Opinion ID: 2331458
Heading Depth: 2
Heading Rank: 2

Heading: UIM and Workers' Compensation Exclusivity

Text: ¶ 25. We now address Bell Atlantic's argument that the exclusivity provision of Vermont's Workers' Compensation Act, 21 V.S.A. § 622, bars any recovery for UIM benefits from a self-insured employer. The issue central to this question is whether Bell Atlantic can be considered a third party subject to UIM liability to Bonanno under § 624(a) of the Act. Bell Atlantic asserts that it is not a third party because it is Bonanno's employer. In making this argument, Bell Atlantic ignores this Court's precedent looking favorably on the so-called dual persona or dual capacity doctrine. Under that doctrine, an employer immune from suit by § 622 may be subject to a third-party claim in accordance with § 624(a) if the employer's liability to the victim arises from actions taken in a nonemployer capacity. ¶ 26. In Derosia v. Duro Metal Products Co., 147 Vt. 410, 413, 519 A.2d 601, 604 (1986), we held that a workers' compensation insurer, which is considered the employer under the Workers' Compensation Act, 21 V.S.A. § 601(3), is a third party subject to suit if the insurer undertakes to provide, rather than pay for, benefits and services. 147 Vt. at 413, 519 A.2d at 604. Similarly, we have found no bar to suits against corporate officers who otherwise enjoy employer immunity under § 622 where the officer's negligence arose from a breach of a personal duty rather than a duty owed to the worker by the employer. See, e.g., Gerrish v. Savard, 169 Vt. 468, 471-72, 739 A.2d 1195, 1198 (1999) (third-party exception to exclusivity may in certain circumstances apply to an employer if employer acts in capacity of co-employee in negligently causing accident); Garrity v. Manning, 164 Vt. 507, 511, 671 A.2d 808, 811 (1996) (adopting the Wisconsin rule on dual capacity, which requires examination of the duty breached when assessing whether worker's suit for damages is permissible); see also Dunham v. Chase, 165 Vt. 543, 543, 674 A.2d 1279, 1280 (1996) (mem.) (corporate officer may be subject to co-employee liability for those negligent acts that breach personal duty only rather than nondelegable corporate duty). ¶ 27. Our decision in Libercent v. Aldrich, 149 Vt. 76, 539 A.2d 981 (1987), further supports Bonanno's claim against Bell Atlantic. In deciding that § 624(a) allowed a third-party claim by a state employee against a coworker where the state would defend and indemnify the coworker, we looked at the source of the state's obligation to defend its employees in the workplace negligence suit and determined that it arose independently of its obligations under the Workers' Compensation Act. 149 Vt. at 82-83, 539 A.2d at 985. We explained that the state does not assume direct liability for the acts of an employee; rather its status is analogous to that of an insurer. Id. at 82, 539 A.2d at 985. The same analogy applies in this case, even if the employer is a named defendant. Bell Atlantic's liability for UIM is not direct; rather, Bell Atlantic's liability arises from the negligence of the third-party underinsured driver who caused Bonanno's injuries and the statutory mandate to provide UIM coverage. Bell Atlantic's role in this case, like that of the state in Libercent, is one of an insurer. Like the co-employee tortfeasor in Libercent, the tortfeasor who injured Bonanno remains primarily liable, although the damages Bonanno seeks to recover will come in whole or in part from the employer as UIM insurer. Cf. William v. City of Newport News, 240 Va. 425, 397 S.E.2d 813, 816 (1990) (employer's liability for UIM payments to injured worker flows from judgment obtained against third-party tortfeasor and statute requiring self insurers to provide UIM coverage; the workers' compensation exclusivity provision therefore does not apply); see also Nat'l Farmers Union, 516 N.W.2d at 318 (if employee seeks UIM from employer for injury employer caused, claim is barred by workers' compensation exclusivity, but claim is not barred where third party causes injury). ¶ 28. Thus, under our precedents, we examine the capacity in which the party protected by § 622 was engaged to determine the injured worker's right to pursue additional compensation under § 624(a). Section 622 immunity offers no protection to an insurer or corporate officer who becomes liable to an injured employee for actions taken outside of the employer/employee relationship. The same rule should apply here to Bell Atlantic. Bell Atlantic has chosen a dual role for itself. It is an employer. The company is also an insurer bound to provide UIM coverage on its motor vehicles in accordance with § 941(f). Invoking the dual capacity doctrine here recognizes Bell Atlantic's different and distinct duties toward Bonanno: its duty as an employer to provide workers' compensation, and its duty as an insurer and automobile owner to maintain UIM coverage on its vehicles. ¶ 29. Applying the dual capacity doctrine in this case also makes sense because it furthers the Legislature's intent regarding UIM and self insurance and does no violence to the concepts underlying workers' compensation. The purpose of the Workers' Compensation Act is to eliminate the delays and costs involved in employee/employer litigation over workplace injuries under the common law. See Sienkiewycz v. Dressell, 151 Vt. 421, 423, 561 A.2d 415, 416 (1989) (workers' compensation law was passed for benefit of employees who were victims of industrial injury to avoid cost, delays, and complications of recovery under old common law, with its rules relating to such doctrines as contributory negligence and fellow servant negligence). The Act provides swift compensation to the injured worker in exchange for employer immunity from suit for the worker's injury. Id. Underlying § 941(f) is the legislative desire to protect the insured public from financially irresponsible drivers, Monteith, 159 Vt. at 381, 618 A.2d at 489-90, by requiring all owners or operators of motor vehicles to obtain UIM coverage regardless of the form of insurance. Employer responsibility for an employee's workplace injury is not at issue when the employee seeks UIM benefits from any UIM provider. When the employee seeks UIM payments from the employer, the employee is enforcing the employer's statutory obligation to provide UIM coverage irrespective of the method of insurance. The facial conflict between mandatory UIM coverage, the exclusiveness of the workers' compensation remedy, and the third-party exception to exclusivity can be resolved by harmonizing the statutes to give effect to the legislative intent underlying each. See Vt. Agency of Natural Res. v. Holland, 159 Vt. 21, 23, 613 A.2d 712, 713 (1992) (Where two statutory provisions conflict, interpretations that harmonize and give effect to both are favored.). Bell Atlantic's position, on the other hand, frustrates the Legislature's intent to make UIM coverage universal, even for workers injured by underinsured motorists, solely because Bell Atlantic made a business decision to self insure. See Heavens, 755 S.W.2d at 333 ([I]t would be ... unconscionable to allow an employer to totally avoid providing employees with uninsured motorist coverage by choosing to be self-insured.). It is inconceivable that this result was intended by the Legislature when it enacted § 941(f), which was intended to apply to drivers generally. Therefore, the trial court's decision in Bell Atlantic's favor must be reversed.