Dugas v. Lumbermens Mut. Cas. Co.

• Decision Date: 11 July 1990
• Docket Number: No. 7924,7924
• Citation: 22 Conn.App. 27,576 A.2d 165
• Court: Connecticut Court of Appeals
• Parties: Thomas P. DUGAS v. LUMBERMENS MUTUAL CASUALTY COMPANY.

Page 165

576 A.2d 165

22 Conn.App. 27

Thomas P. DUGAS v.LUMBERMENS MUTUAL CASUALTY COMPANY.

No. 7924.

Appellate Court of Connecticut.

Argued Dec. 5, 1989.

Decided June 12, 1990.

Certification Granted

July 11, 1990.

Michael Brodinsky, North Haven, for appellant(defendant).

Juri E. Taalman, Norwich, with whom, on the brief, was Nicholas G. Sarantopoulos, Danielson, for appellee(plaintiff).

Before DUPONT, C.J., and EDWARD Y. O'CONNELL and LAVERY, JJ.

LAVERY, Judge.

The sole issue in this appeal is whether an insurance carrier providing uninsured motorist coverage may deduct from those proceeds payable to its insured the full amount of any unreimbursed reparations payments ¹ without contributing to its insured's expenses, namely, attorney's fees, in procuring the uninsured motorist recovery.The trial court rendered judgment requiring the defendant insurance carrier to contribute to those expenses in an amount proportionately equal to the plaintiff's contribution.We affirm.

The case was tried upon the following stipulated facts.The plaintiff was injured in a two car accident on April 17, 1982.At that time, the automobile driven by the plaintiff was covered by a policy with the defendant that provided reparations coverage of $25,000 and uninsured motorist coverage of $40,000.The defendant paid to the plaintiff or on his behalf reparations totalling $13,316.63.The stipulated amount of the plaintiff's damages under the uninsured motorist coverage was $20,000, ² and the parties agreed that the defendant would be reimbursed for its reparations benefits payments out of this $20,000.

The parties disagree, however, over whether the defendant is entitled to reimbursement of the full amount of its reparations payments.The defendant claims that, pursuant to the Connecticut insurance regulations, it is entitled to full reimbursement.The plaintiff, on the other hand, contends that the defendant's reimbursement is limited to two thirds of the amount of the reparations payments.³The trial court found for the plaintiff, and the defendant appealed.

To decide this appeal, we must consider the relationship among several statutes and regulations pertaining to no-fault insurance.These are General Statutes §§ 38-325(b),⁴38-175c, ⁵andRegulations of Connecticut State Agencies § 38-175a-6.⁶

The parties agree that General Statutes § 38-325(b) governs the reimbursement to the insurer of reparations benefits out of damage recoveries from tortfeasors or their liability carriers.The trial court apparently held, however, as the plaintiff urges us to hold, that § 38-325(b) also governs the reimbursement to the insurer of reparations benefits out of uninsured motorist damage awards.It is true, as the plaintiff contends, that the reparations benefits being reimbursed to the insurer are the same in the case of a recovery from either a tortfeasor or an uninsured motorist carrier.That the reparations payments being reimbursed are the same in either case, however, does not necessarily mean that the statute applies with equal force in either instance.

The relevant portion of § 38-325(b) provides: "Whenever a person who receives basic reparations benefits for an injury recovers damages ... from the owner, registrant, operator or occupant of [an insured] private passenger motor vehicle ... or from a person or organization legally responsible for his acts or omissions, the insurer is entitled to reimbursement from the claimant...."It is evident, therefore, that three factors must be satisfied before the provisions of this section become applicable.First, the claimant must receive reparations benefits.⁷Second, the claimant must recover damages either through judgment or settlement.In the case before us, these two factors are satisfied.Lastly, the damages must be received from an individual or organization specified in the statute.On this factor the plaintiff's argument fails.Uninsured motorist carriers are not specified in the statute, as they are not considered to be the tortfeasor or any other statutorily specified person; neither is the claimant's uninsured motorist carrier considered to be in privity with the tortfeasor or with any of the persons specified in the statute.Jones v. Southern Home Ins. Co., 135 Ga.App. 385, 217 S.E.2d 620, cert. denied, 424 U.S. 902, 96 S.Ct. 1093, 47 L.Ed.2d 307(1975);8C J.Appleman, Insurance Law and Practice§ 5071, p. 83.Thus, § 38-325(b) is not directly applicable to the situation before us.

The defendant, on the other hand, argues that the applicable authority is § 38-175a-6(d)(3) of the Regulations of Connecticut State Agencies, which provides that any uninsured motorist damages the insured may recover may be reduced by the amount of any unreimbursed reparations payments.In contrast to General Statutes § 38-325(b), the regulation makes no provision for reducing the carrier's reduction as a contribution toward the claimant's attorney's fees to reflect the claimant's cost of procuring the benefit for the carrier.We agree with the defendant that this regulation controls the case.

It does not necessarily follow, however, that the trial court's judgment allowing a setoff for attorney's fees is erroneous and must be reversed.It is not clear whether the trial court considered the relationship of the regulation and the statute or the apparent conflict between them.Its memorandum of decision simply states that the court considered § 38-325(b) and various cases.Even if the trial court failed to give adequate consideration to these issues, however, we may uphold a correct decision rendered below when the decision is rendered upon incorrect grounds, provided proper grounds may be found in the record to sustain it.Stamford v. Administrator, 15 Conn.App. 738, 743, 546 A.2d 335, cert. denied, 209 Conn. 814, 550 A.2d 1082(1988).We uphold the trial court's judgment because we hold, for the reasons set out below, that the regulation cannot be read to be valid without reference to the attorney's fee provision of § 38-325(b).

Our review of General Statutes § 38-325(b) and the Regulations of Connecticut State Agencies § 38-175a-6 indicates that, although the statute seems facially inapplicable to this case, the public policy implicated by the statute cannot be wholly dismissed from our consideration of the regulation.The two are closely related; both the statute and the regulation govern the direct reimbursement to the insurer of reparations benefits paid to the insured, albeit from differing sources of recovery.Yet the two conflict on the insured's ability to recoup part of the cost of collecting the funds reimbursed to the insurer.

"Although it is axiomatic that, where the statutory language is clear and unambiguous, construction of the statute by reference to its history and purpose is unnecessary;Manchester v. Manchester Police Union, 3 Conn.App. 1, 6, 484 A.2d 455(1984); that axiom only applies in full force '[w]here ... the language of a statute is ... absolutely clear' on its face and where no ambiguity is disclosed by reference to its background.(Emphasis in original.)Anderson v. Ludgin, 175 Conn. 545, 552-54, 400 A.2d 712(1978).Where such absolute clarity is lacking and such an ambiguity is disclosed, the court must look to the language of the statute, its history, purpose, objective and underlying policy.Id."Shelby Mutual Ins. Co. v. Della Ghelfa, 3 Conn.App. 432, 437-38, 489 A.2d 398(1985), aff'd, 200 Conn. 630, 513 A.2d 52(1986).We therefore examine the statute and the regulation to see if the apparent conflict between them can be resolved without resort to judicial construction.

We turn first to the statute, § 38-325(b).Originally enacted as Public Acts 1972, No. 273, § 7, it gave insurers the right to require insureds who receive reparations benefits and recover tort damages to reimburse the insurer for the reparations benefits paid.The act did not require insurers to make any contribution toward the expenses that the insured bore in procuring the damage award.The act served a principal goal of the no-fault laws, namely, to limit the insured to a single net recovery, thereby reducing the cost of insuring the motoring public and easing the upward pressure on insurance premium rates.SeeHartford Accident & Indemnity Co. v. Holder, 37 Conn.Sup. 723, 731-32, 436 A.2d 308(1981), citingGentile v. Altermatt, 169 Conn. 267, 290-92, 363 A.2d 1(1975), appeal dismissed, 423 U.S. 1041, 96 S.Ct. 763, 46 L.Ed.2d 631(1976).⁸

In 1980, the legislature, growing increasingly aware that § 38-325(b) placed an unfair burden on insureds and granted insurers a windfall;see generally23 S.Proc., Pt. 4, 1980 Sess., pp. 1266-1273(remarks of Sens. James J. Murphy and Louise S. Barry);Conn. Joint Standing Committee Hearings, Judiciary, Pt. 2, 1980 Sess., pp. 341-345 and 417-420(remarks of Sen. Salvatore De Piano); amended the statute to require insurers to make a pro-rata contribution toward the expenses borne by the insured in procuring the recovery.Henceforth, it was to be "part of our system," in Senator Murphy's words, "that if an insured or a member of the public is to make payments and bring upon him or herself to incur costs in order to effect a recovery ... an insurance company which benefits from effecting this recovery, should participate in the expenses of the same percentage that it effects a recovery for itself."23 S.Proc., Pt. 4, supra, 1270.Section 38-325(b), as amended, thus incorporates two basic principles of fairness and public policy: first, that insureds be limited to a single recovery; and, second, that the cost of recouping the insurer's reparations benefits payments should not be borne solely by the insured.

Both of these principles again found expression the following year, in Public Acts 1981, No. 81-386, § 1, a new statute granting health insurers a lien on the proceeds of any workers' compensation award won by a...