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Goberdhan v. Illinois Farmers Insurance Co.12/28/2004
In this appeal from a district court order confirming an arbitration award, the underinsured-motorist carrier challenges the district court's refusal to modify the award to deduct workers' compensation benefits. Because the underinsured-motorist carrier failed to move for modification or correction and also failed to inform the arbitrators of an unrecorded agreement on collateral-source deductions, the district court was procedurally limited to confirming the arbitration award, and we affirm.
FACTS
Bhupaul Goberdhan sustained a work-related injury while driving his employer's vehicle. Goberdhan settled his liability claim against the at-fault driver and also settled the subrogation interest of the workers' compensation carrier.
Goberdhan then sued Illinois Farmers Insurance Company, his employer's insurer, to recover underinsured motorist benefits. Goberdhan and Illinois Farmers submitted the issue of damages to binding arbitration. According to Goberdhan and Illinois Farmers, they initially agreed to collateral-source deductions from the gross-damages award for the $90,000 liability settlement and for $39,000 in workers' compensation payments. The arbitrators were not informed of the oral agreement.
On April 17, 2003, the arbitrators issued their award, totaling $135,000 without any collateral-source deductions. Four days later, Illinois Farmers' attorney sent Goberdhan's attorney a letter stating that they had "requested the settlement draft" and would forward it upon receipt. Deducting the agreed-on collateral-source payments, the resulting settlement amount was $6,000. But in a letter dated May 6, 2003, Illinois Farmers' attorney notified Goberdhan's attorney that a check would not be sent. The letter stated that the attorney had concluded that, after the collateral-source offsets, Goberdhan was no longer underinsured. Illinois Farmers did not move to modify or correct the $135,000 arbitration award.
Several months later, in August 2003, Goberdhan applied to the district court to confirm the arbitration award, minus a $90,000 deduction for the liability settlement. Illinois Farmers contested the motion, arguing that the case should be remanded to the arbitrators for redetermination. The district court refused to remand and granted the motion to confirm, explaining that Illinois Farmers had filed no motion for modification within the statutory ninety-day period. Illinois Farmers requested reconsideration, arguing for reinstatement of the initial oral agreement on collateral-source deductions. The district court rejected the reconsideration request, and Illinois Farmers appeals.
DECISION
Illinois Farmers presents this appeal as a legal controversy over the deduction of workers' compensation benefits from an arbitration award. The procedure for dealing with workers' compensation payments in arbitration for underinsured-motorist benefits was addressed and resolved in W. Nat'l Mut. Ins. Co. v. Casper, 549 N.W.2d 914 (Minn. 1996). It is not the substantive law, but Illinois Farmers' dispositive procedural choices that preclude recovery: Illinois Farmers did not move to modify or correct the arbitrators' award and Illinois Farmers did not submit to the arbitrators any evidence of its oral agreement with Goberdhan or any evidence of a collateral-source payment from the workers' compensation carrier.
The district court's power to confirm, modify, or correct an arbitration award is governed by statute. Int'l Union of Elec. & Mach. Workers v. Portec, Inc., 303 Minn. 341, 343, 228 N.W.2d 239, 241 (1975). Under Minn. Stat. ยง 572.18 (2002), " pon application of a party, the court shall confirm an award, unl
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