In a recent decision interpreting the interplay between the Colorado Workers' Compensation Act (WCA) and uninsured/underinsured motorist (UM/UIM) insurance, the Colorado Supreme Court ruled that an employee injured by a third-party tortfeasor may seek benefits through both a worker's compensation claim and their employer's UM/UIM carrier. In so doing, the court provided important clarification to the WCA's exclusivity provisions (which state that workers' compensation is the exclusive remedy for work-related injuries) and immunity provision (which provides immunity from liability to employers and their workers' compensation carriers) – and under what circumstances those provisions apply to employers' UM/ UIM insurers. The court's decision in Klabon v. Travelers Prop. Cas. Co. of Am., 2024 CO 66, was in response to a certified question from the U.S. District Court for the District of Colorado.
BACKGROUND
Colorado courts have recently struggled with this question, which resulted in conflicting precedent in interpreting and applying the WCA's exclusivity and immunity provisions in auto liability cases. For example, in Ryser v. Shelter Mut. Ins. Co., 480 P.3d 1286 (Colo. 2021), the Colorado Supreme Court refused to allow an injured employee to recover from his coworker's UM/UIM insurer, expanding the exclusivity and immunity protections of the WCA beyond the employer, to include co-employees and their insurers. Yet, in the subsequent decision of Ward v. Acuity, No. 22-1117 (10th Cir. June 22, 2023), the Tenth Circuit Court of Appeals permitted an injured employee to recover benefits from their employer's UM/UIM carrier, holding that the WCA did not provide immunity to an employer's UM/UIM carrier for auto accidents caused by a third-party tortfeasor. In arriving at that conclusion, the Tenth Circuit overturned a lower court's ruling upholding the WCA's exclusivity provisions.
The Klabon case was filed into this landscape. In Klabon, an employee in the course and scope of employment was struck by a vehicle driven by a third party who had run a red light, causing injuries to the employee. The employee received benefits through his employer's workers' compensation carrier and settled with the other driver's carrier for the $25,000 policy limits. The employee subsequently filed for benefits from his employer's UM/ UIM carrier in connection with the accident. The UM/ UIM carrier advocated for upholding the exclusivity of the WCA as the sole remedy for workplace injury, while the employee argued the WCA should not apply to situations where an employee was injured by a third party. Magistrate Judge N. Reid Neureiter heard arguments and certified this question of law to the Colorado Supreme Court for an answer.
COLORADO SUPREME COURT RULING
The Colorado Supreme Court accepted certification and ruled that the UM/UIM and WCA statutory frameworks allowed an employee to receive benefits from both the employer's workers' compensation and the employer's UM/UIM insurer. The court's decision explicitly holds that the exclusivity and immunity provisions of the WCA apply only to an employer's workers' compensation carrier. A UM/UIM carrier, by contrast, is afforded no such protection by the WCA.
The court further ruled that a suit to recover UM/UIM benefits for a third party's actions does not constitute a suit against an employer/co-employee sufficient to trigger the WCA's exclusivity provisions. Instead, such action arises out of the injured employee's rights against the thirdparty tortfeasor. Thus, UM/UIM benefits are not "worker compensation." Rather, they are a substitute for benefits that would have been available to the injured employee had the tortfeasor been adequately insured.
ADDITIONAL CONSIDERATIONS
The Colorado Supreme Court has made clear that the WCA and UM/UIM statutes serve different functions: the WCA was enacted to provide an efficient remedy for injured employees, while the UM/UIM statute serves a separate goal of making an injured person whole. Although the benefits may overlap, they are not co-extensive.
Moving forward, any potential claims arising under a commercial auto liability policy in Colorado should be examined carefully. Carriers should be aware that merely because an employee has received workers' compensation, the employee is not barred from also claiming UM/UIM benefits for the same incident. Additionally, UM/UIM carriers will not be afforded any kind of immunity from suit for an employee's injury arising out of a third party's actions.
Although not a surprising decision for Colorado, Klabon is reflective of Colorado courts' continued focus on enforcing and advocating for an insured's rights, and maximizing coverage that could be available to any insured.
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