Duplicate Payments Provisions in UM/UIM Litigation

WDC Journal Edition: Spring 2014
By: Ryan M. Wiesner, McCoy Leavitt Laskey, LLC

Defense counsel representing insurance companies in UM/UIM litigation have one goal: ensure that a plaintiff’s damages are what he or she says they are and—most importantly—that those damages are covered by the respective policy. To accomplish this goal, defense counsel must recognize and understand applicable policy exclusions and provisions. But more importantly, they must be able to be creative with these exclusions to ensure that the insurance company is not paying for damages for which a plaintiff has already been compensated or can be compensated from another source in the future.

Typically, UIM policies include a “duplicate payments” provision. While this provision can be worded various ways, the most common wording provides that the insurance company “will not pay for any element of ‘loss’ if a person is entitled to receive payment for the same element of ‘loss’ under any workers’ compensation, disability benefits or similar law.”

This provision might appear straightforward in that it simply allows an insurer to reduce UIM benefits by those amounts an insured has already received from workers’ compensation or disability benefits—much like a reducing clause. But there are several questions regarding the meaning of this provision and the extent of its application. The key words in this provision are “elements of damages.” In defending UIM cases, there is a strong argument that this provision is not simply a reducing clause as stated above. Rather, it is arguably an exclusion prohibiting an insured from claiming and collecting entire categories of damages that have been paid or are payable from the other sources named.

While there is limited case law on this issue in Wisconsin, decisions from other jurisdictions provide support for the argument that this provision precludes an insured from receiving entire categories of damages, including past and future medical expenses and past and future wage loss, because those damages have been or can be recovered via workers’ compensation coverage.

I. When the Duplicate Payments Provision Comes Into Play

The above “duplicate payments” provision becomes applicable in a very common situation: when an insured is injured on the job, collects workers’ compensation benefits, but then also makes a claim under a UIM policy. To help illustrate, consider the following facts.

A plaintiff is involved in an auto accident while driving his employer’s vehicle in the scope of his employment. He is seriously injured. The defendant driver’s insurer tenders its $250,000 liability limits shortly after the accident. The plaintiff is covered by workers’ compensation insurance and also has a UIM policy with $1 million limits.

The plaintiff’s damages include $100,000 of past medical specials, $100,000 of past wage loss, and $100,000 of future wage loss ($200,000 total wage loss). The workers’ compensation insurer pays the plaintiff’s medicals and past wage loss—at a 2/3 rate—pursuant to its workers’ compensation policy. The plaintiff may still be entitled to receive additional workers’ compensation benefits for future wage loss.

The plaintiff then makes a $600,000 UIM demand, which encompasses a claim for past and future wage loss, past and future medical expenses, past and future pain and suffering, and his spouse’s loss of consortium. The UIM policy contains the following “duplicate payments” provision:

We will not make a duplicative payment under this Coverage for any element of “loss” for which payment has been made by or for anyone who is legally responsible.

We will not pay for any element of “loss” if a person is entitled to receive payment for the same element of “loss” under any workers’ compensation, disability benefits or similar law.

As is true with the majority of like policies, the term “loss” is defined as “direct and accidental loss or damage.” The policy does not define “element of loss.”

Importantly for the discussion here, assume that the applicable UIM policy was issued at a time when Wisconsin’s Truth in Auto legislation, 2009 Wisconsin Act 28, was in effect, thereby prohibiting reducing clauses. In making his UIM claim, the plaintiff contends that both provisions quoted above are invalid reducing clauses. Alternatively, the plaintiff argues that even if the provision prohibiting “duplicate payments” made by workers’ compensation is not an invalid reducing clause, that provision simply wipes out benefits already received—i.e., the plaintiff could still receive future benefits for which workers’ compensation has yet to compensate him.

While the first provision may arguably act as a reducing clause, reducing the UIM benefits available by amounts paid by the tortfeasor’s insurer, there is case law from other jurisdictions supporting the argument that the second provision is anything but a reducing clause. Rather, this second “duplicate payments” provision arguably acts to completely wipe out entire categories of damages for which the plaintiff receives or can receive workers’ compensation benefits.

II.Reducing Clause or Something More Powerful?

Wisconsin courts have yet to address the specific question of whether a “duplicate payments” provision as provided above is a reducing clause or an exclusion prohibiting recovery of entire categories of claimed damages.1 Utilizing case law from other jurisdictions, though, it is clear that this “duplicate payments” provision is not a reducing clause and therefore is valid and enforceable despite Wisconsin’s short lived Truth in Auto Act.2 Instead of acting as a reducing clause—which is simply a dollar for dollar set off against the UIM limits—this “duplicate payments” provision acts to bar complete elements, or categories, of damages.

A. Case Law from Other Jurisdictions

Other states have applied “duplicate payments” provisions as a coverage exclusion that bars a UIM claimant from making a claim for a complete element of damages that he is entitled to receive from a different policy, such as a workers’ compensation policy.3

In the Iowa case of Greenfield v. Cincinnati Ins. Co., the plaintiff was seriously injured in a motor vehicle accident while in the scope of her employment.4 The plaintiff settled with the tortfeasor for his liability limits of $30,000 and subsequently pursued a UIM claim against her insurer, Cincinnati Ins., which also happened to be her workers’ compensation carrier.5

After litigating the UIM issues, a jury returned a verdict in favor of the plaintiff and her husband totaling $173,000—$123,000 to the plaintiff and $50,000 to her husband for his loss of consortium. The special verdict was broken down as follows:


$10,000 for medical expenses
$25,000 for past pain and suffering
$30,000 for future pain and suffering
$20,000 for past loss of function
$30,000 for future loss of function
$8,000 for lost wages
$0.00 for future loss of earning capacity

Plaintiff’s Husband

$20,000 for past loss of consortium
$30,000 for future loss of consortium6

After trial, the trial court applied provisions in Cincinnati’s UIM policy that allowed for credit/ offset for benefits received by the plaintiff via workers’ compensation and from the tortfeasor’s insurer. The applicable provisions were identical to those at issue in the above-stated factual scenario, providing that:

We will not make a duplicative payment under this Coverage for any element of “loss” for which payment has been made by or for anyone who is legally responsible.

We will not pay for any element of “loss” if a person is entitled to receive payment for the same element of “loss” under any workers’ compensation, disability benefits or similar law.7

Pursuant to these provisions, the trial court excluded from the jury verdict medical expenses, lost wages, and past and future loss of function because they were “elements of loss” covered by the workers’ compensation policy. The trial court further excluded from the jury verdict the $30,000 received by the plaintiff via her settlement with the tortfeasor.8

The case ultimately made its way to the Iowa Supreme Court, which offset the jury awards for medical expenses and lost wages because the UIM policy “unconditionally state[d] that Cincinnati [would] not make ‘duplicative’ payments for the same ‘element of loss’ covered by workers’ compensation benefits.”9 Since the plaintiff was entitled to receive medical expenses and lost wages from her workers’ compensation policy, those categories of benefits were properly excluded from recovery under her UIM policy.

Additionally, the Iowa Supreme Court affirmed the trial court’s decision to offset the total jury award by the entire $30,000 settlement from the tortfeasor.10 So ultimately, the plaintiff was awarded a total of $75,000—her total damages ($123,000) minus the entire categories of medical bills and lost wages ($18,000) and minus the total recovery from the tortfeasor ($30,000).11

Similar conclusions were reached by the Illinois Court of Appeals in Burcham v. West Bend Mutual Ins. Co. and by the Nevada Supreme Court in St. Paul Fire & Marine Ins. Co. v. Employers Ins. Co. of Nevada.12

Burcham v. West Bend Mutual Ins. Co. is intriguing in that it directly supports the argument that a plaintiff cannot claim wage loss that he or she has not actually received, but would have but for the accident. In Burcham, the plaintiff was injured while at work but only received compensation for 2/3 of his lost wages from his workers’ compensation coverage. He subsequently made a claim against his UIM carrier. The question then became whether the plaintiff should be entitled to receive the other 1/3 of his lost wages from his UIM carrier. The plaintiff sought to recover 1/3 of his lost wages that was not included in his workers’ compensation benefits. In denying this claim, the court stated:

Consistent with our analysis of medical payments (which were excluded as an entire “element of loss” to which the plaintiff could receive via work comp), we agree with defendant that loss of earnings would be a category of loss included in the phrase “element of loss.” Regardless of the dollar amount, plaintiff is receiving payment for lost earnings under the [Workers’ Compensation] Act and he thus may not seek such damages in arbitration. Just as with his argument regarding medical payments, plaintiff’s interpretation would treat the limitation provision as a setoff provision, which is contrary to the provision’s plain language. Therefore, the trial court erred in holding that plaintiff could claim in arbitration the loss of earnings over the amount paid in his workers’ compensation case.13

Consequently, even though the plaintiff only received 2/3 of his past wages through his workers’ compensation claim, he was not entitled to seek recovery of the other 1/3 through his UIM claim because that element of loss, as a whole, was barred via the “duplicate payments” provision in his UIM policy.

B. There Is Reason to Believe Wisconsin Courts Would Reach the Same Result as These Other Jurisdictions.

Although the case law on this issue is limited in Wisconsin, there is reason to believe that Wisconsin Courts would reach a similar result as the out-of- state cases discussed above.

In Ruenger v. Soodsma, a 2005 Wisconsin Court of Appeals decision, the UIM policy contained a similar, but not identical, duplicate payment provision.14 As explained in Ruenger, a duplicate payment provision “serves a purpose distinct from that of the reducing clause: it prevents a double recovery by the insured for the same loss....”15 This implies that if a plaintiff receives, and is able to continue to receive, benefits from workers’ compensation, the “duplicate payments” provision will not simply reduce UIM benefits by amounts already received, but will completely wipe out that category of damages.

III. Applying the Duplicate Payments Provision as Intended

Applying this interpretation to the above-stated hypothetical results in a favorable outcome for the UIM insurer. Since the plaintiff has already received medical and wage loss benefits under workers’ compensation coverage, the plaintiff cannot make those claims in any future UIM case. Therefore, the vast majority of the plaintiff’s claims—the $100,000 in past medical specials and $200,000 in past and future wage loss—are not recoverable under UIM coverage. While the plaintiff was able to assert those claims against the defendant driver, those claims are not available in his UIM case because they are covered under his workers’ compensation benefits.

Additionally, the $250,000 received from the defendant driver should be credited against those claims that can be made in the UIM case. In essence, the $250,000 operates as a credit against the total amount awarded for the plaintiff’s past and future pain and suffering and his wife’s loss of consortium claim. The issue of how to apply the defendant driver’s credit to a UIM award involving the application of a duplicate payment provision based on workers’ compensation benefits was specifically addressed in Greenfield, discussed at length above.16 The application of that provision is illustrated below:

Plaintiff’s Damages

$100,000 for past medical expenses (not available from UIM)
$100,000 for past wage loss (not available from UIM)
$100,000 for future wage loss (not available from UIM)
Amount TBD for pain and suffering (reduced by tortfeasor’s liability limits)
Amount TBD for spouse loss of consortium (reduced by tortfeasor’s liability limits).

IV. Conclusion

Ultimately, while Wisconsin case law in this area may be limited, other jurisdictions clearly allow insurers to exclude from UIM claims entire elements of damages—whether paid or payable— that are recoverable via workers’ compensation or disability benefits. This not only includes claims for past medical payments and wage loss for which a plaintiff was already compensated, but for future medical payments and wage loss for which the plaintiff could be compensated at a later date.

1 Myers v. Gen. Cas. Co., 2005 WI App 49, 279 Wis. 2d, 694 N.W.2d 723, deals with a similar, but not identical, provision. That provision contained specific language indicating that amounts payable will be “reduced.”
2 The Truth in Auto Act referenced in this article, 2009 Wisconsin Act 28, is no longer in effect. Therefore, reducing clauses are once again perfectly permissible for policies issued or renewed since its repeal. It is important to check the effective date of any insurance policy to determine whether it falls within the time period that the Act was in effect. The Truth in Auto Act applies to policies issued or renewed between November 1, 2009 and November 1, 2011.
3 See Greenfield v. Cincinnati Ins. Co., 737 N.W.2d 112, 123 (Iowa 2007); Burcham v. West Bend Mutual Ins. Co., 961 N.E.2d 453 (Ill. App. 2011); St. Paul Fire & Marine Ins. Co. v. Employers Ins. Co. of Nevada, 146 P.3d 258 (Nev. 2006).
4 Greenfield, 737 N.W.2d 112.
5 Id. at 115-16.
6 Id. at 116.
7 Id. at 118.
8 Id. at 116.
9 Id. at 123.
10 Id. at 124.
11 Id.
12 Burcham, 961 N.E.2d 453 (holding that the UIM claimant was precluded from seeking compensation for medical expenses and wage loss when such benefits were received under workers’ compensation and the UIM policy provision stated that insurer would not pay for any element of loss if a person was entitled to receive payment for the same “element of loss” under workers’ compensation); St. Paul Fire & Marine Ins. Co., 146 P.3d 258 (holding that a provision of the employer’s uninsured motorist/ underinsured motorist policy that stated the insurer would not pay for any element of loss if the person was entitled to receive payments for same element of loss under workers’ compensation policy limited coverage to elements of loss not already covered by workers’ compensation and thus did not require dollar-for-dollar reduction in benefits available under policy).
13 Burcham, 961 N.E.2d at 460 (emphasis added).
14 2005 WI App 79, ¶ 11, 281 Wis. 2d 228, 695 N.W.2d 840.
15 Id., ¶ 24.
16 Greenfield, 737 N.W.2d 112.