The Delaware Supreme Court's decisions in Henry I and Henry II have had a significant impact on workers’ compensation claims involving underinsured motorist (UIM) benefits. Here, we break down the complex issues surrounding subrogation rights, non-duplication clauses, and how these rulings were applied in Henry, et. al. v. Cincinnati Ins. Co. and Manz v. ProAssurance Grp. d/b/a/ Eastern Alliance Ins. Co. Below is a review of the facts, procedural history, and key findings that shaped the outcome.
PARTIES
- Henry and Manz: Injured workers pursuing UIM benefits after recovering from third-party tortfeasors.
- Eastern Alliance Insurance Group ("Eastern"): Workers’ compensation carrier for Henry and Manz, asserting subrogation rights to recover benefits from UIM settlements.
- Cincinnati Insurance: Employer’s UIM carrier in Henry’s case, opposing Eastern’s subrogation claim.
- Philadelphia Insurance Companies ("PIC"): Employer’s UIM carrier in Manz’s case, whose non-duplication clause was at issue.
FACTS
Henry and Manz were involved in two separate work-related car accidents, and both received workers’ compensation benefits from Eastern. Henry and Manz pursued additional recovery through their employer’s UIM carrier. The issue was whether Eastern could enforce a workers’ compensation lien on both Henry’s and Manz’s UIM settlements in light of the Henry II decision.
PROCEDURAL HISTORY
Henry initially sued Cincinnati for UIM benefits, but the trial court dismissed the case under 19 Del. C. § 2304 (“exclusivity provision”). The Delaware Supreme Court reversed, allowing UIM claims against employers’ insurers (Henry I). The case was remanded to determine whether Cincinnati’s policy prohibited Eastern’s lien. Eastern joined the case and filed a declaratory judgment, which was dismissed. On appeal, the Delaware Supreme Court in Henry II overruled its previous decision in Simendinger and recognized a statutory subrogation right for workers’ compensation carriers under 19 Del. C. § 2363 to collect its lien against an employer provided UIM settlement. Henry’s and Manz’s claims were before the Superior Court on motions for summary judgment.
DISCUSSION
Henry’s claim focused on whether Eastern could enforce its statutory subrogation rights against Henry’s UIM recovery from Cincinnati. Cincinnati’s UIM policy included a non-duplication clause that would block Eastern’s recovery. The court invalidated the clause, ruling that it violated public policy by undermining Eastern’s statutory subrogation rights, which cannot be undermined because Eastern was not a party to the UIM contract. Eastern’s motion for summary judgment was granted.
In Manz’s case, the issue was whether Eastern could assert a workers’ compensation lien on her UIM settlement with PIC. Eastern argued Manz lacked standing because she accepted a reduced settlement with an escape clause, which she could not later challenge. The court disagreed, ruling that Manz had standing because Eastern’s lien would directly affect her recovery. It also held that Henry II should not apply retroactively, as it would affect her settled claim. The court granted Manz’s declaratory judgment, preserving her UIM settlement without Eastern’s lien.
MOTION FOR REARGUMENT
Eastern filed a motion for reargument on December 30, 2024, contending that the Henry II decision, which invalidated non-duplication clauses, was binding law before Manz resolved her UIM and workers’ compensation claims. Eastern claims that Manz knew about the decision when she negotiated her claims, so retroactive application of the law is not required, and the non-duplication clause should be deemed unenforceable.
