Opinion ID: 2519908
Heading Depth: 2
Heading Rank: 3

Heading: Extension of Handy v. City of Lawton fringe benefit analysis in the context of workers' compensation.

Text: ¶ 12 Claimant asserts she personally paid a portion of premiums for her health insurance coverage, which was provided as a part of Claimant's benefits package with Employer University of Oklahoma. [14] In our view, Claimant is entitled to reimbursement for the amount paid on her behalf by her insurance carrier regardless of Claimant's payment of premiums for such coverage because such coverage was a fringe benefit of her employment for which Employer has no right to set-off. Generally, this Court has held in a tort action that an employer is not entitled to a set-off for an amount attributable to a fringe benefit received by the employee. Handy v. City of Lawton, 1992 OK 111, 835 P.2d 870; Folkestad v. Burlington Northern, Inc., 813 F.2d 1377 (9th Cir.1987). Although these cases are not workers' compensation cases, they are common law tort actions brought by employees against their employers and they address the issue of whether the employer is entitled to offset liability for health insurance benefits recovered by the employee. Handy provides that the courts were unanimous that the determining factor was the purpose and nature of the fund, and not merely the source. Handy, 835 P.2d at 874. These cases further provide [i]f the fund is for general hospital and medical coverage upon which the insured may make a claim without regard to liability on the part of the employer, the policy is a fringe benefit, and is part of the employee's income. The collateral source rule prohibits a set-off of benefits received thereunder by the employee. Handy, 835 P.2d at 874-75 (citing Folkestad, 813 F.2d at 1381). ¶ 13 The rule enunciated in Handy and Folkestad falls squarely in line with the older workers' compensation case of Tidewater Associated Oil Co. v. Ale, 1942 OK 373, 130 P.2d 991, which likewise prohibited the employer's set-off of the employee's insurance benefit in the context of determination of a workers' compensation award. Further, pursuant to the test set forth in Handy and Folkestad, the nature and purpose of the fund at issue in this case, Claimant's health insurance benefit, was in the nature and purpose of health insurance coverage, which employees such as Claimant are entitled to make claims thereto without regard to Employer's liability. Clearly, Claimant's health insurance constitutes a fringe benefit of Claimant's employment to which Employer is not entitled to a set-off. Claimant is therefore entitled to recovery of $26,461.82, which represents the amount Claimant's health insurance carrier paid on Claimant's behalf for prescriptions, [15] in addition to $19,882.42, which is the amount the WCC previously ordered to be reimbursed for Claimant's personal prescription expenses.