State v. Donahue

• Decision Date: 25 February 1983
• Citation: 472 A.2d 824
• Parties: STATE of Delaware, Plaintiff, v. Joseph M. DONAHUE, Defendant. . Submitted:
• Court: Delaware Superior Court

Page 824

472 A.2d 824

STATE of Delaware, Plaintiff, v. Joseph M. DONAHUE, Defendant.

Superior Court of Delaware New Castle County.

Submitted: Feb. 25, 1983.

Decided: Oct. 28, 1983.

Upon cross-motions for summary judgment. Plaintiff's motion granted and defendant's motion denied.

B. Wilson Redfearn, of Tybout, Redfearn, Casarino & Pell, Wilmington, for plaintiff.

Susan C. Del Pesco, Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, for defendant.

MARTIN, Judge.

This is an action for declaratory relief to determine whether 19 Del.C. § 2363 ¹ gives a workmen's compensation employer-payor a right of subrogation against proceeds paid to an employee pursuant to uninsured motor vehicle coverage (18 DEL.C. § 3902 )² which had been purchased by the employer. The statutory provision, 19 Del.C. § 2363(a), mandates that an employer-payor, or his workmen's compensation insurance carrier, be reimbursed for any amounts paid under the Workmen's Compensation Act ("Act") to the extent that the legal liability of a third party and the concomitant payment of damages has yielded additional relief for the injured employee. Statutory provision 19 Del.C. § 2363(e) further clarifies the above provision, giving the employer or insurance carrier a right to subrogation for amounts recovered in an action in tort, in order to reimburse the employer for previous or future workmen's compensation payments. Based on the foregoing statutory provision, this Court must determine whether the obligation of an insurer to make payments under an uninsured motorist policy to an employee who has been injured by an uninsured motorist constitutes a "legal liability" to pay "damages", and, further, whether such payments constitute an amount the injured employee would be entitled to recover in an "action in tort." If the answer to the above questions is in the affirmative, then the employer must be granted the subrogation rights he seeks. This is believed to be a case of first impression in the State of Delaware.

The events which precipitated the present contest began on December 4, 1978 when the defendant, Joseph Donahue, ("employee"), an employee of the State of Delaware ("State") was injured in the course of his employment in an automobile accident with an uninsured motorist. As a result of the accident, the State paid $8,630.30 in workmen's compensation benefits to the employee. The employee also received $25,000.00 in settlement from the State's insurance carrier, Pennsylvania Manufacturers Association Insurance Company, such amount representing the uninsured motorist coverage under the State's policy. The State argues that pursuant to 19 Del.C. § 2363, it has a right to subrogation against payments received by the employee under the State's uninsured motorist coverage, for payments the State has made and will make in the future as workmen's compensation benefits. The employee maintains that the language of the statute prohibits such a result.

A number of decisions in other jurisdictions have construed statutes containing language similar to that found in the Delaware Workmen's Compensation Statute. Some of these courts have held that their respective statutes, based on a literal interpretation of the language contained therein, did not give a workmen's compensation employer-payor or his insurance carrier a right to subrogation against proceeds paid to the employee pursuant to uninsured motorist coverage ³; other Courts have come to the opposite conclusion by construing the language contained in their statutes so as to give effect to the legislative intent underlying the statute. ⁴

In analyzing 19 Del.C. § 2363 and its application to the case sub judice, this Court must give effect to the specific legislative intent in enacting the original statute, "even though a literal reading of the statutory language might seem to be inconsistent with the general intent." Kohanovich v. Youree, Del.Super., 147 A.2d 655, 657 (1959). [Emphasis added]. The policy underlying the present workmen's compensation reimbursement provision, 19 Del.C. § 2363, was explored in Travelers Ins. Co. v. E.I. Du Pont De Nemours & Co., Del.Supr., 9 A.2d 88 (1939). The Travelers Court held that "the subrogation clause [referring to Code 1935, § 6108, a predecessor of 19 Del.C. § 2363], is solely for the benefit of the employer who has paid or becomes liable for compensation." Id. at 90; see also, Frank C. Sparks Co. v. Huber Baking Co., Del.Supr., 96 A.2d 456 (1953). The Court in Travelers continued,

The obvious purpose is that the person to whom compensation is paid, whether it be the person injured or other person having a claim against the third party tort feasor shall not collect both the statutory compensation and also the full damages for the injury, but that the employer having paid the compensation is equitably entitled (or subrogated) to the right against such third person liable for the injury. Id. at 90-91 [Emphasis added].

Based on the rule of construction set forth in Kohanovich v. Youree, supra, this Court must defer to the legislative purpose of the workmen's compensation reimbursement provision, as expressed in Travelers, and permit the employer-payor or his insurance carrier to exercise reimbursement rights against payments made to the employee pursuant to an uninsured motorist policy paid for by the employer, even though the language in the statute is capable of conflicting constructions.

As noted previously, some courts in other jurisdictions, when faced with statutory language substantially similar to Delaware's, have construed such language in the light of the policy which the statute sought to further, thereby giving effect to the legislative intent rather than finding themselves unduly constricted by a literal interpretation. One such case is Johnson v. Fireman's Fund Ins. Co., La.Supr. 425 So.2d 224 (1982). The Supreme Court of Louisiana in Johnson was faced with a factual situation quite similar to the instant case, that is, an employee had been injured in an automobile accident while driving his employer's vehicle in the course of his employment. The employee subsequently sought both workmen's compensation and uninsured motor vehicle benefits. The uninsured motor vehicle policy had been paid for by the employer and the employer alleged a right to reimbursement pursuant to statute. The statute construed in Johnson ⁵ is similar to 19 Del.C. § 2363 ⁶ in that it grants an employer a right to reimbursement to amounts received by the employee from a third person who had a legal liability to pay damages to the injured employee: The Johnson Court held that,

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 tort feasor has caused and to guarantee recovery as if the tort feasor had been insured. Therefore, a worker compensation insurer can recover amounts paid to an injured employee out of uninsured motorist coverage. Id. at 225. ⁷

The Court in Johnson limited an employer's right of reimbursement to the proceeds of uninsured motorist coverage paid for by the employer, stating that if the employee had paid for the uninsured motorist coverage, the employer would have no reimbursement rights. Id. 425 So.2d at 228. The Johnson Court supported this position by citing Louisiana Code provision La.R.S. 23:1163, which protects the employee "against dilution of his compensation benefits by the compensation act's specific prohibition against direct or indirect collections from an employee to reimburse the employer, his insurer or any person for the cost of worker compensation insurance." Id. 425 So.2d at 229. The Delaware counterpart to the aforementioned provision of the Louisiana Code is 19 Del.C. § 2377, dealing with substitute compensation systems and providing that,

(b) No such substitute system shall be approved ... if it requires contribution from the employees, unless it confers benefits in addition to those provided under this chapter at least commensurate with such contributions. [Emphasis added].

Since the fact situation in the case sub judice includes uninsured motorist coverage paid for by the employer, this Court declines to rule as to whether an employer or his insurance carrier would have a right to reimbursement from proceeds paid by an employee's own uninsured motorist carrier.

In order for the Johnson Court to conclude that payments to an injured employee, pursuant to uninsured motorist's coverage purchased by the employer, were subject to the employer's statutory subrogation rights, it was necessary to reject previous case law constructions of the phrase, a "third person's legal liability to pay damages." A lower Court in Gentry v. Pugh, La.Ct.App., 362 So.2d 1154 (1978), writ refused, La.Supr., 363 So.2d 922 (1978), had previously determined that uninsured motorist carriers were not "third persons" as that term is contemplated in La.R.S. 23:1101's grant of reimbursement against any "third person" legally liable to pay damages. Additionally, in Bannon v. Edrington, La.Ct.App., 392 So.2d 186 (1980), a lower Court had held that the uninsured motorist carrier was not "legally liable to pay damages" so as to qualify under 23:1101. The Johnson Court held that, the previous cases represented too narrow a view of 23:1101, and that these cases failed to give effect to the legislative aim to minimize double-recovery operative in the statute. Additionally, the Court in Johnson noted:

The provision of R.S. 23:1101 authorizing an employer's suit against third persons legally liable in damages to the employee was enacted in 1914, long before the law had developed the concept of uninsured motorist coverage ... Since the legislature could not have anticipated the future laws by which insurers would become surrogates by tortfeasors, its failure to specifically state that ......