United States Court of Appeals
For the First Circuit
No. 09-1239
HEIDI M. BAKER,
Plaintiff, Appellant,
v.
ST. PAUL TRAVELERS INSURANCE COMPANY,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Mary M. Lisi, U.S. District Judge]
Before
Lipez, Stahl and Howard, Circuit Judges.
Merrill Friedemann with whom Anthony Gianfrancesco and William
F. Warren were on brief for appellant.
Paul V. Sullivan for appellee.
February 17, 2010
STAHL, Circuit Judge. This case arises out of a car
accident on December 17, 2002, in Boston, Massachusetts. On that
day, Heidi M. Baker, the plaintiff-appellant and a resident of
Rhode Island, was driving a vehicle owned by her employer, Safety
Source Northeast1 ("Safety"), as part of her job duties. Baker was
seriously injured in the car accident, which was caused by the
other driver. Baker filed a third-party claim against the
tortfeasor, but the other driver's insurance coverage was
insufficient to cover Baker's damages. Baker also filed for and
received workers' compensation ("WC") benefits through the Rhode
Island workers' compensation system. Finally, Baker sought to
recover under the Underinsured Motorist (UIM) provision of her
employer's automobile insurance policy,2 which was provided by St.
Paul Travelers Insurance Company ("St. Paul"), the defendant-
appellee in this case. St. Paul denied Baker's attempt to recover
under the UIM provision, citing Massachusetts law for the
proposition that an employee cannot recover for work-related
injuries under both workers' compensation and her employer's UIM
coverage.
1
Safety Source Northeast is a Massachusetts corporation with
its principal place of business in Massachusetts. According to
Baker, Safety is licensed to do business in Rhode Island and Baker
was hired by Safety in Rhode Island and exclusively worked out of
Safety's Rhode Island office, in Warwick, Rhode Island.
2
The insurance policy was executed and delivered in
Massachusetts.
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In response to the denial, Baker filed a complaint in
Rhode Island state court seeking a declaratory judgment regarding
her eligibility for coverage under St. Paul's UIM coverage.3 St.
Paul removed the case to Rhode Island District Court and Baker and
St. Paul both moved for summary judgment. A magistrate judge
recommended granting St. Paul's motion and denying Baker's, on the
grounds that Massachusetts law governed the matter and
Massachusetts case law prohibited recovery by an injured employee
under both workers' compensation and her employer's UIM coverage.
Baker filed a written objection to the report and recommendation,
arguing that Rhode Island law should apply, but that even under
Massachusetts law the bar on recovery under both workers'
compensation and the employer's UIM coverage did not apply where
the UIM coverage was a bargained-for provision. Nonetheless, the
district court adopted the magistrate's report and recommendation
in full, writing additionally only to correct an error in the
magistrate's report. See Baker v. Safety Source Northeast, No. 07-
314 ML, 2009 WL 211865 (D.R.I. January 28, 2009). This appeal
followed.
For the following reasons, we disagree with the
conclusion reached by the district court and will remand this case
for further proceedings consistent with this opinion.
3
Baker also brought suit in state court against her employer,
Safety. After removal by Safety to federal court, Baker
voluntarily dismissed her claim against Safety.
-3-
As a preliminary matter, we must determine what law
governs the question before us. Because this court is sitting in
diversity, we apply the choice of law rules of the forum state,
here, Rhode Island. See Montalvo v. Gonzalez-Amparo, 587 F.3d 43,
46 (1st Cir. 2009). Under Rhode Island law, "[W]hen the insured is
a Massachusetts corporation doing business in Massachusetts, and
the contract is executed and delivered in Massachusetts,
Massachusetts law governs the interpretation of the contract."
Hartford Cas. Ins. Co. v. A & M Assoc., Ltd., 200 F. Supp. 2d 84,
87 (D.R.I. 2002) (citing Baker v. Hanover Ins. Co., 568 A.2d 1023,
1025 (R.I. 1990)). Thus, in this case, Massachusetts law applies.4
The district court concluded that two decisions from the
Massachusetts Supreme Judicial Court (SJC), Berger v. H.P. Hood,
4
Baker argues that Rhode Island law should apply under the
interest-weighing approach adopted in Woodward v. Stewart, 243 A.2d
917, 923 (R.I. 1968). Such a conclusion would clearly advantage
Baker because Rhode Island law seems to permit an injured employee
to recover under both workers' compensation and her employer's UIM
coverage, provided the WC payment is reduced by the amount of the
UIM recovery (an "offset"). Though the parties cite to no
definitive Rhode Island case so holding, there are numerous cases
that suggest this result. See, e.g., Poulos v. Aetna Cas. & Sur.
Co., 379 A.2d 362, 365 (R.I. 1977) (where an injured employee's
personal UIM coverage includes an offset provision regarding
workers' compensation, such clause is enforceable only to the
extent that it prevents a double recovery by the injured employee);
Cruz v. Wausau Ins., 866 A.2d 1238, 1239-40 (R.I. 2005) (court only
decided a procedural matter and raised no objection to injured
employee's recovery from both WC and his employer's UIM coverage);
Charest v. Pawtucket Mut. Ins. Co., 1996 WL 936921 (R.I. Super.
April 23, 1996) (an injured employee who recovered on his
employer's UIM coverage and received WC payments was required to
offset those two amounts when he sought coverage from a third
source, his personal UIM coverage).
-4-
Inc., 416 Mass. 652 (1993), and Nat'l Union Fire Ins. Co. v.
Figaratto, 423 Mass. 346 (1996), squarely foreclosed Baker's claim.
We do not agree. Berger and National Union only address whether
the exclusivity provision of the Massachusetts workers'
compensation statute permits an injured employee to recover under
both WC and her employer's UIM coverage. See Berger, 416 Mass. at
652 ("At issue is whether the exclusivity provision of the Workers'
Compensation Act, G.L. c. 152, § 23 (1992 ed.), bars an employee's
claim against the owner and the insurer of the employer's motor
vehicles, for underinsurance benefits."); Nat'l Union, 423 Mass. at
348 (explaining that the court was bound to follow its recent
decision in Berger, which held that "the exclusivity provision of
the Workers' Compensation Act . . . barred the employee's claim
against the employer's insurers."). In contrast, in Baker's case,
she has recovered workers' compensation benefits under the Rhode
Island workers' compensation statute, rather than the Massachusetts
statute. Therefore, in our view, Berger and National Union are not
dispositive.5
Thus, because the SJC has not "spoken directly to the
precise question that confronts us," we are tasked with predicting
"how that court likely would decide the issue." Gonzalez Figueroa
5
It is also worth noting that the SJC acknowledged in Berger
that state courts have reached a variety of conclusions on this
question depending on how they have interpreted the exclusivity
provisions of their own workers' compensation statutes. See
Berger, 416 Mass. at 655 and n.8.
-5-
v. J.C. Penney Puerto Rico, Inc., 568 F.3d 313, 318 (1st Cir.
2009). We are persuaded that the SJC's decisions in Berger and
National Union were largely governed by the court's policy concerns
regarding providing Massachusetts companies with a predictable and
reliable scheme concerning the interplay of workers' compensation
and underinsured motorist coverage, and holding down insurance
costs for Massachusetts companies.6 Because this case concerns a
Massachusetts company doing business in Massachusetts, and carrying
an auto insurance policy executed and delivered in Massachusetts,
we expect these policy concerns would lead the SJC to apply the
conclusions of Berger and National Union to this case, even though
6
In Berger the court noted that the Massachusetts uninsured
motorist provision was intended to "minimize the possibility of .
. . catastrophic financial loss [to] the victims of an automobile
accident," while in the case of a workplace injury, "the employee
is protected from the risk of catastrophic financial loss through
workers' compensation." 416 Mass. at 656 (internal citations and
quotations omitted). In National Union, the court expanded on this
policy concern:
As a matter of fair and equal treatment, a person injured
in the course of employment while in a motor vehicle of
the employer need not obtain any greater insurance
benefits than another person sustaining a similar injury
in the course of employment but not in a motor vehicle of
the employer. The cost of UM coverage for employers
would be substantially higher than otherwise if that
coverage in a standard policy applied to employees'
on-the-job motor vehicle injuries. That increase would
not be accompanied by a corresponding reduction in the
cost of workers' compensation coverage.
423 Mass. at 349-50.
-6-
those cases concerned collection of WC payments under the
Massachusetts worker's compensation scheme.
However, that conclusion does not end our analysis. In
National Union, decided three years after Berger, the SJC carved
out an exception to the general bar on an employee's recovery under
both WC and her employer's UIM coverage. "[W]e would not extend
the bar imposed by the exclusivity provision of the Workers'
Compensation Act to make ineffective [UIM] coverage (or any other
coverage) that an employer explicitly purchased for the purpose of
providing [UIM] coverage (or any other coverage) to employees
injured in the course of their employment." 423 Mass. at 350-51.
Below, the district court granted summary judgment to St. Paul
without addressing the carve-out language in National Union, and
therefore it did not reach the factual question of whether the
underinsurance coverage purchased by Safety was indeed a bargained-
for provision intended to provide Safety's employees with
additional protection from damages caused by underinsured
motorists.7
7
St. Paul argues that the National Union carve-out only
applies to "non-standard" policies, which St. Paul appears to
define as policies that do not use the standard forms issued by the
Massachusetts Insurance Commissioner. The plain language of the
National Union carve-out, however, suggests a broader exclusion of
any coverage explicitly purchased in order to provide additional
protection to the employer's workers. This exception requires a
factual determination as to whether the UIM coverage was elected
and paid for by the employer in order to protect his employees from
the harm of underinsured motorists.
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Our review of the contract shows that at the time of the
accident Safety carried underinsured motorist coverage in the
amount of $100,000 per person and $300,000 per accident. The
contract also shows that Safety paid a premium of $79.00 in order
to receive this coverage during the policy year. Further, we take
judicial notice of the Massachusetts Commercial Automobile
Insurance Manual for 2002, the year the policy was issued.8
According to the Manual, it appears that in 2002 there was no
compulsory underinsured motorist coverage requirement for
commercial automobile policies and insurers were only required to
offer underinsured motorist coverage at limits up to $35,000 per
person/$80,000 per accident. In addition, the Manual set the
"basic limit" for underinsured motorist coverage at $20,000 per
person/$40,000 per accident. The limited facts available to us
suggest that perhaps Safety purchased and paid for additional UIM
coverage above and beyond what was required by law in force at the
time. However, without the benefit of discovery, we are unable to
conclusively determine whether Safety indeed bargained for the UIM
8
The manual is available in PDF form on the public website of
the Automobile Insurers Bureau of Massachusetts (AIB). See
http://www.aib.org/ContentPages/DocumentView.aspx?DocId=559. The
AIB is a non-profit association of Massachusetts insurers that is
subject to the "visitation, supervision and examination" of the
Massachusetts Commissioner of Insurance. See Constitution of
Automobile Insurers Bureau of Massachusetts, at
http://www.aib.org/ContentPages/DocumentView.aspx?DocId=447.
-8-
coverage contained in its policy with the intention of protecting
its workers from damage caused by uninsured motorists.
We therefore vacate the district court's entry of summary
judgment and remand for appropriate discovery on the question of
whether the National Union carve-out applies, namely whether Safety
"explicitly purchased" its underinsured motorist coverage "for the
purpose of providing [UIM] coverage . . . to employees injured in
the course of their employment." 423 Mass. at 350-51. If the
court concludes in the affirmative, the terms of the contract would
require that any recovery by Baker under the underinsured motorist
provision would be reduced by "[t]he amount paid under a workers'
compensation law." In other words, an offset would be required.
Vacated and remanded for further proceedings consistent
with this opinion. Costs are taxed in favor of Heidi M. Baker.
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