American Economy Ins. Co. v. Thompson

• Decision Date: 01 July 1994
• Citation: 643 So.2d 1350
• Parties: AMERICAN ECONOMY INSURANCE COMPANY and American States Insurance Company v. Benjamin Paul THOMPSON and Sharon Thompson. 1911958.
• Court: Alabama Supreme Court

Page 1350

643 So.2d 1350

AMERICAN ECONOMY INSURANCE COMPANY and American States Insurance Company v. Benjamin Paul THOMPSON and Sharon Thompson.

1911958.

Supreme Court of Alabama.

July 1, 1994.

Ronald G. Davenport, Amy C. Vibbart and N. Wayne Simms, Jr. of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for appellants.

John A. Owens and Susie T. Carver of Phelps, Owens, Jenkins, Gibson & Fowler, Tuscaloosa, for appellees.

COOK, Justice.

This case involves Benjamin Paul Thompson's claim that he can "stack" $300,000 in uninsured motorist coverage from one policy onto $200,000 already recovered pursuant to another policy issued by American Economy Insurance Company to Raymon's East, Inc. It also involves the right of American States Insurance Company, as the workers' compensation carrier for Thompson's employer, to be subrogated to money paid by another insurance carrier for the benefit of Thompson and his wife Sharon Thompson.

Benjamin Paul Thompson was employed by Raymon's of Columbus, Inc., in Columbus, Mississippi. He had traveled to Tuscaloosa, Alabama, at the request of Bernard Raymon, a partial owner of Raymon's of Columbus, to assist him in redecorating a Tuscaloosa store operated by Raymon's East, Inc., also partially owned by Bernard Raymon. After Thompson had completed his stay in Tuscaloosa and while he was returning home to Columbus, he had an accident. At the time of the accident, he was driving a van owned by Raymon's of Columbus and principally garaged in Mississippi. The accident occurred in Alabama, and it involved a collision between the van Thompson was driving and a vehicle driven by an uninsured motorist, Chester Waters. A third vehicle, driven by Beatrice Adkins, allegedly pulled out in front of Waters, but that third vehicle was not involved in the collision. There was a factual dispute as to whether the accident was caused by Adkins, who was insured by The Hartford Insurance Company, or by Waters. Thompson, who was permanently disabled as a result of the accident, has received workers' compensation payments from American States. Following the accident, Hartford Insurance Company paid its policy limit of $100,000 to the Thompsons, and American Economy paid its policy limit of $200,000 on the insurance policy covering the vehicles owned by Raymon's of Columbus.

The Thompsons then sued American Economy, claiming that Thompson should be entitled to stack the $300,000 under the second policy issued by American Economy onto the $200,000 already received by him. American States sought subrogation rights to the $100,000 paid to the Thompsons by Hartford. The Trial court held in favor of the Thompsons. American Economy and American States appealed. We affirm in part and reverse in part.

American Economy had issued two automobile insurance policies to Raymon's East. One policy covered two vehicles owned and principally used by the Raymon's of Columbus store and the other policy covered three vehicles owned and principally used by the Tuscaloosa store. Although both policies were issued to Raymon's East, Raymon's East contends that it was reimbursed by Raymon's of Columbus for the premium payments it made on the policy covering the vehicles owned by Raymon's of Columbus. Following the accident, American Economy paid Thompson $200,000 in uninsured motorist benefits, pursuant to the policy covering the vehicles owned by Raymon's of Columbus; however, it refused to pay $300,000, which Thompson contends he is entitled to "stack," pursuant to the second policy covering automobiles owned by Raymon's East. This case was presented to the trial judge ore tenus; the judge found that at the time of the accident Thompson was working for both Raymon's of Columbus and Raymon's East. Furthermore, he applied Mississippi law to the issue of stacking and determined that Thompson was entitled to the $300,000 under the second policy issued to Raymon's East.

As a result of the accident, Atkins's liability carrier, The Hartford, paid $64,000 ($100,000 less $36,000 in attorney fees) into an escrow account for the benefit of the Thompsons. (Sharon Thompson had claimed a loss of consortium.) American States Insurance Company, the workers' compensation carrier for Raymon's, claims the right to be reimbursed with regard to that money, pursuant to § 25-5-11(a), Ala.Code 1975, because it has been making workers' compensation payments to Thompson since the accident. The trial judge held that the money paid for the benefit of the Thompsons by The Hartford was not subject to subrogation by American States because, the judge found, the Thompsons had not been made whole as a result of the moneys that they had received. In so holding, the trial judge also determined that the proceeds from the $100,000 Hartford policy applied solely to Mrs. Thompson's claim for loss of consortium and not to the claims of Mr. Thompson.

"The entire law of subrogation, conventional or legal, is based upon equitable principles. International Underwriters/Brokers, Inc. v. Liao, 548 So.2d 163, 165 (Ala.1989). The equitable considerations that are the underpinnings of subrogation are (1) that the insured should not recover twice for a single injury, and (2) that the insurer should be reimbursed for payments it made that, in fairness, should be [made] by the wrongdoer. Id. In International Underwriters, we stated;

" '[N]o right of subrogation against the insured exists upon the part of the insurer where the insured's actual loss exceeds the amount recovered from both the insurer and the wrongdoer, after deducting costs and expenses. In other words, the insurer has no right as against the insured where the compensation received by the insured is less than the loss.'

"548 So.2d at 164-65."

Powell v. Blue Cross & Blue Shield, 581 So.2d 772, 774 (Ala.1990). Nevertheless, footnote 8 of Powell states:

"We note that any reimbursement for compensation paid to an injured plaintiff under the Alabama Workmen's Compensation Act, Ala.Code 1975, § 25-5-1 et seq. (hereinafter the 'Act'), by an employer or its insurer is specifically governed by § 25-5-11(a). Our holding in this case in no way interferes with the legislatively mandated scheme provided for under the Act.

"We also note that, pursuant to the Act, only compensation, as opposed to medical payments, is reimbursable. For an analysis of this reimbursement scheme, see Maryland Cas. Co. v. Tiffin, 537 So.2d 469 (Ala.1988). All of the examples set forth in the present opinion are based on the premise that no compensation under the Act is involved."

Powell v. Blue Cross & Blue Shield, n. 8 at 779. We find the above-quoted language in Powell dispositive of the claim of American States for reimbursement. It is undisputed that American States was the workers' compensation carrier for Raymon's. Pursuant to Powell, the payments made to Thompson in compliance with the Workers' Compensation Act are governed by § 25-5-11(a), which states:

"If the injury or death for which compensation is payable under Articles 3 or 4 of this chapter was caused under circumstances also creating a legal liability for damages on the part of any party other than the employer, whether or not the party is subject to this chapter, the employee, or his or her dependents in case of death, may proceed against the employer to recover compensation under this chapter or may agree with the employer upon the compensation payable under this chapter, and at the same time, may bring an action against the other party to recover damages for the injury or death, and the amount of the damages shall be ascertained and determined without regard to this chapter. If a party, other than the employer, is a workers' compensation insurance carrier of the employer or any person, firm, association, trust, fund, or corporation responsible for servicing and payment of workers' compensation claims for the employer, or any officer, director, agent, or employee of the carrier, person, firm, association, trust, fund, or corporation, or is a labor union, or any official or representative thereof, or is a governmental agency providing occupational safety and health services, or an employee of the agency, or is an officer, director, agent, or employee of the same employer, or his or her personal representative, the injured employee, or his or her dependents in the case of death, may bring an action against any workers' compensation insurance carrier of the employer or any person, firm, association, trust, fund, or corporation responsible for servicing and payment of workers' compensation claims for the employer, labor union, or the governmental agency, or person, or his or her personal representative, only for willful conduct which results in or proximately causes the injury or death. If the injured employee, or in case of death, his or her dependents, recovers damages against the other party, the amount of the damages recovered and collected shall be credited upon the liability of the employer for compensation. If the damages recovered and collected are in excess of the compensation payable under this chapter, there shall be no further liability on the employer to pay compensation on account of the injury or death. To the extent of the recovery of damages against the other party, the employer shall be entitled to reimbursement for the amount of compensation theretofore paid on account of injury or death. If the employee who recovers damages is receiving or entitled to receive compensation for permanent total disability, then the employer shall be entitled to reimbursement for the amount of compensation theretofore paid, and the employer's obligation to pay further compensation for permanent total disability shall be suspended for the number of weeks which equals the quotient of the total damage recovery, less the amount of any reimbursement for compensation already paid, divided by the amount of the weekly benefit for permanent total disability which...