United States Court of Appeals

For the First Circuit

No. 09-1239

HEIDI M. BAKER,

Plaintiff, Appellant,

v.

ST. PAUL TRAVELERS INSURANCE COMPANY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Mary M. Lisi, U.S. District Judge]

Before

Lipez, Stahl and Howard, Circuit Judges.

Merrill Friedemann with whom Anthony Gianfrancesco and William

F. Warren were on brief for appellant.

Paul V. Sullivan for appellee.

February 17, 2010
Safety Source Northeast is a Massachusetts corporation with 1

its principal place of business in Massachusetts. According to

Baker, Safety is licensed to do business in Rhode Island and Baker

was hired by Safety in Rhode Island and exclusively worked out of

Safety's Rhode Island office, in Warwick, Rhode Island. 

The insurance policy was executed and delivered in 2

Massachusetts.

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STAHL, Circuit Judge. This case arises out of a car

accident on December 17, 2002, in Boston, Massachusetts. On that

day, Heidi M. Baker, the plaintiff-appellant and a resident of

Rhode Island, was driving a vehicle owned by her employer, Safety

Source Northeast ("Safety"), as part of her job duties. Baker was 1

seriously injured in the car accident, which was caused by the

other driver. Baker filed a third-party claim against the

tortfeasor, but the other driver's insurance coverage was

insufficient to cover Baker's damages. Baker also filed for and

received workers' compensation ("WC") benefits through the Rhode

Island workers' compensation system. Finally, Baker sought to

recover under the Underinsured Motorist (UIM) provision of her

employer's automobile insurance policy, which was provided by St. 2

Paul Travelers Insurance Company ("St. Paul"), the defendantappellee in this case. St. Paul denied Baker's attempt to recover

under the UIM provision, citing Massachusetts law for the

proposition that an employee cannot recover for work-related

injuries under both workers' compensation and her employer's UIM

coverage.
Baker also brought suit in state court against her employer, 3

Safety. After removal by Safety to federal court, Baker

voluntarily dismissed her claim against Safety. 

-3-

In response to the denial, Baker filed a complaint in

Rhode Island state court seeking a declaratory judgment regarding

her eligibility for coverage under St. Paul's UIM coverage. St. 3

Paul removed the case to Rhode Island District Court and Baker and

St. Paul both moved for summary judgment. A magistrate judge

recommended granting St. Paul's motion and denying Baker's, on the

grounds that Massachusetts law governed the matter and

Massachusetts case law prohibited recovery by an injured employee

under both workers' compensation and her employer's UIM coverage.

Baker filed a written objection to the report and recommendation,

arguing that Rhode Island law should apply, but that even under

Massachusetts law the bar on recovery under both workers'

compensation and the employer's UIM coverage did not apply where

the UIM coverage was a bargained-for provision. Nonetheless, the

district court adopted the magistrate's report and recommendation

in full, writing additionally only to correct an error in the

magistrate's report. See Baker v. Safety Source Northeast, No. 07-

314 ML, 2009 WL 211865 (D.R.I. January 28, 2009). This appeal

followed. 

For the following reasons, we disagree with the

conclusion reached by the district court and will remand this case

for further proceedings consistent with this opinion. 
Baker argues that Rhode Island law should apply under the 4

interest-weighing approach adopted in Woodward v. Stewart, 243 A.2d

917, 923 (R.I. 1968). Such a conclusion would clearly advantage

Baker because Rhode Island law seems to permit an injured employee

to recover under both workers' compensation and her employer's UIM

coverage, provided the WC payment is reduced by the amount of the

UIM recovery (an "offset"). Though the parties cite to no

definitive Rhode Island case so holding, there are numerous cases

that suggest this result. See, e.g., Poulos v. Aetna Cas. & Sur.

Co., 379 A.2d 362, 365 (R.I. 1977) (where an injured employee's

personal UIM coverage includes an offset provision regarding

workers' compensation, such clause is enforceable only to the

extent that it prevents a double recovery by the injured employee);

Cruz v. Wausau Ins., 866 A.2d 1238, 1239-40 (R.I. 2005) (court only

decided a procedural matter and raised no objection to injured

employee's recovery from both WC and his employer's UIM coverage);

Charest v. Pawtucket Mut. Ins. Co., 1996 WL 936921 (R.I. Super.

April 23, 1996) (an injured employee who recovered on his

employer's UIM coverage and received WC payments was required to

offset those two amounts when he sought coverage from a third

source, his personal UIM coverage). 

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As a preliminary matter, we must determine what law

governs the question before us. Because this court is sitting in

diversity, we apply the choice of law rules of the forum state,

here, Rhode Island. See Montalvo v. Gonzalez-Amparo, 587 F.3d 43,

46 (1st Cir. 2009). Under Rhode Island law, "[W]hen the insured is

a Massachusetts corporation doing business in Massachusetts, and

the contract is executed and delivered in Massachusetts,

Massachusetts law governs the interpretation of the contract."

Hartford Cas. Ins. Co. v. A & M Assoc., Ltd., 200 F. Supp. 2d 84,

87 (D.R.I. 2002) (citing Baker v. Hanover Ins. Co., 568 A.2d 1023,

1025 (R.I. 1990)). Thus, in this case, Massachusetts law applies.4

The district court concluded that two decisions from the

Massachusetts Supreme Judicial Court (SJC), Berger v. H.P. Hood,
It is also worth noting that the SJC acknowledged in Berger 5

that state courts have reached a variety of conclusions on this

question depending on how they have interpreted the exclusivity

provisions of their own workers' compensation statutes. See

Berger, 416 Mass. at 655 and n.8.

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Inc., 416 Mass. 652 (1993), and Nat'l Union Fire Ins. Co. v.

Figaratto, 423 Mass. 346 (1996), squarely foreclosed Baker's claim.

We do not agree. Berger and National Union only address whether

the exclusivity provision of the Massachusetts workers'

compensation statute permits an injured employee to recover under

both WC and her employer's UIM coverage. See Berger, 416 Mass. at

652 ("At issue is whether the exclusivity provision of the Workers'

Compensation Act, G.L. c. 152, § 23 (1992 ed.), bars an employee's

claim against the owner and the insurer of the employer's motor

vehicles, for underinsurance benefits."); Nat'l Union, 423 Mass. at

348 (explaining that the court was bound to follow its recent

decision in Berger, which held that "the exclusivity provision of

the Workers' Compensation Act . . . barred the employee's claim

against the employer's insurers."). In contrast, in Baker's case,

she has recovered workers' compensation benefits under the Rhode

Island workers' compensation statute, rather than the Massachusetts

statute. Therefore, in our view, Berger and National Union are not

dispositive. 

5

Thus, because the SJC has not "spoken directly to the

precise question that confronts us," we are tasked with predicting

"how that court likely would decide the issue." Gonzalez Figueroa
In Berger the court noted that the Massachusetts uninsured 6

motorist provision was intended to "minimize the possibility of .

. . catastrophic financial loss [to] the victims of an automobile

accident," while in the case of a workplace injury, "the employee

is protected from the risk of catastrophic financial loss through

workers' compensation." 416 Mass. at 656 (internal citations and

quotations omitted). In National Union, the court expanded on this

policy concern:

As a matter of fair and equal treatment, a person injured

in the course of employment while in a motor vehicle of

the employer need not obtain any greater insurance

benefits than another person sustaining a similar injury

in the course of employment but not in a motor vehicle of

the employer. The cost of UM coverage for employers

would be substantially higher than otherwise if that

coverage in a standard policy applied to employees'

on-the-job motor vehicle injuries. That increase would

not be accompanied by a corresponding reduction in the

cost of workers' compensation coverage. 

423 Mass. at 349-50.

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v. J.C. Penney Puerto Rico, Inc., 568 F.3d 313, 318 (1st Cir.

2009). We are persuaded that the SJC's decisions in Berger and

National Union were largely governed by the court's policy concerns

regarding providing Massachusetts companies with a predictable and

reliable scheme concerning the interplay of workers' compensation

and underinsured motorist coverage, and holding down insurance

costs for Massachusetts companies. Because this case concerns a 6

Massachusetts company doing business in Massachusetts, and carrying

an auto insurance policy executed and delivered in Massachusetts,

we expect these policy concerns would lead the SJC to apply the

conclusions of Berger and National Union to this case, even though
St. Paul argues that the National Union carve-out only 7

applies to "non-standard" policies, which St. Paul appears to

define as policies that do not use the standard forms issued by the

Massachusetts Insurance Commissioner. The plain language of the

National Union carve-out, however, suggests a broader exclusion of

any coverage explicitly purchased in order to provide additional

protection to the employer's workers. This exception requires a

factual determination as to whether the UIM coverage was elected

and paid for by the employer in order to protect his employees from

the harm of underinsured motorists. 

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those cases concerned collection of WC payments under the

Massachusetts worker's compensation scheme.

However, that conclusion does not end our analysis. In

National Union, decided three years after Berger, the SJC carved

out an exception to the general bar on an employee's recovery under

both WC and her employer's UIM coverage. "[W]e would not extend

the bar imposed by the exclusivity provision of the Workers'

Compensation Act to make ineffective [UIM] coverage (or any other

coverage) that an employer explicitly purchased for the purpose of

providing [UIM] coverage (or any other coverage) to employees

injured in the course of their employment." 423 Mass. at 350-51.

Below, the district court granted summary judgment to St. Paul

without addressing the carve-out language in National Union, and

therefore it did not reach the factual question of whether the

underinsurance coverage purchased by Safety was indeed a bargainedfor provision intended to provide Safety's employees with

additional protection from damages caused by underinsured

motorists. 

7
The manual is available in PDF form on the public website of 8

the Automobile Insurers Bureau of Massachusetts (AIB). See

http://www.aib.org/ContentPages/DocumentView.aspx?DocId=559. The

AIB is a non-profit association of Massachusetts insurers that is

subject to the "visitation, supervision and examination" of the

Massachusetts Commissioner of Insurance. See Constitution of

Automobile Insurers Bureau of Massachusetts, at

http://www.aib.org/ContentPages/DocumentView.aspx?DocId=447. 

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Our review of the contract shows that at the time of the

accident Safety carried underinsured motorist coverage in the

amount of $100,000 per person and $300,000 per accident. The

contract also shows that Safety paid a premium of $79.00 in order

to receive this coverage during the policy year. Further, we take

judicial notice of the Massachusetts Commercial Automobile

Insurance Manual for 2002, the year the policy was issued.8

According to the Manual, it appears that in 2002 there was no

compulsory underinsured motorist coverage requirement for

commercial automobile policies and insurers were only required to

offer underinsured motorist coverage at limits up to $35,000 per

person/$80,000 per accident. In addition, the Manual set the

"basic limit" for underinsured motorist coverage at $20,000 per

person/$40,000 per accident. The limited facts available to us

suggest that perhaps Safety purchased and paid for additional UIM

coverage above and beyond what was required by law in force at the

time. However, without the benefit of discovery, we are unable to

conclusively determine whether Safety indeed bargained for the UIM
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coverage contained in its policy with the intention of protecting

its workers from damage caused by uninsured motorists.

We therefore vacate the district court's entry of summary

judgment and remand for appropriate discovery on the question of

whether the National Union carve-out applies, namely whether Safety

"explicitly purchased" its underinsured motorist coverage "for the

purpose of providing [UIM] coverage . . . to employees injured in

the course of their employment." 423 Mass. at 350-51. If the

court concludes in the affirmative, the terms of the contract would

require that any recovery by Baker under the underinsured motorist

provision would be reduced by "[t]he amount paid under a workers'

compensation law." In other words, an offset would be required. 

Vacated and remanded for further proceedings consistent

with this opinion. Costs are taxed in favor of Heidi M. Baker.