured party's statutorily mandated underinsured motorist coverage limits. This also means that where the underinsured motorist endorsement does not provide protection to the extent mandated by the underinsured motorist statute, the offending portion of the policy is void and...