Opinion
No. CV 01 0184076
November 9, 2004
MEMORANDUM OF DECISION RE #138 INTERVENING PLAINTIFF'S MOTION FOR ORDER
Presently before the court is a motion for order filed by the intervening plaintiff, Stamford EMS, requesting reimbursement from the Connecticut Insurance Guaranty Association for Stamford EMS's lien on the settlement in this case, and further requesting a credit for future payment of benefits. For the reasons set forth below, the motion for order is granted.
The following facts have been stipulated by both parties. Stamford EMS is a member of the Connecticut Healthcare Workers' Compensation Trust (the Trust) which is an Employers' Mutual Association created under the employers' mutual association statutes and authorized to operate under General Statutes §§ 31-328 to 31-339. The Trust's membership is composed exclusively of healthcare organizations, and its premium base is derived entirely from healthcare organizations. The Trust is a for-profit entity and non-stock corporation. It operates pursuant to a self-insurance license issued by the Workers' Compensation Commission. The Trust does not pay into the assigned risk pool, and it is not required to adhere to the guidelines of the National Council on Compensation Insurance. Finally, the Trust is not assessed for nor is it a member of the Connecticut Insurance Guaranty Association.
An employers mutual association is an association of employers in a similar trade or business who join together to insure their liabilities under the Workers' Compensation Act. General Statutes § 31-328.
On June 7, 2000, the plaintiff, Holly Simms, was injured on Stamford Hospital property while working as an emergency medical technician for Stamford EMS. Since that time, Stamford EMS has paid $47,343.61 in workers' compensation benefits for the plaintiff's injury. The plaintiff settled her case with Stamford Hospital for $165,000. The Connecticut Insurance Guaranty Association (the Guaranty Fund), created by the Connecticut Insurance Guaranty Association Act (the Act) and operating pursuant to General Statues §§ 38a-836 to 38a-853, has assumed the obligations of Stamford Hospital's insurance carrier.
The Guaranty Fund assumed the responsibilities of Stamford Hospital's insurance carrier after said carrier, Reliance Insurance Company, was declared insolvent by the Commonwealth of Pennsylvania.
Stamford EMS now moves this court pursuant to General Statutes § 31-293 for an order (1) requiring the Guaranty Fund to reimburse Stamford EMS for its $47,343.61 lien on the $165,000 settlement with the plaintiff and (2) allowing Stamford EMS to maintain its credit for unknown future workers' compensation benefits.
General Statutes § 31-293 entitled "Liability of Third persons to employer and employee" provides in relevant part that "(a) . . . any employer or the custodian of the Second Injury Fund, having paid, or having become obligated to pay, compensation under the [Workers' Compensation Act] may bring an action against such person to recover any amount that he has paid or has become obligated to pay as compensation to the injured employee."
DISCUSSION
The Guaranty Fund is only responsible for paying covered claims. A covered claim does not include "any claim by or for the benefit of any reinsurer, insurer, insurance pool, or underwriting association, as subrogation or otherwise . . ." General Statutes § 38a-838(6). According to the Guaranty Fund, the Trust is an insurer and, therefore, not entitled to any reimbursement.
Whether the Trust is an insurer for the purposes of the Act is a question of statutory interpretation. "The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered." Public Acts 2003, No. 03-154, § 1.
The word insurer is not defined in § 38a-838(6). Insurer is, however, defined in the general definition portion of the insurance law as "any corporation, association, partnership or combination of persons doing any kind or form of insurance business other than a fraternal benefit society . . ." General Statutes § 38a-1(11). The Trust, as an employers mutual association, is a group of employers joining together to insure their workers' compensation liabilities. The plaintiff contends that the Trust, which operates pursuant to a self-insurance license issued by the Workers' Compensation Commission, does not engage in the business of insurance. Indeed, there is "substantial authority for the position that self-insurance is not insurance at all." See Doucette v. Pomes, 247 Conn. 442, 458, 724 A.2d 481, citing 12 J. Appleman J. Appleman, Insurance Law and Practice (1981) § 7002, p. 22. It is not clear and unambiguous that an employers mutual association is in the business of insurance such that it may be considered an insurer within the meaning of § 38a-838(6). As such, it is not only appropriate, but necessary, for this court to look to extratextual sources to determine whether the term insurer is broad enough to encompass an employers mutual association.
See n. 1, supra.
Whether an employers mutual association, such as the Trust, is an insurer for the purposes of the Guaranty Act is a matter of first impression for this court. The Supreme Court's decision in Doucette v. Pomes, supra, holding that a self-insurer was not an insurer for purposes of the Guaranty Act provides a certain amount of guidance and insight into this court's inquiry. Although the decision in Doucette involved a single employer, the Court implied that the outcome would be the same for a group of self-insurers insuring against their workers' compensation liability. The Supreme Court noted that ". . . a self-insured workers' compensation group might be considered similar to an insurance pool, which is not defined in the General Statutes. Initially, however, we note that, as there is a distinction between a self-insurer and an insurer, it is reasonable to conclude that there is a similar difference between a self-insured insurance pool or group and an insurance pool. An insurance pool is the `combining together of several insurers to share premiums and losses so as to spread risks . . . [A] workers' compensation group self-insurance pool is a combining of smaller employers who pool their risks . . . Therefore, we believe that a self-insured workers' compensation group is more like a self-insurer than an insurer . . . [A]lthough § 38a-838(6) precludes an insurance pool from recovering from the [Guaranty Fund], it does not necessarily preclude a self-insured workers' compensation group or pool from recovering." (Citations omitted; internal quotation parks omitted.) Id., 461 n. 17.
Further support for Stamford EMS's position is found in the statutes governing the Second Injury Fund contained in the Workers' Compensation Act. For purposes of the Second Injury Fund, "self-insured employers shall include an employer mutual association organized prior to June 6, 1996, with a membership composed exclusively of health care providers and whose premium base is derived entirely from health care organizations." (Internal quotation marks omitted.) General Statutes § 31-349g. Here, the Guaranty Fund has stipulated that the Trust's membership is composed exclusively of healthcare organizations, and its premium base is derived entirely from healthcare organizations.
In light of the fact that this is a matter of first impression in Connecticut, both Stamford EMS and the Guaranty Fund have urged this court to consider case law from other jurisdictions. These cases are easily distinguishable from the factual situation presented before the court and are not, therefore, persuasive. See City of Arvada v. Colorado Intergovermnental Risk Sharing Agency, 19 P.3d (Colo. 2001) (fund contained precise definition of insurer that explicitly excluded non-profit entities such as the group self-insurer in question); Iowa Contractors Workers' Compensation Group v. Iowa Ins. Guaranty Assn., 437 N.W.2d 909 (1989) (fund contained precise definition of insurer that explicitly excluded the workers' compensation group); California Plant Protection v. Zayre Corp., 39 Mass.App.Ct., 627, 659 N.E.2d 1202 (1996) (involved single employer, not a group); Miles v. Van Meter, CT Page 17061 427 Pa.Super. 278, 628 A.2d 1159 (1993) (act creating the Guaranty Fund specifically excluded workers' compensation from coverage); Rhode Island Insurer's Insolvency Fund v. Rhode Island Public Transit Authority, No. 92-6770 (R.I. Superior Court, March 16, 1994) (involved single employer, not a group); South Carolina Property and Casualty Ins. Guaranty Assn. v. Carolinas Roofing and Sheet Metal Contractors Self-Insurance Fund, 315 S.C. 555, 446 S.E.2d 422 (1994) (self-insurers were excluded from definition of insurer by statute); Washington Ins. Guaranty Assn. v. Department of Labor and Industries, 122 Wn2d 527, 859 P.2d 592 (1993) (defendant was not an insurer for purposes of the Guaranty Act because it was merely an administrator of the group); Stamp v. Dept. of Labor and Industries, 122 Wash.2d 536, 859 P.2d 597 (1993) (involved single employer, not a group).
Finally, the court notes that "[a] statute . . . should not be interpreted to thwart its purpose." (Internal quotation marks omitted.) Falkenstein v. Falkenstein, 84 Conn.App. 495, 502, 854 A.2d 749, cert. denied, 271 Conn. 928 (2004). The legislative purpose of the Guaranty Act is "to benefit members of the public, individuals and entities . . . which are outside the insurance industry, from losses due to the insolvency of a member of that industry." (Internal quotation marks omitted.) Doucette v. Pomes, supra, 460 (citing with approval a statement of the legislative purpose of the Massachusetts Guaranty Fund, which is similar to the Guaranty Fund established by Connecticut). Allowing Stamford EMS, an entity outside the insurance industry, to be reimbursed for its workers' compensation lien, is in harmony with this stated purpose.
The legislative purpose of the Guaranty Fund, the classification of employers mutual associations as self-insurers under the Second Injury Fund, and the Supreme Court's dicta from Doucette v. Pomes, stating that a self-insured workers' compensation group is more like a self-insurer than an insurer, lead this court to conclude that an employers mutual association is not an insurer for the purposes of the Guaranty Fund. As such, the workers' compensation lien held by the Trust is a covered claim subject to reimbursement by the Guaranty Fund.
The court is aware that Public Act No. 04-229, effective October 1, 2004, amended § 31-349g so that employer mutual associations are no longer defined as self-insured employers. While the amended version of § 31-349g may give credence to the Guaranty Fund's argument, it is not the subject of this discussion. "[S]tatutes are to be interpreted with regard to other relevant statutes . . ." (Emphasis added.) Waterbury v. Washington, 260 Conn. 506, 557, 800 A.2d 1102 (2002). The relevant version of § 31-349g, for the purposes of this discussion, is the version that existed at the time the current controversy arose. Thus, the court's inquiry is focused on § 31-349g as it existed prior to being amended by Public Act No. 04-229.
Regarding Stamford EMS's request for a credit for payment of unknown future benefits, the court grants the request. As an initial matter, the Guaranty Fund does not have standing to object to Stamford EMS's request for a credit . . . "Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy." (Citation omitted; internal quotation marks omitted,) Ganim v. Smith Wesson Corp., 258 Conn. 313, 347, 780 A.2d 98 (2001). The Guaranty Fund has already agreed to pay a settlement of $165,000. It has no interest in whether Stamford EMS receives a credit against that amount for unknown future workers' compensation benefits, therefore, the Guaranty Fund does not have standing to object to this portion of the motion.
Regardless of the Guaranty Fund's lack of standing to challenge this portion of the motion, it is proper for the court to grant the motion for order requesting a credit for unknown future workers' compensation benefits. In Enquist v. General Datacom, 218 Conn. 19, 26, 587 A.2d 1029 (1991), the Supreme Court held that pursuant to General Statutes § 31-293, an employer has a right to credit for unknown future workers' compensation benefits against the net proceeds of a third-party action. This is so because there is a strong public policy against double recovery by the injured party. Schietinger v. Southern New England Telephone Co., Superior Court, complex litigation docket at New Britain, Docket No. X03 CV 99 0506065 (February 14, 2002, Aurigemma, J.) ( 31 Conn. L. Rptr. 413). Allowing the plaintiff to receive the settlement and collect future workers' compensation benefits without a credit to the employer for payment of such future benefits would result in a double recovery by the plaintiff.
CONCLUSION
The motion of Stamford EMS is granted and the court hereby orders (1) reimbursement of the workers' compensation lien in the amount of $47,343.61, and (2) a credit against the net proceeds of the settlement in this matter for payment of unknown future workers' compensation benefits.
Arthur A. Hiller, Judge