Court Opinion

ID: 9704190
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:26:25.019398+00
Date Added: 2024-06-11T15:16:17.037598
License: Public Domain

SABERS, Justice
(dissenting).
I dissent.
SDCL 62-4-33 controls this case because it controls claims of employees of the highway department and the payment of such claims from department funds. § 62-4-33 provides in part that ... [the state highway department] ... shall pay such claims from funds available for the maintenance of [the] department, or may procure insurance as provided in §§ 62-5-2 to 62-5-4, inclusive. (Emphasis added)
SDCL §§ 62-5-2 to 62-5-4 inclusive, pertain to worker’s compensation insurance. Obviously, “such claims” include workmen’s compensation claims.
This court has held that the attorney fees statute, SDCL 58-12-3.1, applies to worker’s compensation claims against insurance companies and that an employee is entitled to a hearing on attorney fees under this statute. Hollman v. Dale Electronics, 298 N.W.2d 177 (S.D.1978). Other states specifically impose attorney fees on insurance companies and self-insured state programs *543that wrongfully refuse to pay claims. Blewer v. Continental Assurance Co., 394 So.2d 842 (La.Ct.App. 3d Cir.1981) (medical benefits).
Even though this is not an action against an “insurance company” on a “policy” in the technical sense, it is an action against a person (SDCL 58-1-2(3)),* or entity engaged as an (insurer), indemnitor, surety or contractor in the business of entering into contracts of insurance, within the definition “insurer” under SDCL 58-1-2(2).* (Emphasis added).
Courts have recognized that the purpose of statutes imposing attorney fees on insurance companies who fail to pay claims is to reimburse claimants who might otherwise conclude it is not economically feasible to bring suit on a claim. Hubbard v. Lumbermans Mutual Casualty Co., 24 N.C.App. 493, 211 S.E.2d 544 (1975). These types of statutes are also intended to prevent delay and discourage the contesting of insurance claims. T.J. Chastain Farms v. Kusiak, 414 So.2d 1187 (Fla.Dist.Ct.App.1982); All Ways Reliable Bldg. Maintenance, Inc. v. Moore, 261 So.2d 131 (Fla.1972); Chalmers v. Oregon Automobile Ins. Co., 263 Or. 449, 502 P.2d 1378 (1972). We too have acknowledged the deterrent purpose of our statute. See: All Nation Ins. Co. v. Brown, 344 N.W.2d 493 (S.D.1984) on remand, 363 N.W.2d 216 (S.D.1985). Given these purposes for imposing attorney fees, I see nothing about the unique status of a self-insuring employer that would otherwise prevent it from engaging in the same obdurate practices as insurance companies who vexatiously or unreasonably refuse to pay claims.
Moreover SDCL 62-4-33 requires employer to either pay worker’s compensar tion claims from its departmental funds or to procure insurance for these purposes. Because employer has elected to pay claims rather than procure the required insurance, it is engaged as an insurer within SDCL 58-1-2(2) and 58-12-3. Consequently, the administrative hearing examiner’s award of attorney fees was correct. See generally: Johnson v. Skelly Oil Co., 359 N.W.2d 130 (S.D.1984) (Worker’s compensation insurer’s refusal to pay claim was not vexatious); Hollman, supra.
Under the decision reached by the majority, Ofstad would be entitled to attorney fees if the Department had purchased Workmen’s Compensation insurance but would not be entitled here because the Department did not purchase Workmen’s Compensation insurance, but simply chose to be “self-insured.” This result is not only unfair but totally inconsistent. The Department had a right to choose to be self-insured, but that should not relieve it from its legal obligations to its employee.
The majority and concurring opinions go on for several pages and wholly fail to explain this glaring inconsistency. In fact, they make no attempt because they can’t. Nor can they explain the inconsistencies between their opinion and either the Holl-man decision, or the obligation to pay “such claims” under SDCL 62-4-33.
The judgment of the trial court should be reversed.
I am hereby authorized to state that Justice MORGAN joins in this dissent.

SDCL 58-1-2(2) and (3) provide in pertinent part:
Terms used throughout this title, unless the context otherwise plainly requires, shall mean:
(2) "Insurer" includes every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance.
(3) “Person," includes an individual, insurer, company, association, organization, Lloyds, society, reciprocal or inter-insurance exchange, partnership, syndicate, business trust, corporation, and any other legal entity.