Worker’s Compensation – Employer Cannot Subrogate Against UM Proceeds

O’Brien, etc. v. Mobile Public Library, [Ms. 2200845, Mar. 18, 2022] __ So. 3d __ (Ala. Civ. App. 2022). The court (Edwards, J.; Thompson, P.J., and Hanson and Fridy, JJ., concur; Moore, J., concurs in the result, with writing) reverses the Mobile Circuit Court’s decision holding that the Mobile Public Library was entitled to subrogation or reimbursement under Ala. Code 1975, § 25-5-11(a), regarding uninsured-motorist insurance proceeds paid to the Library’s employee Mosley by Transportation Insurance Company (“TIC”).

The court notes “the trial court concluded that precedents that supported the denial of the library’s claim, see State Farm Mutual Automobile Insurance Co. v. Cahoon, 287 Ala. 462, 252 So. 2d 619 (1971); River Gas Corp. v. Sutton, 701 So. 2d 35, 39 (Ala. Civ. App. 1997); and Bunkley v. Bunkley Air Conditioning, Inc., 688 So. 2d 827 (Ala. Civ. App. 1996), were inapplicable because, it stated, Cahoon and Bunkley had been decided based on a precursor to § 25-5- 11(a) that predated the 1992 amendment to that Code section…” Ms. * 11.

The court rejects this conclusion and explains that in Cahoon “the Supreme Court concluded that the quoted language from § 312 [now § 25-5-11] described an employee’s claim against a third party who was at fault in causing the employee’s injury and did not include a claim against a third party who was not at fault in causing such injury, such as an uninsured-motorist insurance carrier.” Ms. *25. The court notes that

“[S]ince Cahoon was decided, the legislature has continued, with slight variation, to include the exact language from § 312 that the supreme court relied on in Cahoon. No substantive change has occurred to that language since the supreme court concluded in Cahoon that the phrase a ‘party other than the employer’ in § 312, which phrase has been carried forward in § 25-5-11(a), references a party whose fault caused the personal injury to the employee and does not include a party whose liability to the employee is based on a contract.

Ms. **41-42. The court concludes that “[t]he 1992 amendment to § 25-5-11(a) does not reflect a legislative decision to supersede Cahoon, … and any plain-language approach to § 25-5-11(a) that requires the overruling of Cahoon is for the consideration of the supreme court.” Ms. *43.

The court also rejects “drawing a distinction between employee-purchased and employer-purchased uninsured-motorist insurance policies for purposes of reimbursement or subrogation, it would be purely arbitrary to conclude that an action as to the former is a contract action, but an action as to the latter is a tort action. In other words, if such a distinction validly may be drawn, it requires ignoring the rationale in or overruling Cahoon, which this court cannot do.” Ms. * 43.

Finally, the court observes “we remain concerned about the potential for double recovery by an employee and the various issues that presents, which may be illustrated by considering what might occur if the library and TIC attempt to collect their combined subrogation claims, which exceed $100,000, from Carter [the uninsured motorist], who is liable for $100,000.” Ms. *52.

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