UIM Insurer May Offset IL Employee’s Comp Benefits Against Policy Obligation

In a decision not designated for publication, an Illinois appellate court held that a trial court did not err in granting judgment on the pleadings favoring an auto insurance company in a declaratory action in which it contended that its obligation to pay an injured employee up to $25,000 in uninsured motorist (UIM) coverage benefits had been completely offset by his receipt of workers’ compensation benefits [First Acceptance Ins. Co. v. Stephens, 2021 IL App (3d) 200490-U, 2021 Ill. App. Unpub. LEXIS 1778 (Oct. 14, 2021)]. The appellate court stressed that the UIM policy provisions clearly provided that UIM benefits be offset by amounts the employee/policy holder received, including workers’ compensation benefits.

Background

Stephens sustained injuries when he was struck by an unknown hit-and-run driver while working at a gas station. He subsequently received more than $25,000 in workers’ compensation benefits. Stephens also submitted a claim for uninsured motorist benefits under an amended automobile insurance policy (“the auto policy”) that he had purchased from the plaintiff, First Acceptance Insurance Company, Inc. (First Acceptance). First Acceptance filed a declaratory action in which it requested that the trial court find it was not obligated to pay Stephens’s claim due to the policy’s $25,000 per person limit and the offset provision pertaining to workers’ compensation benefits. The trial court granted a judgment on the pleadings in favor of First Acceptance. Stephens appealed.

Part C of the policy, which pertained to uninsured and underinsured motorist coverage, provided that no one was entitled to receive “duplicate payments for the same elements of loss.” It provided further that payments under the UM/UIM provision were to be reduced by sums paid because of the bodily injury or property damage under, inter alia, “workers’ compensation law.” First Acceptance asserted that any benefits Stephens would be entitled to receive from First Acceptance, according to the terms of the UIM coverage provisions of the Stephens policy, was subject to the $25,000 per person limit and “completely offset” by the amount Stephens received in workers’ compensation benefits. The trial court found the language of the Stephens policy was clear and unambiguous. It granted First Acceptance’s motion for judgment on the pleadings.

Appellate Court Decision

The appellate court noted that due to the “simplicity of the issue” presented in the appeal, the required analysis was “quite brief and straightforward” [Opinion, ¶ 16]. The facts were undisputed, said the court. Moreover, the language of the auto policy was clear and unambiguous. Stephens undisputedly received workers’ compensation benefits in excess of the $25,000 per person coverage limit contained in the auto policy. Hence, after applying the offset for workers’ compensation benefits received by Stephens, any claim by Stephens for damages related to pain and suffering would exceed the $25,000 per person limit contained in the auto policy. In other words, stressed the court, the amount “otherwise payable” to Stephens for pain and suffering would be reduced to zero.

The court added that even if Stephens’s claim for pain and suffering was not for the same element of loss for which payment had been made by workers’ compensation, the claim could properly be denied by First Acceptance based on the $25,000 per person policy limit and the offset language. Accordingly, the trial court properly granted First Acceptance’s motion for a judgment on the pleadings.