Kilner v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 05 March 1993 |
| Docket Number | No. 68205,68205 |
| Citation | 252 Kan. 675,847 P.2d 1292 |
| Parties | Wayne KILNER, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee. |
| Court | Kansas Supreme Court |
Syllabus by the Court
1. The purpose of legislation mandating the offer of uninsured and underinsured motorist coverage is to fill the gap inherent in motor vehicle financial responsibility and compulsory insurance legislation. This coverage is intended to provide recompense to innocent persons damaged through the wrongful conduct of motorists who, because they are uninsured or underinsured and not financially responsible, cannot be made to respond in damages.
2. The uninsured and underinsured motorist statutes are remedial in nature. They should be liberally construed to provide broad protection to the insured against all damages resulting from bodily injuries sustained by the insured in an automobile accident caused by the acts of an uninsured or underinsured motorist.
3. The purpose of K.S.A. 1992 Supp. 40-284 is to provide the individual who is covered by the standard automobile liability policy with a right against his or her own insurer, up to the limits of the insured's coverage, which the insured would have against the uninsured or underinsured tortfeasor.
4. K.S.A. 1992 Supp. 40-284(e)(4) allows an insurer to exclude or limit its uninsured and underinsured motorist coverage to the extent that duplicative workers compensation benefits apply. The legislature intended K.S.A. 1992 Supp. 40-284(e)(4) to permit an insured to recover underinsured motorist benefits which are not duplicative of workers compensation benefits. Any other result negates the legislature's intent to require underinsured motorist coverage protection.
5. The rules of statutory construction are discussed and applied.
Jerry R. Palmer, of Palmer & Lowry, Topeka, argued the cause and was on the briefs, for appellant.
Craig C. Blumreich, of Gehrt & Roberts, Chartered, Topeka, argued the cause and was on the brief, for appellee.
Plaintiff Wayne Kilner, who was injured by an underinsured motorist, appeals the district court's grant of summary judgment to his insurer, State Farm Mutual Automobile Insurance Company (State Farm). The order allows plaintiff's insurer, pursuant to K.S.A. 1992 Supp. 40-284(e)(4), to offset against its underinsured motorist coverage liability nonduplicative workers compensation benefits paid by the plaintiff's employer's insurer.
The appeal is on an agreed statement pursuant to Supreme Court Rule 3.05 (1992 Kan.Ct.R.Annot. 17). Facts set out in the statement are summarized.
Wayne Kilner was injured in an automobile accident when the vehicle he was driving was struck by a pickup truck being driven by Robert Owen, Jr. At the time of this accident, Kilner was driving a pickup truck owned by his employer, Dick Edwards Ford, and was acting in the scope of his employment. The employer's pickup was insured through Federated Mutual Insurance Company (Federated) with a $50,000 single limit for liability of uninsured/underinsured motorist coverage. Kilner insured his personal vehicles with State Farm. His uninsured/underinsured motorist coverage limits with State Farm were $100,000 per person and $300,000 per occurrence. Owen's pickup was insured by Dairyland Insurance Company (Dairyland) with a $25,000 liability limit.
Kilner filed a workers compensation claim against Dick Edwards Ford and its workers compensation insurance carrier, Federated. As of December 4, 1990, Kilner had received workers compensation benefits of $89,872.45. Of this amount, $62,224.45 was paid for medical expenses. Kilner has continued to receive payments for permanent partial disability at the rate of $256 per week. State Farm has paid personal injury protection (PIP) benefits to the plaintiff in the amount of $14,721 for lost wages and interest on lost wages.
Due to the multiple claimants in the accident, Dairyland filed an interpleader action requesting that its liability limits of $25,000/ $50,000 be equitably distributed by the court among the claimants. The district court apportioned the sum of $25,000 to Kilner from the Dairyland policy. The $25,000 was paid to Federated, Kilner's subrogated workers compensation carrier.
The parties agree that Wayne Kilner's claim for damages against Robert Owen, Jr. exceeds by more than $75,000 the aggregate of PIP benefits paid and workers compensation benefits paid and payable. The parties also agree that Robert Owen, Jr. was 100% at fault in causing the accident and that the plaintiff would be entitled to recover $75,000 underinsured motorist coverage from State Farm if duplicative workers compensation benefits are excluded.
Prior to the district court's decision, two pertinent cases were filed. On August 2, 1991, United States District Judge Patrick F. Kelly issued a memorandum and order in the case of Bockwinkel v. American Economy Insurance Company, 1991 WL 171968 (D.Kan.), determining that uninsured or underinsured motorist coverage was not an issue in that case. On January 17, 1992, this court issued its decision in Rich v. Farm Bur. Mut. Ins. Co., 250 Kan. 209, 824 P.2d 955 (1992), 40-284(e)(6) with regard to permissible offsets for PIP benefits paid from an automobile insurer's underinsured motorist coverage.
The district court granted State Farm's motion for summary judgment, finding Rich inapplicable to the interpretation of 40-284(e)(4) because the insured paid a separate premium for PIP benefits coverage but did not pay a premium for workers compensation benefits coverage. The district judge adopted the analysis of Judge Kelly in Bockwinkel, and determined that the absence of the word "duplicative" in 40-284(e)(4) allows an offset for workers compensation benefits received by the insured. Because the district court granted the defendant's motion for summary judgment, it also denied plaintiff's request for prejudgment interest and attorney fees.
In 1968, the Kansas Legislature enacted the uninsured motorist statute, K.S.A. 1968 Supp. 40-284. This statute allowed motorists who incurred damages in an automobile accident with an individual who had no automobile insurance to recover benefits for those damages from their own insurance company, up to the limits of their coverage. In 1981, the legislature amended the law to include within the uninsured motorist statute provisions for coverage for underinsured motorists. Section (b) of this statute now provides:
"Any uninsured motorist coverage shall include an underinsured motorist provision which enables the insured or the insured's legal representative to recover from the insurer the amount of damages for bodily injury or death to which the insured is legally entitled from the owner or operator of another motor vehicle with coverage limits equal to the limits of liability provided by such uninsured motorist coverage to the extent such coverage exceeds the limits of the bodily injury coverage carried by the owner or operator of the other motor vehicle."
The insurer charges a premium for uninsured motorist coverage and a separate premium for underinsured motorist coverage. Rich v. Farm Bur. Mut. Ins. Co., 250 Kan. at 212, 824 P.2d 955.
K.S.A. 1992 Supp. 40-284(e) allows an insurer to exclude or limit its uninsured and underinsured motorist coverage. It provides in part:
"(e) Any insurer may provide for the exclusion or limitation of [underinsured motorist] coverage:
....
"(4) to the extent that workers' compensation benefits apply;
....
"(6) to the extent that personal injury protection benefits apply."
The question is, does 40-284(e)(4) allow the offset of underinsured motorist benefits for every dollar of workers compensation benefits received, or just where underinsured motorist benefits duplicate the workers compensation benefits?
Plaintiff Joseph Bockwinkel was involved in a multi-vehicle accident on I-70 while driving a pickup truck owned by his employer, Great Western Tire of Oakley, Inc. At the time of the accident, two insurance policies issued by the American Economy Insurance Company and Northwestern National Casualty Company provided coverage to the employer's pickup truck.
A severe dust storm caused drivers on I-70 to slow. Defendant, Franklin J. Clayton, slowed to a halt in the righthand lane. While stopped, Clayton's car was struck by a semi-tractor truck. After this collision, Clayton's car was damaged, but he was able to push it onto the shoulder.
The dust had caused several vehicles, including Bockwinkel's pickup truck, to halt behind Clayton's car. Bockwinkel's pickup truck was struck from behind by a semi-tractor truck owned by Gray Rock Farms. The pickup was thrown into the lefthand lane by the force of the impact, and then struck by a vehicle driven by defendant Burke Kitchen. Bockwinkel filed a tort action against all parties and his employer's insurers.
Bockwinkel claimed that because he was unable to identify the driver of the semi-truck that struck the Clayton's car, he was entitled to uninsured motorist coverage under his employer's policies. One of the employer's insurers argued (1) that no uninsured motorist coverage was available because Bockwinkel had already received workers compensation in excess of the potential uninsured motorist coverage; and (2) that uninsured motorist coverage was not an issue because the plaintiff had failed to prove that the uninsured motorist caused the plaintiff's injury. The United States District Court, after noting both the policies of American and National contained provisions reducing coverage for amounts received in the form of workers compensation benefits, discussed 40-284(e) and Kansas cases which discussed workers compensation benefits and setoffs allowed an employer's insurer. The federal district court determined that the plaintiff failed to meet his burden of proof that an uninsured motorist caused or contributed to...
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