Vitti v. Allstate Ins. Co.

Decision Date30 June 1998
Docket NumberNo. 15734,15734
Citation245 Conn. 169,713 A.2d 1269
CourtConnecticut Supreme Court
PartiesAnthony VITTI v. ALLSTATE INSURANCE COMPANY.

Linda L. Morkan, Hartford, for appellant (defendant).

John Jowdy, Danbury, for appellee (plaintiff).

Susan M. Phillips, New London, filed a brief for the Connecticut Trial Lawyers Association as amicus curiae.

Jon S. Berk and Claudia A. Baio, Hartford, filed a brief for the Connecticut Defense Lawyers Association as amicus curiae.

Before CALLAHAN, C.J., and BORDEN, KATZ, PALMER and McDONALD, JJ.

CALLAHAN, Chief Justice.

The sole issue in this appeal is whether an insurer is entitled to a reduction of its limits of liability for uninsured and underinsured motorist coverage (underinsured motorist coverage) by an amount equal to the sum of social security disability benefits paid or payable to the insured. The trial court concluded that allowing such a reduction would be contrary to public policy. The defendant, Allstate Insurance Company, 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 now Practice Book (1998 Rev.) § 65-1, and General Statutes § 51-199(c). We reverse the judgment of the trial court.

The parties have stipulated to the facts. On March 30, 1990, the plaintiff, Anthony Vitti, was a passenger in a motor vehicle, owned by him and operated by his wife, Joanne Vitti, when his vehicle was involved in a collision with a motor vehicle owned and operated by Pamela R. Ruokonen. The accident, in which the plaintiff sustained serious injuries, was attributable solely to Ruokonen's negligence. At the time of the accident, the limit of Ruokonen's liability coverage was $20,000, the entire amount of which was paid to the plaintiff by Ruokonen's liability carrier. The plaintiff then sought recovery under his own automobile insurance policy, issued by the defendant, which policy provided for uninsured and underinsured motorist coverage for two vehicles in the amount of $100,000 per covered vehicle. The plaintiff is entitled under his own policy, therefore, to coverage of up to $200,000, less any applicable offsets to the limits of the defendant's liability.

The parties agree that the $200,000 limit of the defendant's liability should be reduced by the $20,000 paid to the plaintiff by Ruokonen's insurer and by the $5000 paid by the defendant to the plaintiff as basic reparations benefits. The parties also agree that the plaintiff's injuries would, in the absence of further offsets, entitle him to collect the entire remaining balance of the defendant's policy. It was determined on April 1, 1991, however, that because the plaintiff was totally disabled as a result of the accident, 1 he was entitled to disability benefits pursuant to a social security medical determination of impairment made in accordance with 42 U.S.C. § 423 and 20 C.F.R. § 404.1 et seq. As a consequence, prior to the time of trial, the plaintiff had received social security disability benefits in the amount of $63,577. The trial court also found that the present value of future social security disability benefits, as noted in an affidavit submitted by the defendant's expert and undisputed by the plaintiff, is $83,393. The amount of social security disability benefits paid or payable to the plaintiff, for which the defendant claims an offset against its liability, is, therefore, $146,970. If we agree with the defendant's claim, the defendant is obligated to the plaintiff for only $28,030 in underinsured motorist benefits. The defendant requests that, if we conclude that the available underinsured motorist coverage may be offset by the amount of social security disability benefits paid or payable to the plaintiff, we direct the trial court to render a judgment for the plaintiff in the amount of $28,030. 2

The sole dispute between the parties is whether the defendant may offset the amount of underinsured motorist coverage available to the plaintiff by the amount of social security disability benefits paid or payable to the plaintiff. Section 38a-334-6 (d)(2) 3 of the Regulations of Connecticut State Agencies, and the policy issued to the plaintiff, 4 which materially tracks the regulatory language, permit the defendant to reduce the amount payable pursuant to a claim for uninsured or underinsured motorist coverage, in the language of the policy, by "all amounts paid or payable under any worker's compensation law, disability benefits law, or similar law." The defendant argues that social security disability benefits are clearly payable to the plaintiff under a "disability benefits law," and, consequently, are properly offset against the plaintiff's available underinsured motorist coverage.

The plaintiff counters that because neither his insurance policy nor the regulation specifically refers to social security disability benefits, they are vague and ambiguous. Accordingly, he maintains that the policy should be construed against the insurer so as not to allow social security disability benefits as an offset. He argues that the regulation must be narrowly construed to apply only to those disability benefits laws that are like workers' compensation laws. 5 Alternatively, he argues that if § 38a-334-6 (d)(2) does permit the defendant to offset social security disability benefits, it is contrary to the public policy underlying our uninsured and underinsured motorist statute and beyond the scope of the statute authorizing the commissioner to promulgate regulations, and is, therefore, void.

"Interpretation of an insurance policy, like the interpretation of other written contracts, involves a determination of the intent of the parties as expressed by the language of the policy.... Unlike certain other contracts, however, where absent statutory warranty or definitive contract language the intent of the parties and thus the meaning of the contract is a factual question subject to limited appellate review ... construction of a contract of insurance presents a question of law for the court which this court reviews de novo...." (Citations omitted.) Aetna Life & Casualty Co. v. Bulaong, 218 Conn. 51, 58, 588 A.2d 138 (1991). Moreover, we have concluded that "an insurer may not, by contract, reduce its liability for such uninsured or underinsured motorist coverage except as § 38-175a-6 [now § 38a-334-6] of the Regulations of Connecticut State Agencies expressly authorizes. ... Allstate Ins. Co. v. Ferrante, 201 Conn. 478, 483, 518 A.2d 373 (1986)...." (Citations omitted; emphasis added; internal quotation marks omitted.) Streitweiser v. Middlesex Mutual Assurance Co., 219 Conn. 371, 377-78, 593 A.2d 498 (1991). Consequently, we must interpret § 38a-334-6 (d)(2) and determine its validity. If the regulation is valid, the contract language will be enforceable because it parallels the regulation. Our review of the regulation and the authorizing statute is plenary. See Andover Ltd. Partnership I v. Board of Tax Review, 232 Conn. 392, 396, 655 A.2d 759 (1995); Diamond v. Marcinek, 226 Conn. 737, 744 n. 8, 629 A.2d 350 (1993).

The question of whether an insurer may offset, pursuant to § 38a-334-6 (d)(2), the available limits of coverage by the amount of social security disability benefits paid or payable to an insured is one of first impression for this court. Although we previously have interpreted this regulation and the attendant public policy considerations underlying the uninsured or underinsured motorist statute, we have done so in the context of other permitted offsets. See, e.g., Rydingsword v. Liberty Mutual Ins. Co., 224 Conn. 8, 15, 615 A.2d 1032 (1992)(unclaimed workers' compensation benefits); Wilson v. Security Ins. Co., 213 Conn. 532, 538, 569 A.2d 40, cert. denied, 498 U.S. 814, 111 S.Ct. 52, 112 L.Ed.2d 28 (1990), cert. denied, 502 U.S. 1005, 112 S.Ct. 640, 116 L.Ed.2d 658 (1991) (claimed workers' compensation benefits); Roy v. Centennial Ins. Co., 171 Conn. 463, 370 A.2d 1011 (1976) (amounts received from negligent tortfeasor). 6

We begin our analysis with the relevant provision of the insurance contract, which provides that "[t]he limits of this [uninsured or underinsured motorist] coverage will be reduced by ... 2. all amounts paid or payable under any worker[s'] compensation law, disability benefits law, or similar law." (Emphasis added.) "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." (Internal quotation marks omitted.) Rydingsword v. Liberty Mutual Ins. Co., supra, 224 Conn. at 15, 615 A.2d 1032. Additionally, if the policy comports with the language of the regulation, it will be deemed to provide that same level of protection permitted by the regulation. Id., at 15-16, 615 A.2d 1032. "In order for a policy exclusion to be expressly authorized by [a] statute [or regulation], there must be substantial congruence between the statutory [or regulatory] provision and the policy provision." (Internal quotation marks omitted.) Lowrey v. Valley Forge Ins. Co., 224 Conn. 152, 156, 617 A.2d 454 (1992). The terms in the policy issued by the defendant and § 38a-334-6 (d)(2) correspond in all material respects. 7 "We can perceive no incongruence between the regulation and the policy exclusion that would suggest that the policy exclusion was not authorized by the regulation." Id., at 157, 617 A.2d 454. ...

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