Kacur v. Employers Mutual Casualty Co.

Finan, J., delivered the opinion of the Court. John C. Kacur, t/a John C. Kacur Tire Service, appeals from an order entered in the Circuit Court for Montgomery County sustaining the demurrer of Employers Mutual Casualty Company to Kacur’s bill for declaratory relief. In his bill of complaint Kacur prayed for a declaratory decree [pursuant to the Uniform Declaratory Judgment Act, Code (1967 Repl. Vol.) Art. 31A, §§ 1-16] holding Employers Mutual liable to Kacur under the terms of a policy for payments of workmen’s compensation insurance awarded to Kacur’s employee by the Maryland Workmen’s Compensation Commission and also for injunctive relief and damages.

Kacur, who is a resident of Montgomery County, Maryland, had for many years operated a tire recapping and sales business in Uuiontown, Pennsylvania, where he employed James Phillip Sesler. Employers Mutual is a corporation engaged in the business of casualty insurance and is authorized to engage in that business in Pennslyvania and Maryland. Kacur and Employers Mutual entered into a contract of insurance for the period of May 14, 1965, to May 14, 1966, described as “Standard Workmen’s Compensation and Employer’s Liability Policy (Pennsylvania!,” policy % 853 61 98. Under the terms of the policy Employers Mutual agreed to insure Kacur for liability imposed upon ⁵⁰² him by the Workmen’s Compensation Act of Pennsylvania and to defend any proceeding against Kacur seeking workmen’s compensation benefits. 1 Kacur paid all of the premiums due on the ⁵⁰³ policy and performed all acts and conditions required of him under the policy.

On January 5, 1966, Kacur’s employee, James Phillip Sesler, teas injured in Rockville, Maryland, while in the course of his employment. On January 15, 1966, Kacur filed an employer’s report of industrial injury with the Bureau of Workmen’s Compensation of Pennsylvania, and on February 15, 1966, he filed an employer’s first report with the Maryland Workmen’s Compensation Commission. Both reports were about the injury to Sesler and in both Kacur named Employers Mutual as his insurance carrier. On May 20, 1966, Sesler filed a compensation claim, % A 398 375, with the Maryland Workmen’s Compensation Commission for the injury he sustained on January 5, 1966.

On June 15, 1966, the Commission awarded him compensation in the amount of $55.00 per week retroactive to January 9, 1966. No claim was filed with the Workmen’s Compensation Commission of Pennsylvania. On June 2, 1967, the Maryland Commission confirmed and continued its award of June 15, 1966, and ordered Kacur to pay all costs of medicines, medical attention, and hospital services arising out of the injury to Sesler. Employers Mutual by letter dated September 29, 1966, denied coverage of Kacur in regard to the injury of Sesler under the provisions of their policy % 853 61 98.

Because of Employers Mutual’s failure to assume liability, Kacur has paid or become liable, under the award of the Maryland Workmen’s Compensation Commission, for compensation payments, hospital, surgical, medical expenses, attorney’s fees and court costs amounting to many thousands of dollars. The lower court in sustaining the demurrer to the appellant’s bill for declaratory relief, stated that the policy covered injuries compensable under the Workmen’s Compensation Law of Pennsylvania and that the admitted facts before the court were that a claim had been filed with, and an award made, by the Mary ⁵⁰⁴ land Workmen’s Compensation Commission. 2 The court was of the opinion that since the policy did not provide for a coverage under the Workmen’s Compensation Law of Maryland, but did expressly provide for coverage under the Pennsylvania law, that the case of The Travelers Insurance Company of California v. Industrial Accident Commission of the State of California, 240 C. A. 2d 804, 50 Cal. Rptr. 114 (1966) controlled. Travelers held that where a policy covers liability exclusively for injury under the Workmen’s Compensation Law of a named state, the insurer cannot be held liable in proceedings instituted under the Workmen’s Compensation Law of another forum, wherein the accident occurred, even though the compensation commission of the named state may grant an award if the claim were to be brought in that jurisdiction.

It is the correctness of this ruling which is questioned on appeal. For a better understanding of this case it may be well to note that an employee who enters into a contract of employment in a state in which a Workmen’s Compensation Act is in force may recover compensation under the Act in that state for an injury sustained in the course of his employment, even though the accident occurred in another state. Restatement, Conflicts of Laws, § 398. The employee, however, if he shall so choose, may elect to pursue his claim in the state where the accident occurred under the Workmen’s Compensation Act of that state, although the contract of employment was made in another state.

Id. § 399. It is possible for the Workmen’s Compensation Act of more than one state to be applicable, Id. § 402, and an “award already had under the Workmen’s Compensation Act of another state will not bar a proceeding under an applicable Act, but the amount paid on a prior award in another state will be credited on the second award.” Id. § 403. However, the contract of insurance coverage between the em ⁵⁰⁵ ployer and his carrier, may or may not, depending on its language and the interpretation to which it is susceptible, be sufficiently broad as to cover the employer in all situations coextensive with the options open to the injured employee under applicable Workmen’s Compensation Acts. It is the question of the scope of this coverage under the contract of insurance in effect between the appellant and appellee with which we are concerned.

The appellee relied both on Travelers, supra, which the lower court found persuasive and also Consolidated Underwriters v. King, 160 Tex. 18 , 325 S.W.2d 127 (1959). In Travelers the plaintiff was an employee who sustained accidental injuries arising out of and in the course of his employment working in Alaska. The contract of employment was executed in California. It does not appear that the employee ever filed an application for an award with the Alaska Workmen’s Compensation Board, and therefore, no hearing on or determination of the claim was had in that forum.

However, pursuant to the requirements of the Alaska Workmen’s Compensation Law, the carrier, Travelers, paid a total $22,167.00 for a temporary disability, permanent partial disability and for medical expenses, which covered all liability under the Alaska Act except for future medical expenses. Several months after receipt of these benefits, the employee filed a claim with the Industrial Accident Commission of California against his employer and Travelers. The latter contended that its policy covered only claims under the Alaska Workmen’s Compensation Law. The State Compensation Insurance Fund of California was subsequently joined as a party defendant.

The Fund conceded that its California policy, which it had issued to the employer, would cover the injuries sustained by the employee, but argued that the defendant, Travelers, collected premiums on the basis of the payroll in Alaska under which the employee’s activities were included and accordingly, that Travelers should be held solely liable for any award made under the Workmen’s Compensation Law of California. The policy which had been issued by Travelers under the item “Coverage” provided, “This policy applies to the Workmen’s Compensation Law of each of the following states: Alaska * * The policy was quite similar to the one ⁵⁰⁶ in the case at bar and had a “Coverage B” identical to the one in the instant case. The California Commission fixed joint liabilityr on the two carriers, namely, the California Fund and Travelers. On appeal the California District Court of Appeals reversed the holding stating: “* * * we conclude that such policy states clearly and without ambiguity that Travelers agrees to pay all compensation required of the employer under the workmen’s compensation law of Alaska, and that it clearly excludes liability under the workmen’s compensation of any other state.

The referee, in his report on reconsideration, erroneously concluded that ‘Coverage B— Employer’s Liability could be interpreted to include coverage under the California workmen’s compensation law. * * * Coverage B relates to damages, not workmen’s compensation. Under the California law, a policy of workmen’s compensation is exclusively presumed to contain all of the provisions required by the Insurance Code * * *. Obviously these provisions do not apply to a policy of insurance which by its terms limits the coverage to liability under the provisions of the workmen’s compensation law of another jurisdiction, and where a policy covers liability exclusively for injury under the workmen’s compensation law of one state, the insurer cannot be held liable in proceedings instituted under the workmen’s compensation law of another forum. * * *.” 50 Cal. Rptr. at 118-119 .

In Consolidated, supra, the coverage provision was the same as in the instant case except that it applied to the Workmen’s Compensation Law of Louisiana. The employer had its home office and principal operations in Logansport, Louisiana. The employee was fatally injured while working on a logging operation of the employer in the State of Texas. The lower court upheld the employee’s widow’s claim filed in Texas; however, the Texas Supreme Court reversed the lower court stating: “It thus appears that only the name of the State of Louisiana was placed in the various spaces provided ⁵⁰⁷ for listing the states under whose laws benefits were afforded.

It seems to us too plain for argument that far from providing for benefits and remedies under the Texas law for employees injured while working in Texas, the plain and unambiguous language of the policy expressly limits the rights and remedies of the insured’s employees to those provided in the Louisiana law.” Id. at 129 . It would appear to us that the courts both in Travelers, supra, and Consolidated, supra, jumped at the obvious by seizing upon what appears to be the literal language of the coverage provisions of the contract, concerning which law may be applicable