Amcom Ins. v. Atkinson

Filed 5/10/07 Amcom Ins. v. Atkinson CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Kern County. Louis P. Etcheverry, Judge.

Young Wooldridge and Gregory A. Muir for Defendant and Appellant.

Woodall & Almeida and James C. Almeida for Plaintiff and Respondent.

-ooOoo-

INTRODUCTION

Appellant Jeremy Atkinson was injured in a multi-vehicle accident while in the course and scope of his employment. The responsible party was an uninsured motorist. Atkinson applied for and received workers compensation benefits from his employers carrier, and entered into a compromise and release as to all future benefits in exchange for a lump sum payment. Thereafter, Atkinson filed a claim for future medical expenses pursuant to the uninsured motorist provisions of his employers business auto insurance policy. Respondent AmCom Insurance, Inc., the representative of his employers insurance company, filed the instant action for declaratory relief that Atkinson was barred from filing a claim under the uninsured motorist provisions based upon policy exclusions and the release of future workers compensation benefits. The trial court agreed with AmComs argument and found Atkinsons insurance claim was barred. Atkinson appeals and argues he could pursue a claim for future medical benefits under his employers uninsured motorist coverage, pursuant to the provisions of Insurance Code^[1]section 11580.2. We will affirm.

STATEMENT OF THE CASE

On August 8, 2005, respondent AmCom Insurance, Inc. (AmCom) filed a complaint for declaratory relief in the Superior Court of Kern County against appellant Jeremy Atkinson (Atkinson). On September 13, 2005, Atkinson filed an answer, denied the allegations, and requested declaratory relief in his favor.

On November 1, 2005, the trial court received Atkinsons trial brief and a statement of stipulated facts. On November 4, 2005, the trial court received AmComs trial brief. On November 10, 2005, the court conducted a hearing on the matter. On December 5, 2005, the trial court received AmComs posttrial brief. On December 19, 2005, the trial court received Atkinsons posttrial brief. On December 30, 2005, AmCom filed a posttrial reply brief.

On February 2, 2006, the court filed a tentative ruling in favor of AmCom. On February 21, 2006, the court filed a judgment in favor of AmCom. On March 9, 2006, the notice of entry of judgment was filed.

On April 5, 2006, Atkinson filed a notice of appeal.

FACTS

Atkinson was employed as a mechanic by Western Fabrication and Equipment (Western Fabrication) in Bakersfield. Western Fabrication had a workers compensation policy with State Compensation Insurance Fund (SCIF). Western Fabrication also purchased a Business Auto Coverage liability insurance policy from Clarendon National Insurance Company, which included uninsured motorist coverage. AmCom is the authorized representative of Clarendon.

On the afternoon of November 15, 2002, Atkinson was driving a Ford F-450 truck, a vehicle owned by his employer, in the course of and scope of his employment, when he was injured in an accident involving two other trucks. Atkinson was headed eastbound on Rosedale Highway (State Route 58) and approached the intersection of Wegis Avenue. There were stop signs for vehicles traveling north/south on Wegis Avenue, but no stop signs for vehicles traveling east/west on Rosedale Highway.

Anton Safronov was driving a Ford F-350 truck southbound on Wegis Avenue, approached the stop sign at Rosedale Highway, and came to a complete stop at the intersection. Ray Startt was driving a Ford F-250 truck westbound on Rosedale Highway, approached the Wegis Avenue intersection, and intended to continue on Rosedale Highway since there was no stop sign.

Due to fog and poor visibility, Safronov failed to see Startts vehicle as Startt crossed the intersection and continued westbound on Rosedale Highway. Safronov headed into the intersection, driving southbound on Wegis Avenue, and directly into the path of Startts vehicle as Startt continued westbound on Rosedale Highway. Safronov stopped suddenly and Startt attempted to swerve around him, but the vehicles collided. The collision pushed Startts vehicle into the eastbound lane of Rosedale Highway. Atkinson had been traveling eastbound on Rosedale Highway when Startts vehicle headed toward him. Startt hit the left front end of Atkinsons vehicle. Atkinson lost control of his vehicle and hit a utility pole on the south shoulder of the road.

When the police arrived, they found Safronov standing on the shoulder of the road, and his vehicle had received moderate damage. Startt was pinned inside his vehicle, which had major front end damage. Atkinsons vehicle also had major damage to the left side, and the front and rear windows were shattered. Atkinsons head hit the windshield and his left foot was caught between the clutch and the emergency brake. Atkinson suffered injuries to his left ankle with fractures of the fourth metatarsal base, compression fractures of his fourth and fifth metatarsal heads, and cervical neck strain.

Safronov was found to be the responsible party because he failed to yield the right of way to approaching vehicles after stopping at a stop sign. Safronov was not insured. Safronov stated he had an international drivers license issued from Russia but this claim was not substantiated. The investigating officer found Safronov failed to yield the right of way to approaching vehicles after stopping at a stop sign (Veh. Code,  21802, subd. (a)), and he was driving without a license (Veh. Code,  12500, subd. (a)), and without proof of financial responsibility (Veh. Code,  16028, subd. (a)).

Atkinsons Workers Compensation Claim and Release

Since the accident occurred in the course and scope of his employment, Atkinson filed a claim pursuant to Western Fabrications workers compensation policy with SCIF. Atkinson complained of constant pain in his left foot, numbness and limping, and a decreased range of motion. He received benefits including temporary and permanent disability, vocational rehabilitation, and medical and hospital expenses.

On March 15, 2003, Atkinson filed an application for adjudication of his claim with the Workers Compensation Appeals Board (WCAB), because of a disagreement over SCIFs liability for temporary and permanent disability benefits, reimbursement for medical expenses, medical treatment, and all other benefits.

On August 12, 2004, Atkinson entered into a Compromise and Release (C&R) of his workers compensation claim with SCIF. The C&R was executed on a preprinted form, with various terms handwritten into the agreement, and reflects that Atkinson was represented by counsel. The C&R states that Atkinson, the applicant, suffered injuries to his neck and left foot on November 15, 2002, while in the course and scope of his employment; he received medical and hospital benefits, and temporary and permanent disability payments; Atkinson had been fully compensated; and estimated future medical expenses would be paid by the applicant. Atkinson agreed to release all future claims in exchange for a lump sum payment of $34,500. The settlement was based upon an agreed permanent disability rating of 36.5 percent.^[2]

The preprinted language stated that Atkinson released and forever discharged his employer and SCIF, the employers carrier, from all claims and causes of action, whether now known or ascertained, or which may hereafter arise or develop as a result of said injury .... (Italics added.) The preprinted language further stated that the settlement only applied to the rights and benefits under the workers compensation law, and did not waive or resolve civil claims, lawsuits or causes of action, which are not subject to the jurisdiction of WCAB.^[3]

AmComs Action for Declaratory Relief

After entering into the C&R with SCIF, Atkinson filed a claim with Clarendon for the full breadth of tort claim damages, including future medical benefits, pursuant to the uninsured motorist provisions of his employers automobile liability insurance policy with Clarendeon. AmCom, as Clarendons authorized representative, initially accepted Atkinsons claim for future medical benefits since the responsible party for the vehicle accident was not insured. Atkinson states he requested formal arbitration and the matter was scheduled for arbitration when AmCom advised him that his claim was barred by the terms of the uninsured motorist policy.

Thereafter, AmCom filed the instant action for declaratory relief, and asserted Atkinsons claim for future medical benefits was barred because the employers automobile liability and uninsured motorist policies contained exclusions for claims otherwise covered by workers compensation benefits, Atkinson was injured in the course and scope of his employment, and the workers compensation system would have covered all of his future medical expenses. AmCom also argued Atkinsons release of SCIFs future liability to pay medical benefits under the C&R further barred his ability to receive future medical benefits under the uninsured motorist coverage. AmCom requested a declaratory judgment on these issues.^[4] In turn, Atkinsons answer denied AmComs allegations and requested a judicial declaration that neither the terms of the policy nor the C&R barred his claim for future medical expenses under the uninsured motorist policy.

The parties prepared pretrial briefs which explained the nature of their dispute. First, the dispute involved exclusionary language in the insurance policy which Western Fabrication purchased from Clarendon. The Business Auto Coverage policy covered damages arising from bodily injury resulting from an accident involving Western Fabrications employees and vehicles, with the following exclusion for Any obligation for which the insured or the insureds insurer may be held liable under any workers compensation, disability benefits or unemployment compensation law or any similar law. The policys uninsured motorist coverage contained a similar exclusion, that the insurance did not apply to: The direct or indirect benefit of any insurer or self-insurer under any workers compensation, disability benefits or similar law ....

Atkinson argued that neither the policys exclusions nor the C&R barred his claim for future medical benefits under the terms of the uninsured motorist coverage. Atkinson argued that AmCom was entitled to a setoff for the medical benefits he already received through his workers compensation claim, based on the language of the uninsured motorist law, section 11580.2, subdivision (h)(1), which states:

(h) An insured entitled to recovery under the uninsured motorist endorsement or coverage shall be reimbursed within the conditions stated herein without being required to sign any release or waiver of rights to which he or she may be entitled under any other insurance coverage applicable; nor shall payment under this section to the insured be delayed or made contingent upon the decisions as to liability or distribution of loss costs under other bodily injury liability insurance or any bond applicable to the accident. Any loss payable under the terms of the uninsured motorist endorsement or coverage to or for any person may be reduced:

(1) By the amount paid and the present value of all amounts payable to him or her, his or her executor, administrator, heirs, or legal representative under any workers compensation law, exclusive of nonoccupational disability benefits.

(2) By the amount the insured is entitled to recover from any other person insured under the underlying liability insurance policy of which the uninsured motorist endorsement or coverage is a part, including any amounts tendered to the insured as advance payment on behalf of the other person by the insurer providing the underlying liability insurance. (Italics added.)

Atkinson argued the insurance policys exclusionary clauses, and section 11580.2, subdivision (h)(1), merely operated to provide a setoff so there would be no duplication of benefits. Atkinson admitted that pursuant to the terms of the C&R, he gave up all future benefits due under the workers compensation system, and released SCIF of responsibility for his future workers compensation medical benefits for injuries suffered in the accident. However, Atkinson asserted the C&R included an amount for future medical payments, within the lump sum for permanent disability, and AmCom would receive a full set-off for those amounts. Atkinson argued the workers compensation carrier did not have any future obligation to pay for his claimed future medical expenses.

Therefore recovery for future medical beyond amounts previously paid would not result in a duplicate payment. It is well settled that the entire set off scheme is to avoid double payment to a claimant. That will not occur in this case because [AmCom] is entitled to a full credit for the exact amount paid by the workers compensation carrier as and for a payment toward future medical. Thus, to the extent a portion of the projected future medical expenses has been paid by the workers compensation carrier, [AmCom] is entitled to a set off in that amount.

AmCom cited the exclusionary language quoted ante, and argued that the employers business auto insurance policy contained clear and unambiguous provisions which excluded coverage for medical care available from the employers workers compensation carrier. AmCom argued the plain language of the exclusionary clauses expressed the parties intent that the exclusions must logically extend to all benefits available under the workmans compensation system whether they are tendered prior to the settling of the workmans compensation claim or after. (Italics added.)

AmCom also argued section 11580.2 expressed the public policy that the costs for an injured workers medical care be borne by the workers compensation system and not motorists through the premiums paid by the motoring public for uninsured motorist coverage. The insurance policy used exclusionary language which was similar to this statute since medical care was a benefit of the workers compensation system.

The parties also disputed whether Atkinson had actual knowledge, before he entered into the C&R with SCIF, that he would need future medical care for the injuries he suffered in the collision. AmCom noted that in the course of discovery, Atkinson admitted that when he executed the C&R with SCIF, he gave up all future benefits he was due under the workers compensation system. AmCom asserted that prior to executing the release, Atkinson was advised by his physician that he would need further surgery on his injured foot, custom orthotics for the rest of his life, future physical therapy, and the cost of future surgery could range from $30,000 to $50,000. AmCom noted that Atkinson was represented by counsel when he entered into the release, there were various modifications to other terms of the release unrelated to this issue, which indicated that some time and thought went into the terms of settlement. AmCom further asserted the C&Rs exception of civil claims not subject to the workers compensation system only excluded Atkinsons tort claims for general damages against a third-party tortfeasor, whereas Atkinsons pending claim was against his employers uninsured motorist policy and the employer had been released from all future causes of action arising from the accident.

In the course of discovery, Atkinson admitted that he received $34,500 in exchange for the release of all claims for future workers compensation benefits for injuries incurred in the accident. Atkinson also admitted that prior to executing the SCIF release, he was advised by his physician that he would need custom orthotics for his injured left foot for the rest of his life, along with future physical therapy. However, Atkinson denied that he was informed by his physician that he would need one or two additional surgeries on his left foot, or the potential cost of such future surgery. Atkinson declared he did not recall a discussion about the specific number of surgeries, I only recall the subject of future surgery and that such surgery was problematic and might have complications.

The Courts Hearing

On November 10, 2005, the court conducted a hearing on AmComs complaint for declaratory relief, and the parties restated their positions. AmCom argued it was not liable for Atkinsons future medical expenses because the employers automobile liability and uninsured motorist policies excluded coverage for injuries covered by workers compensation benefits, and Atkinson had released the workers compensation carrier from liability for future benefits in exchange for a lump sum payment.

Atkinson responded the C&R only constituted a settlement as to the workers compensation benefits, and included disability and a small payment for unknown future medical expenses at the time of the settlement. Atkinson argued he was required to resolve the workers compensation claim before he could seek recovery under the uninsured motorist coverage. Atkinson argues the employers insurance carrier would receive a setoff for medical benefits already received from his workers compensation claim. AmCom replied the exclusionary language did not constitute an offset or a lien, but clearly excluded Atkinsons claim for future medical benefits since he could have received those benefits under his workers compensation claim. AmCom argued Atkinsons insurance claim was barred by the exclusions in the automobile liability and uninsured motorist policies, regardless of the terms and conditions of the C&R with SCIF.

Atkinson agreed the exclusions addressed benefits paid under the workers compensation system, but argued the policy only barred duplicate benefits and provided for a setoff of benefits the employee already received, rather than completely barring any type of claim under the employers uninsured motorist coverage. Atkinson argued that AmCom erroneously relied upon cases which involved employees who filed claims under uninsured motorist policies rather than workers compensation claims, and the cases simply held that an employees initial remedy was to file a workers compensation claim prior to pursuing a claim under uninsured motorist coverage.

The court asked Atkinson about the effect of the C&R, and whether he negotiated the C&R to get something for releasing the employers workers compensation carrier from future medical liability, and gave up his right to future medical benefits. Atkinson argued the C&R did not completely resolve his future medical claims, but AmCom would receive a setoff for medical expenses already paid by the workers compensation carrier.

The court noted the public policy behind section 11580.2 was that we dont want the motoring public to be paying higher premiums for their [uninsured motorist] coverage because this coverage is going to apply to right now for assumption reimbursement for medical for Workers Comp payments, but asked the parties about the impact of the employers purchase of uninsured motorist coverage for his employees. AmCom responded it made no difference because the uninsured motorist premiums were rated over the general population rather than for each specific employer. AmCom argued the C&R was a red herring and irrelevant because the exclusionary provisions of the insurance policy clearly excluded Atkinsons claim for future medical benefits. AmCom argued such a position seemed cold hearted, but that is the policy language. And this is not about feeling, having sympathy for a person, this is about the interpretation of a policy. The court replied it was concerned with interpreting the insurance contract in light of the uninsured motorist legislation, and it was not about feeling sympathy for a person, even though it could have a cruel result.

Atkinson replied his interpretation of the exclusionary language was consistent with the public policy behind the uninsured motorist coverage, because the employers insurance company would receive an offset for benefits already paid by the employers workers compensation carrier. AmCom clarified an employee could recover general damages for pain and suffering under the uninsured motorist policy, because such damages are not provided as workers compensation benefits and thus not barred by the policys exclusionary language; whereas all benefits which could be recovered under a workers compensation claim, including future medical benefits, are excluded.

The court asked the parties for further briefing on these issues, particularly as to whether the uninsured motorist statute and the policy exclusions were broad enough to prohibit Atkinsons claim for future medical benefits, given his eligibility and receipt of workers compensation benefits. The court set a briefing and submission schedule, and the parties did not request a statement of decision.

Posttrial Briefs

AmComs posttrial brief directed the court to several cases from California and other states in support of its interpretation of the policy exclusions.

Atkinsons posttrial brief again asserted that the insurance company could claim a credit for workers compensation benefits already received to prevent duplication and a windfall, but the insurance company could not claim the exclusions completely barred a claim for medical expenses based on the legislative intent of the uninsured motorist law. Atkinson objected to AmComs reliance on decisions from other states.

AmCom filed a posttrial reply brief, and clarified that it sought a declaratory judgment that Atkinsons claim for future medical benefits were not covered under his employers automobile liability and uninsured motorist policies, based upon the clear language of the exclusions in the policies, and that Atkinson released the workers compensation carrier for all claims for future medical expenses when he entered into the C&R. AmCom argued that Atkinson was represented by counsel when he executed the C&R, and he knowingly and intelligently waived his right to obtain future benefits from his employers workers compensation carrier.

The Courts Ruling

The court found that Atkinsons claim for future medical care was not covered under the uninsured motorist provisions of his employers insurance policy. The court found it was undisputed that Atkinson received workers compensation benefits and executed a release as to future medical benefits and released [SCIF] of any future duty to pay these benefits in exchange for a lump sum payment. The court also found the insurance policy contained two exclusions as to workers compensation benefits which were clear and unambiguousone within the terms of the business auto liability coverage, and the other within the uninsured motorist provisions.

The exclusions are valid because in this case they manifest a clear intention in unambiguous language to exclude coverage for any injury incurred in the course and scope of employment.

The purpose for enacting [Insurance Code] section 11580.2 was to shift the cause of an industrial injury that resulted from an uninsured motorist from the motoring public to the employer or workmans compensation carrier. (Rangel v. Interinsurance et al. (1992) 4 Cal.4th 1, 8.) Mr. Atkinson chose to decline future medical care available to him and instead settled and released the workman compensation carrier from any liability for these benefits. In so doing he gave up those future benefits and because of the exclusions in the policy [AmCom is] not liable for any further payments to him for future medical care.

The court did not address the factual conflict as to whether Atkinson knew about possible future medical expenses when he entered into the C&R with SCIF.

DISCUSSION

Atkinson contends the trial court improperly granted AmComs complaint for declaratory relief and found that he was barred from pursuing a claim for future medical benefits pursuant to his employers uninsured motorist insurance. We will address the applicable standard of review, the legislative intent and provisions of the uninsured motorist law, the applicable exclusions in this case, and the nature of Atkinsons workers compensation benefits.

I.

THE STANDARD OF REVIEW

Whether a determination is proper in an action for declaratory relief is a matter within the trial courts discretion and the courts decision to grant or deny relief will not be disturbed on appeal unless it is clearly shown its discretion was abused. [Citation.] (Dolan-King v. Rancho Santa Fee Assn. (2000) 81 Cal.App.4th 965, 974.) The exercise of discretion must be supported by the evidence; to the extent the trial court had to review the evidence to resolve disputed factual issues, and draw inferences from the presented facts, we review such factual findings under the substantial evidence standard. (Shapiro v. San Diego City Council (2002) 96 Cal.App.4th 904, 912.) We resolve all factual conflicts and questions of credibility in favor of the prevailing party and indulge all reasonable inferences to support the trial courts order. (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 390.)

However, we are not bound by the trial courts determination where the question involves the scope and interpretation of a statute. (Trustors Security Service v. Title Recon Tracking Service (1996) 49 Cal.App.4th 592, 599, superseded by statute on another point as recognized by Markowitz v. Fidelity Nat. Title Co. (2006) 142 Cal.App.4th 508, 524.) When the trial court has interpreted a statute and the legal meaning of a written instrument on undisputed facts, we are presented with questions of law subject to de novo review. (Dolan-King v. Rancho Santa Fe Assn., supra, 81 Cal.App.4th at p. 974; Kelly v. County of Los Angeles (2006) 141 Cal.App.4th 910, 919; Snow v. Woodford (2005) 128 Cal.App.4th 383, 393-394.)

The interpretation of a written instrument ... [citation], is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. [Citations.] (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865; Culligan v. State Comp. Ins. Fund (2000) 81 Cal.App.4th 429, 434 (Culligan).) The interpretation of the meaning of an insurance policy and the scope of coverage are questions of law. (Barnett v. Firemans Fund Ins. Co. (2001) 90 Cal.App.4th 500, 508.) Insurance contracts are governed by ordinary rules of contract interpretation, the fundamental goal of which is to give effect to the mutual intention of the parties. Such intent is to be inferred, if possible, solely from the written provisions of the contract. If contractual language is clear and explicit, it governs. If policy terms are used by the parties in a technical sense or a special meaning is given to them by usage, this use or meaning controls judicial interpretation. [Citation.] (Culligan, supra, 81 Cal.App.4th at p. 434.)

The court must examine the coverage provisions to determine whether a claim falls within the policy terms, before even considering exclusions. (Atlantic Mutual Ins. Co. v. Ruiz (2004) 123 Cal.App.4th 1197, 1208 (Atlantic Mutual).) Exclusion clauses remove coverage for risks that would otherwise fall within the insuring clause. (Ibid.) Clauses which identify coverage are interpreted broadly, whereas exclusionary clauses are interpreted narrowly. (Ibid.)

Each clause of an insurance contract must be considered with reference to every other clause on which it has any bearing and all of the provisions are to be construed together for the purpose of ascertaining the intent of the parties. The primary object is to ascertain and carry out the intention of the parties. In construing insurance contracts, the standard to be used is the understanding of the ordinary person. If any ambiguity or uncertainty exists, an insurance policy is construed strictly against the insurer and most liberally in favor of the insured. This rule requiring all uncertainties, ambiguities, inconsistencies and doubtful provisions to be resolved against the insurer and in favor of the insured is subject to the important limitation, however, that it is applicable only when the policy actually presents such uncertainty, ambiguity, inconsistency or doubt. In the absence thereof, the courts have no alternative but to give effect to the contract of insurance as executed by the parties. When the terms of the policy are plain and explicit, the courts will not opt for a forced construction so as to fasten a liability on the insurance company which it has not assumed. [Citation.] (McGreehan v. California State Auto. Assn. (1991) 235 Cal.App.3d 997, 1002, italics added.)

The disputed question in the instant case is whether Atkinsons claim for future medical benefits under his employers uninsured motorist policy was barred by policys exclusions, the statutory scheme, and/or the provisions of Atkinsons C&R with SCIF. While there were disputed facts as to whether Atkinson knew that he might need another surgery when he entered into the C&R, that dispute is not relevant to the resolution of the nature and extent of the policys exclusions. We are thus presented with a question of law subject to our de novo and independent review.

II.

THE UNINSURED MOTORIST LAW

California law requires owners and operators of automobiles to be financially responsible (usually by means of insurance) for any bodily injury or property damage that they may cause. [Citation.] Despite this law, financially irresponsible motorists remain and individuals injured by such motorists are frequently unable to recover damages. (Daun v. USAA Casualty Ins. Co. (2005) 125 Cal.App.4th 599, 605-606 (Daun).) To address this problem, the Legislature enacted the Uninsured Motorist Act. Section 11580.2 mandates that every automobile insurance contract contain a provision providing coverage for the insured against bodily injury wrongfully inflicted by an uninsured or underinsured motorist. (McGreehan v. California State Auto. Assn., supra, 235 Cal.App.3d at p. 1001; Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 712; Daun, supra, 126 Cal.App.4th at pp. 605-606.) The objective is to provide protection to the insured from the injuries caused by the unsafe operation of uninsured motor vehicles. (Denny v. St. Paul Guardian Ins. Co. (1987) 196 Cal.App.3d 73, 77; Mercury Ins. Co. v. Enterprise Rent-A-Car Co. of Los Angeles (2000) 80 Cal.App.4th 41, 48-49.)

The purpose of the uninsured motorist statute is to protect one lawfully using the highway by assuring him of payment of a minimum amount of an award to him for bodily injury caused by the actionable fault of another driver. (Hartford Fire Ins. Co. v. Macri (1992) 4 Cal.4th 318, 324; Daun, supra, 125 Cal.App.4th at p. 608.) The insured contributes directly to this fund through automobile insurance premiums. The amount of coverage is specified by statute, and can be reduced or eliminated only by written agreement in a form approved by statute. (McGreehan v. California State Auto. Assn., supra, 235 Cal.App.3d at p. 1001; Smith v. State Farm Mutual Automobile Ins. Co., supra, 93 Cal.App.4th at p. 712.)

Public policy favors compensation for innocent casualties of the dangerous enterprise of negotiating California highways, and the uninsured motorist statute should be construed liberally in favor of coverage whenever possible to carry out the legislative objective. (Craft v. State Farm Mut. Auto. Ins. Co. (1993) 14 Cal.App.4th 1284, 1291 (Craft); Atlantic Mutual, supra, 123 Cal.App.4th at p. 1211.) Any doubtful language in the statute should be resolved in favor of the insured. However, the principle of liberal interpretation should not be applied to give a forced construction or one which inserts a requirement not contained in the statute where the statute is clear in the context of the factual situation. [Citations.] (Craft, supra, 14 Cal.App.4th at pp. 1291-1292.)

[T]he purpose of the uninsured motorist statute is not to make all drivers whole from accidents with uninsured drivers, but to make sure that drivers injured by such drivers are protected to the extent that they would have been protected had the driver at fault carried the statutory minimum of liability insurance. [Citation.] The law is not designed to provide the insured with greater insurance protection than would be available under a policy containing minimum statutory limits. [Citation.] These limits are not and never have been adequate to make injured parties whole. (Austin v. Allstate Ins. Co. (1993) 16 Cal.App.4th 1812, 1817, italics in original.)

[A]n insurance policy is governed by the relevant statutory law in force at the time the policy is issued. Such provisions are read into the policy and become a part of the contract. This rule is applicable to ... section 11580.2 and the provisions of the [uninsured motorist] statute are part of every insurance policy to which it is applicable. [Citation.] (Craft, supra, 14 Cal.App.4th at p. 1292.)

Section 11580.2 must be liberally construed to carry out its objective of providing financial protection for injuries caused by uninsured motorists. (State Farm Mut. Auto. Ins. Co. v. Lykouresis (1977) 72 Cal.App.3d 57, 61.) [A]s a corollary, any exception or exclusion from uninsured motorist coverage must be strictly construed. [Citation.] (Ibid.) The rights of the parties are to be determined by the terms of their policy, provided such policy grants benefits equal to or greater than is required by the Uninsured Motorist Act. [Citations.] (Lumbermans Mut. Cas. Co. v. Wyman (1976) 64 Cal.App.3d 252, 257, italics added (Lumbermans); Utah Property & Casualty Ins. etc. Assn. v. United Services Auto. Assn. (1991) 230 Cal.App.3d 1010, 1015; Atlantic Mutual, supra, 123 Cal.App.4th at p. 1211.)

There is no doubt that an insurance company can limit the coverage of a policy issued by it as long as such limitation conforms to the law and is not contrary to public policy; when it has done so the plain language of the limitation must be respected. [Citation.] (Lumbermans, supra, 64 Cal.App.3d at p. 259.)

The policy should be read as a layman would read it and not as it might be analyzed by an attorney or an insurance expert. (Crane v. State Farm Fire & Cas. Co. (1971) 5 Cal.3d 112, 115; Utah Property & Casualty Ins. etc. Assn. v. United Services Auto. Assn., supra, 230 Cal.App.3d at p. 1015.) In view of the public policy in favor of uninsured motorist coverage, any deletion or reduction thereof must be in plain and understandable language, sufficient to apprise the insured of the nature of the right he is relinquishing. [Citations.] (State Farm Mut. Auto. Ins. Co. v. Lykouresis, supra, 72 Cal.App.3d at p. 61.) Thus, clauses which identify coverage are interpreted broadly, whereas exclusionary clauses are interpreted narrowly. (Atlantic Mutual, supra, 123 Cal.App.4th at p. 1208.) An exclusionary clause must be conspicuous, plain and clear [citation] and must be construed strictly against the insurer and liberally in favor of the insured. [Citations.] (Crane, supra, 5 Cal.3d at pp. 115-116.)

There are several provisions of section 11580.2, the uninsured motorist law, which are relevant to this case. As explained ante, section 11580.2, subdivision (a)(1) provides that all automobile insurance policies include uninsured motorist coverage. Section 11580.2, subdivision (c) defines several exclusions to the uninsured motorist coverage, including one for workers compensation benefits:

(c) The insurance coverage provided for in this section does not apply either as primary or as excess coverage: [][]

(4) In any instance where it would inure directly or indirectly to the benefit of any workers compensation carrier or to any person qualified as a self-insurer under any workers compensation law, or directly to the benefit of the United States, or any state or any political subdivision thereof. (Italics added.)

The purpose and intent of the workers compensation exclusion in section 11580.2, subdivision (c)(4) is clearly to shift the cost of an industrial injury sustained by an employee, as the result of the negligence of an uninsured motorist, from the motoring public (who pay the premium for uninsured motorist coverage) to the employer or workmens compensation carrier. In other words, the uninsured motorist coverage, the cost of which is borne by holders of automobile liability policies, is withheld and the burden of liability falls on the employer or his carrier at least to the extent of compensation provided under workmens compensation law. (California State Auto. Assn. Inter-Ins. Bureau v. Jackson (1973) 9 Cal.3d 859, 869, fn. omitted (Jackson); see also Interinsurance Exchange v. Marquez (1981) 116 Cal.App.3d 652, 657; Rangel v. Interinsurance Exchange (1992) 4 Cal.4th 1, 8; Firemans Fund Indem. Co. v. Industrial Acc. Commission (1964) 226 Cal.App.2d 676, 678.)

Section 11580.2, subdivision (f) provides for arbitration between the insured and insurer if there is disagreement over the amount the insured shall recover under the uninsured motorist provisions. It states:

If the insured has or may have rights to benefits, other than nonoccupational disability benefits, under any workers compensation law, the arbitrator shall not proceed with the arbitration until the insureds physical condition is stationary and ratable. In those cases in which the insured claims a permanent disability, the claims shall, unless good cause be shown, be adjudicated by award or settled by compromise and release before the arbitration may proceed. Any demand or petition for arbitration shall contain a declaration, under penalty of perjury, stating whether (i) the insured has a workers compensation claim; (ii) the claim has proceeded to findings and award or settlement on all issues reasonably contemplated to be determined in that claim; and (iii) if not, what reasons amounting to good cause are grounds for the arbitration to proceed immediately. ( 11580.2, subd. (f), italics added.)

The purpose of the arbitration provision is to offer a means of resolving disputes that is more expeditious and less expensive than litigation. [Citations.] Its beneficiaries include the insurer and the insured, who are each thereby given a right against litigating these issues. [Citation.] But they also include the courts themselves, which are thereby freed from entertaining such litigation. [Citation.] (Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th 332, 342; Pilimai v. Farmers Ins. Exchange Co. (2006) 39 Cal.4th 133, 140.) Section 11580.2, subdivision (f) thus provides that if a party claims a permanent disability, that party must resolve his or her workers compensation claim prior to pursuing arbitration under the uninsured motorist provisions of an insurance policy. The workers compensation claim must be adjudicated by award or settled by compromise and release before arbitration may occur. ( 11580.2, subd. (f).) We will address the meaning of this phrase in section IV, post.

Section 11580.2, subdivision (h) addresses setoffs where the insured has received workers compensation benefits and files a claim under uninsured motorist coverage:

(h) An insured entitled to recovery under the uninsured motorist endorsement or coverage shall be reimbursed within the conditions stated herein without being required to sign any release or waiver of rights to which he or she may be entitled under any other insurance coverage applicable; nor shall payment under this section to the insured be delayed or made contingent upon the decisions as to liability or distribution of loss costs under other bodily injury liability insurance or any bond applicable to the accident. Any loss payable under the terms of the uninsured motorist endorsement or coverage to or for any person may be reduced:

(1) By the amount paid and the present value of all amounts payable to him or her, his or her executor, administrator, heirs, or legal representative under any workers compensation law, exclusive of nonoccupational disability benefits.

(2) By the amount the insured is entitled to recover from any other person insured under the underlying liability insurance policy of which the uninsured motorist endorsement or coverage is a part, including any amounts tendered to the insured as advance payment on behalf of the other person by the insurer providing the underlying liability insurance. ( 11580.2, subd. (h), italics added.)

The legislative intent behind section 11580.2, subdivision (h) is that to prevent an injured employees recovery of both uninsured motorist coverage and workers compensation for the same loss, uninsured motorist liability may be reduced to the extent paid and payable under any workers compensation benefits. (Jackson, supra, 9 Cal.3d at p. 869, fn. 13.) In doing so, the Legislature has made plain that there shall be no double recovery under the [uninsured motorist] policy and under the [workers] compensation law when the parties have so agreed. (Waggaman v. Northwestern Security Ins. Co. (1971) 16 Cal.App.3d 571, 579, italics added; Safeco Ins. Co. v. Houchins (1970) 12 Cal.App.3d 12, 16.)

We also note Vehicle Code section 16454 is relevant to the instant case and states:

Any motor vehicle liability policy need not cover any liability for injury to the assured or any liability of the assured assumed by or imposed upon the assured under any workers compensation law nor any liability for damage to property in charge of the assured or the assureds employees or agents.

The exclusion of employees from coverage under an automobile insurance policy constitutes an exception to the requirement that an automobile or motor vehicle liability policy cover permissive users of a covered vehicle, and does not violate public policy. (Key Ins. Exchange v. Washington (1970) 7 Cal.App.3d 209, 213 (Washington); Cal-Farm Ins. Co. v. Firemans Fund Ins.Co. (1976) 54 Cal.App.3d 708, 712.)

III.

THE POLICY EXCLUSIONS

While section 11580.2 must be liberally construed to carry out its objectives (State Farm Mut. Auto. Ins. Co. v. Lykouresis, supra, 72 Cal.App.3d at p. 61), [t]he rights of the parties are to be determined by the terms of their policy, provided such policy grants benefits equal to or greater than is required by the Uninsured Motorist Act. [Citations.] (Lumbermans, supra, 64 Cal.App.3d at p. 257, italics added; American Nat. Property and Casualty Co. v. Julie R. (1999) 76 Cal.App.4th 134, 138.) With these legal guidelines in mind, we turn to the terms and provisions of the insurance policy at issue in this case.

Western Fabrication, Atkinsons employer, purchased a Business Auto Coverage insurance liability policy which covered damages arising from bodily injury resulting from an accident involving Western Fabrications employees and vehicles, with a liability limit of $1,000,000. The Business Auto Coverage section stated the following exclusion:

B. EXCLUSIONS

This insurance does not apply to any of the following: [][]

3. WORKERS COMPENSATION

Any obligation for which the insured or the insureds insurer may be held liable under any workers compensation, disability benefits or unemployment compensation law or any similar law.

The Business Auto Coverage insurance policy contained a separate section for uninsured motorist coverage, also with a limit of $1,000,000. It provided that the insurer would pay all sums the insured was legally entitled to recover as compensatory damages from the owner or driver of an uninsured vehicle causing an accident which resulted in bodily injury. The uninsured motorist coverage also contained exclusions:

C. EXCLUSIONS

This insurance does not apply to any of the following: [][]

3. The direct or indirect benefit of any insurer or self-insurer under any workers compensation, disability benefits or similar law ....

The question is whether Atkinsons claim for future medical benefits pursuant to his employers uninsured motorist coverage is excluded by the terms of that policy because he was eligible for, and received, workers compensation benefits. AmCom argued, and the trial court found, the clear and unambiguous exclusions barred Atkinsons claim because he was entitled to workers compensation benefits for future medical expenses. Atkinson argued that the exclusions did not bar his claim, and that AmCom was merely entitled to the setoff described in section 11580.2, subdivision (h)(1), for future medical benefits already received through his workers compensation claim.

In Washington, an employee was injured while in an employers vehicle. The employers automobile insurance policy stated: This policy does not apply ... to bodily injury to any employee of the insured arising out of and in the course of ... employment by the insured. (Washington, supra, 7 Cal.App.3d at p. 211, italics in original.) The trial court found the insurance company was not required to pay benefits to the employee and the exclusion required the employee to pursue a workers compensation claim. (Id. at pp. 210-211.)

Washington agreed with the trial courts interpretation of the exclusion. Washington relied upon Vehicle Code section 16454 and held that the employer was liable under the workers compensation system for the employees injuries, the exclusion was not ambiguous, and the policy clearly excludes from its coverage employees of [the employer]. (Washington, supra, 7 Cal.App.3d at p. 213.)

In Bailey v. Interinsurance Exchange (1975) 49 Cal.App.3d 399 (Bailey), the plaintiff was injured in an automobile accident while in the course and scope of his employment, and filed a claim under his employers automobile insurance policy, which contained the following exclusion for payment of medical expenses:

This policy does not apply to bodily injury sustained by any person if benefits therefor are in whole or in part either payable or required to be provided under any Workmens Compensation Law. (Bailey, supra, 49 Cal.App.3d at pp. 401-402.)

The plaintiffs employer also had a workers compensation policy but the plaintiff had not requested any benefits under that policy. (Bailey, supra, 49 Cal.App.3d at p. 402.) The trial court held the exclusions purpose was to exclude coverage for expenses for medical services which were payable or required to be paid under workers compensation, and not dependent on whether the plaintiff actually received any workers compensation benefits. (Ibid.)

Bailey agreed with the trial courts interpretation, and found the exclusion clause to be clear, unambiguous, and not in conflict with any other terms of the policy. (Bailey, supra, 49 Cal.App.3d at p. 402.)

Workmens compensation coverage is an integral part of our insurance system in providing medical coverage for persons injured in the course of their employment, and a person who has been injured in the course of his employment through the acts of a third party tortfeasor generally looks to the workmens compensation carrier as the primary provider of medical benefits. [Citations.] Hence, it has become commonplace in various forms of medical and disability insurance policies to include an exclusion from the policy for benefits obtainable under workmens compensation law. These exclusions are clearly consistent with public policy. [Citations.]

The exclusion in question here applies whether workmens compensation benefits are payable either in whole or in part and manifests a clear intention to exclude coverage for any injury incurred in the course and scope of employment and to leave the entire matter of medical coverage under those circumstances to the workmens compensation law.

The term payable is defined in Blacks Law Dictionary as capable of being paid; suitable to be paid; admitting or demanding payment; justly done, legally enforceable. Under that definition the word payable standing alone might be ambiguous. [Citation.] However, the additional language or required to be provided under any workmens compensation law creates an exclusion which is susceptible of only one reasonable and logical interpretation. That interpretation is that the policy excludes coverage for an injury for which the insured is eligible for workmens compensation benefits. The plaintiffs voluntary decision not to seek those benefits cannot expand the insurers liability under the contract of insurance. (Bailey, supra, 49 Cal.App.3d at pp. 403-404, italics added.)

Bailey relied upon section 11580.2 and Vehicle Code section 16454 in finding that the exclusion did not violate public policy, and concluded the exclusion barred the employees recovery of medical expenses under the employers automobile insurance policy, and the employees medical expenses should be borne by the employers workers compensation policy.

In Culligan, the court indirectly addressed a similar exclusion. The case began when three employees sued their employer for wrongful discharge and alleged they were terminated in retaliation for having complained about noxious odors in the workplace that caused a variety of health problems. The odors allegedly originated from printing and dry cleaning businesses located next to their employer. The employees complaint sought to recover lost wages and benefits, plus damages for emotional distress arising from the firing and loss of employment. (Culligan, supra, 81 Cal.App.4th at p. 432.) Two of the employees had filed workers compensation claims for respiratory and related problems caused by the fumes. SCIF, the employers workers compensation carrier, paid benefits to those employees. (Ibid.) The employees also sued the dry cleaning business, which cross-complained against the employer for indemnity and apportionment. SCIF initially agreed to pay the employers defense costs, but then refused the tender because the underlying issue was wrongful termination. (Id. at pp. 432-433.) The employer then sued SCIF for breach of contract and other causes of action arising from SCIFs refusal to defend. (Id. at p. 433.)

Culligan reviewed the two-part policy which the employer had purchased from SCIF. Part one was the workers compensation insurance. Part two was the employers liability insurance, which excluded any obligation imposed by a workers compensation, occupational disease, unemployment compensation or disability benefits law or any similar law and damages arising out of the discharge of, coercion of or discrimination against any employee in violation of law. (Culligan, supra, 81 Cal.App.4th at p. 436, italics in original.) Culligan noted the employers two-part policy was a standard policy issued to employers:

The Supreme Court has noted generally, in examining a very similar policy: [E]mployers liability insurance is traditionally written in conjunction with workers compensation policies, and is intended to serve as a gap-filler, providing protection to the employer in those situations where the employee has a right to bring a tort action despite the provisions of the workers compensation statute or the employee is not subject to the workers compensation law. [Citation and fn.] Generally, these two kinds of coverage are mutually exclusive. [Citation.] Speaking of the employers liability coverage, the court added, The policy is not a general liability policy providing coverage for injuries to members of the general public; instead it provides coverage to employers for those injuries to their employees not covered by workers compensation. [Citation.] (Culligan, supra, 81 Cal.App.4th at p. 436, citing Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 916.)

Culligan addressed the employers argument that the workers compensation exclusion was ambiguous and did not apply because it only addressed situations where an obligation had been imposed because of a workers compensation claim, whereas one of the three employees did not file a claim for workers compensation benefits so that there was no obligation imposed under the workers compensation insurance. (Culligan, supra, 81 Cal.App.4th at p. 438.) Culligan relied on Bailey and rejected this argument:

We reject the claim of ambiguity. It would be stronger were there no context or case law history for this language, but there is. Taking precedent first, the alternative phrase may be held liable has been called clear in this regard (Transamerica Ins. Co. v. Superior Court, supra, 29 Cal.App.4th at p. 1715) and may have been better suited than the language used here, but other formulations have also been held unambiguous. An exclusion for workers compensation benefits either payable or required to be provided (Bailey v. Interinsurance Exchange (1975) 49 Cal.App.3d 399, 402) was held to manifest[] a clear intention to exclude coverage for any injury incurred in the course and scope of employment (id. at p. 403), the court holding that this did not require that the worker actually receive workers compensation benefits (id. at p. 402). That case also noted general high court guidance that a clause which can, without conflicting or creating an ambiguity, when read in conjunction with other parts of the policy, be interpreted as excluding persons eligible for work[ers] compensation benefits, will serve to deny coverage to such persons whether or not they receive such benefits. (Id. at p. 403, citing Silberg v. California Life Ins. Co. (1974) 11 Cal.3d 452.)

All of this serves the so-called compensation bargain long recognized in the case law. The employer assumes liability for industrial injury, without regard to fault, in exchange for limitations on liability amount, and the employee receives relatively swift and certain payment of benefits (Privette v. Superior Court