With multiple judges reaching different conclusions and hazarding guesses about what the Colorado Supreme Court might say, the state’s justices on Tuesday attempted to answer a question at the center of several recent lawsuits: When an employee is driving on the job and another motorist injures them, can they pursue both workers’ compensation and an insurance payout? Or are they entitled to only one?

In plaintiff Kevin Klabon’s telling, the answer for decades was “both.” Then in 2021, the Supreme Court issued a decision limiting employees to only workers’ comp when injured due to a coworker’s careless driving. In the process, the court broadly stated Colorado law served to “abolish” all legal claims for insurance money when an injured employee avails themselves of workers’ comp.

From there, the insurance industry contended workers’ comp is virtually the only payment due to Colorado workers injured in all other on-the-job car accidents. But at oral arguments, the justices were not so sure.

“It’s always interesting as a judge when people talk about what you wrote,” said Justice Richard L. Gabriel, who authored the contested 2021 decision in Ryser v. Shelter Mutual Insurance Company. “I mean, in Ryser, I don’t think we could have made it any more clear that that was about a co-employee situation.”

Competing views

Klabon’s lawsuit against Travelers Property Casualty Company of America arrived at the state’s highest court in an unusual way: A federal judge, facing competing interpretations of Colorado’s workers’ comp law, asked the justices to decide who was right.

Klabon was on the job, operating a company vehicle in 2019 when another driver injured him in a crash. The at-fault driver was underinsured, meaning his vehicle insurance did not fully cover Klabon’s injuries. Klabon’s lawsuit alleged he incurred at least $500,000 in medical expenses from the accident – far greater than the $25,000 paid by the driver’s insurer. Travelers, which insured Klabon’s company vehicle, provided up to $1 million in underinsured motorist coverage for such situations, but the company only ended up paying Klabon $45,766.

Klabon alleged his employer made premium payments so that Travelers could provide coverage in the event of an accident, and Travelers was failing to abide by that contract. Consequently, he filed suit.

In support of the idea that Klabon’s pursuit of workers’ compensation rendered him ineligible to sue, Travelers cited a 2022 ruling from U.S. District Court Senior Judge Christine M. Arguello. In a case similar to Klabon’s, she used the Supreme Court’s Ryser decision to conclude an injured worker could not sue for insurance benefits after collecting workers’ comp.

On the other hand, U.S. District Court Judge Daniel D. Domenico issued an order two years prior finding the opposite – that employees injured by a third party in a car crash can claim workers’ comp and benefits from their employer’s insurer after all.

“Thus, this Court finds itself confronted with: directly conflicting decisions from my respected colleagues,” wrote U.S. Magistrate Judge N. Reid Neureiter, who was assigned Klabon’s case. Neureiter asked the Colorado Supreme Court for its opinion, and the justices agreed to intervene.

Shortly after the case moved to the Supreme Court, the Denver-based U.S. Court of Appeals for the 10th Circuit issued its own divided decision on the subject. By 2-1, a panel agreed with Domenico’s interpretation that both sources of payment are available to injured workers.

However, the dissenter, Judge Timothy M. Tymkovich, adopted Arguello’s reading. He warned the result would be increased premiums for employers if their injured workers could now seek payments through their auto insurance policies in addition to workers’ comp.

“It’s an argument we often hear from insurance companies in these kinds of cases,” said Justice William W. Hood III during oral arguments. “But it seems to have some merit here. Is that argument overblown?”

“I think it is overblown,” responded Klabon’s attorney, Nelson A. Waneka. “Insurance premiums can be raised for any number of reasons. We don’t even know what they are. It’s not necessarily linked to making a claim.”

How broad is the rule?

Waneka elaborated that workers’ comp only covers certain categories of damages and came nowhere close to compensating Klabon for the entirety of his injuries. Therefore, permitting Klabon to also seek insurance benefits from Travelers would not be a “windfall” for him.

Several outside organizations weighed in to the Supreme Court. The Colorado Trial Lawyers Association, backing Klabon, argued the court should not excuse insurers from providing the benefits employers have paid for through premiums. The Colorado Defense Lawyers Association, in support of Travelers, contended lawmakers meant for workers’ comp to be the exclusive solution for on-the-job injuries.

However, Justice Melissa Hart pointed to the legal provision requiring employees to “surrender” their right to sue and suggested it only applied to limited and specific circumstances not relevant to Klabon’s case. Waneka responded that the law’s “overall intent” was to cover the employer-employee relationship, not necessarily to render insurance companies off-limits.

“That’s a very vibes-based argument,” Hart said. “I’m very concerned about the fact that nobody’s talking about this language.”

Multiple members of the court were concerned that if injured employees could only seek workers’ comp and not auto insurance benefits, other types of benefits would also be off limits – such as life or disability insurance.

Travelers’ attorney, Max K. Jones, Jr., cited a recent decision from the Supreme Court in which the justices decided insurance policies covering antique vehicles did not have to abide by the broad coverage requirement in state law. He suggested the court could similarly carve out a workers’ comp-only exception for auto accidents.

“So, those are like a specialty policy?” asked a skeptical Justice Maria E. Berkenkotter, who was the only dissenter in the antique car decision.

“It seems to me you’re adding words. ‘We’ve gotta have a special rule’,” echoed Gabriel.

The case is Klabon v. Travelers Property Casualty Company of America.