Opinion
No. 377108
April 13, 2004
MEMORANDUM OF DECISION ON MOTION TO RECONSIDER AND REARGUE
The plaintiff, Barbara Fusco, filed an application to vacate, modify or correct the awards in two related underinsured motorist arbitrations. The defendants, Allstate Insurance Company (Allstate) and Liberty Mutual Insurance Company (Liberty Mutual), filed motions to confirm the awards. After a hearing, the court modified the awards. Allstate has now filed a motion to reargue and reconsider the modification. The court affirms its earlier decision.
These proceedings arise out of a February 3, 1986 motor vehicle collision in which the plaintiff sustained injuries when an underinsured motor vehicle struck the vehicle operated by the plaintiff. The plaintiff's husband owned the vehicle and Allstate insured that vehicle. Liberty Mutual, which insured a vehicle owned by the plaintiff, paid her $25,233.23 in "no-fault" basic reparation benefits. That vehicle was not involved in the accident. The tortfeasor's insurance carrier paid the plaintiff $50,000 in damages. The plaintiff made demands on the defendants for underinsured motorist benefits. For reasons unrelated to the issues before the court, the arbitration of the claims against the defendants was delayed.
Two separate panels arbitrated the claims against Allstate and Liberty Mutual, respectively. On July 26, 2000, both panels issued their awards. Both panels found that the plaintiff's injuries and damages were caused solely by the negligence of the tortfeasor. The Allstate panel found that the plaintiff had $100,000 in underinsured motorist coverage under Allstate's policy. The Liberty Mutual panel found that the plaintiff had $300,000 in underinsured motorist coverage under Liberty Mutual's policy. Both panels found that the plaintiff's social security disability did not result from the injuries she sustained in the accident and that the defendants were not entitled to a credit for social security disability payments.
The Allstate panel further found: "Taking into consideration all offsets, credits and collateral sources to which the respondent is entitled, the plaintiff is awarded the sum of $13,750.00." The Liberty Mutual panel found: "Taking into consideration all offsets, credits and collateral sources to which the respondent is entitled, the plaintiff is awarded the sum of $16,016,67."
In her application to vacate, the plaintiff claimed that the court should vacate the awards because they were rendered in an untimely manner. The plaintiff also argued that the awards failed to conform to the submissions because the arbitrators did not state the plaintiff's gross damages before applying offsets and credits. Additionally, the plaintiff argued that the arbitrators improperly deducted from her available coverage or from the awards, collateral sources other than those permitted to be deducted under the policies.
In its original decision of December 12, 2003, the court ruled that the awards were not untimely. Also, the court held that the policies required the arbitrators to determine whether and to what extent to plaintiff was "legally entitled to recover damages." Further, the court concluded that the phrase "legally entitled to recover damages" connoted an unrestricted submission. Carroll v. Aetna Casualty Surety Co., 189 Conn. 16, 19 n. 5, 20, 453 A.2d 1158 (1983); United States Fidelity Guaranty Co. v. Hutchinson, 244 Conn. 513, 520-21, 710 A.2d 1343 (1998). Accordingly, the court held that the arbitrators were not required to separately determine the damages caused by the tortfeasor. See J. Berk M. Jainchill, Connecticut Law of Uninsured and Underinsured Motorist Coverage (2d Ed. 1999) § 7.7.2., p. 438.
With respect to the plaintiff's claim that the arbitrators improperly reduced the awards by collateral sources, the court observed that when the accident occurred, Connecticut subscribed to the common-law "collateral source rule, which provides that benefits received by a plaintiff from a source wholly collateral to and independent of the tortfeasor will not diminish the damages otherwise recoverable." Gorham v. Farmington Motor Inn, Inc., 159 Conn. 576, 579, 271 A.2d 94 (1970). Because the collateral source rule focuses on damages recoverable from the tortfeasor, it is not a coverage issue and is not afforded de novo review under the test articulated by the court in Quigley-Dodd v. General Accident Ins. Co. of America, 256 Conn. 225, 239, 772 A.2d 577 (2001). Further, since the submissions were unrestricted, the arbitrators' decisions with respect to the collateral source rule are "considered final and binding; thus the courts will not review the evidence considered by the arbitrators nor will they review the award for errors of law or fact." American Universal Ins. Co. v. DelGreco, 205 Conn. 178, 186, 530 A.2d 171 (1987). For this reason, the court rejected the plaintiff's claim that the arbitrators improperly reduced her coverage or awards by collateral sources.
Subsequent to the plaintiff's accident the legislature enacted by No. 86-338 of 1986 Public Acts. Now codified as General Statutes § 52-225a, that law generally abolishes the collateral source rule in all personal injury actions. See Alvarado v. Black, 248 Conn. 409, 416-17, 728 A.2d 500 (1999). Section 52-225a applies to personal injury actions, such as the present action, wherein the claimant seeks to recover damages resulting from . . . personal injury or wrongful death occurring on or after October 1, 1987. The rights of the parties, however, must be judged according to the law in effect in 1986. See General Accident Ins. Co. v. Powers, Bolles, Houlihan Hartline, Inc., 50 Conn. App. 701, 713-14, 79 A.2d 77 (1998), aff'd, 251 Conn. 56, 738 A.2d 168 (1999).
The plaintiff's principle claim in its application to vacate was that the arbitrators improperly construed the policies' "other insurance" provisions and failed to determine which insurance policy was primary and which was excess. The court agreed with this claim. The court determined that the arbitrators had misconstrued the "other insurance" provisions and that, when properly construed, the Allstate policy was primary and Liberty Mutual policy was excess. The court further determined that, had the arbitrators properly applied the other insurance provisions and available credits, they would have awarded the plaintiff 50,000 dollars from Allstate and zero dollars from Liberty Mutual. The court modified the awards accordingly.
In its motion to reargue and reconsider, Allstate argues that the court erred in holding that (1) the arbitrators misconstrued the "other insurance" provisions, and (2) that Allstate was not entitled to an offset in underinsured motorist benefits for Liberty Mutual's payment of no-fault benefits. The court disagrees with both contentions.
The court's determinations with respect to the timeliness of the awards, the arbitrators' failure to state the plaintiff's gross damages and the arbitrators' treatment of collateral sources are not implicated by Allstate's motion for reconsideration.
The court reiterates its finding in its earlier decision that the arbitrators adopted an agreement entered into by the defendants whereby Liberty Mutual, whose policy limit was 300,000 dollars, would pay 75 percent of any award, and that Allstate, whose policy limit was 100,000 dollars, would pay 25 percent. This agreement was recited by the defendants at the hearing before the arbitrators and was also contained in their respective briefs to the arbitrators. As the court stated in is earlier decision "[t]he arbitrators clearly did adopt the defendants' agreement and apportioned the award based on the defendants' respective policy limits of $300,000 for Liberty Mutual and $100,000 for Allstate. Of course, the award of $16,016.67 is not a multiple of the $13,750.00 award against Allstate. Rather, based on these awards, the arbitrators, to a mathematical certainty: (1) found that the total damages suffered by the plaintiff was $105,000, (2) deducted from this amount the $50,000 paid on behalf of the tortfeasor, leaving a remainder of $55,000, (3) apportioned this sum on the basis of the parties' agreement so that 1/4, or $13,750.00, was allocated to Allstate, 4) deducted from the remaining $41,250.00 allocated to Liberty Mutual the $25,233.23 no fault payment made by Liberty Mutual, leaving a balance of $16,016.77. The awards produced by this calculus are the very awards rendered by the arbitrators nearly to the penny. `This court cannot ignore what is obvious.' Wilson v. Wayne County, 856 F. Sup. 1254, 1264 (M.D.Tenn. 1994), cert. denied, 525 U.S. 811, 119 S.Ct. 43, 142 L.Ed.2d 34 (1998)." Fusco v. Allstate Ins. Co., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 03 377108 (December 12, 2003) (The actual amount of the award against Liberty Mutual is 10 cents less, clearly owing to a minor error in subtraction.)
I
The court first addresses Allstate's claim that the court misconstrued the "other insurance" clauses in the defendants' policies.
As the court discussed in its earlier memorandum of decision, the issue of whether the arbitrators had properly interpreted and applied the other insurance provisions was a question of law and required the court to engage in de novo review of the arbitrators' decision. Quigley-Dodd v. General Accident Ins. Co. of America, supra, 256 Conn. 239; Aetna Casualty Surety Co. v. CNA Ins. Co., 221 Conn. 779, 783-85, 606 A.2d 990 (1992) (determination of which insurer's policy was primary, in light of conflicting "other insurance" provisions in each insurers policy, afforded de novo review); Wilson v. Security Ins. Co., 213 Conn. 532, 536-39, 569 A.2d 40, cert. denied, 498 U.S. 814, 111 S.Ct 52, 112 L.Ed.2d 28 (1990), cert. denied, 502 U.S. 1005, 112 S.Ct. 640, 116 L.Ed.2d 658 (1991) (whether, under the governing insurance regulations, the insurer was entitled to a setoff for workers' compensation payments to the claimant, afforded de novo review); American Universal Ins. Co. v. DelGreco, supra, 205 Conn. 191 (whether insurer could reduce claimant's recovery by amount paid to claimant by a particular type of third party, afforded de novo review).
The "other insurance" clause in Liberty Mutual's policy provides: "If there is other applicable similar insurance, we will not pay for any damages which would duplicate any payment made for damages under such similar insurance. However, any insurance we provide with respect to a vehicle you do not own, to which other similar insurance is applicable, shall be excess over such other applicable insurance."
The "other insurance" clause in Allstate's policy provides: "If there is other insurance[:] If the injured person was in, on, getting into or out of a vehicle which is insured for this coverage under another policy, this coverage will be excess. This means that when the injured person is legally entitled to recover damages in excess of the other policy limit, we will pay up to your policy limit, but only after all other collectible insurance has been exhausted." (Emphasis in original.)
After noting the rules of construction governing the interpretation of insurance policy provisions, the court, in its initial memorandum of decision, observed with respect to the Allstate "other insurance" provision that, "the plaintiff was not injured in, on, getting into or out of a vehicle which was insured for uninsured/underinsured motorist coverage under another policy. Allstate and only Allstate insured the car that the plaintiff was operating when she was injured. Therefore, under the very terms of its other insurance clause, Allstate's coverage was not excess." That is, Allstate and only Allstate insured the car that the plaintiff was operating when she was injured. Allstate takes no exception to this determination.
The court also held: "Under the second sentence of Liberty Mutual's other insurance clause, its coverage is clearly excess, since its insurance is being provided to a vehicle which the plaintiff did not own. The policies themselves, therefore, dictate, that Allstate's policy be primary and that Liberty Mutual's policy be excess." Allstate argues that the court misconstrued the second sentence of the other insurance provision in the Liberty Mutual policy.
The Supreme Court has held that the first sentence of "other insurance" clauses such as that contained in Liberty Mutual's insurance policy "expresses the rule that a claimant who has already recovered for a loss is prohibited from recovering again for the same loss. Upon reading this sentence, a claimant is put on notice that if he has already received payment for his damages under another insurance policy, he may not seek duplicate payment under this insurance policy. In the case in which payment has not been made for damages under other similar insurance, however, this sentence does not address the insurer's obligation to provide coverage among all applicable similar insurance." (Emphasis in original.) O'Brien v. United States Fidelity Guaranty Co., 235 Conn. 837, 847, 669 A.2d 1221 (1996). By "other similar insurance" the court was referring to other uninsured motorist coverage. Since, in this case, the plaintiff has not already received payment for her damages under other underinsured motorist coverage, the first sentence of Liberty Mutual's "other insurance" clause is inapplicable.
As quoted supra, the second sentence of Liberty Mutual's "other insurance" provision stated: "However, any insurance we provide with respect to a vehicle you do not own, to which other similar insurance is applicable, shall be excess over such other applicable insurance." In its brief, Allstate argues: "The Liberty Mutual insurance was provided `with respect to a vehicle' the claimant did own. The Liberty Mutual coverage, as noted in the Memorandum of Decision was from a vehicle owned by the client [sic]. The Liberty Mutual coverage is at issue here because it traveled with the insured person; it does not transfer from the vehicle she owned to another vehicle. Hence, this second sentence is inapplicable to the case at hand and does not compel the court's conclusion that `under the second sentence of Liberty Mutual's other insurance clause, its coverage is clearly excess, since its insurance is being provided to a vehicle which [the] plaintiff did not own.' The clause does not measure insurance being provided `to' a vehicle but rather `with respect to' the vehicle the claimant did own." (Emphasis in original.) (Allstate's Motion to Reconsider and Reargue, p. 6.)
In its earlier decision, this court stated that Liberty Mutual's "insurance is being provided to a vehicle which the plaintiff did not own." (Emphasis added.) Allstate argues that this language was incorrect insofar as Liberty Mutual provided underinsured motorist insurance with respect to a vehicle that the plaintiff did not own. The court agrees with Allstate that its verbiage was grammatically incorrect, and that, at least since Harvey v. Travelers Indemnity Co., 188 Conn. 245, 248, 449 A.2d 157 (1982), the rule has been that uninsured motorist "coverage attaches to the insured person." and not to the vehicle. The court, however, cannot agree with Allstate's conclusion that the second sentence in Liberty Mutual's insurance policy is inapplicable. Based on Aetna Casualty Surety Co. v. CNA Ins. Co., supra, 221 Conn. 787 and O'Brien v. United States Fidelity Guaranty Co., 235 Conn. 837, 669 A.2d 1221 (1996), the court concludes that Allstate's policy is primary and Liberty Mutual's is excess.
In Aetna Casualty Surety Co. v. CNA Ins. Co., supra, 221 Conn. 779, the claimant was injured when the vehicle she was driving collided with a vehicle owned and operated by another person. The claimant's vehicle was owned by her father and insured by the plaintiff, Aetna. At the time of the incident, the claimant was residing with her sister and brother-in-law who were the named insureds on an automobile policy issued by the defendant, CNA. Id., 781. After the tortfeasor's policy limits were exhausted, the claimant brought underinsured motorist claims against both Aetna and CNA. Id. Both carriers' policies contained identical "other insurance" clauses, which are identical to Liberty Mutual's "other insurance" clause at issue here. The claims were arbitrated. Id. The arbitrators determined that Aetna's coverage was primary and CNA's coverage was excess. Id., 782. The Superior Court then vacated the award and determined that both coverages should be treated as primary and the court, therefore, prorated the damages. Id., 782-83.
The Supreme Court reversed, holding that Aetna's coverage was primary. Id., 787-88. "The essential language to be construed in the policies is `[a]ny insurance we provide with respect to a vehicle you do not own, to which other similar insurance is applicable, shall be excess over such other applicable insurance.' (Emphasis added.) It is clear that both Aetna and CNA contemplated in their respective `other insurance' clauses that the policy issued by each would be excess in situations where the covered person was injured in a vehicle `you' do not own. In order to determine to whom the word `you' in each clause refers, we consult the definition of that word within the policies. Both policies provide: `Throughout this policy, "you" and "your" refer to: 1. The `named insured' shown in the Declarations; and 2. The spouse if a resident of the same household.'
"Accordingly, the Aetna policy, by its own terms, does not envision being excess in this situation because the claimant was injured while occupying a vehicle owned by [the plaintiff's father], the named insured in the Aetna policy. Therefore, the Aetna policy is primary and its `other insurance' clause does not apply. Conversely, the CNA policy is excess because the claimant was not injured while an occupant in a vehicle owned by [the claimant's sister and brother-in-law], the named insureds in the CNA policy. The only reasons CNA is providing the underinsured motorist coverage is because the claimant is a resident relative of the named insureds, and thus, a covered person under the CNA policy. We find no conflict between the policies because only one insurer, Aetna could be primary. The policies themselves, therefore, dictate that we hold that the Aetna underinsured motorist coverage be primary and that the CNA underinsured motorist coverage be excess." Id., 787.
Aetna Casualty Surety Co. v. CNA Ins. Co., supra, 221 Conn. 779, makes clear that the phrase "with respect to" relates to a vehicle which a claimant was occupying when injured. This does not mean that the "other insurance" insures that vehicle; rather, it merely connotes that coverage is being afforded in connection with an injury the claimant received occupying the other vehicle. "Under the term `respect,' Webster defines `with respect to' as `with reference to: in relation to.'" Webster's 10th Collegiate Dict. (2000) pp. 994-95." People v. Hard, 112 Cal.App.4th 272, 279, 4 Cal.Rptr.3d 103 (2003). "`With respect to' is a general phase requiring only a logical or causal connection in a general transactional sense . . ." People v. Speegle, 53 Cal.App.4th 1405, 1417,62 Cal.Rptr.2d 384 (1997), cert. denied, 1997 Cal. LEXIS 4331 (Cal. July 9, 1997).
Here, Liberty Mutual's policy does not contain a definition of "you," as did Aetna's policy in Aetna Casualty Surety Co. v. CNA Ins. Co., supra, 221 Conn. 779. The plaintiff did not own the vehicle in which she was injured. Liberty Mutual is providing insurance with respect to a vehicle the plaintiff ("you") did not own, to which other similar insurance (Allstate), is applicable. Therefore, applying its "other insurance" clause, Liberty Mutual's policy is excess.
Notably, General Statutes § 52-421(a) provides: "Any party applying for an order confirming, modifying or correcting an award shall, at the time the order is filed with the clerk for the entry of judgment thereon, file the following papers with the clerk: (1) The agreement to arbitrate . . ." Here, the plaintiff filed the provisions from the Liberty Mutual policy which contained tie uninsured motorist endorsement and "other insurance" clause. If another part of the policy defined other terms in the "other insurance" provision, neither the plaintiff nor the defendants has submitted those portions. Furthermore, no party suggests that Liberty Mutual's policy contains a definition of the word "you."
This conclusion is further buttressed by O'Brien v. United States Fidelity Guaranty Co., supra, 235 Conn. 837. In O'Brien, the court held that the second sentence in an "other insurance" clause identical to that in Liberty Mutual's policy "does not apply when a plaintiff is injured while a pedestrian." Id., 849. The holding is inconsistent with Allstate's assertion that the words "with respect to" pertain to a vehicle other than a vehicle to which the plaintiff had a connection at the time of the accident.
For these reasons, the court concludes that the arbitrators improperly interpreted the "other insurance" clauses of the defendants' policies. The court holds that the clauses denote that Allstate's policy is primary and Liberty Mutual's is excess.
In 1993, the legislature amended the statute governing uninsured and underinsured motorist benefits to provide: "If a person insured for uninsured and underinsured motorist coverage is an occupant of a nonowned vehicle covered by a policy also providing uninsured and underinsured motorist coverage, the coverage of the occupied vehicle shall be primary and any coverage for which such person is a named insured shall be secondary. All other applicable policies shall be excess. The total amount of uninsured and underinsured motorist coverage recoverable is limited to the highest amount recoverable under the primary policy, the secondary policy or any one of the excess policies. The amount paid under the excess policies shall be apportioned in accordance with the proportion that the limits of each excess policy bear to the total limits of the excess policies. If any person insured for uninsured and underinsured motorist coverage is an occupant of an owned vehicle, the uninsured and underinsured motorist coverage afforded by the policy covering the vehicle occupied at the time of the accident shall be the only uninsured and underinsured motorist coverage available." General Statutes § 38a-336(d). Since the amendment was enacted subsequent to the accident here, it is inapplicable.
II
In its original decision, the court concluded that Allstate's coverage was primary and Liberty Mutual's excess, and further determined: "Allstate's policy limits for underinsured motorist coverage was $100,000. From this limit, Allstate, as the primary insurer, was entitled, under the provisions of its policy and the applicable insurance regulations, to deduct the $50,000.00 paid to the plaintiff on behalf of the tortfeasor. See Loika v. Aetna Casualty Surety Co., [ 44 Conn. Sup. 59, 70, 667 A.2d 1308, 12 Conn.L.Rptr. 8 (1995), aff'd and adopted, 39 Conn. App. 714, 667 A.2d 78 (1995), cert. denied, 236 Conn. 902, 670 A.2d 32 (1996).]. That, however, is the only offset to which Allstate would have been entitled. Liberty Mutual, as the excess carrier, would have been responsible for the remaining $5,000.00 of damages. Having paid the plaintiff no-fault benefits of $25,233.23, Liberty Mutual would have been entitled to offset the entire $5,000.00. "The plaintiff's award would have been $50,000.00 against Allstate." (Emphasis added.) Allstate claims that "[t]he court erred in concluding that although Allstate Insurance Company was primary to pay its underinsured motorist coverage, it was not entitled to the setoff for $25,233.23 in basic and added reparations benefits paid to the claimant." (Allstate's Motion to Reconsider and Reargue, p. 3.) Allstate argues that the court overcompensated the plaintiff. The plaintiff replies that since only Liberty Mutual paid the plaintiff reparations benefits, only Liberty Mutual can claim the offset. The issue presented is one of first impression and, since the No Fault Motor Vehicle Insurance Act was repealed over ten years ago; see Public Acts 1993, No. 93-297, § 1; likely one of last impression as well.
At the time of the plaintiff's injury, General Statutes (Rev. 1985) § 38-319(k) provided, in pertinent part, "`Basic reparations benefits' are benefits reimbursing persons suffering economic loss though injury arising out of the ownership, maintenance or use of a private passenger motor vehicle as provided in this chapter." General Statutes (Rev. 1985) § 38-319(b) provided that "economic loss" meant "economic detriment resulting from injury" and consisting of medical expenses, loss of income during the period of disability, "expenses reasonably incurred in obtaining ordinary and necessary services from others not members of the injured person's household in lieu of those that the injured person would have performed had he not been injured," and survivor's loss consisting primarily of loss of income sustained by dependent survivors after an injured person's death. Basic reparations benefits were limited to $5,000. General Statutes (Rev. 1985) § 38-320. However, General Statutes (Rev. 1985) § 38-330 provided: "Basic reparations insurers may offer optional added reparations coverages providing other benefits as compensation for injury or harm arising from the owner, maintenance or use of a private passenger motor vehicle, including loss excluded by limits on funeral and burial expenses, and loss excluded by limits on work loss and survivor's loss. The insurance commissioner may adopt rules requiring that specific optional added reparations coverages be offered by insurers writing basic reparations insurance . . ." Consistent with § 38-330, the commissioner adopted § 38-330-1 of the Regulations of Connecticut State Agencies, requiring that insurers writing basic reparations insurance to offer optional increased amounts of coverage up to $25,000. In Shelby Mutual Ins. Co. v. Della Ghelfa, 3 Conn. App. 441, 489 A.2d 398 (1985), aff'd, 200 Conn. 630, 513 A.2d 52 (1986), the Appellate Court stated that added reparations benefits were "benefits of a kind defined by § 38-319(k), in an amount in excess of the limit stated in § 38-320(a) . . ." The Supreme Court agreed. See Shelby Mutual Ins. Co. v. Della Ghelfa, 200 Conn. 638 ("Given this statutory scheme, we conclude that the legislature intended for the operative provisions of the act . . . to apply to reparations benefits paid by an insurer, whether under a policy giving the minimum $5000 coverage originally contemplated, or under a policy offering greater coverage as required by regulation."). Here, Liberty Mutual paid the plaintiff $25,233.23 in basic and added reparations benefits. Allstate seeks a credit for that payment.
General Statutes (Rev. 1985) § 38-319(b) provided in its entirety:
"Economic loss" means economic detriment resulting from injury and consists only of allowable expense, work loss, and, if injury causes death, survivor's loss, as follows: (1) "Allowable expense" means reasonable charges incurred, whether or not covered by insurance, for reasonably needed products, services and accommodations, including, but not limited to, those for medical, surgical, dental and hospital care, nursing services, ambulance services, x-rays, prosthetic devices, laboratory fees and drugs, rehabilitation, rehabilitative occupational training, and other health treatment and care. Allowable expense also includes reasonable charges for funeral and burial expenses, up to a total amount not exceeding two thousand dollars; (2) "work loss" means economic loss consisting of (i) loss of income from work and injured person who would normally be employed in gainful activity during the period of his disability would have performed had he not been injured, or if employed at the time of the accident, at least the equivalent of any unemployment compensation benefits the injured person would have received if eligible during the period of his disability had he not been injured, reduced by any income from substitute work actually performed by the injured person or by income the injured person would have earned in available appropriate substitute work which he was capable of performing but unreasonably failed to undertake and (ii) expenses reasonably incurred in obtaining ordinary and necessary services from others not members of the injured person's household in lieu of those that the injured person would have performed had he not been injured, not for income but for the benefit of himself or his family. Work loss does not include any loss after the death of an injured person; (3) `survivor' loss' means economic loss sustained after an injured person's death by his dependent survivors during their dependency and consisting of the loss of the contributions they would have received or their support from the decedent out of income from work he would normally have performed or if unemployed at the time of the accident, at least the equivalent of unemployment compensation the decedent would have received if eligible, had he not died and expenses reasonably incurred by his dependent survivors in obtaining ordinary and necessary services from others not members of the decedent's household in lieu of the services he would have performed for the benefit of his household; "dependent survivors" of a deceased injured person include the following survivors only: (i) The surviving spouse if residing in his household at the time of his death and (ii) other persons receiving support from the deceased at the time of his death which would qualify them as dependents of the deceased for federal income tax purposes under the Internal Revenue Code. The dependency of a surviving spouse shall terminate upon remarriage. The dependency of any other person shall continue only so long as such person is under the age of eighteen years or physically or mentally incapacitated from earning or engaged full-time in a formal program of academic or vocational education or training; (4) "noneconomic detriment" means pain, suffering, inconvenience, physical impairment, mental anguish and other noneconomic loss recoverable under the laws of this state. Noneconomic detriment is not economic loss. However, economic detriment, such as loss of income, is economic loss although arising from the interference with work caused by pain and suffering or physical impairment.
Unless the context otherwise indicates, any reference hereafter, in this opinion, to basic reparations benefits is intended to include added reparations benefits.
In order for Allstate to be able to setoff the amount of basic reparations benefits against the amount of underinsured motorist benefits owed to the plaintiff, its policy must authorize such a setoff. Vitanza v. Amica Mutual Ins. Co., 76 Conn. App. 570, 581, 820 A.2d 324 (2003), quoting J. Berk M. Jainchill, Connecticut Law of Uninsured and Underinsured Motorist Coverage (2d Ed. 1999) § 6.1, p. 353 ("If an insurer wishes to reduce its payment obligations as set forth in the regulations [and the statutes], it must provide for the reductions by the appropriate policy language . . . If it fails to do so, the insurer will not obtain the reduction." [Internal quotation marks omitted.]); see United States Fidelity Guaranty Co. v. Pitruzzello, 35 Conn. App. 638, 644, 646 A.2d 936, cert. denied, 231 Conn. 933, 649 A.2d 255 (1994). Allstate's policy does not do so.
Collateral source reductions pursuant to General Statutes § 52-225a are an exception to this rule. Smith v. Safeco Ins. Co. of America, 225 Conn. 566, 572-73, 624 A.2d 892 (1993). However, § 52-225a was enacted subsequent to the plaintiff's accident and, therefore, is inapplicable.
Allstate's policy provided that "[t]he limits of this coverage will be reduced by:
"(1) all amounts paid by the owner or operator of the uninsured auto or anyone else responsible. This includes all sums paid under the bodily injury liability coverage of this or any other auto policy.
"(2) all amounts paid or payable under any workers' compensation law, disability benefits law, or similar law.
"Damages payable under this coverage will be reduced by all amounts payable under Automobile Medical Payments, Basic Reparations Benefits, Added Reparations Benefits, or any similar auto medical payments coverage."
"Interpretation of an insurance policy, like the interpretation of other written contracts, involves a determination of the intent of the parties as expressed by the language of the policy . . . Unlike certain other contracts, however, where absent statutory warranty or definitive contract language the intent of the parties and thus the meaning of the contract is a factual question subject to limited appellate review . . . construction of a contract of insurance presents a question of law for the court . . ." (Citations omitted.) Aetna Life Casualty Co. v. Bulaong, 218 Conn. 51, 58, 588 A.2d 138 (1991). "The policy words must be accorded their natural and ordinary meaning." Stephan v. Pennsylvania General Ins. Co., 224 Conn. 758, 763, 621 A.2d 258 (1993). "A policy is to be taken as a whole and all its relevant provisions considered in connection with each other . . . Every provision is to be given effect, if possible, and no word or clause eliminated as meaningless, or disregarded as inoperative, if any reasonable meaning consistent with the other parts of the policy can be given to it." (Citation omitted.) Downs v. National Casualty Co., 146 Conn. 490, 495, 152 A.2d 316 (1959). Moreover, "[i]f the terms of the insurance policy at issue are ambiguous, any limitation of liability on uninsured or underinsured motorist coverage must be construed most strongly against the insurer." (Internal quotation marks omitted.) Middlesex Ins. Co. v. Quinn, 27 Conn. App. 573, 576, 609 A.2d 1008 (1992), aff'd, 225 Conn. 257, 622 A.2d 572 (1993); see also Streitweiser v. Middlesex Mutual Assurance Co., 219 Conn. 371, 375, 593 A.2d 498 (1991).
Allstate's policy authorizes the reduction of the limits of coverage by "all amounts paid or payable under any . . . disability benefits law." The court assumes, without deciding, that Connecticut's No-Fault Act was a disability benefits law.
In Vitti v. Allstate Ins. Co., 245 Conn. 169, 177, 713 A.2d 1269 (1998), the Supreme Court held that social security disability benefits were amounts paid under a disability benefits law. "The ordinary definition of `disability' includes `the inability to pursue an occupation or perform services for wages because of physical or mental impairment . . .' Webster's Third New International Dictionary. The term `benefit' is defined to include `financial help in a time of sickness, old age, or unemployment . . .' Webster's Third New International Dictionary. `Law's defined as `a rule or mode of conduct or action that is prescribed or formally recognized as binding by a supreme controlling authority . . .' Webster's Third New International Dictionary." Id., 178.
Like social security disability benefits, basic reparations benefits compensated for loss of income based on disability. See 42 U.S.C. § 423(a), (d), (e). Also, like social security disability benefits, basic reparations benefits included survivor's benefits. See 42 U.S.C. § 402. Further, some jurisdictions have legislatively defined basic reparations benefits, or personal injury protection (PIP) benefits, to include disability benefits. See K.S.A. 1998 Supp. 40-3103(q).
However, the paragraph following this provision in Allstate's policy specifically deals with basic reparations benefits. That paragraph governs whether and when Allstate may claim a credit for basic reparations benefits. "For generations, it has been well settled that the particular language of a contract must prevail over the general." (Citations omitted; internal quotation marks omitted.) Issler v. Issler, 250 Conn. 226, 237 n. 12, 737 A.2d 383 (1999).
The particular language in Allstate's policy provides: "Damages payable under this coverage will be reduced by all amounts payable under Automobile Medical Payments, Basic Reparations Benefits, Added Reparations Benefits, or any similar auto medical payments coverage." Allstate capitalized the terms: Automobile Medical Payments, Basic Reparations Benefits, and Added Reparations Benefits, which evidences that Allstate intended to refer to specific, rather than generic, benefits or payments. Cf. Wolf v. Superior Court, 114 Cal.App.4th 1343, 1352, 8 Cal.Rptr.3d 649 (2004) (discussing that failure to capitalize terms and failure to include terms in a separate section heading suggests that the terms lack a specialized or limited meaning in the context of the contract.)
Moreover, under the maxim of noscitur a sociis; Smedley Co. v. Employers Mutual Liability Ins. Co., 143 Conn. 510, 515, 123 A.2d 755 (1956) (words "are known by the company they keep"); the concluding phrase "any similar auto medical payments coverage" relates to payments made under coverages within Allstate's policy. "Coverage," in this sense, means "[t]he risk or loss covered by an insurance policy." Ballentine's Law Dictionary (3rd Ed 1969). Automobile Medical Payments, Basic Reparations Benefits, and Added Reparations Benefits are specific coverages under the Allstate policy and as such, "any similar medical payments" also relates to a specific coverage, absent any indication to the contrary. Notably, this sentence does not use the words "this or any other auto policy," which is used in the preceding provision providing for a reduction in the limits of coverage for "all sums paid under the bodily injury liability coverage of this or any other auto policy." (Emphasis added.) This omission indicates a difference in intent. "[W]hen parties to the same contract use such different language to address parallel issues . . . it is reasonable to infer that they intend this language to mean different things." Taracorp, Inc. v. NL Industries, Inc., 73 F.3d 738, 744 (7th Cir. 1996). The provision of the policy is, at best, ambiguous, requiring that it be construed against the insurer, Allstate. Stephan v. Pennsylvania General Ins. Co., supra, 224 Conn. 764. Since basic and added reparations benefits were not paid to the plaintiff by Allstate but by Liberty Mutual, Allstate may not reduce its underinsured motorist payments under the guise of this provision.
This conclusion is supported by reference to the administrative regulation that authorized the setoffs in Allstate's policy. "There is no dispute that parties contract with reference to existing law, except when the contract discloses a contrary intention." Hatcho Corporation v. Della Pietra, 195 Conn. 18, 21, 485 A.2d 125 (1985). "Unless the agreement indicates otherwise, [an applicable] statute existing at the time an agreement is executed becomes a part of it and must be read into it just as if an express provision to that effect were inserted therein." (Internal quotation marks omitted.) Harlach v. Metropolitan Property Liability Ins. Co., 221 Conn. 185, 192, 602 A.2d 1007 (1992). Moreover, the Supreme Court has held that "any provision of a private contract of insurance which conflicts with the statutes or regulations must give way to the latter." American Universal Ins. Co. v. DelGreco, supra, 205 Conn. 199 n. 10.
As the Supreme Court has repeatedly stated, "an insurer may not, by contract, reduce its liability, for such uninsured or underinsured motorist coverage except as § 38-175a-6 . . . of the Regulations of Connecticut State Agencies expressly authorizes . . . Allstate Ins. Co. v. Ferrante, 201 Conn. 478, 483, 518 A.2d 373 (1986) . . . Streitweiser v. Middlesex Mutual Assurance Co., 219 Conn. 371, 377-78, 593 A.2d 498 (1991)." (Emphasis in original; internal quotation marks omitted.) Vitti v. Allstate Ins. Co., 245 Conn. 169, 174-75, 713 A.2d 1269 (1998). "In order for a policy exclusion to be expressly authorized by [a] statute or regulation], there must be substantial congruence between the statutory [or regulatory] provision and the policy provision. Id., 176.
At the time Allstate issued its policy to the plaintiff, § 38-175a-6 of the Regulations of Connecticut State Agencies provided in pertinent part: "(d) LIMITS OF LIABILITY. The limit of the insurer's liability [for uninsured and underinsured motorist benefits] may not be less than the applicable limits for bodily injury liability specified in subsection (a) of section CT Page 5874 14-112 of the general statutes, except that the policy may provide for the reduction of limits to the extent that damages have been
"(1) paid by or on behalf of any person responsible for the injury,
"(2) paid or are payable under any workers' compensation or disability benefits law, or
"(3) paid under the policy in settlement of a liability claim. The policy may also provide that any direct indemnity for medical expense paid or payable under the policy or any amount of any basic reparations benefits paid or payable under the policy will reduce the damages which the insured may recover under this coverage and any payment under these coverages shall reduce the company's obligation under the bodily injury liability coverage to the extent of the payment." (Emphasis added.) "Regulations issued by the insurance commissioner to implement the statutes governing uninsured motorist coverage are presumed valid and have the force and effect of statute." Dugas v. Lumbermens Mutual Casualty Co., 217 Conn. 631, 641, 587 A.2d 415 (1991).
The rules of statutory construction apply to administrative regulations. Marrocco v. Giardino, 255 Conn. 617, 625, 767 A.2d 720 (2001). As with contracts, "it is a well-settled principle of construction that specific terms covering the given subject matter will prevail over general language of the same or another statute . . ." (Internal quotation marks omitted.) Tappin v. Homecomings Financial Network, Inc., 265 Conn. 741, 760, 830 A.2d 711 (2003). Therefore, while the regulation provides for the reduction in limits of liability for payments made under a disability policy, the governing provision is that which specifically pertains to the reduction of damages for basic reparations benefits paid. See Vitti v. Allstate Ins. Co., 245 Conn. 169, 177, 713 A.2d 1269 (1998) (observing that "the commissioner would have included a separate subdivision only if the intent was to exclude social security disability benefits from the broad scope of the limitation for `any . . . disability benefits law.'" [Emphasis in original.]) The provision, however, makes clear that only basic reparations benefits paid under the policy will reduce damages. Here, the policy refers to the same policy under which uninsured motorist benefits are sought, Allstate's policy. The noun, "the policy," is used twice in the same sentence and is presumed to refer to the same thing. Connecticut Light Power Co. v. Dept. of Public Utility Control, 266 Conn. 108, 123, 830 A.2d 1121 (2003) ("where the same words are used in a statute two or more times they will ordinarily be given the same meaning in each instance." [Internal quotation marks omitted.]); Shelby Mutual Ins. Co. v. Della Ghelfa, supra, 3 Conn. App. 438 ("The meaning of a particular phrase in a statute is to be determined by reference to the use of that phrase in other parts of the same statute."); cf. Stephan v. Pennsylvania General Ins. Co., supra, 224 Conn. 764 (emphasizing the significance of the use of "the" as opposed to "a," "any," or "all," in policy language authorizing reduction in damages); Vitanza v. Amica Mutual Ins. Co., supra, 76 Conn. App. 577-80 (setoff in Amica Mutual uninsured motorist coverage disallowing duplication of payment "for the same elements of loss under this coverage and Part A. or Part B. of this policy" inapplicable to reparations benefits made by Amica Mutual in view of "the lack of an express structural linkage between the reparations policy and the personal auto policy that provided the plaintiff with uninsured motorist coverage . . ." Id., 577.). Since Allstate did not pay the plaintiff reparations benefits, it may not offset such amounts against its underinsured motorist obligation.
Allstate argues that under this interpretation of its policy, the plaintiff will receive total compensation from all sources in excess of the damages she sustained. It is true that if Allstate is not allowed to reduce its damages by the amount of reparations benefits paid to the plaintiff, then the plaintiff will end up receiving compensation totaling $125,233.23 from all sources for her injuries, $20,233.23 more than the $105,000 damages the arbitrators impliedly found that she had sustained.
The Supreme Court has stated that "[t]he public policy established by the uninsured motorist statute is that every insured is entitled to recover for the damages he or she would have been able to recover if the uninsured motorist had maintained a policy of liability insurance;" Harvey v. Travelers Indemnity Co., supra, 188 Conn. 249; and that it is a "time-honored rule that an injured party is entitled to full recovery only once for the ham suffered." Peck v. Jacquemin, 196 Conn. 53, 70 n. 19, 491 A.2d 1043 (1985). Moreover, "an insured may not recover double payment of damages under overlapping insurance coverage." Pecker v. Aetna Casualty Surety Co., 171 Conn. 443, 452, 370 A.2d 1006 (1976).
Here, however, the "excess" compensation to the plaintiff is not a product of the court's interpretation of Allstate's policy, but is due to the discharge of the plaintiff's debts in bankruptcy, including the discharge of her obligation to reimburse Liberty Mutual for reparations benefits.
At the time of the plaintiff's accident, General Statutes (Rev. 1985) § 38-325(b) provided: "Whenever a person who receives basic reparations benefits for an injury recovers damages, either by judgment or settlement . . . the insurer is entitled to reimbursement from the claimant to the extent that said basic reparations benefits have been paid, minus an amount which represents the insurer's contribution toward attorneys fees for the collection of basic reparations benefits . . . In no event shall such amount exceed one-third the amount of the basic reparations benefits to be reimbursed to the insurer. The insurer shall have a lien on the claimant's recovery for the amount to which he is entitled for such reimbursement; provided no such lien shall attach until such time as the proceeds of such recovery are in the possession and control of such claimant." Both the lien and the right to reimbursement extended to added reparations benefits and basic reparations benefits. Shelby Mutual Ins Co. v. Della Ghelfa, supra, 200 Conn. 637.
General Statutes (Rev. 1985) § 38-325 provided:
(a) Except as provided in this section, an insurer does not have, and may not directly or indirectly contract for, any right of subrogation to the proceeds of any cause of action of a recipient of basic reparations benefits against any person or organization not entitled to an exemption from liability under section 38-323.
(b) Whenever a person who receives basic reparations benefits for an injury recovers damages, either by judgment or settlement, from the owner, registrant, operator or occupant of a private passenger motor vehicle with respect to which security has been provided under this chapter or from a person or organization legally responsible for his acts or omissions, the insurer is entitled to reimbursement from the claimant to the extent that said basic reparations benefits have been paid, minus an amount which represents the insurer's contribution toward attorneys fees for the collection of basic reparations benefits. Such amount shall be computed by multiplying the total amount of such reasonable attorneys fees and costs, by a fraction, the numerator of which shall be the amount of basic reparations benefits received by the claimant and the denominator shall be the amount of damages recovered by the claimant, less court costs. In no event shall such amount exceed one-third the amount of the basic reparations benefits to be reimbursed to the insurer. The insurer shall have a lien on the claimant's recovery for the amount to which he is entitled for such reimbursement; provided no such lien shall attach until such time as the proceeds of such recovery are in the possession and control of such claimant.
(c) Whenever a person who receives basic reparations benefits for an injury has a right of recovery against any person or organization not described in subsection (b), an insurer that has paid such benefits to or for the injured person shall be subrogated to all such rights of recovery to the extent of its payments.
However, after her receipt of reparations benefits from Liberty Mutual and her settlement against the tortfeasor for $50,000, the plaintiff filed a bankruptcy petition and received a general discharge from the bankruptcy court. Had the plaintiff not received a bankruptcy discharge, Liberty Mutual would have recouped its payments to the plaintiff less its contribution toward the plaintiff's attorneys fees incurred in the recovery of damages. The reimbursement for attorneys fees, moreover, does not result in the plaintiff being overcompensated for her injuries, since such a contribution toward attorneys fees is not compensation for injuries or losses sustained in the accident. Thus, only because of the anomaly of her having received a bankruptcy discharge does the plaintiff's total compensation exceed the amount of the damages she sustained.
To recap, after finding that the plaintiff had sustained damages of $105,000, the arbitrators improperly adopted the defendants' agreement to apportion damages between them or improperly construed the defendants' "other insurance" clauses. Properly construed, those other insurance clauses result in Allstate's policy being primary and Liberty Mutual's policy being excess. Since Allstate's policy limits for underinsured motorist coverage was $100,000, Allstate was liable for the first $100,000 of damages. As the court held in its original decision, Allstate, as the primary insurer, was entitled to deduct from its $100,000 limit, the $50,000 paid to the plaintiff on behalf of the tortfeasor. That is the only offset to which Allstate was entitled. Liberty Mutual, as the excess insurer, is responsible for the remaining $5,000 in damages. However, the plaintiff does not dispute that Liberty Mutual is entitled to entirely offset that $5,000 liability by the basic and added reparations benefits it paid the plaintiff notwithstanding her discharge in bankruptcy.
The court, having reconsidered its original decision, denies the relief sought in Allstate's motion.
BY THE COURT
Bruce L. Levin Judge of the Superior Court