Lumbermens Mutual Casualty Co. v. Hansen

In this appeal the only issue raised is whether an insurance carrier which has paid to its insured "basic reparations benefits"¹ for injuries he received in an automobile accident in accordance with the terms of "no-fault motor vehicle insurance"² provisions of the policy may recover the amount it has paid out in a suit against the person whose negligence caused the accident. The trial court concluded that no such recovery could be allowed in the light of the decisions in Berlinski v. Ovellette, 164 Conn. 482,325 A.2d 239 (1973), and Ciulewicz v. Doyle,172 Conn. 177, 374 A.2d 175 (1976). Those cases hold that "uninsured motorist"³ provisions of insurance policies allowing a carrier to be subrogated to the personal injury claim of the insured against negligent third parties in order to recoup the amounts paid to the insured under such coverage violate the common-law rule against the assignment of a cause of action for personal injuries. Restatement, 2 Contracts 547(1)(d). Our conclusion is that, although Berlinski and Ciulewicz might bar the plaintiff's suit in the absence of legislation, General Statutes 38-325 (c) expressly authorizes a no-fault insurer which has paid "basic reparations benefits" to its insured to recover the amount paid from the negligent party.

The facts are not disputed. On June 3, 1977, the plaintiff's insured, Gerald Gilman, was injured while riding as a passenger in an automobile operated by the defendant which struck a telephone pole. The accident was caused by the negligence of the defendant who was uninsured. Under the no-fault provisions of his policy with the plaintiff, Gilman received "basic reparations" payments for medical expenses and lost earnings of $4235.04. The plaintiff seeks the recovery of that amount from the defendant.

We reject the proposition advanced by the plaintiff that the common-law rule barring the assignment of a personal injury claim, which in Berlinski and Ciulewicz was found applicable to subrogation under uninsured motorist insurance coverage, would not also apply to a subrogation action for the recoupment of "basic reparations" payments. The opinion in Berlinski includes a discussion of other kinds of insurance where subrogation would not be permissible under the common-law rule and suggests that the time may be appropriate for legislative modification of the rule "in the case of Blue Cross, the Connecticut Medical Service, medical payments insurance, accident insurance, and double indemnity benefits under life insurance policies." Berlinski v. Ovellette, supra, 494. In both Berlinski and Ciulewicz the opinions quote with approval the view taken in Peller v. Liberty Mutual Fire Ins. Co.,220 Cal. App. 2d 610, 612, 34 Cal. Rptr. 41 (1963): "If an insurance company is to be allowed the right to indemnify itself by subrogation of the insured's right to press a claim arising out of personal injuries, against a third party tortfeasor, that right must emanate from legislative action and not from court-made law." We see no reason to exempt subrogation under no-fault insurance from that principle.

We agree with the plaintiff that a right of subrogation for no-fault insurance carriers has been created by General Statutes 38-325 (c) which provides that "[w]henever a person who receives basic reparations benefits for an injury has a right of recovery against any person or organization not described in subsection (b), an insurer that has paid such benefits to or for the injured person shall be subrogated to all such rights of recovery to the extent of its payments." The reference to a "person or organization not described in subsection (b)," who is exempted from such subrogation claims, is to someone for whom the requisite insurance coverage has been provided. General Statutes 38-325 (b).⁴ The effect of this exemption is to prohibit subrogation claims against persons for whom "basic reparations" insurance has been provided as required by General Statutes 38-327, but to permit such claims to be brought against others who are not within the no-fault system. Since the status of the defendant as the wholly uninsured driver and owner of the private passenger motor vehicle involved in the accident is admitted, it is clear that he cannot claim the benefit of the exemption created for an "owner, registrant, operator or occupant of a private passenger motor vehicle with respect to which security has been provided . . . ." General Statutes 38-325 (b).

It appears from the memorandum of decision that the trial court construed the general prohibition contained in subsection (a) of 38-325⁵ against subrogation by an insurer to negate the effect of subsection (c) which creates such a right.⁶ The prohibition in subsection (a) is preceded by the phrase, "[e]xcept as provided in this section," which obviously was intended to preserve the subrogation right created by subsection (c).

There is error, the judgment is set aside and the case is remanded with direction to render judgment for the plaintiff to recover the sum of $4235.04 against the defendant with costs.

In this opinion DALY and COVELLO, Js., concurred.