Guaranty Association’s Attempt to Overcome Exclusive Remedy Fails

Exclusive Remedy Applies to Guaranty Association

The exclusive remedy rule is the most firmly entrenched doctrine in workers’ compensation law. An employer who maintains workers’ compensation insurance for the benefits of its employees may not be sued by the employee for tort damages since those damages replaced by the workers’ compensation benefits promised by the state’s workers’ compensation law.

In Asurion Services, LLC v. Montana Insurance Guaranty Association, Supreme Court of Montana, 2017 MT 140,  2017 WL 2558455, DA 16-0581 (June 13, 2017) the defendant Montana Insurance Guaranty Association (MIGA) sought indemnity from the employer of benefits it paid when Asurion’s insurer became insolvent and MIGA took over the claim. It appealed the August 29, 2016 order denying its motion for summary judgment by the First Judicial District Court, Lewis and Clark County.


Whether the District Court erred by granting summary judgment to Asurion and denying summary judgment to MIGA based on the exclusivity provision of the Montana Workers’ Compensation Act.


Christy Harris is a former employee of National Electronics Warranty, LLC—now known as Asurion Services, LLC (Asurion) — at its customer service facility in Great Falls was injured while employed by Asurion. Harris filed industrial injury claims for two different incidents, occurring on May 5, 2002, and September 4, 2002. Asurion was insured by Lumbermens Mutual Casualty Company (Lumbermens) as a Plan 2 employer under Montana’s Workers’ Compensation Act (WCA). Lumbermens accepted and adjusted Harris’s workers’ compensation claims until it was declared insolvent in May 2013. When Lumbermens went into liquidation, the MIGA assumed handling of Harris’s claims pursuant to the Montana Insurance Guaranty Association Act (Guaranty Act).

In February 2015, MIGA notified Asurion that it was seeking recovery of benefits paid on Harris’s claims pursuant to, which provides, in pertinent part: “(2) The association has the right to recover from the following persons the amount of any “covered claim” paid on behalf of the person pursuant to this part: ¶ (a) any insured whose net worth, on December 31 of the year preceding the date the insurer becomes an insolvent insurer, exceeds $50 million and whose liability obligations to other persons are satisfied in whole or in part by payments made under this part[.]”

The District Court concluded that the statute did not afford MIGA relief because the WCA protects the employer by providing an exclusive remedy that frees the employer from potential liability claims by an employee. The District Court held that because Asurion met its obligation to obtain workers’ compensation insurance, it has no payment obligations to Harris; therefore, MIGA cannot base a claim for recovery.

The District Court concluded, with clarity and common sense: “[I]t would be illogical to conclude that an employer, protected from liability and removed from the benefits distribution process by law, is suddenly liable for all the payments made by MIGA because the insurer became insolvent.”


The WCA applies to all employers and employees. Asurion elected to be bound by the provisions of the WCA Plan 2, which provides for coverage through a licensed private insurance company.

As noted by the District Court, the Montana Constitution likewise provides for the nonliability of an insured employer: “Courts of justice shall be open to every person, and speedy remedy afforded for every injury of person, property, or character. No person shall be deprived of this full legal redress for injury incurred in employment for which another person may be liable except as to fellow employees and his immediate employer who hired him if such immediate employer provides coverage under the Workmen’s Compensation Laws of this state.” Mont. Const. art. II, § 16 (emphasis added). Other than a basic duty to cooperate and assist its insurer, an employer insured under either Plan 2 or 3 has no role in the adjusting of its employee’s workers’ compensation claim.

Montana’s Guaranty Act provides that when an insurer becomes insolvent and enters into liquidation, MIGA assumes most, if not all, of the insolvent insurers’ financial obligations on first-party and third-party claims. This statutory obligation includes workers’ compensation claims.

Although the parties advance some ancillary arguments, the fundamental conflict in this case is between the exclusivity provision of the WCA, as set forth in § 39-71-411, MCA, and Article II, Section 16 of the Montana Constitution which insulate an insured employer from liability for an injured employee’s workers’ compensation claim, and § 33-10-114(2)(a), MCA, which would ordinarily allow MIGA to seek reimbursement from an insolvent insurer’s insured whose net worth exceeds $50 million.

The WCA provides an exclusive remedy that protects the employer from liability claims by employees and third parties if the employer has met its obligation to obtain workers’ compensation insurance. Insured employers are “not subject to any liability whatever … for any claims for contribution or indemnity asserted by a third person ….”

Asurion met its WCA obligation as a Plan 2 employer by securing coverage from Lumbermens. As such, it enjoys the protection of the exclusivity provisions of the WCA, and is not subject to any claims for contribution or indemnity asserted by MIGA.

The Supreme Court was unpersuaded by MIGA’s arguments that, upon Lumbermens’ insolvency, Asurion effectively became an “uninsured employer,” and was no longer compliant with the WCA. Harris’s claims were made and accepted by Lumbermens in 2002, before Lumbermens’ insolvency. Lumbermens’ subsequent insolvency did not render Asurion an “uninsured employer” as MIGA contends.


The exclusive remedy rule is the benefit employers receive from the quid pro quo compromise when they provide workers’ compensation insurance coverage. Asurion provided workers’ compensation coverage in this case, exactly as the WCA required. To deprive Asurion of the benefit of the exclusive remedy by requiring it to reimburse MIGA for the benefits paid to Harris, despite Asurion’s full compliance with the WCA, would strike at one of the very foundations of the workers’ compensation system.


The state of Montana promised employers in its state that if it provided workers’ compensation insurance to protect its employees it would be safe from any liability if an employee was injured. MIGA tried to get reimbursement from the employer and get around the exclusive remedy doctrine. A statute allowing reimbursement that defeats a constitutional right should never occur. The Supreme Court, over a single justice’s dissent, upheld the priority of the exclusive remedy.


ZALMA-INS-CONSULT                      © 2017 – Barry Zalma

This article and all of the blog posts on this site digests and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business.

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