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Excess Workers’ Compensation Policy is not a Workers’ Compensation Policy
Posted on May 4, 2022 by Barry Zalma
Neville Chemical Company (“Neville”), appealed from the District Court’s order granting summary judgment to its excess workers’ compensation insurer, TIG because of a failure to meet the self-insured-retention (SIR). In Neville Chemical Company v. TIG Insurance Company, successor-in-interest to Transamerica Insurance Company, No. 21-1616, United States Court of Appeals, Third Circuit (April 26, 2022)
Neville, a Pittsburgh hydrocarbon resins manufacturer, maintained a self-insured workers’ compensation program. To supplement this program, Neville purchased a “Specific Excess Workers Compensation Policy” (“Policy”) from TIG. Under this Policy, after Neville provided workers’ compensation benefits up to the Self-Insured Retention (“SIR”) limit of $500,000 per occurrence
The injuries sustained by Lawrence Kelley occurred on three occasions during his employment with Neville.
The term “accident” implies a degree of fortuity as an unexpected and undesirable event, or an event that occurs unexpectedly or unintentionally. The District Court concluded that, in this case, the term “accident” meant a single, finite event of an “unexpected or unforeseen nature.” The TIG policy would only have been triggered if the SIR limit of $500,000 was met as to each occurrence.
Finally, Neville’s argument that the District Court failed to recognize that the Policy must be read to include the Pennsylvania Workers’ Compensation Act concepts of “recurrence” and “aggravation” are irrelevant to this case.
State workers’ compensation regulations do not apply to an excess workers’ compensation policy because an excess policy is not a workers’ compensation policy.
Excess policies are excess over an SIR. Neville, as self insured, took an injured employee who was entitled to workers’ compensation benefits for three separate and distinct injuries and accumulated them into a single claim and then tried to get the excess insurer relieve Neville of its obligation to its injured employee. The attempt failed because the District Court and the Third Circuit recognized that three separate accidents required three separate funding of the $500,000 SIR.
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