Repo v. Capitol Elevator Co., Division of Intern. Multifoods Corp.

• Decision Date: 18 March 1977
• Docket Number: 46511,Nos. 46386,s. 46386
• Parties: Oscar REPO, Relator, v. CAPITOL ELEVATOR COMPANY, DIVISION OF INTERNATIONAL MULTIFOODS CORPORATION, et al., Employer and Insurer, The Prudential Insurance Company of America, intervenor, Respondent, Oscar REPO, Appellant, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Respondent.
• Court: Minnesota Supreme Court

Page 248

252 N.W.2d 248

312 Minn. 364

Oscar REPO, Relator, v. CAPITOL ELEVATOR COMPANY, DIVISION OF INTERNATIONAL

MULTIFOODS CORPORATION, et al., Employer and

Insurer, The Prudential Insurance

Company of America, intervenor, Respondent, Oscar REPO, Appellant, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Respondent.

Nos. 46386, 46511.

Supreme Court of Minnesota.

March 18, 1977.

Rehearing Denied April 28, 1977.

Syllabus by the Court

Under the facts of this case, the Workers' Compensation Board order that Prudential Insurance Company be reimbursed for certain medical expenses paid plaintiff-employee, Oscar Repo, under a group sickness and accident policy is affirmed. Likewise, the dismissal by the district court of Repo's action against Prudential for benefits under its policy is also affirmed.

Paul J. Louisell, Duluth, for relator-appellant.

Van Evera, Mundt, Koskinen, Clure & Andrew and Thomas F. Andrew, Duluth, for intervenor-respondent.

Heard before ROGOSHESKE, PETERSON and MacLAUGHLIN, JJ., and considered and decided by the court en banc.

MacLAUGHLIN, Justice.

Oscar Repo, plaintiff-employee, appeals from a district court judgment in favor of Prudential Insurance Company (Prudential) in an action to recover disability benefits allegedly due to Repo under a group sickness and accident policy. Repo also seeks review by certiorari of an order of the Workers' Compensation Board (now Worker's Compensation Court of Appeals) awarding Prudential, as intervenor, a portion of Repo's workers' compensation settlement with his employer, Capitol Elevator Company (Capitol). The matters were consolidated for hearing before this court. For reasons stated herein, we affirm both the district court and the Workers' Compensation Board.

On Sunday, September 9, 1973, Repo suffered a heart attack while at his home. He was hospitalized for more than 3 weeks and disabled a considerably longer period of time as a result of the attack. Since Repo worked for Capitol in a grain elevator and had a prior history of emphysema, the heart attack was arguably work related.

As an employee of Capitol, Repo was covered under a group sickness and accident policy issued by Prudential. This policy provided for payment of medical expenses and benefits for disability incurred as a result of sickness or accident not covered by the Workers' Compensation Act. Workers' compensation coverage was provided by Liberty Mutual Insurance Company (Liberty Mutual).

In December 1973, Repo filed a claim with the Workers' Compensation Division, alleging that the heart attack was work related. Capitol and Liberty Mutual denied liability and hearings were held. On July 31, 1974, before the hearings were complete, Repo entered into a settlement agreement with Capitol and Liberty Mutual. The agreement provided for a lump sum payment of $12,000 in settlement of all claims Repo had under the Workers' Compensation Act. Although Repo had requested medical and disability benefits in his petition, the settlement agreement purported to pay $12,000 in disability only.

While the workers' compensation claim was pending, Repo also sought benefits under the sickness and accident policy with Prudential. On August 3, 4 days after the settlement with Capitol and Liberty Mutual, Repo signed an agreement with Prudential whereby Prudential agreed to pay Repo's medical expenses (totaling $2,626.84) but with a provision that Prudential would be reimbursed

" * * * if at any later date medical and hospital expenses are paid under any Workmen's Compensation Law or Act for this disability, or any settlement of claim for such medical and hospital expenses is made or any payment is made to avoid a claim for such medical and hospital expenses or a settlement of such claim * * *."

Prudential was not informed of the settlement with Capitol and Liberty Mutual when it signed this agreement. ¹

Repo's settlement with Capitol and Liberty Mutual was submitted to the Workers' Compensation Division on August 19, 1974, but failed to set forth the expenses for medical treatment and care. Since Repo's claim petition had alleged certain medical expenses, the division made inquiry of Repo's attorney and learned that Prudential had made certain payments. The division then notified Prudential of the proposed settlement and it petitioned for intervention, claiming that it was entitled to reimbursement. The commission allowed Prudential to intervene, upheld the settlement with Capitol and Liberty Mutual, and placed $2,626.84 of the settlement in escrow pending a determination of Prudential's claim. The compensation judge held a hearing on January 6, 1975, on the merits of Prudential's claim and entered a decision favorable to Repo. The board reversed this decision on October 10, 1975, and ordered the sum held in escrow to be paid to Prudential.

While Prudential's intervention claim was pending before the board, Repo brought an action against Prudential in the district court to recover disability benefits totaling $1,950. The district court dismissed the action on September 19, 1975.

Prudential argues that when an insurer pays benefits under a policy which excludes injury or sickness covered by the Workers' Compensation Act, and the employee, without the insurer's consent, makes a settlement with the workers' compensation carrier arising out of the same sickness for which benefits were paid, the insurer should be reimbursed. It is clear that if Repo had litigated his claim and the commission ultimately found in his favor, Prudential would be entitled to reimbursement from the proceeds of the award. Lemmer v. Batzli Electric Co., 267 Minn. 8, 125 N.W.2d 434 (1963); Equitable Life Assurance Society v. Bachrach, 265 Minn. 83, 120 N.W.2d 327 (1963). Repo...