State Farm Mutual Automobile Insurance v. Aetna Casualty & Surety Co.

Order unanimously reversed on the law with costs and petitioner’s application granted. Memorandum: On December 15, 1982, Douglas K. Ellsmore delivered a hospital bed to the residence of Shirley S. Miller using his employer’s van. As Ellsmore was unloading the van, he was injured when Miller backed her car into him.

Petitioner State Farm Mutual Automobile Insurance Company (State Farm) was Miller’s automobile liability insurance carrier and respondent Aetna Casualty and Surety Company (Aetna) was Ellsmore’s employer’s workers’ compensation carrier. Aetna paid benefits for lost wages and medical expenses to Ellsmore in the amount of $65,882.21. Aetna made a loss transfer claim against State Farm for reimbursement of these expenses and demanded arbitration pursuant to Insurance Law § 5105. State Farm thereupon brought this special proceeding seeking a permanent stay of arbitration upon the ground that there was no legal basis for Aetna’s claim for reimbursement. Special Term erroneously denied the stay.

The purpose of the 1977 amendment to Insurance Law § 5105 was to limit the right of insurance carriers to recover first-party payments (see, Matter of 20th Century Ins. Co. [Lumbermen’s Mut. Cas. Co.], 80 AD2d 288). To accept Special Term’s interpretation that the words "for hire” modify the words "persons or property”, would frustrate this purpose by permitting a loss transfer claim in almost all cases involving commercial deliveries by an owner of a vehicle. Although the statute is unartfully drafted, we believe that the words "for hire” modify the word "vehicle” and that the statute covers only those vehicles hired to transport people, such as taxis and buses, and livery vehicles hired to transport property. Consequently, there can be no recovery of compensation payments under Insurance Law § 5105 in this case. (Appeal from order of Supreme Court, Monroe County, Siracuse, J.—arbitration.) Present—Callahan, J. P., Denman, Boomer, Balio and Lawton, JJ.