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Travelers Insurance Co. v. Henry6/24/2005
Travelers suggests that an employee's UIM recovery under a privately-purchased policy should be considered a "first-party payment or benefit," while a UIM recovery under an employer-purchased policy should not. The critical question is the source of the obligation. Having concluded above that § 624(e) protects first-party contract rights under both privately-purchased policies as well as employer-purchased policies, we find this argument without merit. The statute does not draw the distinction urged on us by Travelers, nor does Travelers offer any reason for distinguishing between these two types of recoveries that is not at odds with the plain meaning of the statute. We therefore reject Travelers' assertion that UIM benefits recovered under an employer-purchased policy are not "first party insurance payments or benefits" under 21 V.S.A. § 624(e).
17. We turn next to Travelers' assertion that its right to a credit against the balance of an employee's third-party recovery for any future benefits owed was not affected by the amendment to § 624(e). According to Travelers, the plain language of the statute and its legislative history do not indicate that the Legislature contemplated impairing its right to a future credit. In support of this assertion, Travelers argues that the phrase "except to prevent double recovery" applies only to "reimbursement" required under § 624(e), and its right to a credit does not constitute reimbursement. Travelers thus argues that the district court erred in dismissing its complaint and awarding Henry $500,000 in damages free and clear of its right under § 624(e) to treat those monies as an advance payment or credit against future workers' compensation benefits.
18. Travelers essentially reiterates its assertion that it is entitled to first-dollar reimbursement, in this case, from the balance of an employee's UIM recovery. We reject this argument, which is at odds with a reasonable interpretation of § 624(e). We can discern no policy reason why the Legislature would distinguish between a carrier's right to reimbursement for the workers' compensation benefits paid and its corollary right to a credit against the balance of the third-party recovery for future benefits owed. The two are distinguished only by the date on which an injured employee obtains a third-party recovery. Economically, they are the same thing. To say that the term reimbursement does not include an offset for future benefits owed is to draw an artificial distinction, and we reject Travelers' narrow interpretation of the term. Travelers' right to an offset against the balance of Henry's UIM proceeds for future benefits owed, like its right to recoup benefits paid, exists only to the extent necessary to prevent a double recovery.
19. To determine Travelers' rights under the statute, we must therefore address the meaning of the phrase "except to prevent a double recovery." The federal district court awarded Henry $500,000 in UIM proceeds, free of Travelers' right to reimbursement and its right to an offset against the balance of such proceeds for future benefits owed. Although it is not clear from the district court's opinion, it appears that the court construed the phrase "double recovery" to mean a recovery by the employee that exceeds his "total damages." Because the parties in this case stipulated that Henry's "total damages" were the sum of the available UIM coverage ($500,000) and the total amount of workers' compensation benefits paid through the date of the court's final judgment order, the court presumably concluded that Travelers did not have any right to Henry's UIM proceeds.
20. Travelers argues that the federal district court erred in interpreting the words "d
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