Alabama Workers' Comp Blawg

  • 20
  • Jun
  • 2011

AIGA Reimbursement Claims Subject to Six Year Statute of Limitations

The Alabama Court of Civil Appeals recently considered a case where the Alabama Insurance Guaranty Association ("AIGA") sought reimbursement for money paid out to cover a workers’ compensation claim from a high-net-worth insured.

The AIGA is a state-run insurer that steps in to cover any unpaid claims that are made against state-licensed insurers by state residents when the insurer is judicially declared insolvent. However, high-net-worth insureds (those with assets greater than $25,000,000) are excluded from coverage by the AIGA.

This was the scenario presented in Alabama Insurance Guaranty Association v. Water Works and Santiary Sewer Board of the City of Montgomery. A dispute arose over payments made by AIGA to an injured employee of Water Works and Sanitary Sewer Board of the City of Montgomery ("the Board"). The Board’s workers’ compensation carrier had become insolvent and an injured worker’s claim was forwarded to AIGA. A number of years past before AIGA filed suit against the Board, believing it to be a high-net-worth insured.

The Board claimed that AIGA’s claim should be excluded as it was either a statutory "penalty" or a tort claim and a two year statute of limitations should apply. AIGA claimed that it was a contract action and a six-year statute of limitations should apply. After a number of hearings and summary judgment motions, the trial court found for the Board.

AIGA appealed the decision to the Court of Civil Appeals. The Court held that AIGA’s reimbursement claim was in the nature of a common-law action of debt and, as such, a six-year statute of limitations should apply. Therefore, AIGA’s filing of its claim against the Board was timely and the trial court was reversed.

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