Utah Top Court Clarifies what ‘Payable’ Means for Underinsured Motorist, Workers’ Comp Overlap

Case File

In a case that Simply Research subscribers have access to, Utah's top court explained that the state's legislature intended that a claimant who wants to seek the type of benefits workers’ compensation provides attempt to recover from workers’ compensation before claiming underinsured motorist benefits. Only once a claimant ascertains how much they will receive in workers’ compensation may they then attempt recovery of those types of benefits from their underinsured motorist insurer. Otherwise, all benefits that workers’ compensation might theoretically pay remain “payable” and unavailable under the underinsured motorist policy.

Case

Midwest Family Mutual Insurance v. Hinton, No. 20230615 (Utah 03/20/25)

What Happened?

A worker suffered extensive injuries when she crashed into a motorist who ran a red light while working. She alleged that she incurred $175,314.51 in medical expenses and lost $24,960 in earnings. An expert opinion for the worker estimated that her future care, including medical expenses, would cost $3,128,796.40.

The worker first sought compensation for her injuries from her employer's workers' compensation insurer. She then obtained a settlement from the insurance carrier of the motorist who caused the accident and then brought a claim for underinsured motorist benefits against her underinsured motorist coverage provider.

The UIM provider sought a declaratory judgment from the district court that would limit the categories of damages that the worker could recover.

Workers' Comp 101: Underinsured motorist insurance allows an insured who “purchases a set limit of [underinsured motorist insurance], guaranteeing recovery for injuries up to that amount,” to collect the difference between those limits and the insurance limits of the person responsible for the insured's injuries. See Jordan R. Plitt, et al., Couch on Insurance § 122:3 (3d ed. Dec. 2024 update).

The district court interpreted the state's underinsured motorist statute to mean that "payable" amounts included past medical expenses, future medical expenses, and two-thirds of lost wages. The district court ruled that the worker could not recover those categories of damages from the UIM provider.

The worker petitioned the Utah Supreme Court for interlocutory review.

Rule of Law

At the time, Utah law directed that underinsured motorist coverage did not cover any benefit paid or payable under the Workers' Compensation Act.

What the Utah Supreme Court Said

The district court misinterpreted Utah's underinsured motorist statute, according to the Utah Supreme Court, because of how it defined "payable," a word that didn't have a definition in the relevant statute.

The court reasoned that to be "payable," benefits "need only be capable of being paid to a claimant in a particular case" because the statute directed that underinsured motorist coverage provided coverage for a covered person who was legally entitled to recover damages from an owner or operator of an underinsured motor vehicle because of bodily injury, sickness, disease, or death. The statute also indicated that the term "covered person" had the same meaning as "named insured," and thus, when the statute directed that underinsured motorist coverage did not cover any benefit paid or payable under the workers' compensation statute, the Utah legislature meant any benefits "paid or payable" to the "covered person" under the Workers' Compensation Act.

"This means that when the district court interpreted payable to mean a categorical bar on categories of damages that might be available as workers’ compensation to any claimant in any case, it erred," the court wrote. "That is, the district court's interpretation did not recognize that what is payable to a particular claimant could shift depending on what is awarded as workers’ compensation."

Moreover, the court pointed out that the statute instructs that underinsured motorist coverage "may not be reduced by benefits provided by workers' compensation insurance," which suggested that the law "intended for a claimant to have already ascertained what benefits she will receive in workers’ compensation before she makes a claim for underinsured motorist benefits."

"A claimant may not recover those underinsured motorist benefits that are hypothetically available from workers’ compensation until she gets a determination allowing her to know for certain what workers’ compensation will—and will not—cover," the court wrote. "In light of this, we conclude that benefits remain “payable” under the Workers’ Compensation Act until a claimant in a particular case finds out otherwise."

However, once the workers' compensation claim has been adjudicated, "payable" means the amounts that have been awarded or are owed but not yet paid. 

Verdict: The Utah Supreme Court vacated the district court's order and remanded the case for the court to determine what benefits remained "payable" under the Utah Workers' Compensation Act.

Takeaway

In Utah, "payable" means benefits that can or may be paid to a specific claimant in a particular case.

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