Rydingsword v. Liberty Mut. Ins. Co.

• Decision Date: 10 November 1992
• Docket Number: No. 14499,14499
• Citation: 224 Conn. 8,615 A.2d 1032
• Court: Connecticut Supreme Court
• Parties: Roy A. RYDINGSWORD v. LIBERTY MUTUAL INSURANCE COMPANY.

Page 1032

615 A.2d 1032

224 Conn. 8

Roy A. RYDINGSWORD v. LIBERTY MUTUAL INSURANCE COMPANY.

No. 14499.

Supreme Court of Connecticut.

Argued Sept. 25, 1992.

Decided Nov. 10, 1992.

Edward J. Holahan, Jr., with whom, on the brief, was Kevin J. Gumpper, Bridgeport, for appellant (defendant).

Daniel D. Portanova, with whom, on the brief, was Dominick J. Rutigliano, Bridgeport, for appellee (plaintiff).

Before PETERS, C.J., and CALLAHAN, BORDEN, BERDON and NORCOTT, JJ.

CALLAHAN, Associate Justice.

The principal issue in this appeal is whether an insurer is entitled to set off against its liability for underinsured motorist coverage an amount equal to the value of an unrealized workers' compensation award for which the claimant has not yet chosen to apply. The defendant, Liberty Mutual Insurance Company, appeals from the judgment of the trial court modifying an award by an arbitration panel. The panel had credited the defendant insurer with an amount equal to the value of the unrealized workers' compensation claim for which the plaintiff, Roy Rydingsword, had not yet applied. The trial court vacated the setoff to the defendant and modified the award in favor of the plaintiff. The defendant appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c). We reverse the judgment of the trial court.

The defendant claims that the trial court improperly found that: (1) the prospective recovery by the plaintiff of a workers' compensation specific indemnity award for a lumbar spine disability did not constitute an amount "payable" for the purposes of the defendant's underinsured motorist policy exclusion clause; (2) the arbitrators lacked any factual basis for determining the amount of the prospective compensation award; and (3) no compensation award becomes payable until the workers' compensation commissioner makes findings and renders an award. ¹ We determine that the arbitrators had the authority to award a setoff upon the presentation of substantial evidence on which to base their determination of the amount of this prospective award where the claimant had chosen to bypass the workers' compensation forum. We therefore conclude that the defendant insurer is entitled to a setoff for the prospective indemnity. Accordingly, we reverse the judgment of the trial court.

The parties stipulated to the underlying facts. The plaintiff, while in the course of his employment, was injured in an automobile accident caused solely by the negligence of a third party. The plaintiff suffered lacerations to his forehead that resulted in permanent scarring. He also sustained injuries to his lower back that resulted in a 20 percent permanent partial disability of the lumbar spine. The plaintiff recovered $20,000 from the liability insurer of the negligent driver, thereby exhausting the coverage limits of the policy of the tortfeasor.

At the time of the accident, the plaintiff was covered by a workers' compensation insurance policy. The workers' compensation commissioner for the fourth district approved the plaintiff's claims for medical expenses in the amount of $2274.36, and for lost wages in the amount of $5775.77. The commissioner subsequently approved the plaintiff's claim of permanent scarring of his forehead and awarded him $7044.51 ² pursuant to General Statutes § 31-308(d). ³ The plaintiff did not pursue a workers' compensation claim for specific indemnity for the 20 percent disability of the lumbar spine as provided in § 31-308(b). ⁴ The plaintiff, however, did not terminate his workers' compensation rights and his workers' compensation case remained open throughout the course of the proceedings below. ⁵

At the time of the accident, the defendant had issued an automobile insurance policy to the plaintiff wherein it agreed to pay all sums that the insured would be legally entitled to recover as damages from the owner of an uninsured or underinsured vehicle because of injuries sustained by the insured as a result of an accident arising out of the use of such uninsured or underinsured vehicle. The policy provided uninsured/underinsured motorist coverage in the amount of $300,000. The policy provided further, however, that the limit of liability for uninsured/underinsured motorist coverage would be reduced, inter alia, by all sums "paid or payable ... under ... workers' compensation law...."

Pursuant to provisions of the policy, the plaintiff demanded that the defendant proceed with arbitration. The arbitration panel found that the plaintiff had sustained damages in the amount of $98,050.13. The panel also found that the defendant was entitled to a credit of $20,000, representing exhaustion of the third party tortfeasor's policy, and a credit of $7044.51, representing the workers' compensation scarring award. These credits are not at issue in this appeal.

A majority of the panel also agreed that the lumbar spine disability was work related and compensable under the workers' compensation policy coverage held by the plaintiff's employer. Using the formula set forth in § 31-308(b), the majority determined that the plaintiff would be entitled to a workers' compensation specific indemnity award of $66,602.64. ⁶ The majority then calculated the present value of the indemnity to be $60,603.22. ⁷ The majority found that the prospective specific indemnity award was payable under the workers' compensation coverage and therefore allowed a credit in this amount to the defendant. ⁸

The trial court concluded, however, that the defendant was not entitled to a setoff against the underinsured motorist award equal to the calculated value of the prospective workers' compensation specific indemnity award. ⁹ The trial court determined that the use of the words "sums" and "payable" in the exclusion clause of the uninsured/underinsured motorist coverage endorsement to the automobile insurance policy connoted the existence of specific obligations payable at present or in the future. The trial court concluded, therefore, that the exclusion did not apply to the specific indemnity that had not yet been awarded by the workers' compensation commissioner. Consequently, the trial court found that the determination of a specific value for the indemnity by the arbitration panel lacked a factual basis. The trial court vacated the credit for the value of the specific indemnity to the defendant and modified the award in favor of the plaintiff accordingly.

I

The defendant first claims that the trial court improperly concluded that the predicted recovery by the plaintiff of a workers' compensation specific indemnity award for a lumbar spine disability did not constitute an amount payable for the purposes of the exclusion clause contained in the underinsured motorist endorsement to the automobile insurance policy. The policy provided that "[t]he limit of liability shall be reduced by all sums ... paid or payable because of the bodily injury under any of the following or similar law: (a) workers' compensation law...." (Emphasis added.) This wording parallels the language of § 38-175a-6(d) of the Regulations of Connecticut State Agencies, which provides in part "that the policy may provide for the reduction of limits to the extent that damages have been ... paid or are payable under any workers' compensation or disability benefits law...." ¹⁰ (Emphasis added.)

We have recently held that "[i]f damages are paid pursuant to the workers' compensation law, the uninsured motorist coverage may be reduced accordingly. General Statutes § 38-175c contains no mandate that uninsured motorist coverage benefits may not be reduced." (Emphasis added.) Wilson v. Security Ins. Co., 213 Conn. 532, 538, 569 A.2d 40, cert. denied, --- U.S. ----, 111 S.Ct. 52, 112 L.Ed.2d 28 (1990). ¹¹ General Statutes § 38a-334 (formerly § 38-175a) explicitly authorizes the insurance commissioner to adopt regulations relating to exclusions. ¹²

A

To counter the defendant's reliance on the language in the contract and the regulations, the plaintiff contends that the meaning of the phrase "sums ... paid or payable" in the insurance policy is ambiguous and that therefore the phrase must be construed in favor of the insured. The general rule that "[w]hen the words of an insurance contract are, without violence, susceptible of two interpretations, that which will sustain the claim and cover the loss must, in preference, be adopted"; Raffel v. Travelers Indemnity Co., 141 Conn. 389, 392, 106 A.2d 716 (1954); does not apply in this case because the contract is not ambiguous.

The Connecticut rule of construction of insurance policies is well settled. "If the terms of an insurance policy are of doubtful meaning, that permissible construction which is most favorable to the insured is to be adopted; but if they are plain and unambiguous the established rules for the construction of contracts apply, the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning, and the courts cannot indulge in a forced construction ignoring provisions or so distorting them as to accord a meaning other than that evidently intended by the parties." Porto v. Metropolitan Life Ins. Co., 120 Conn. 196, 200, 180 A. 289 (1935).

We have previously defined "sum" and "payable" in the context of an exclusion of benefits clause in an insurance policy. " 'Sum' is defined as 'an indefinite or specified amount of money....' Webster, Third New International Dictionary." Griswold v. Union Labor Life Ins. Co., 186 Conn. 507, 515 n. 4, 442 A.2d 920 (1982). Accordingly, we reject the assertion that the word "sums" as used in the insurance policy must only mean a specified sum of money. The plaintiff notes without further explication that the policy uses the word "sums" while the regulation uses the word "damages." Section 38-175a-3 of the Regulations of...