Fuller v. Director of Finance , 1985 Utah LEXIS 753 ( 1985 )

HOWE, Justice

(dissenting):

I dissent. Under the policy, the Fund expressly insured the employer against liability for compensation only under the “Workmen’s Compensation Act and the Utah Occupational Disease Disability Law as provided in chapters 1, 2, and 3 of Title 35, Utah Code Annotated, 1953, and all amendments thereto....” This limitation is in accord with the statutory authority of the Fund found in U.C.A., 1953, § 35-1-50. That section provides for the payment of compensation from the Fund for injuries or for death “as is provided in this title....” It is undisputed that Ireland was not entitled to compensation under the laws of Utah since he was not hired in nor worked in this state. His claim for compensation and the award to him were made under California law. Clearly, the policy did not insure against that liability.

The Employer’s Liability Coverage in the policy does not expand the coverage for compensation beyond our Workmen’s Compensation Act and Occupational Disease Disability Law and extend such coverage to workers in other states who are not covered by those statutes. To adopt that interpretation is to render meaningless the express limitation on compensation coverage to liability under our Act and Law. Obviously, the Employer’s Liability Coverage provides a different type of coverage. This additional coverage is authorized by section 35-3-5 which provides in part:

The commission of finance may in its official name make contracts of insurance as herein provided, and such other contracts relating to the state insurance fund as are authorized or permitted under the provisions of this title. Such contracts of insurance may include and cover the entire underlying liability of employers insured in the state insurance fund so that such employers may be fully protected, not only for all compensation claims but for all liability claims whatsoever by employees or the dependents of killed employees, including the cost of defense in the event of suit.

(Emphasis added.) The statute clearly delineates between compensation claims and liability claims and authorizes the Fund to insure against both. The Employer’s Liability Coverage deals only with liability claims. It does not deal with compensation claims. It is a mistake to confuse and equate the two coverages as does the majority opinion when the authorizing statute treats them separately. A liability claim may be made by an employee for damages on the premise that compensation is not his exclusive remedy under the peculiar fact situation presented. For example, the claimant may assert that he is not in fact an employee but is an independent contractor. Or, a liability claim may arise where an employee sues a tortfeasor other than his employer for causing an industrial injury, and the tortfeasor brings the employer into the action as a third-party defendant for contribution or indemnity. In these situations, the Fund must pay for the defense of its insured and contend that compensation is the exclusive remedy. However, if an insured employer is found liable for damages to an employee, the Fund must pay the employer up to $100,000. It is to be noted that the policy provides no monetary limit on the Fund’s liability for compensation since the amount of compensation awardable is fixed by our statutes.

The majority opinion relies heavily on rules of construction that ambiguities are to be construed against the insurer, that in some contexts “damages” and “compensation” are used interchangeably and that “if the fund’s intent was to exclude worker’s compensation from its employer’s liability coverage, it could have easily expressed this intent in unambiguous terms.” While I have no quarrel with these rules when properly applied, they do not apply in this case since the contract of insurance is not ambiguous, and the Fund is expressly authorized by statute to write the two types of coverage for different purposes. The policy clearly delineates between the two. I disagree with the gratuitous assertion by the majority that the plaintiff could have reasonably understood the provisions of the policy to cover him for out-of-state workers compensation liability. The plaintiff did not present any evidence to that effect, and he does not claim that the Fund ever represented to him that the policy included coverage for out-of-state workers. Had the insured examined the policy, he would have discovered that it did not include coverage for compensation for workers who are not subject to the Utah Act, viz., who were neither hired in Utah nor worked in Utah.

I would reverse the judgment which requires the Fund to indemnify the plaintiff for the award of compensation made to Ireland under California law, for plaintiff’s attorney fees in the California administrative action, and for his attorney fees in this action.

DURHAM, J., concurs in the dissenting opinion of HOWE, J.