Johnson v. Fireman's Fund Ins. Co.

• Decision Date: 10 December 1982
• Docket Number: No. 82-C-0778,82-C-0778
• Citation: 425 So.2d 224
• Parties: Joseph JOHNSON, Jr. v. FIREMAN'S FUND INSURANCE COMPANY, et al.
• Court: Louisiana Supreme Court

Page 224

425 So.2d 224

Joseph JOHNSON, Jr. v. FIREMAN'S FUND INSURANCE COMPANY, et al.

No. 82-C-0778.

Supreme Court of Louisiana.

Dec. 10, 1982.

Concurring Opinion Jan. 17, 1983.

Rehearing Denied Jan. 21, 1983.

Sidney L. Patin, Henderson, Hanemann & Morris, Houma, for applicant.

Lawrence J. Duplass, Johnston & Duplass, Robert E. Birtel, Gordon Hackman, Herbert B. Bowers, III, Hammett, Leake & Hammett, New Orleans, for respondents.

DENNIS, Justice.

We are called upon to decide whether a worker compensation insurer can recover from an uninsured motorist carrier amounts it is obliged to pay an employee whose work-related automobile accident was caused by the fault of an underinsured motorist. The previous courts held that a worker compensation carrier has no cause of action for such recovery from either the employer's or the employee's uninsured motorist carrier because neither carrier is a "third person" who is "legally liable to pay damages" to the employee so as to require it to reimburse the compensation insurer under the worker compensation act. We affirm in part and reverse in part, 411 So.2d 538. An uninsured motorist carrier is a third person legally liable to pay damages to an injured employee protected by its coverage because it is obliged by law and the issuance of its policy to repair the same damage which the tortfeasor has caused and to guarantee recovery as if the tortfeasor had been insured. Therefore, a worker compensation insurer can recover amounts paid to an injured employee out of uninsured motorist coverage. La.R.S. 23:1101. However, this is subject to one limitation. Worker compensation insurers cannot recover out of uninsured motorist coverage paid for by an employee because the worker compensation statute prohibits direct or indirect imposition of the cost of compensation upon an employee. La.R.S. 23:1163.

Plaintiff, Joseph Johnson, Jr., filed suit alleging that he had been injured in an automobile accident while in the scope and course of his employment and while driving his employer's vehicle. He alleged that an insurance policy issued to Joseph Becnel, the other driver involved in the accident, was insufficient to cover his damages and named as defendants Fireman's Fund Insurance Company, his employer's uninsured motorist carrier, and Lumberman's Mutual Casualty Company, his own uninsured motorist carrier. His employer's worker compensation insurer, Continental Insurance Companies, intervened seeking reimbursement for compensation it is obliged to pay Joseph Johnson, Jr. on account of the automobile accident. Both Joseph Johnson and Fireman's Fund filed exceptions of no cause of action to the intervention which were sustained. The court of appeal affirmed without expressing its rationale but citing Lute v. City of Lake Charles, 394 So.2d 736 (La.App. 3d Cir., 1981); Bannon v. Edrington, 392 So.2d 186 (La.App. 4th Cir., 1980); Gentry v. Pugh, 362 So.2d 1154 (La.App. 2d Cir.), writ denied, 363 So.2d 922 (La.1978). These opinions adduce two reasons for holding that the employer is not entitled to recover from the uninsured motorist carrier: the carrier is not a "third person" from whom reimbursement may be sought; and the carrier is not "legally liable to pay damages" to the employee so as to entitle the employer or his insurer to recover from the carrier under the worker compensation act. We granted writs to determine whether these holdings correctly reconcile the conflicting interests and rights which arise among the employee, the worker compensation insurer, and the uninsured motorist carriers in this situation.

The worker compensation statute provides that when an injury for which compensation is payable creates in some person (other than those against whom compensation is the employee's exclusive remedy) a legal liability to pay damages, the claim or payment of compensation shall not affect the employee's right of action against such third person. Any employer obliged to pay compensation may recover from such third person any amount he has paid or become obligated to pay as compensation. La.R.S. 23:1101. ¹ The employer's claim shall be given precedence in apportioning the recovery of damages in a suit by the employer or employee, and the employee shall be entitled to any excess. No compromise with such third person by either the employer or the employee shall be binding on the other unless assented to by him. La.R.S. 23:1103.

The uninsured motorist statute provides that automobile liability insurance, delivered or issued for delivery in this state, with respect to vehicles registered or principally garaged here, shall contain coverage for the protection of insureds who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury, sickness, or disease, including death, unless such coverage has been rejected. La.R.S. 22:1406 D(1)(a). ² Thus, the object of the uninsured motorist statute is to promote full recovery of damages by innocent automobile accident victims by making uninsured motorist coverage available for their benefit as primary protection when the tortfeasor is without insurance and as additional or excess coverage when he is inadequately insured. Bond v. Commercial Union Assurance Co., 407 So.2d 401 (La.1981); Niemann v. Travelers Ins. Co., 368 So.2d 1003 (La.1979); Whitten v. Empire Fire and Marine Ins. Co., 353 So.2d 1071 (La.App.Cir.1977).

The central purpose of both the worker compensation act and the uninsured motorist statute is the protection of the injured person. The compensation act protects him by providing compensation and by reserving to him any tort recovery from a third person that exceeds his compensation benefits. The uninsured motorist act protects him by making available in all situations, not just those that are work-connected, an opportunity for some recovery in place of what he would have gotten if the tortfeasor had been insured. See, 2A A. Larsen, The Law of Workmen's Compensation, § 71.23(h) (Desk Ed. 1982).

Closely related concepts underlying both acts are that the ultimate loss for wrongdoing should fall on the wrongdoer and that the injured person should not receive more in reparation than that required to make him legally whole. 14 W. Malone & A. Johnson, Louisiana Civil Law Treatise-Worker's Compensation § 372 p. 209 (1980). The employer is given so much of the employee's recovery from a third person as is necessary to reimburse him for his compensation outlay, and the employee is given the excess. La.R.S. 23:1103. The uninsured motorist carrier who either totally or partially pays the employee automobile accident victim for the damages he has suffered is subrogated to the employee's action against the uninsured or underinsured tortfeasor, reserving to the employee who has been only partially compensated for his loss a lawful cause and preference over the insurer for payment out of the tortfeasor's property. La.C.C. arts. 2160-62. La.R.S. 22:1406(D)(4); Bond v. Commercial Union Assurance Co., 407 So.2d 401, 411 (La.1981).

Because the employer is entitled to proceed against a "third person" for reimbursement for compensation paid, it is important to ascertain who is a "third person" for these purposes. The worker compensation statute provides that when an employee's work-related injury creates a legal liability to pay damages in some person, other than those listed in La.R.S. 23:1032, that person is a "third person." La.R.S. 23:1101. The parties excluded from the category of third persons by reference to La.R.S. 23:1032 are those persons against whom compensation is the employee's exclusive remedy, such as the claimant's employer, co-employees, principal, principal's employer, partner, or employee of such employer, director of stockholders of employer or principal. See La.R.S. 23:1032. Accordingly, a "third person" is anyone who is legally liable to pay an employee damages because of his injury who is not included within the list of classifications provided by La.R.S. 32:1032. Such a "third person" is amenable to suit by the employer's worker compensation insurer by virtue of the insurer's statutory subrogation to all rights and actions to which the employer is entitled. La.R.S. 23:1162.

Because neither of the uninsured motorist carriers in this case come within the classifications of La.R.S. 23:1032, they qualify as "third persons" if they are legally liable to pay the employee damages because of his work-related automobile accident. Accepting the allegations of the petition and the intervention as proven for purposes of the exception of no cause of action, it is clear that the carriers would be legally liable to pay the employee certain sums because of his injury caused by the fault of an underinsured motorist. The crucial issue is whether these sums are "damages" under the worker compensation and uninsured motorist statutes.

We conclude that when an uninsured motorist carrier becomes liable under its policy, it is required to pay "damages" within the meaning of La.R.S. 23:1101 to the person protected. Although uninsured motorist coverage is provided for the protection of persons injured by uninsured or underinsured tortfeasors, and not for the benefit of such wrongdoers, the statutorily specified coverage guarantees the injured person's recovery of damages as if the tortfeasor had been insured. La.R.S. 22:1406 D(1)(a). Subject to conditions not granted the tortfeasor, the uninsured motorist carrier is independently obliged to repair the same damage which the tortfeasor has wrongfully caused. By effect of law and the delivery or issuance for delivery of automobile liability insurance, both the uninsured motorist carrier and the tortfeasor are obliged to the same thing. Hoefly v. Government Employee's Ins. Co., 418 So.2d 575 (La.1982). The fact that the uninsured motorist carrier is bound by the combined effect of the tortfeasor's wrongful act, the...