Comp exclusive remedy does not bar uninsured motorist benefits: N.Y. high court

NEW YORK—The exclusive remedy provision in workers compensation law does not bar an employee from collecting uninsured motorist benefits from a self-insured employer, New York state’s high court has ruled.

In the case of Elrac Inc. vs. Birtis Exum, Mr. Exum was in an automobile accident with another car while working for Elrac, a self-insured subsidiary of Enterprise Rent-a-Car Co.The other car’s driver had not purchased liability insurance, according to Tuesday’s New York Court of Appeals ruling. So Mr. Exum notified Elrac that he intended to seek uninsured motorist benefits from the employer through arbitration.

Elrac sought to stay the arbitration, and a trial court granted the petition. But in 2010, an appellate court reversed and allowed arbitration to proceed.

Elrac appealed to New York’s highest court, arguing that because Mr. Exum is entitled to workers comp benefits in this injury case, he is barred from recovering uninsured motorist benefits.

Exception to the rule

While New York state law says an employer’s liability for workers comp benefits “shall be exclusive and in place of any other liability whatsoever,” the high court found that wording “cannot be taken literally” in all cases.

“Specifically, the statute cannot be read to bar all suits to enforce contractual liabilities,” the court ruled. “If an employer agrees, as part of a contract with an employee, to provide life insurance or medical insurance, and breaches that contract, an action to recover damages for the breach would not be barred.”

Likewise, “There is no policy reason why Exum’s uninsured motorist protection should decrease because he happened to be driving the car of a self-insurer,” the court ruled in affirming the appellate court’s decision to allow arbitration to proceed.