KAGC v. Music Construction: AIG/AIU Doesn’t Negate the IOU

In Kentucky Associated General Contractors (KAGC) Self-Insurance Fund v. Music Construction, Inc.  2008-SC-000795-DG (Ky. 2008), Music’s employee was injured, and the injury was found to have occurred as a result of Music’s violation of specific safety regulations. Under KRS 342.165(1) the employee was entitled to a 30% increase in workers’ compensation benefits. Those benefits were awarded, and KAGC sought reimbursement from its insured for the additional benefits. KAGC asserted that Music bore liability for the additional benefits paid under KRS 342.165 (1) based on a specific exclusion from coverage in the parties’ contract for workers compensation insurance. Music attempted to rely on the case of AIG/AIU Insurance Co. v. South Akers Mining Co., LLC, 192 SW3d 687 (Ky. 2006) for its assertion that it was not responsible for reimbursement. The Court distinguished AIG/AIU by noting AIG/AIU was a workers’ compensation claim involving a statutory requirement that insurers promptly pay all benefits, where in Music the issue was a contract dispute between the carrier and its insured. Therefore, under the contract, Music was required to reimburse KAGC for the additional 30% in benefits. 

Commentary:   This was a sound decision.  AIG/AIU was indeed inapplicable.

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By |2009-12-28T13:26:01+00:00December 28th, 2009|