Opinion ID: 1864717
Heading Depth: 2
Heading Rank: 1

Heading: self-insured employers are required to provide uninsured motorist coverage

Text: The trial court found as a matter of law that self-insurers are required to provide UIM. U.S. West is a self-insurer under SDCL ch. 32-35. SDCL XX-XX-XXX provides in relevant part: Every driver or owner of a motor vehicle shall at all times maintain in force one of the forms of financial responsibility on the motor vehicle by one of the following methods:       (4) Having a certificate of self-insurance, as provided in §§ 32-35-90 and 32-35-91, supplemented by an agreement by the self-insurer that, with respect to accidents occurring while the certificate is in force, he will pay the same amounts that an insurer would have been obligated to pay under an owner's motor vehicle liability policy if it had issued such a policy to said self-insurer[.] (Emphasis added.) All insurance policies issued in South Dakota must include uninsured motorist coverage. SDCL 58-11-9 provides in relevant part: No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle may be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto in limits for bodily injury or death equal to the coverage provided by such policy for bodily injury and death, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. However, the coverage required by this section may not exceed the limits of one hundred thousand dollars ... unless additional coverage is requested by the insured. The question of whether a self-insured entity under SDCL ch. 32-35 is required to provide uninsured coverage is a question of first impression in this jurisdiction. There is a decided split of authority in other jurisdictions as to whether self-insured entities are required to provide UIM absent specific statutory mandates. While courts in a slight majority of states have determined statutes requiring uninsured motorist coverage are not applicable to self-insurers, [2] we find that under the liberal construction given South Dakota's uninsured motorist statutes, self-insurers must provide uninsured protection. Clark, 270 N.W.2d at 29. SDCL XX-XX-XXX mandates that a self-insurer pay the same amounts it would have paid had it purchased a motor vehicle liability policy. It is clear that if U.S. West had chosen to obtain commercial liability insurance, SDCL 58-11-9 would mandate UIM coverage. Because UIM is statutorily mandated under an owner's motor vehicle liability policy and SDCL XX-XX-XXX requires self-insurers to pay as if an owner's motor vehicle liability policy were in force, UIM must be provided by a self-insured entity. The obligation to pay the same amount it would be obligated to pay under a motor vehicle liability policy is exactly what U.S. West agreed to in its application for self-insurance. On December 30, 1986, it sent a signed and notarized application for self-insurance to the South Dakota Department of Commerce and Regulation and stated: The undersigned agrees to pay the same amounts with respect to accidents occurring while the certificate is in force that an insurer would be obligated to pay under an owners motor vehicle liability policy if issued to the self-insurer. Accord McClain v. Begley, 465 N.W.2d 680, 681-82 (Minn.1991) (where application for self-insurance stated entity retained excess coverage, it would be held liable up to limits it represented in application). Furthermore, the legislature did not exempt self-insured entities who establish proof of financial security from providing UIM. It did specifically exempt policies on government-owned vehicles from the requirement of UIM. SDCL 58-11-9; Simpson v. Tobin, 367 N.W.2d 757, 763-64 (S.D.1985) (declaring where legislature provided only one statutory exception, it intended only one). In addition, this reasoning is consistent with courts in other jurisdictions which have concluded self-insurers should be put in the same position as those who purchase liability policies. The sole purpose of self-insurance is to relieve self-insurers of the burden of expending their assets on insurance premiums; self-insurance is not a means by which self-insurers may avoid the claims of those individuals for whose protection the insurance laws have been enacted. Modesta v. Southeastern Pa. Transp. Auth., 503 Pa. 437, 469 A.2d 1019, 1022 (1983). [3] Thus, we agree with the trial court and hold that unless specifically exempted by statute, self-insurers in South Dakota must provide UIM as well as coverage for motor vehicle liability.
The trial court found as a matter of law that U.S. West must provide both worker's compensation and UIM to Bergstresser. U.S. West asserts that even if self-insurers in South Dakota are required to provide UIM, the exclusivity of worker's compensation prevents an employee covered by worker's compensation from recovering UIM from his employer. SDCL 62-3-2 provides: The rights and remedies herein granted to an employee subject to this title, on account of personal injury or death arising out of and in the course of employment, shall exclude all other rights and remedies of such employee, his personal representatives, dependents, or next of kin, on account of such injury or death against his employer or any employee, partner, officer or director of such employer, except rights and remedies arising from intentional tort. Although SDCL 62-3-2 and SDCL 58-11-9 are seemingly in conflict, we have consistently stated that, where possible, statutes should be read in harmony and construed so as to give effect to each statute. In re Silver King Mines, 323 N.W.2d 858, 860 (S.D.1982); Kinzler v. Nacey, 296 N.W.2d 725, 728 (S.D.1980). Where statutes do conflict, the more recent enactment is controlling. In re Estate of Smith, 401 N.W.2d 736, 740 (S.D.1987). Terms of a statute relating to a specific subject prevail over the general terms of another statute. Meyerink v. Northwestern Public Service Co., 391 N.W.2d 180, 183-84 (S.D.1986). We believe these statutes can be construed harmoniously. The exclusivity provision of worker's compensation speaks to rights and remedies herein granted to an employee ... against his employer or any employee, partner, officer or director of such employer. Insofar as the injury for which an employee seeks UIM is caused by his employer, a fellow employee, partner or officer or director of his employer, recovery from the employer is clearly and specifically barred. However, the statute is silent as to recovery from the employer for injury caused by a third-party tort-feasor. Where the exclusivity statute is silent, requiring the employer to provide the mandatory UIM required of all motor vehicle liability policies, is consistent with what we think the legislature intended. Moreover, the exclusive remedy provision is not all-encompassing. Subject to statutes granting an employer subrogation for worker's compensation paid and barring double recovery, an employee may choose to proceed against a third party for injuries received in the course of employment. Stratton v. Sioux Falls Traction System, 49 S.D. 113, 206 N.W. 466 (1925). An employee may elect to proceed in tort against an employer who does not operate under the provisions of worker's compensation. Keil v. Nelson, 355 N.W.2d 525 (S.D.1984). An employee may obtain separate accident insurance not subject to subrogation by the employer. Meyers v. Meyers Oil Co., 88 S.D. 166, 216 N.W.2d 820 (1975). Our decision is similar to the reasoning of the Supreme Court of Virginia in William v. City of Newport News, 240 Va. 425, 397 S.E.2d 813 (1990). The Virginia court found that its worker's compensation exclusivity provision only prohibited an employee from recovering UIM from a self-insured employer for injuries caused to an employee by the employer or a fellow employee. Id. 397 S.E.2d at 815-16. It determined the provision did not bar an employee from recovering UIM from the employer for injury caused by a third-party tort-feasor. [4] Id. 397 S.E.2d at 816. We hold that in South Dakota the exclusive remedy provision of SDCL 62-3-2 does not bar recovery by an employee of UIM from his employer if the injury was caused by a third-party tort-feasor.