PA Supreme Court Strikes Down Workers’ Compensation Exclusion in Insurance Policy

From the Desk of Adam K. Levin, Esq. (PA workers’ comp and personal injury attorney).

Since it violates public policy, workers’ compensation exclusion in employer-sponsored insurance policy is unenforceable.

Heller v. League of Cities (PICS Case No. 11-4354)(Pa. Oct. 19, 2011).    A police officer was severely injured in an automobile accident in the course and scope of his employment as a police officer for a municipal police department.  Workers’ compensation covered the officer’s medical expenses and two-thirds of his salary.  The borough paid the remainder of his salary.  The officer recovered the policy limits from the insurance carrier for the responsible driver; however, the officer’s losses and damages exceeded the liability coverage.  Accordingly, the officer sought underinsured motorist (UIM) benefits from the borough under a policy issued to the borough by its insurance company, PA League of Cities (PALC).  PALC denied the officer’s claim for UIM benefits based on a policy exclusion stating that UIM coverage did not apply to any claim by anyone eligible for workers’ compensation benefits.

In this case, the borough voluntarily elected to purchase optional UIM coverage and paid a premium to PALC to provide additional protection to its employees who operated or occupied borough vehicles.  Borough employees, such as the officer, used the vehicles in the course and scope of their employment.  Therefore, the vast majority of all UIM claims would be made by borough employees who were eligible for workers’ compensation.  The exclusions operated to deny UIM benefits to anyone eligible for workers’ compensation.  Thus, PALC sold additional coverage that would not attach because of the exclusion.Under the facts and circumstances, the PA Supreme Court held that the coverage was illusory and found that it was a “sham offering” and that PALC received a windfall.  As such, the exclusion was unenforceable since it violated public policy.

At Liever, Hyman & Potter, P.C., we handle cases on behalf of injured workers’ who are entitled to both work comp benefits and benefits under automobile insurance policies.  An experienced attorney for work comp and personal injury at our firm can assist you with these types of matters.


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