Appellate Commission Resolves Insurance Benefits Coverage Dispute Between Auto Insurers and Self-Insured Employer

In Salenbien, et al. v. Arrown Uniform Rental Ltd., Self Insured, the Michigan Compensation Appellate Commission applies two important principles in this dispute between an auto insurer and the self-insured employer in a claim concerning which of the two is responsible for medical and wage-loss benefits owed to an employee injured in an automobile accident while on his way back from an end-of-day client call.

The facts are not remarkable.  The employee was involved in an auto accident after making a sales call.  It was the end of the day and it was not clear whether the employee was returning to the office.  In any event, the magistrate ruled the injury arose out of an in the course of his employment.

The Appellate Commission reverses.  It establishes (or clarifies) two important principles under the workers’ compensation statute.  First, the Commission clarifies that a workers’ compensation claimant bears the burden of proving that an injury both “arose out of” and “in the course of” employment.  Both section 301 and 315 of the act require proof that both of these elements be established by the claimant seeking benefits from his or her employer.

The second aspect of this case that it is important is that the Commission has ruled that the auto insurer, rather than the workers compensation insurer (here the self-insured employer) is responsible first and foremost for injuries incurred in an automobile accident.  Auto insurers are allowed to seek indemnity coverage for medical expenses and other benefits paid to one injured in an accident arising out of the operation, ownership, maintenance, or use of a motor vehicle as a motor vehicle under Michigan’s No-Fault Automobile Insurance Liability Act (the No-Fault Act).  See mcl 500.3109.  But to do so, the auto insurer bears the same burden of proof as the employee seeking workers’ compensation benefits.  In other words, the auto insurer steps into the shoes of the employee and must prove that an injury incurred in an auto accident both arose out of and in the course of employment.  Otherwise, the auto insurer remains primarily and solely responsible for benefits payable to the injured claimant.

This is an important case in the complex tapestry of law under two “no-fault” insurance systems:  auto insurance and workers’ compensation insurance.  Any insurance coverage question must include consideration of the jurisdiction’s laws and appellate decisions assigning primary coverage responsibilities to one insurer over another.

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