Employee’s Medical Bills Not Covered by “Medpay” Provision of Arizona Auto Policy Due to Exclusion for Workers’ Compensation Benefits

Where an employee was injured in a work-related auto accident, incurred $22,000 in medical expenses, a portion of which was paid pursuant to a workers’ compensation claim and the employee recovered $15,000 from a third-party tortfeasor but, under the Arizona subrogation law [Ariz. Rev. Stat. § 23-1023(D)], was required to reimburse the workers’ compensation insurer some $8,750, he could not proceed against his own automobile liability insurance carrier to recover $5,000 under the policy’s “medpay” provision since the policy also contained an exclusion providing for no medpay coverage when “workmen’s compensation benefits are required” [Doneson v. Farmers Ins. Exch., 2018 Ariz. App. LEXIS 159 (Oct. 3, 2018)].

The injured employee contended that when an insured party reimburses a workers’ compensation insurer for the benefits received, the insured has taken nothing, and therefore benefits were essentially not “required.” The auto insurer countered that benefits are “required” when an injured employee is entitled to receive workers’ compensation benefits, regardless of whether the employee “sought, was ever paid, or was later required to reimburse workers’ compensation benefits.”

Reviewing decisions from Nevada and California, the Arizona court sided with the carrier, finding that the language of the exclusion was not reasonably susceptible to the employee’s interpretation.