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Liberty Mutual Insurance Co. v. Ditillo5/8/1998
rage by the amount paid to the insured as workers' compensation benefits. Id. at 565, 495 S.E.2d at 354. Likewise, the UM limit of liability provision in the Liberty Mutual and State Farm policies at issue in this case is authorized by N.C.G.S. § 20-279.21(e), and plaintiff UM carriers are permitted to reduce coverage for Stilwell and Clark by the amount of workers' compensation benefits paid or payable. In this case, the workers' compensation benefits paid or payable to the survivors of Stilwell and Clark, $162,400 and $130,997.62 respectively, exceed the $100,000 per person UM coverage in the Liberty Mutual and State Farm policies. Because the limit of liability provision reducing UM coverage for amounts paid or payable under workers' compensation law is authorized by the Financial Responsibility Act, coverage may be reduced without regard to its characterization as "mandatory" or "voluntary" under the Act. Cf. Bray, 341 N.C. 678, 462 S.E.2d 650 (holding that the family member/household-owned exclusion contained in automobile insurance policy was contrary to the Financial Responsibility Act and therefore unenforceable as to the mandatory UM coverage contained in the policy).
For the foregoing reasons, we conclude that the Court of Appeals erred in holding that the limitation of liability provision, and by extension exclusion "C," in the Liberty Mutual and State Farm policies is unenforceable as conflicting with the Financial Responsibility Act. We hold that the limitation of liability provision in the UM coverage section of the Liberty Mutual and State Farm policies is authorized by N.C.G.S. § 20-279.21(e) and that, to the extent workers' compensation benefits were paid or are payable, Liberty Mutual and State Farm are entitled to reduce the UM coverage available under the respective automobile insurance policies. Moreover, because the decision in this case results in no UM coverage for Stilwell and Clark, there are no insurance proceeds available upon which Reliance, the workers' compensation carrier, could assert a claim. We therefore specifically decline to decide whether a workers' compensation carrier has a right under N.C.G.S. § 97-10.2 to a lien on UM benefits paid to an employee in a case where the UM coverage limits exceed the amount of workers' compensation benefits.
DISCRETIONARY REVIEW IMPROVIDENTLY ALLOWED IN PART; REVERSED IN PART.
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