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Walker v. Penn National Security Insurance Co.2/15/2005
UIM Insurance and Workers' Compensation Credit
James Carnell Walker, Jr. (plaintiff) was injured in a motor vehicle collision on 1 August 2000. The accident was caused by the negligence of Troy Walker. At the time of the accident, plaintiff was working in the scope and course of his employment and operating a vehicle owned and insured by his employer, SIA Group-Seashore (SIA).
Troy Walker had liability insurance coverage with Shelby National Insurance Company (the liability carrier). The liability insurance coverage limit was $30,000 per person and $60,000 per accident. The vehicle in which plaintiff was injured was also covered by an underinsured motorist (UIM) policy with Penn National Security Insurance Company (defendant). The UIM policy coverage limit was $1,000,000.
Plaintiff recovered the full $30,000 allowable from the liability carrier. The workers' compensation carrier forplaintiff's employer also paid a total of $81,948.37, as follows: $24,201.54 for plaintiff's medical expenses, $51,547.88 to plaintiff as compensation, and $6,198.95 to Hoover Rehabilitation. Pursuant to a clincher agreement, the workers' compensation carrier asserted a lien in the amount of $35,000 on any recovery plaintiff received from third parties.
Plaintiff and defendant submitted the issue of the value of plaintiff's personal injury claim to arbitration on 2 October 2002. The arbitrator found that the value of plaintiff's personal injury claim was $129,524. The parties thereafter agreed that the award should be modified to $126,874. The arbitrator did not resolve coverage issues or amounts to be credited.
Following the arbitration, plaintiff and defendant were unable to agree on the amount payable by defendant under the UIM policy. Specifically, the parties were unable to resolve how the 1999 amendment to the UIM statute, N.C. Gen. Stat. ยง 20-279.21(e) (2003), would affect the relationship between the award amount and the workers' compensation lien, thereby determining the amount payable by defendant. Defendant contended that the statute required that the arbitration award be offset by plaintiff's recovery from the workers' compensation carrier.
Plaintiff filed a complaint for a declaratory judgment on 2 April 2003, asking the trial court to declare the rights and liabilities of the parties and to declare that defendant pay plaintiff $96,874: the difference between the arbitration award and the $30,000 recovered from the liability carrier. Defendant's answer asked that the trial court require defendant to payplaintiff an amount not greater than $50,874. Defendant calculated this amount by subtracting the sum of $30,000 recovered from the liability carrier and $46,000 workers' compensation benefits from the $126,874 total value of plaintiff's injury.
While the declaratory judgment action was pending in the trial court, this Court, in Austin v. Midgett (Austin I), 159 N.C. App. 416, 583 S.E.2d 405 (2003), resolved the confusion surrounding the 1999 amendment to the UIM statute. We held that the 1999 amendment "requires UIM carriers to insure the amount of the employer's workers' compensation lien on UIM proceeds received by the employee in addition to the damages uncompensated by workers' compensation benefits." Id. at 421, 583 S.E.2d at 409. As a result, a UIM carrier is entitled to a credit for the amount of workers' compensation benefits that are not subject to a workers' compensation lien. Id. at 421, 583 S.E.2d at 409. However, our Court did not consider the amount paid by the liability carrier and did not credit the UIM carrier with this amount.
In accordance with our holding in Austin I, the trial court credited defenda
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