Opinion ID: 1757463
Heading Depth: 2
Heading Rank: 2

Heading: Right of Indemnity for Basic Reparation Benefits.

Text: Bee Line has no right of indemnity for BRB from Coleman. Nationwide's claim is not against the proceeds of the settlement; it is instead for BRB recoupment, an independent and distinct method of recovery with additional requirements set out in the statute. To settle her personal injury claim against Bee Line, Coleman signed a Release of All Claims. This release provided: This Indenture Witnesseth that I, Myanh Coleman, in consideration of the sum of $6,500.00, do hereby for my heirs, personal representatives and assigns, release and forever discharge Frank Huff, Bee Line Courier Service, Gallagher Bassett Services, Inc., Zurich Insurance and any other person, firm or corporation charged or chargeable with responsibility or liability, their heirs, representatives or assigns, from any and all claims, demands, damages, costs, expenses, loss of services, actions and causes of action arising from any act or occurrence up to the present time, and particularly on account of all personal injury, disability, property damages, loss or damages of any kind sustained or that I may hereafter sustain in consequence of an accident that occurred on or about the 11th day of December, 2003, at or near Louisville, KY. ... The undersigned agrees to hold the released parties harmless and indemnify them from any claims asserted by any third parties or lien holders, including but not limited to, all medical providers and any other insurance carriers against the proceeds of this settlement. The Undersigned Agree(s), as a further consideration and inducement for this compromise settlement, that it shall apply to all unknown and unanticipated injuries and damages resulting from said accident, casualty or event, as well as to those now disclosed. (Emphasis added.)
Generally, a tort settlement and release does not affect the payment of BRB. A tort settlement and release and contractual BRB are distinct methods of recovery. See Ammons v. Winklepleck, 570 S.W.2d 287, 289 (Ky.App.1978) ([Bodily injury] liability coverage and the BRB coverage do not overlap and do not provide duplicate benefits for the same elements of loss.) (internal quotation marks omitted). Dealing with the two methods of recovery is like dealing with apples and oranges. Holzhauser v. West American Ins. Co., 772 S.W.2d 650, 651 (Ky.App.1989). When the insured files suit against the tortfeasor, the trial court is required by law to permit the no-fault insurer to piggyback its claim against the tortfeasor's insurer, and, as the real party in interest, it is the only party who could give the tortfeasor and his insurer a release for elements of damages covered by basic reparation benefits. State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co., 684 S.W.2d 283, 285 (Ky.App. 1985) ( quoting Grange Mut. Cas. Co. v. McDavid, 664 S.W.2d 931 (Ky.1984)). Therefore, [a] release as to the tort-feasor has no effect on the contractual [BRB] claim. Holzhauser, 772 S.W.2d at 651. Here, the claims adjuster for Bee Line described the settlement offer as an offer to resolve Coleman's injury claim. Because the Bee Line Release only provides for indemnification from any claims ... against the proceeds of this settlement[,] which was a personal injury tort settlement, it was merely a general tort release.
Coleman also argues that she cannot be required to indemnify Bee Line under Ohio Casualty Ins. Co. v. Ruschell, 834 S.W.2d 166 (Ky.1992). In Ruschell , the Plaintiff, Ruschell, had settled with the tortfeasor and had given a general release and indemnification/hold harmless agreement. She then attempted to collect BRB from her no-fault carrier, Ohio Casualty. The carrier denied her claim, arguing that since Ruschell had released the tortfeasor under a general release, it had no further liability for BRB. The trial court agreed, but the Court of Appeals reversed. This Court took review and affirmed the Court of Appeals. Pointing to the difference between contractual and tort claims, Justice Leibson wrote for the Court, the reparations obligor is the only party who could give the tortfeasor and his insurer a release for elements of damages covered by basic reparations benefits.' Id. at 168 ( quoting Stovall v. Ford, 661 S.W.2d 467, 470 (Ky.1983)). So the general release to the tortfeasor does not address those former elements of a tort claim now abolished by the no-fault act. Id. Therefore, in Ruschell , the plaintiff could pursue BRB from her own carrier despite her complete release of the tortfeasor. It is important to note that in the case at hand, the parties align in a significantly different manner. Coleman's BRB carrier had paid BRB, so this case does not present the plaintiff trying to collect BRB from her own carrier as in Ruschell . This case presents the unanswered question in Ruschell : whether the BRB carrier can proceed against the tortfeasor for recoupment and the tortfeasor can then seek indemnity from the settling plaintiff. This Court indicated in dicta in Ruschell that a plaintiff may agree to take on this indemnity for BRB recoupment as a matter of contract in order to settle a claim but only if the agreement is made explicitly and with specificity: We recognize that, as a contract right, in the process of striking a bargain to pay a given amount for a release of the tort claim, an alleged tortfeasor and his liability carrier may extract as an additional consideration the release or reimbursement of no-fault obligations, but certainly this should not be inferred as the intent of the parties unless the release specifically so provides. Id. Although dicta, this Court correctly concluded that an intent to indemnify the tortfeasor against BRB recoupment claims should not be inferred in the absence of explicit, specific language of agreement. This is especially true in light of the distinctly different nature of BRB versus tort liability claims. The question in Ruschell was whether the plaintiffs own BRB carrier could refuse to pay under a general release to a tortfeasor. This Court held that the plaintiffs own BRB carrier could not refuse to pay absent specific language agreeing to release or reimburse no-fault obligations. The Court wanted to ensure that if a plaintiff did intend to release her no-fault carrier as well, then the release must say so specifically and clearly. This Court, also in acknowledged dicta, then commented on language in the Court of Appeals opinion that said that it may be that if Ruschell's BRB carrier then pursued recoupment of whatever it may pay out as BRB from the torfeasor, then Ruschell may in turn have to reimburse the torfeasor. Id. at 169. Naturally, a plaintiff cannot contract away rights that do not belong to her and are not a part of her injury claim. So a plaintiff could not release the BRB carrier's right to recoupment. Whether a plaintiff could agree to indemnify the tortfeasor for BRB recoupment claims is another question, of course. In fact, in Ruschell , this Court noted that the automobile victim's rights to those elements of damages covered by basic reparation benefits were abolished by KRS 304.39-060(2)(a); deducing from this that the reparations obligor is the only party who could give the tortfeasor and his insurer a release for elements of damages covered by basic reparations benefits. Id. at 168 ( quoting Stovall, 661 S.W.2d at 470) (emphasis added). In this case, Nationwide has paid BRB to Coleman; and Bee Line has reimbursed Nationwide an agreed-upon amount. Nationwide, as the no-fault carrier, had every right to seek such reimbursement since the claim belongs to it and the statute gives it the right to do so. But does the tortfeasor, Bee Line, then have the right to collect that amount back from Coleman, with whom it has settled, under a general release that does not specify that Coleman must indemnify the tortfeasor for BRB recoupment claims? Under the rule in Ruschell requiring a specific designation in the release that BRB are released or indemnified, the answer is no. The release here is no more than a general release and does not mention no-fault benefits. [2] So the trial court and Court of Appeals erred in concluding that Coleman was contractually obligated to reimburse Bee Line for BRB recoupment payments.