Are Private Automobile Insurance Companies Replacing Workers’ Compensation Coverage When the Employee/Insured is Injured in the Course and Scope of Employment by a Third-Party Tortfeasor?: Rubin v. State Farm Mutual Automobile Insurance Company

Abstract

[Excerpt] “Multiple sources for recovery are available for an employee who is physically injured by a third-party tortfeasor in the course and scope of employment. This is especially true when the physical injury triggers coverage under a health insurance policy or other type of insurance policy for medical benefits. First, assuming that the employer participates in workers’ compensation insurance, the employee is entitled to receive workers’ compensation benefits for medical expenses. Second, the employee can also recover payments for medical benefits from the third-party tortfeasor in a common-law negligence lawsuit. Third, the employee, who in this context would be considered “the insured,” can also make a claim for medical benefits under a private health insurance policy, private automobile insurance policy, or some other variety of private insurance. […] In 2002, the Nevada Supreme Court held in Rubin v. State Farm Mutual Automobile Company that a workers’ compensation exclusionary clause in a private insurance contract does not apply where an injured employee subsequently recovers damages from a third-party tortfeasor. The recovery the employee receives from the third-party tortfeasor, however, is to be reimbursed to the workers’ compensation carrier until workers’ compensation is made whole. Finally, the Rubin court also allows the employee/insured to recover payments for medical benefits under the insured’s med-pay clause of his private automobile insurance policy. This Note contends that under Rubin when an employee recovers medical benefits from both workers’ compensation and the employee’s own private insurance, the insured employee should either not be entitled to med-pay benefits from the private insurance company, or the private automobile insurance company should be permitted to subrogate against the third-party tortfeasor for med-pay benefits already paid to the insured. Many other jurisdictions support this approach. This Note concedes, however, that Rubin was correctly decided under Nevada law since subrogation of med-pay benefits in Nevada is against public policy. Although some states have allowed the same result as the decision in Rubin, the opposing view is better because it serves the purpose of no-fault med-pay benefits, discourages the windfall of a double recovery, and requires that physical injuries sustained in the course and scope of employment are primarily covered by workers’ compensation. Part II of this Note will provide background information on no-fault medical benefits, subrogation and offsetting, and the collateral source rule as they relate to med-pay benefits. Part III of this Note will report the facts, procedural history, and reasoning of the Rubin decision. Part IV will analyze the Rubin decision using explanations from other jurisdictions that have reached similar results. Part V will explain the problems associated with the Rubin situation, and offer alternate solutions, as reached in jurisdictions other than Nevada. Part VI will briefly conclude this Note.