Insurance Law

Insurer is entitled to a setoff of wage-loss payments received by Claimant in workers' compensation settlement from benefits paid under disability policy.  Grubbs, Jr., v. Standard Insurance Company, No. 94568 (Mo. App. E.D., November 30, 2010), Odenwald, J.
Gerald Grubbs, Jr. ("Claimant") was insured by a group long-term disability policy issued by Standard.  Claimant was receiving disability benefits under his Standard policy when he filed a permanent partial disability claim under the Missouri Workers' Compensation Act.  He settled his workers' compensation claim.  Standard then deducted the amount of the Claimant's workers' compensation settlement from the monthly disability benefits it was paying to Claimant.  Claimant filed a motion for declaratory judgment to prohibit the setoff and both Standard and Claimant filed cross motions for summary judgment.  The trial court granted Claimant's motion.  Standard appealed.  
On appeal, the main issues were whether Standard's policy language regarding the setoff was ambiguous and whether Claimant's workers' compensation settlement was a recovery of lost wages or settlement for something other than lost wages.  The court examined Standard's policy language and found that "lost wages" was not defined and applied the ordinary meaning, which it found was consistent with the term as it was used in the policy.  The court also examined the terms of Claimant's compromise settlement, in which the parties had expressly stipulated that no portion of the settlement was attributable to rehabilitation expenses, death benefits, burial expenses, or medical expenses. 
Held:  Under Sheldon v. Bd. Of Trs. Of the Police Ret. Sys., 779 S.W.2d 553, 556 (Mo. banc 1989) workers' compensation payments are divided into two categories:  1) wage loss payments based on the concept of disability; and 2) payments of hospital and medical expenses occasioned by any work-connected injury, regardless of wage loss or disability.  The court found that under the terms of the Claimant's workers' compensation settlement agreement his settlement payment was for lost wages and therefore deductible from the monthly disability benefits Standard paid Claimant under its unambiguous policy.

The Missouri Bar Courts Bulletin, Jan-11