AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

An employee was injured in a motor vehicle collision caused by a third-party tortfeasor while acting within the scope of his employment. The employer provided workers' compensation insurance and underinsured motorist (UIM) coverage. The employee received workers' compensation benefits and settled with the tortfeasor for the liability policy limits. He also settled with the workers' compensation insurer for reimbursement of benefits but sought additional recovery under the UIM policy for damages exceeding the tortfeasor's coverage (paras 2-4).

Procedural History

• District Court of Eddy County: Issued a declaratory judgment granting the insurer a credit against any UIM amounts owed to the employee (para 1).

Parties' Submissions

• Appellant (Employee): Argued that the insurer was not entitled to any credit or offset for workers' compensation benefits received and that the district court's judgment was erroneous (para 4).
• Appellee (Insurer): Contended that it was entitled to an offset for the net workers' compensation benefits and medical expenses paid to the employee, based on its interpretation of NMSA 1978, Section 52-5-17(C) (paras 4-5).

Legal Issues

• Whether the insurer is entitled to an offset for workers' compensation benefits paid to the employee under NMSA 1978, Section 52-5-17(C).
• Whether the district court erred in granting the insurer a credit against UIM amounts owed to the employee.

Disposition

• The Court of Appeals reversed the district court's declaratory judgment (para 13).

Reasons

Per Bustamante J. (Pickard and Wechsler JJ. concurring):

The court held that NMSA 1978, Section 52-5-17(C) is a reimbursement statute intended to ensure that an employer who pays for both workers' compensation and UIM coverage is entitled to reimbursement from UIM proceeds for workers' compensation benefits paid. However, the statute does not grant UIM insurers the right to an offset for workers' compensation benefits (paras 6-8).

The court emphasized that the statute's purpose is to benefit the employer or the worker, not the UIM insurer. The insurer's obligation to pay UIM benefits is unaffected by the statute, and the settlement between the employee and the workers' compensation insurer does not alter the insurer's liability under the UIM policy (paras 8-9).

The court rejected the insurer's argument that the statute was amended to prevent double recovery by workers, clarifying that the amendment was aimed at ensuring employers could offset workers' compensation liability with UIM proceeds, not to benefit UIM insurers (paras 10-11).

The court concluded that the insurer remains liable for the full amount of UIM coverage, subject to the employee proving his damages in arbitration (para 13).