Schilling v. Huntington County Community School Corp.

MAY, Judge,

dissenting.

The majority’s interpretation of Exclusion 33 would require any School employee who might possibly be eligible for worker’s compensation coverage, from whatever source, to buy it or risk losing insurance benefits provided by the Health Plan. The policy language before us cannot properly be read to have that effect, and I must therefore respectfully dissent.

The majority presumes Exclusion 33 refers to workers compensation that “has been purchased” by the employee. {See, e.g., Op. at 8, at 390) (holding the policy language excludes injuries that would be covered by worker’s compensation “regardless of whether workers compensation was actually obtained by the insured.”) The policy does not specify the contemplated “purchaser” of the worker’s compensation coverage, but it seems quite unlikely it would be a School employee.

Most School employees are probably not, like Schilling, self-employed in addition to their school employment. Surely a policy meant to cover a typical school system employee would not exclude coverage just because that typical employee had not bought his or her own worker’s compensation coverage. I would therefore decline to read the exclusion to presume an em*392ployee would lose his or her Health Plan coverage for any injury covered by worker’s compensation that employee might have been able to purchase. The majority’s premise that the School employee is obliged to “take the steps necessary to procure worker’s compensation” (Op. at 9, at 390), would render the Health Plan coverage illusory for any employees covered by the Plan who might, under some scenario, be able to purchase worker’s compensation coverage.

The majority’s reading of Exclusion 33 is inconsistent with decisions that have addressed similar situations involving “moonlighting” employees who might have obtained worker’s compensation coverage but did not do so. In Carroll v. Union Labor Life Ins. Co., 65 Wash.2d 513, 398 P.2d 164 (1965), Carroll was a custodian for a school system. By virtue of his employment with the school system he was insured under a group plan issued for members of his union. To supplement his income from the school, Carroll worked as a self-employed cement finisher.

He was injured while doing cement finishing work and claimed benefits under the group insurance policy. The insurer refused to pay, relying on an exclusion for medical expenses “resulting from occupational disease.” “Occupational disease” was defined as one for which the insured “is entitled to benefits under the applicable Workmen’s Compensation Law.” Id. at 165.

The court noted Carroll “had available to him the protection of [worker’s compensation] and failed to make use of it.” Id. There, as in the case before us, the insurer contended Carroll’s self-employment was “embraced within the insurance benefit provisions of the Workmen’s Compensation Act” and consequently not covered by it. Id. The insurer noted Carroll, like Schilling, “qualified for voluntary coverage under the Act” and “could have been entitled to benefits if he had simply applied for coverage. [Insurer] regards the fact that [Carroll] did not so apply as his own fault.” Id. at 166.

The court addressed
the reasonable meaning of the phrase, ‘is entitled to benefits.’ Does it mean actually entitled to benefits, or could qualify for benefits by signing up and paying premiums as a self-employer under the Act? Since no industrial insurance can be paid to Mr. Carroll, the refusal of the insurance company to pay does not avoid duplication or overlapping coverage. It avoids the very purpose of the policy of insurance — i.e., that the medical and related expenses be paid for an injury sustained by the janitor when he was away from the school and was not engaged in work for the school.
Given the facts and circumstances of the present case, we are persuaded to the views of [Carroll], and we have concluded that the insurance company contracted to cover the expenses embraced in [Carroll’s] claim. However, if there may be some doubt about this, we point out that the word Employment and the words Entitled to benefits are at least ambiguous; and being ambiguous as to the extent of intended coverage, the construction of the policy and the disposition of the case are controlled by the oft-cited rule that ambiguous insurance contracts must be construed in favor of the insured.

Id. at 166-67.

Similarly, in Hunt v. Hospital Service Plan of N.J., 33 N.J. 98, 162 A.2d 561 (1960), the court addressed exclusions for medical and hospital services that are “compensable” under the worker’s compensation law. Id. at 563. The court noted the policies “fairly breathe, as their basic motive in excluding such compensa-*393ble services, a desire to avoid duplicate or double payment of the bills to the insured.” Id. at 564.

The Hunt court recognized “two reasonably supportable views as to the significance of the word ‘compensable’ as it is used in its present context.” Id. at 563. One was that it connoted “hospital and medical services of the type declared payable or ‘compensable’ as an incident of an injury of the type entitled to benefits under the Workmen’s Compensation Act. Id. That position was advanced by the Insurer, who argued it was therefore “of no consequence that for some additional technical condition imposed by the Legislature” the particular services did not qualify for payment by the employer. Id.

Hunt’s position was that to be “compen-sable” the services not only must be of the type covered by the compensation act but must in fact qualify for and require payment by the employer. Id. at 564-65. The court found the more reasonable choice of the alternative constructions of the policy language was that it excluded only those hospital and medical services that were “in fact compensable ... and actually are paid ....” Id. at 564 (emphasis supplied).

The Hunt court noted in worker’s compensation cases the primary obligation to provide and to pay for medical and hospital treatment is on the employer, and the employee health insurance plans should not be called on to pay for the care “where liability of the employer in fact exists under the conditions laid down by the Legislature.” Id. But just as the health insurance plans are entitled to be made whole where they have satisfied an obligation that primarily belongs to the employer, “so too they should not be relieved of providing the benefits paid for by their insured unless it cannot be said through any fair interpretation of the language of their policies that the condition upon which the exclusion of liability is predicated does not exist.” Id. at 565.

Schilling, like the plaintiffs Hunt and Carroll, might have been eligible for worker’s compensation coverage under some circumstance. But he did not in fact have such coverage and was not paid worker’s compensation benefits. I would accordingly reverse summary judgment for the School and remand.