1

IN THE SUPREME COURT OF THE STATE OF IDAHO

Docket No. 34404

TINA M. CHERRY, 

 

 Plaintiff-Respondent, 

 

v. 

 

COREGIS INSURANCE COMPANY, an 

Illinois insurance company, doing business in 

Idaho under Certificate of Authority No. 

PC602, 

 

 Defendant-Appellant. 

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Rexburg, September 2008 Term

2009 Opinion No. 40

Filed: March 13, 2009

Stephen Kenyon, Clerk

Appeal from the District Court of the Seventh Judicial District of the State of

Idaho, Bingham County. Honorable Jon J. Shindurling, District Judge.

The district court‟s order on the motion to alter and amend is vacated. The district 

court‟s first order on summary judgment is affirmed.

Anderson Julian & Hull, Boise, for appellant. Brian Julian argued.

Goicoechea Law Offices, Pocatello, for respondent. Albert Matsuura argued.

______________________________________________

HORTON, Justice

This appeal involves the interpretation of offset clauses contained in an underinsured 

motorist insurance (UIM) policy and the interrelationship of that policy and Idaho‟s worker‟s 

compensation laws. The district court granted summary judgment in favor of Respondent Tina 

Cherry (Cherry), holding that Appellant Coregis Insurance Company (Coregis) was not entitled 

to offset funds Cherry received from Farmers Insurance Company (Farmers) on behalf of a thirdparty tortfeasor because Cherry was required to pay those funds to the Idaho State Insurance 

Fund (the Fund) in order to satisfy the Fund‟s statutory subrogation interest. Coregis timely 

appealed to this Court.

Although we disagree with the district court‟s analysis and conclude that Coregis is 

entitled to offset the entire sum paid to Cherry by Farmers, we conclude that Coregis is entitled 

to an offset only for the net sum paid by the Fund to Cherry as worker‟s compensation benefits. 

Accordingly, we affirm in part. 
2

I. FACTUAL AND PROCEDURAL BACKGROUND

Cherry was injured in an automobile accident during the course and scope of her 

employment as a bus driver with the Snake River School District (the School District). The 

School District carried a policy through Coregis which provided UIM coverage with a policy 

limit of $250,000. The parties stipulated that Cherry incurred damages of at least $250,000. 

Coregis‟ policy contains a “Limit of Insurance” provision that provides:

D. LIMIT OF INSURANCE

1. Regardless of the number of covered “autos”, “insureds”, 

premiums paid, claims made or vehicles involved in the “accident”, the 

most we will pay for all damages resulting from any one “accident” is the 

LIMIT OF INSURANCE for UNINSURED MOTORISTS COVERAGE1

shown in the Declarations.

2. Any amount payable under this coverage shall be reduced by:

a. All sums paid or payable under any workers‟

compensation, disability benefits or similar law, and

b. All sums paid by or for anyone who is legally responsible,

including all sums paid under this Coverage Form‟s 

LIABILITY COVERAGE.

(Emphasis original.) 

Following the accident, Cherry received $102,361.01 from the Fund on the condition, as 

provided in I.C. § 72-223(3), that she repay any money she might receive for the accident from a 

third-party tortfeasor. Cherry recovered the policy limits sum of $100,000 from the third-party 

tortfeasor‟s insurance company, Farmers, and, after deducting her attorney fees and costs from 

that amount in accordance with I.C. § 72-223(4), Cherry repaid the Fund with the remaining 

$66,281.38.

 

1 Although this provision appears to relate to UM coverage, rather than UIM coverage, it is undisputed that 

Coregis‟ policy provides UIM coverage to Cherry, despite the fact that the third-party motorist was insured. 

Presumably this is because section F(3) of the policy provides the following definition:

3. “Uninsured motor vehicle” means a land motor vehicle or trailer... 

(b) That is an underinsured motor vehicle. An underinsured motor vehicle is a motor vehicle or 

trailer for which the sum of all liability bonds or policies at the time of an “accident” provides at 

least the amounts required by the applicable law where a covered “auto” is principally garaged but 

that sum is less than the Limit of Insurance of this coverage... 
3

Cherry then sued Coregis to recover under the UIM policy. After the action was filed, 

Coregis applied its interpretation of the setoff provisions set forth above, deducting $102,361.01 

for worker‟s compensation benefits (relying on section D(2)(a)) and $100,000 for the sum 

recovered from Farmers (relying on section D(2)(b)). Based upon the foregoing figures, Coregis 

paid Cherry $47,638.99. Coregis then moved the district court for summary judgment, arguing

that Cherry was not entitled to any further payment under the terms of the UIM policy. The 

district court disagreed and granted summary judgment in favor of Cherry for $66,281.38. 

Cherry moved to alter and amend the order granting summary judgment, arguing that Coregis 

was not entitled to offset any portion of the $100,000 received from Farmers because Cherry was 

never actually compensated by that money. The district court agreed and awarded Cherry 

$100,000, with interest accruing from the date of the first order granting summary judgment. 

Coregis filed a timely notice of appeal. 

II. STANDARD OF REVIEW

When this Court reviews the district court‟s ruling on a motion for summary judgment, it 

employs the same standard properly employed by the district court when originally ruling on the 

motion. Farmers Ins. Co. of Idaho v. Talbot, 133 Idaho 428, 431, 987 P.2d 1043, 1046 (1999). 

Summary judgment is proper when there is no genuine issue of material fact and the only

remaining questions are questions of law. Harwood v. Talbert, 136 Idaho 672, 677, 39 P.3d 612, 

617 (2001); I.R.C.P. 56. 

The question of whether an insurance policy is ambiguous is a question of law over 

which this Court exercises free review. To determine whether a policy is ambiguous, the Court 

must ask whether the policy is reasonably subject to conflicting interpretations. Talbot, 133 

Idaho at 432, 987 P.2d at 1047. Any ambiguities should be resolved in favor of the insured, and 

where language may be given two meanings, one of which permits recovery while the other does

not, the policy should be given the construction most favorable to the insured. Foremost Ins. Co. 

v. Putzier, 102 Idaho 138, 142, 627 P.2d 317, 321 (1981) (citations omitted). 

III. ANALYSIS

There are no material facts in dispute. Rather, this appeal presents two issues of law. 

The primary issue relates to interpretation of the offset provisions in the insurance policy. The 

second issue is Cherry‟s entitlement to an award of attorney fees on appeal. These issues will be 

discussed in turn.
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A. Coregis is entitled to an offset only for the net sum of worker’s compensation 

benefits paid to Cherry.

The amount of the $250,000 policy limit to which Cherry is entitled after Coregis applies 

the offset provisions depends upon the interpretation of the policy in light of the fact that the 

worker‟s compensation benefits received by Cherry were subject to the Fund‟s statutory 

subrogation interest. When analyzing Coregis‟ policy, the district court acknowledged that 

Farmers “paid [Cherry] the limit of its policy with [its insured tortfeasor] in the amount of 

$100,000.” Despite this statement, the district court granted summary judgment in favor of 

Cherry and ordered Coregis to pay her an additional $100,000 based upon its conclusion that the 

funds received by Cherry from Farmers were not “paid” according to the meaning of that word 

as contained in section D(2)(b). We do not think this is a reasonable interpretation.2 

The verb “pay,” of which the word “paid” is the past participle, is a word of common 

usage meaning “to give to (a person) what is due.” WEBSTER‟S NEW WORLD DICTIONARY 1044

(2d College ed. 1976). Farmers has given Cherry $100,000, which it has never recouped. From 

Farmers‟ perspective, it has manifestly “paid” $100,000. The district court‟s conclusion is only 

possible by an analysis that focuses on whether Cherry ultimately benefited from the payment, 

not on whether Farmers gave her the money to which she was entitled. In our view, this analysis 

results in a distortion of the word “paid” beyond recognition. For this reason, we vacate the 

district court‟s order entered on Cherry‟s motion to alter and amend. 

In our view, the more appropriate approach is to evaluate whether money has been “paid” 

or is “payable” by examining the financial impact upon the party responsible for “payment.” 

When considering this matter from the perspective of the Fund, one may reasonably assert that 

the Fund paid one of two different sums: the gross sum of $102,361.01 or the net sum of 

$36,079.63 after accounting for its recovery of $66,281.38 from Cherry under the statutory 

subrogation provision of I.C. § 72-223(3).

3

 Thus, the question is presented whether the phrase 

“[a]ll sums paid or payable” in the D(2)(a) offset provision refers to gross or net sums paid or 

 

2 We recognize that the district court‟s focus on section D(2)(b) was prompted by its awareness of our 

decision in Am. Foreign Ins. Co. v. Reichert, 140 Idaho 394, 94 P.3d 699 (2004). In Reichert, we considered section 

D(2)(a) and stated: “we found nothing in the offset provision that is ambiguous.” 140 Idaho at 399, 94 P.3d at 704. 

As will be discussed infra, our statement in Reichert was overly broad, as it did not take into account the situation 

presented in the instant case wherein the Fund has asserted its statutory subrogation interest in the proceeds 

recovered from an insured third-party tortfeasor. 

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Idaho Code § 72-223(3) provides: “If [worker‟s] compensation has been claimed and awarded, the 

employer having paid such compensation or having become liable therefor, shall be subrogated to the rights of the 

employee, to recover against such third party to the extent of the employer‟s compensation liability.”
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payable as worker‟s compensation benefits. This Court has not previously addressed this 

question.

In examining an issue of first impression, it is helpful to look at how other jurisdictions 

have answered the question. The facts of Wildman v. Nat’l Fire and Marine Ins. Co., 703 

N.E.2d 683 (Ind. App. 1998), are analogous to the facts in this case. Wildman was injured in an 

automobile accident while at work, and his employer carried an uninsured/underinsured motorist 

liability policy with dual offset provisions similar to the provisions in the Coregis policy. Id. at 

685. Wildman received funds from a worker‟s compensation carrier, subject to a statutory lien, 

which he later repaid with money recovered from the responsible party‟s insurance company. Id. 

at 684-85. Wildman argued that his employer‟s insurer, National, should be able to “set-off only 

those worker‟s compensation benefits Wildman actually retained, not the amount of benefits he 

received and then repaid to the worker‟s compensation carrier” pursuant to the statutory lien. Id. 

at 685. 

The setoff provision regarding worker‟s compensation in the National policy stated: 

“Any amount payable under this coverage shall be reduced by all sums paid or payable under 

any worker‟s compensation disability benefits or similar law.” Id. at 686. The court focused on 

the meaning of the phrase “sums paid or payable” in that provision and determined that:

Reasonable people reading this language may conclude that this phrase means the 

amount of worker‟s compensation benefits originally received by the insured; 

equally reasonable people may determine that the reduction applies only to those 

benefits retained after subtraction of the compensation carrier‟s statutory lien. 

Because reasonable people may disagree as to whether it includes worker‟s 

compensation benefits received subject to a repayment obligation, we conclude 

that the reduction clause in National‟s policy is ambiguous. We resolve this 

ambiguity by construing the language in favor of the insured, Wildman, and

against the insurer, National, and hold that National is entitled only to set-off the 

worker‟s compensation benefits received which are not subject to a repayment 

obligation.

Id. at 687 (citing Meridian Mut. Ins. Co. v. Cox, 541 N.E.2d 959, 961 (Ind. App. 1989) 

(ambiguous policy language strictly construed against insurer)). The offset provision regarding 

worker‟s compensation in the Coregis policy is ambiguous for the same reasons outlined by the 

Wildman court, and in Idaho, as in Indiana, all ambiguities in an insurance policy are to be 

resolved against the insurer. Foremost Ins., 102 Idaho at 142, 627 P.2d at 321. We find the 

reasoning in Wildman to be persuasive and conclude that while Coregis‟ obligation is reduced by 

the $100,000 paid by Farmers under section D(2)(b), Coregis‟ obligation to Cherry is reduced 
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only by the net amount of worker‟s compensation benefits paid or payable to Cherry under 

section D(2)(a) – $36,079.63. Thus, Cherry is entitled to recover from Coregis an amount equal 

to the amount she paid to the Fund in order to satisfy the Fund‟s statutory subrogation interest –

$66,281.38.

We recognize that this conclusion is facially at odds with our previous holding in Am. 

Foreign Ins. Co. v. Reichert, 140 Idaho 394, 94 P.3d 699 (2004). In Reichert, we examined 

section D(2)(a) and stated that “we found nothing in the offset provision that is ambiguous.” 140 

Idaho at 399, 94 P.3d at 704. However, we conclude that Reichert is distinguishable from the 

instant case both legally and factually. Reichert was injured by an uninsured motorist while on 

the job, and his employer carried liability insurance for uninsured motorists through American 

Foreign Insurance Company (American). Id. at 397, 94 P.3d at 702. Reichert initiated a 

worker‟s compensation claim. Id. The industrial commission, while processing Reichert‟s 

claim, decided that funds Reichert received for worker‟s compensation would not be subject to 

the subrogation interest set out in I.C. § 72-223. Reichert v. Magic Valley Foods, Inc., IC 93-

830670, Industrial Commission Order at 2 (November 30, 1998).

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 Before the worker‟s 

compensation claim proceedings were completed, Reichert and American agreed to arbitrate 

Reichert‟s uninsured motorist claim, and the arbitrator granted Reichert a compensatory damage 

award. Id. Reichert appealed, raising several issues. 140 Idaho at 398, 94 P.3d at 703. 

The liability policy held by Reichert‟s employer contained an offset provision almost 

identical to section D(2)(a) in Coregis‟ policy. Id. Reichert argued that the offset provision was 

void in its entirety as against public policy because the insurer “knew that all claimants would 

only receive minimal, if any, coverage because all claimants would also receive worker‟s 

compensation benefits.” Id. at 399, 94 P.3d at 704. In other words, Reichert was not arguing the 

gross versus net distinction that Cherry has argued; rather, he was arguing, in the first instance, 

that no offset for worker‟s compensation should be allowed at all. This Court disagreed. Id. at 

400, 94 P.3d at 705. 

The dissent urges that Reichert was “in essence” advancing the same argument that 

Cherry makes now, that “the net money actually retained by the claimant does not reflect the 

 

4 The Court makes no mention of the statutory subrogation interest in Reichert. The industrial commission, 

however, ordered that Reichert would not be subject to the statutory lien because it did not consider American to be 

a “third-party” as contemplated by I.C. § 72-223 and also because it found that the exclusions and limitations in 

American‟s policy were valid. Reichert v. Magic Valley Foods, Inc., IC 93-830670, Industrial Commission Findings 

of Fact and Conclusions of Law at 4-7 (November 30, 1998). 
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gross compensation within the insurance plan.” We believe that this misses the substance of 

Reichert‟s argument. Although Cherry‟s argument is similar to Reichert‟s to the extent that each 

claimant was attempting to maximize recovery under the UIM policy, Reichert argued a much 

broader proposition than does Cherry. He asserted that the worker‟s compensation offset 

provision in section D(2)(a) effectively negated the coverage afforded by the policy and thus,

coverage was illusory. Accordingly, Reichert asked this Court to declare that the offset 

provision was void. 

Cherry does not argue that the offset provision is void or that coverage is illusory. 

Rather, her argument focuses upon the effect of the Fund‟s assertion of its statutory subrogation 

interest in her recovery from the third-party tortfeasor. The Fund‟s assertion of its statutory 

rights has revealed a latent ambiguity in the language of the offset provision that this Court had 

no cause to consider under the facts of Reichert: Does the phrase “sums paid or payable” refer to 

the gross sum of worker‟s compensation or to the net sum of worker‟s compensation after the 

Fund‟s subrogation interest is satisfied? 

The dissent further argues that the Court‟s definition of “payable” in Reichert answers the 

question of whether “sums paid or payable” refers to gross or net sums. The dissent contends

there “is no other purpose to use the term „or payable‟ . . . except to cover funds to which a 

recipient is entitled, or funds which the recipient received but did not retain.” The difficulty with 

reliance on our holding in Reichert is that this Court was addressing a different question than is 

presented in this case. Reichert argued that the term “payable” in the offset provision limited the 

offset to worker‟s compensation benefits already paid, as opposed to those that might be paid in 

the future. Id. at 402, 94 P.3d at 707. The Court held that “applying the common understanding 

of the word „payable,‟ not only should the benefits that have already been paid to Reichert be 

deducted from the compensatory damages amount, but also any future benefits which the 

Industrial Commission awards.” Id. Applying the definition of “payable” in Reichert, we are 

still confronted with the question whether the use of the phrase “sums paid or payable” in the 

offset provision refers to gross or net sums paid (in the past) or gross or net sums payable

(presently or in the future). In short, this case presents a markedly different situation than was 

addressed in Reichert. We conclude that our decision in Reichert is not inconsistent with our 

resolution of the ambiguity in favor of the insured in the instant case. Accordingly, albeit for 
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different reasons, we affirm the district court‟s initial decision on summary judgment in which 

Cherry was awarded $66,281.38.

B. Cherry is entitled to an award of attorney fees on appeal.

The district court awarded Cherry attorney fees, costs and prejudgment interest pursuant 

to I.C. §§ 41-1839 and § 28-22-104.

5

 Coregis has not challenged that award on appeal, although 

in view of our determination that the order on Cherry‟s motion to alter and amend must be 

vacated, the district court ought to reconsider aspects of that order on remand. Cherry now seeks 

an award of attorney fees on appeal.

Cherry‟s claim for attorney fees is based upon I.C. § 41-1839. Coregis argues that an 

award attorney fees ought not be awarded on appeal under I.C. § 41-1839 in cases wherein the 

appeal is not frivolous and was pursued in good faith. There are two provisions of I.C. § 41-

1839 which may potentially apply to this appeal: subsections (1) and (4).6 Although we have yet 

to award attorney fees under the latter provision, we have indicated that attorney fees may 

properly be awarded under I.C. § 41-1839(4) when the appeal “was brought, pursued or

defended frivolously, unreasonably or without foundation.” Trinity Universal Ins. Co. v. 

Kirsling, 139 Idaho 89, 94, 73 P.3d 102, 107 (2003). As we have vacated the district court‟s 

award of $100,000, the issues presented by Coregis in this appeal are manifestly not frivolous. 

Thus, there is no basis for an award of attorney fees under I.C. § 41-1839(4). 

 

5 The trial court‟s order awarding attorney fees, costs and prejudgment interest is not before this Court in the 

record on appeal. However, each of the parties has discussed the award and its statutory bases. 

6

Idaho Code § 41-1839 provides, in pertinent part, as follows:

(1) Any insurer issuing any policy, certificate or contract of insurance, surety, guaranty 

or indemnity of any kind or nature whatsoever, which shall fail for a period of thirty (30) days 

after proof of loss has been furnished as provided in such policy, certificate or contract, to pay to 

the person entitled thereto the amount justly due under such policy, certificate or contract, shall in 

any action thereafter brought against the insurer in any court in this state for recovery under the 

terms of the policy, certificate or contract, pay such further amount as the court shall adjudge 

reasonable as attorney‟s fees in such action.

. . .

(4) Notwithstanding any other provision of statute to the contrary, this section and 

section 12-123, Idaho Code, shall provide the exclusive remedy for the award of statutory 

attorney‟s fees in all actions between insureds and insurers involving disputes arising under 

policies of insurance. Provided, attorney‟s fees may be awarded by the court when it finds, from 

the facts presented to it that a case was brought, pursued or defended frivolously, unreasonably or 

without foundation. Section 12-120, Idaho Code, shall not apply to any actions between insureds 

and insurers involving disputes arising under any policy of insurance.
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We have determined that Cherry is justly due $66,281.38 under the terms of the policy

and that sum has not been paid. Coregis does not dispute that Cherry has provided the proof of 

loss required by I.C. § 41-1839(1). We can see no principled basis for engrafting the language of 

I.C. § 41-1839(4) to this provision. Accordingly, applying the plain language of the statute, we 

conclude that Cherry is entitled to an award of attorney fees incurred on appeal. 

IV. CONCLUSION

We hold that Coregis is entitled to an offset for the $100,000 paid by Farmers under 

section D(2)(b) of Coregis‟ policy and an offset of $36,079.63, representing the net sum of 

worker‟s compensation benefits paid to Cherry, under section D(2)(a) of Coregis‟ policy. The 

district court‟s order on Cherry‟s motion to alter and amend is vacated. The district court‟s 

original order on summary judgment is affirmed. Attorney fees and costs incurred on appeal are 

awarded to Cherry. 

Chief Justice EISMANN and Justices BURDICK and J. JONES CONCUR.

W. JONES, J., dissenting:

I respectfully dissent as follows:

The majority opinion runs contrary to precedence established by this Court and attempts 

to interpret clearly unambiguous language in an insurance policy. For those reasons, I 

respectfully dissent.

Section D(2)(a) is not ambiguous.

The policy in this case essentially has two separate setoff provisions; (1) section D(2)(a), 

which allows for deductions from the policy limits for funds paid or payable by workers‟ 

compensation; and (2) section D(2)(b), which allows for deductions for funds paid by a legally 

responsible party. The majority is technically correct that this issue was properly preserved for 

appeal. However, it must first be clarified that the district court did not find that the section 

D(2)(a) setoff provision was ambiguous and only addressed section D(2)(b) in its decision.7 

Section D(2)(a) reads “[a]ny amounts payable under this coverage shall be reduced by: (a) [a]ll 

sums paid or payable under any workers‟ compensation[.]” Therefore, within section D(2)(a) 

there are two sub-issues; (1) whether the funds were paid by the Fund, or (2) whether the funds 

were payable by the Fund.

 

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“The [district court] finds that, . . . [Cherry] has not been paid a sum by a third party [as] contemplated by section 

D(2)(b) of the addendum because [Cherry] has never been actually compensated by the money from Farmers.”
10

The majority poses the question as one of first impression in Idaho; that is, “whether the 

phrase „[a]ll sums paid or payable‟ in the D(2)(a) offset provision refers to gross or net sums paid 

or payable as worker‟s compensation benefits.” This question is not one of first impression in 

Idaho because, as noted by the majority, it was previously addressed in Am. Foreign Ins. Co. v.

Reichert; although, the Reichert Court addressed the question of “paid” and “payable” 

separately. See Am. Foreign Ins. Co. v. Reichert, 140 Idaho 394, 399-402, 94 P.3d 699, 704-707 

(2004). The majority attempts to distinguish Reichert from the present case on the same basis, 

stating that “Reichert was not arguing the gross versus net distinction that Cherry has argued; 

rather, he was arguing, in the first instance, that no offset for worker‟s compensation should be 

allowed at all.” This statement misconstrues the argument posed in Reichert. The issue 

presented to this Court in Reichert on appeal asked whether “American‟s uninsured motorist 

coverage endorsement paragraph D2(a) (“offset provision”) [is] void[.]” Id. at 399, 94 P.3d at 

704. This Court summarized Reichert‟s argument that the “offset provision” was void because 

“American knew that all claimants would only receive minimal, if any, coverage because all 

claimants would also receive worker‟s compensation benefits.” Id. So, while the words “gross 

versus net” were not specifically used by this Court in Reichert, Reichert was in essence posing 

the same argument as Cherry. That is, the “offset provision” should not be allowed because it 

reduces the amount of total recovery of every claimant who also receives workers‟ compensation 

benefits; or put another way, the net money actually retained by the claimant does not reflect the 

gross compensation within the insurance plan.

The majority recognizes that the offset provision in Reichert is “almost identical to 

section D(2)(a) in Coregis‟ policy.” The offset provisions are not just “almost identical,” they 

are indistinguishably identical.8 It seems illogical that the majority would find the identical 

provision and identical fact pattern in Reichert distinguishable from the present case based on the 

specific language of a party‟s argument presented. The law of this State should not hinge on the 

use of a crafty lawyer‟s verbal gymnastics. The majority‟s conclusion is expressly contrary to 

existing Idaho law as stated by this Court no less than five years ago. This Court has previously 

specifically decided that language identical to section D(2)(a) is not ambiguous, and in 

 

8 Compare the provision in Reichert, which reads “[a]ny amount payable under this coverage shall be reduced by all 

sums paid or payable under any workers‟ compensation, disability benefits or similar law” with the Coregis policy, 

which reads “[a]ny amount payable under this coverage shall be reduced by [a]ll sums paid or payable under any 

workers‟ compensation, disability benefits or similar law[.]” See Am. Foreign Ins. Co. v. Reichert, 140 Idaho 394, 

399, 94 P.3d 699, 704 (2004).
11

accordance with that finding, this Court should reverse the district court‟s decision. See Id. This 

Court has and should continue to find that provision unambiguous, and therefore, valid. Id.

Although the Reichert Court did not expressly find that the funds were “paid” it held the 

offset provision valid and “consistent with the public policy against double recovery for worker‟s 

compensation benefits.” Id. at 400, 94 P.3d at 705. The Court also found no ambiguity in the 

term “payable.”

As indicated above the offset provision is unambiguous. When there is no 

ambiguity, there is no occasion for construction and coverage must be determined 

using the plain meaning of the words employed. Payable means that which is to 

be paid. In further explanation, Black‟s Law Dictionary provides that an amount 

may be payable without being due. The term has also been defined as that 

requiring to be paid, capable of being paid, or due.

These definitions represent the common understanding of the term payable. In 

application to this case, applying the common understanding of the term payable, 

not only should the benefits that have already been paid to Reichert be deducted 

from the compensatory damages amount, but also any future benefits which the 

Industrial Commission awards. Obviously the exact benefits that may be paid in 

the future are unknown.

Id. at 402, 94 P.3d at 707 (2004) (internal citations omitted) (emphasis added). The Court in 

Reichert ultimately found that the decision to pursue any further workers‟ compensation claims 

rested solely in the hands of the worker. So, although the exact language “net versus gross” was 

not addressed in Reichert, the Court did not fail to address the obvious; that being, that the basis 

of Reichert‟s claim in favor of recovery was prevented by the unambiguous language of the 

terms “paid or payable” within the policy. Although American did not have the right to pursue 

Reichert‟s worker‟s compensation claim this Court determined that “[o]n remand the district 

court can decide the issue of breach of contract[.]” Id. That is, under the terms of the insurance 

contract, Reichert may be liable for his failure to pursue future worker‟s compensation and 

reduce American‟s liability limits by the amount which would constitute funds “payable.”

The majority tries to distinguish Reichert further because Reichert‟s worker‟s 

compensation benefits were not subject to a subrogation lien. It appears that a person is to glean 

this information from a separate order issued by the Industrial Commission. This begs the 

question of whether the reliability of the decisions of this Court will be distinguished on facts 

outside of the language of the opinion. I find this “distinguishing” fact unpersuasive because it is 

not found within the plain language of the opinion and is not binding legal authority. From the 
12

plain language of the opinion it is impossible to determine whether Reichert‟s worker‟s 

compensation benefits would be subject to the same statutory lien as Cherry‟s worker‟s 

compensation benefits. However, I.C. § 72-223 was adopted in 1971 and last amended in 2000. 

The decision in Reichert was issued in 2004. Reichert, 140 Idaho 394, 94 P.3d 699. It is 

presumed, but not in the language of the opinion, that Reichert‟s accident occurred around the 

time of the 2000 amendments9 which left the subrogation section, I.C. § 72-223(3), unaffected. 

Therefore, it cannot be presumed that the Court in Reichert was confronted with a different 

situation than the present case.10 This Court should not make a determination that Reichert‟s 

workers‟ compensation benefits were not subject to the provisions of I.C. § 72-223(3).

Further, it should be recognized that there is no other purpose to use the term “or 

payable” in the clause D(2)(a) except to cover funds to which a recipient is entitled, or funds 

which the recipient received but did not retain. By using the term “payable” Coregis was clearly 

and unambiguously limiting their coverage only to funds which the injured employee did not 

receive or expect to receive from worker‟s compensation benefits. If the only provision we were 

looking at was “paid” that would be one thing, but the entire portion of the limitation reads “paid 

or payable.” Whether Cherry was eventually required to reimburse another entity with those 

funds is inconsequential. The payments were payable or due pursuant to law, and therefore the 

setoff by Coregis was valid. The sole purpose of the Coregis policy was to compensate an 

employee who was injured in the course and scope of employment who had no other means for 

recovery because of an underinsured motorist. This policy was purchased by the School District 

to supplement any recovery to which the employee would otherwise be entitled in the instance 

that recovery from others was not possible, for whatever reason.

The majority and the district court rely heavily on the Indiana case of Wildman v. 

National Fire and Marine Ins. Co., 703 N.E.2d 683 (Ind. Ct. App. 1998), which is factually 

similar to the situation at hand. Both cases involve policies with two setoff provisions, one 

which allows for workers‟ compensation setoff and one for responsible party setoff. The court in 

 

9 Reichert‟s complaint stemmed from an arbitration agreement which was entered into in early 2001. Reichert, 140 

Idaho at 397, 94 P.3d at 702.

10 It is noted that Reichert discussed an offset provision in relation to an uninsured motorist policy, whereas this case 

addresses an underinsured motorist policy. Uninsured motorist coverage is generally more stringently evaluated by 

the courts because Idaho has adopted legislation enforcing the coverage of uninsured motorist coverage. See 

Meckert v. Transamerica Ins. Co., 108 Idaho 597, 599-600, 701 P.2d 217, 219-20 (1985) (finding that the Idaho 

legislature has regulated uninsured motorist coverage, but no public policy exists for the regulation of underinsured 

motorist coverage.)
13

Wildman held that the workers‟ compensation provision was ambiguous because it does not 

define sums paid or payable, holding “[r]easonable people reading this language may conclude 

that this phrase means the amount of worker‟s compensation benefits originally received by the 

insured; equally reasonable people may determine that the reduction applies only to those 

benefits retained after subtraction of the compensation carrier‟s statutory lien.” Id. 703 N.E.2d at 

687. Although the decision in Wildman supports Cherry‟s contention that section D(2)(a) is 

ambiguous, it too ignores the term “payable” and that decision is not binding on this Court and 

runs contrary to precedence already established in Reichert.

I find that section D(2)(a) is not ambiguous. This Court held that the offset provision in 

Reichert is “consistent with the public policy against double recovery from worker‟s 

compensation benefits and is valid.” Reichert, 140 Idaho at 400, 94 P.3d at 705. To hold that 

the funds given by the Fund were not “paid or payable” defies logic and completely contradicts 

the statutory scheme for worker‟s compensation. The relevant portions of the statute read “[i]f 

compensation has been claimed and awarded, the employer having paid such compensation or 

having become liable therefore, shall be subrogated to the rights of the employee, to recover 

against such third party to the extent of the employer‟s compensation liability.” I.C. § 72-223(3) 

(emphasis added). According to the express language of I.C. § 72-223(3), the Fund would not 

have a subrogation lien unless the funds were in fact “paid or payable.” See I.C. § 72-223(3). It 

necessarily follows that in order for the Fund to have a subrogation lien, the funds must have 

been “paid or payable.” Therefore, it contradicts logic to argue that the funds were not “paid or 

payable” because the funds were subject to a subrogation lien. Cherry “would have this court 

construe the word „paid‟ in the limitation of liability provision as meaning „paid and retained.‟ 

The word „paid‟ is used unequivocally and without qualification.” Nickamp v. Allstate Ins. Co., 

202 N.E.2d 126, 128 (Ill. App. 1964). I find that section D(2)(a) of the policy is not ambiguous. 

The amount of workers compensation benefits paid were properly deducted from the $250,000 

limit of the Coregis policy.

The district court erred by interpreting the section D(2)(b) setoff provision of the 

policy and finding that the funds received by Cherry from Farmers were not “paid.”

Although the majority does not address this issue, I find it necessary to the analysis 

because it was the entire basis of the district court‟s decision. The district court decision does 

not address section D(2)(a), but hinges entirely upon section D(2)(b). To follow Cherry‟s 
14

argument that none of Farmers payment which goes to the Fund should be deducted from 

amounts owed to Cherry by Coregis would result in a windfall or double recovery to Cherry. 

The workers‟ compensation laws provide for workers‟ compensation payments to injured 

workers only to the extent that the worker is not compensated by third-party tortfeasors. In other 

words, workers‟ compensation is available as a matter of right to workers‟ injured in the course 

and scope of their employment who have no other right of recovery from third parties. Where, 

as here, Cherry is entitled to a $100,000 payment from Farmers, she is not entitled to $100,000 

of the amount she received from the workers‟ compensation surety simply because the law does 

not permit recovery of worker compensation benefits to the extent that a third party has made 

payment. That result is simply the function of the worker compensation laws and is not in any 

way attributable to the deduction Coregis claims pursuant to the explicit terms of its insurance 

policy.

This Court has previously determined that a nearly identical setoff provision to section 

D(2)(b) does not have ambiguous language.11 In Mutual of Enumclaw v. Box, the insurance 

company filed for declaratory relief seeking to establish that according to the terms of the policy 

the insurance company was entitled to reduce the coverage by the amounts the insured received 

from the third party tortfeasor. Mutual of Enumclaw v. Box, 127 Idaho 851, 854, 908 P.2d 153, 

156 (1995). The district court and this Court held that an insurance company may reduce the 

liability of an underinsured motorist policy “dollar for dollar by the amounts recovered from the 

tortfeasor‟s insurer” according to the language of the policy. Id. (internal citation omitted, citing 

Mutual of Enumclaw Ins. Co. v. Key, 883 P.2d 875, 876 (Or. App. 1994)). It was held that an 

insurance company “will only pay the amount necessary to bring [the plaintiff‟s] total recovery 

to the liability limit . . .” when there is clear and unambiguous language allowing for the setoff. 

Id.

The district court held that Cherry was not “paid” the sums which she received from 

Farmers because “she never possessed the $100,000 free of lien, and merely acted as a temporary 

holder” under I.C. § 72-223. The relevant portions of the statute read “[i]f compensation has 

been claimed and awarded, the employer having paid such compensation or having become 

liable therefore, shall be subrogated to the rights of the employee, to recover against such third 

 

11 “Any amounts otherwise payable for damages under this coverage will be reduced by: (a) All sums paid because 

of bodily injury by or on behalf of persons or organizations who may be legally responsible.” Mutual of Enumclaw 

v. Box, 127 Idaho 851, 854, 908 P.2d 153, 155 (1995).
15

party to the extent of the employer‟s compensation liability.” I.C. § 72-223(3) (emphasis added). 

This argument is flawed. Merely because the funds were received subject to a statutory lien does 

not negate the fact that the sums were “paid.” For example, if Cherry had borrowed money from 

her bank, rather than receiving the money from the Fund, Cherry would still be required to pay 

those monies to the bank on or before the agreed point in time. The fact that the money was 

owed to another person at the time the money was received from Farmers does not change the 

interaction between Farmers and Cherry. Farmers made a payment to Cherry, and Cherry 

received that payment. What Cherry does or does not do with the money once the payment is 

made cannot subsequently change the previous transaction between Cherry and Farmers. To find 

so defies logic. The majority also takes issue with the district court‟s interpretation of the 

Farmer‟s payment classifying the result as a “distortion of the word „paid‟ beyond recognition.” 

In other words, even the majority agrees that section D(2)(b) is unambiguous and Farmer‟s 

payment was properly deducted from the policy limits. I agree; the deduction is clearly and 

unambiguously established in the policy. It is difficult to understand how the majority can 

conclude that monies paid by the Fund and subject to its subrogation lien are not “paid” within 

the meaning of the policy, but somehow monies paid by Farmers subject to the same subrogation 

lien are “paid” pursuant to the policy. I cannot reconcile that glaring inconsistency. An 

insurance company is free to limit its liability as long as such limits do not offend public policy 

and those limits are clearly and unambiguously established within the four corners of the 

contractual policy.

Both parties make arguments on public policy grounds. However, it is well established in 

Idaho that the Idaho legislature has not established a public policy regarding underinsured 

motorist coverage. Meckert v. Transamerica Ins. Co., 108 Idaho 597, 600, 701 P.2d 217, 220 

(1985). “Idaho statutes do not regulate underinsured motorist coverage. . . . [A] statute 

governing uninsured motorist coverage does not represent any public policy regarding 

underinsured motorist coverage. Underinsured and uninsured coverage are not identical in either 

definition or operation.” Andrae v. Idaho Counties Risk Management Program Underwriters, 

145 Idaho 33, 36, 175 P.3d 195, 198 (2008) (internal quotation omitted, citation omitted). 

“While such a policy might be desirable . . . public policy should be enunciated by our legislature 

and not by this Court.” Meckert, 108 Idaho at 600, 701 P.2d at 220 (internal citation omitted).
16

For the foregoing reasons I would reverse the district court‟s grant of summary judgment 

in favor of Cherry.