Asurion Svcs., LLC v. Mont. Insur. Guaranty Assoc.

Asurion Svcs., LLC v. Mont. Insur. Guaranty Assoc., 2017 MT 140 (June 13, 2017) (Shea, J.; Sandefur, J., dissenting) (4-1, aff’d)

Issue: Whether the district court erred in granting SJ to Asurion based on work comp exclusivity.

Short Answer: No.

Affirmed

Facts: While employed by Asurion, Harris filed industrial injury claims for two different incidents, occurring on May 5, 2002, and September 4, 2002. Asurion was insured by Lumbermens Mutual Casualty Company as a Plan 2 employer. Lumbermens accepted and adjusted Harris’s workers’ compensation claims until it was declared insolvent in May 2013. When Lumbermens went into liquidation, the MIGA assumed handling of Harris’s claims pursuant to the Montana Insurance Guaranty Association Act (Guaranty Act), § 33-10-101, et seq., MCA. MIGA retained Western Guaranty Fund Services to adjust Harris’s claims, which it continued to do through February 2015.

MIGA sought recovery of benefits plaid on Harris’s claims under § 33-10-114(2). Asurion filed a declaratory judgment action, and MIGA answered and filed a counterclaim.

Procedural Posture & Holding: Upon cross-motions for summary judgment, the district court granted judgment to Asurion, concluding Asurion was protected by the work comp exclusivity provision. MIGA appeals and the Supreme Court affirms.

Reasoning: Asurion provided workers’ compensation coverage in this case, exactly as the WCA required. To deprive Asurion of the benefit of the exclusive remedy by requiring it to reimburse MIGA for the benefits paid to Harris, despite Asurion’s full compliance with the WCA, would strike at one of the very foundations of the workers’ compensation system.

Justice Sandefur’s Dissent: Without consideration of the meaning of “indemnity” or the qualifying statutory reference to third-parties “from whom damages are sought on account of” injury to an employee, the majority’s conclusion erroneously stretches the language and intent of § 39-71-411, MCA, too far in disregard of the perfectly harmonious, clear, and unambiguous provisions of the Montana Insurance Guaranty Association Act (MIGA Act). Indemnity may refer to contract indemnity or equitable indemnity.

MIGA essentially steps into the shoes of an insolvent insurer and is considered by law to be the insurer to the extent of the insolvent insurer’s obligation under the policy. MCA § 30-10-105(1)(b). Here, MIGA’s claim for indemnity from Asurion was neither a claim for contract indemnity or equitable indemnity.

It has always been and remains the express provision and intent of the legislature that the reimbursement provision of § 33-10-114(2), MCA, apply to non-captive Plan 2 insurers with assets in excess of $50 million. The district court erroneously concluded that the exclusivity provision of § 39-71-411, MCA, precludes application of the MIGA reimbursement provision. Justice Sandefur would reverse and remand.