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IN THE SUPREME COURT OF NORTH CAROLINA
No.  104PA97
FILED:  6 FEBRUARY  1998
Douglas H. McMillian and Margaret S. McMillian
v.
North Carolina Farm Bureau Mutual Insurance Company, and Allstate
Insurance Company
On discretionary review pursuant to N.C.G.S.  §  7A-31 of
a unanimous decision of the Court of Appeals,  125 N.C. App.  247,
480 S.E.2d  437  (1997), reversing declaratory judgment in favor of
defendants by Greeson, J., at the  30 October  1995 Civil Session
of Superior Court, Rockingham County.    Heard in the Supreme Court
11 September  1997.
Robert S. Hodgman and Associates, by Robert S. Hodgman
and Todd P. Oxner, for plaintiff-appellees.
Henson & Henson, L.L.P., by Perry C. Henson, Jr., and
Rachel Scott Decker, for defendant-appellant N.C. Farm
Bureau Mutual Ins. Co.
Smith Helms Mulliss & Moore, L.L.P., by Stephen P.
Millikin, for defendant-appellant Allstate Ins. Co.
Morgan & Reeves, by Robert P. Morgan, and Robert R.
Gardner on behalf of Nationwide Mutual Ins. Co., amicus
curiae.
Baker & Jones, P.A., by H. Mitchell Baker, III, on
behalf of North Carolina Academy of Trial Lawyers,
amicus curiae.
PARKER, Justice.
The issue in this case is whether defendant insurance
companies are authorized under N.C.G.S.  §  20-279.21(e) to reduce
uninsured motorist  (“UM”) coverage under their respective




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policies by the amount plaintiff Douglas McMillian has received
for his injuries from workers’ compensation.    We hold that the
reduction is authorized by the statute.
On  2 April  1990 plaintiff Douglas H. McMillian was a
passenger in a car owned and operated by James L. Boswell, a
fellow employee at Winn-Dixie, while both were acting within the
course and scope of their employment.    Another car, driven by
uninsured motorist Emanuel Canty, Jr., collided with Boswell’s
car, injuring McMillian.    McMillian applied for and received
workers’ compensation benefits, which as of  9 June  1993 totaled
in excess of  $78,000.    McMillian brought a personal injury action
against both Boswell and Canty.    Margaret S. McMillian,
plaintiff’s wife, joined in this action to assert her claim for
loss of consortium.    The action as to Boswell was dismissed since
Boswell was immune from liability for ordinary negligence by a
fellow employee.    The action against Canty was still pending at
the time the parties filed briefs in this Court.
At the time of the accident, defendant Allstate
Insurance Company  (“Allstate”) provided UM insurance coverage to
plaintiffs for bodily injury and property damage in the amount of
$25,000.    Defendant North Carolina Farm Bureau Mutual Insurance
Company  (“Farm Bureau”) provided UM and underinsured motorist
(“UIM”) insurance coverage to Boswell for bodily injuries in the
amount of  $50,000.    Both policies contained the following limit
of liability provision:                                                “Any amount otherwise payable for
damages under this coverage shall be reduced by all sums  .  .  .




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[p]aid or payable because of the bodily injury under any of the
following or similar law[s]  .  .  . workers’ compensation law.”
Plaintiffs instituted this declaratory judgment action
to determine the coverage available under both their own
automobile policy and the policy issued to Boswell.    The action
was heard on stipulated facts and exhibits.    On  25 January  1996
the trial court entered a judgment concluding that plaintiffs
were entitled to pursue claims for UM insurance under both the
Allstate and the Farm Bureau policies but that the combined
coverages of  $75,000 were to be reduced by the  $78,000 in
workers’ compensation benefits already paid to Mr. McMillian.
Hence neither policy provided coverage to plaintiffs for the
damages asserted.
On appeal the Court of Appeals reversed the trial
court, holding that N.C.G.S.  §  20-279.21(e) did not authorize the
UM coverage to be reduced by the amount of workers’ compensation
benefits paid and that plaintiffs were entitled to recover the UM
policy limits from Allstate and Farm Bureau.    McMillian v. N.C.
Farm Bureau Mut. Ins. Co.,  125 N.C. App.  247,  254,  480 S.E.2d
437,  441  (1997).    In reaching this decision, the Court of Appeals
distinguished Brantley v. Starling,  336 N.C.  567,  444 S.E.2d  170
(1994), on the basis that Brantley involved a business UM policy
paid for by the employer and issued by the same carrier which
carried the workers’ compensation coverage; whereas, the policies
in the present case were personal policies paid for by plaintiffs
and Boswell individually and issued by carriers different from
the workers’ compensation carrier.    Id.    We find no support for




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such distinctions in N.C.G.S.  §  20-279.21(e) and reverse the
decision below.
Article  9A of chapter  20 of the General Statutes, the
Motor Vehicle Safety and Financial Responsibility Act  (“Act”),
represents a comprehensive legislative scheme requiring
automobile operators to be financially responsible thereby
protecting people injured by negligent operators.    The Act
specifically recognizes the interplay between workers’
compensation and third party liability and provides:
Such motor vehicle liability policy need not
insure against loss from any liability for
which benefits are in whole or in part either
payable or required to be provided under any
workers’ compensation law nor any liability
for damage to property owned by, rented to,
in charge of or transported by the insured.
N.C.G.S.  §  20-279.21(e)  (1993).
This Court initially addressed the reduction allowed
under N.C.G.S.  §  20-279.21(e) in Manning v. Fletcher,  324 N.C.
513,  379 S.E.2d  854  (1989), where the plaintiff, who was injured
in an automobile accident while acting in the course and scope of
his employment, was covered under both a workers’ compensation
policy purchased by the employer and by a UM/UIM policy also paid
for by the employer.    This Court held that N.C.G.S.  §
20-279.21(e) authorized the UIM carrier to reduce its coverage by
the amount paid to the insured as workers’ compensation benefits.
Id. at  518,  379 S.E.2d at  857.    In reaching this conclusion, we
stated:                                                                “By reason of its location in the statute and its
reference to a  ‘motor vehicle liability policy,’ we deduce a
legislative intent that the exclusion permitted by subsection  (e)




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be applicable to all subsections of N.C.G.S.  §  20-279.21(b),
including the uninsured and underinsured coverages defined
therein.”    Id. at  517,  379 S.E.2d at  856.
Thereafter, the Court of Appeals decided Ohio Casualty
Group v. Owens,  99 N.C. App.  131,  392 S.E.2d  647, disc. rev.
denied,  327 N.C.  484,  396 S.E.2d  614  (1990), in which the insured
who was injured within the course and scope of her employment
was, like the plaintiff in Manning, covered by both workers’
compensation and a UM policy.    However, the UM policy in Ohio
Casualty was purchased by the employee individually rather than
by the employer.    The Court of Appeals distinguished Manning on
that ground and concluded that N.C.G.S.  §  20-279.21(e) is
directed only at business automobile liability policies secured
for the benefit of employees by employers who also provide
workers’ compensation coverage.    Id. at  136-37,  392 S.E.2d at
651.    Thus, the Court of Appeals held that N.C.G.S.  §
20-279.21(e) did not allow the UM carrier to reduce its coverage
when the employee/plaintiff purchased the UM policy herself.    Id.
Subsequent to Ohio Casualty the Court of Appeals when
presented with cases factually similar to Ohio Casualty applied
the same analysis, disallowing the reductions to the UM/UIM
carrier on the basis that the purchaser of the UM/UIM coverage
was not the same entity that purchased the workers’ compensation
coverage.    Hieb v. St. Paul Fire & Marine Ins. Co.,  112 N.C. App.
502,  435 S.E.2d  826  (1993); Bailey v. Nationwide Mut. Ins. Co.,
112 N.C. App.  47,  434 S.E.2d  625  (1993); Bowser v. Williams,  108
N.C. App.  8,  422 S.E.2d  355  (1992); Sproles v. Greene,  100 N.C.




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App.  96,  394 S.E.2d  691  (1990), aff’d in part, rev’d in part on
other grounds,  329 N.C.  603,  407 S.E.2d  497  (1991).
In Brantley,  336 N.C.  567,  444 S.E.2d  170, the premiums
for the workers’ compensation coverage were paid by the corporate
employer, S.K. Bowling, Inc., but the UIM policy in question was
issued to the employer S.K. Bowling individually.    The plaintiffs
in Brantley argued that in Manning the reduction was allowed
because the employer had provided both workers’ compensation and
UIM coverage.    Accordingly, the plaintiffs contended, for the
defendants to have the benefit of the reduction permitted for
workers’ compensation payment by N.C.G.S.  §  20-279.21(e),
defendants had to establish that the same entity provided both
coverages.    Id. at  572,  444 S.E.2d at  172.    We rejected that
argument in Brantley, and we reject it now.
Nothing in N.C.G.S.  §  20-279.21(e) suggests that the
legislature intended that a reduction applies only if the
automobile policy was bought by the same entity that purchased
the workers’ compensation coverage and that the reduction does
not apply if the automobile policy was bought by someone else.
Likewise, nothing in N.C.G.S.  §  20-279.21(e) suggests that the
legislature intended that a reduction be applicable only to
“business” automobile policies and not to  “personal” automobile
policies.    As we said in Brantley,
[n]either the language of the statute nor the
policy provision includes such a requirement
[that the same entity provide both UM/UIM
coverage and workers’ compensation coverage].
Without reference to the source of the
coverages, the statute states that a motor
vehicle liability policy need not insure




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against loss covered by workers’
compensation.
Id.
In this case Mr. McMillian is covered by both a
workers’ compensation policy paid for by his employer and by UM
policies paid for by persons other than his employer.    We hold
that under the clear wording of N.C.G.S.  §  20-279.21(e), the
limit of liability provision in defendants’ policies at issue in
this action is authorized and defendant UM carriers are entitled
to reduce coverage to Mr. McMillian by the amount of workers’
compensation he has already received.    We thus reverse the
decision below.    Further, to the extent that Ohio Casualty and
its progeny are inconsistent with our holding herein, they are
hereby overruled.
Having determined that no UM coverage is available
under the policies to satisfy the damages asserted by Mr.
McMillian, we note that similarly neither policy provides
coverage to Mrs. McMillian for her derivative loss of consortium
claim.
For the reasons stated herein, the decision of the
Court of Appeals is reversed.
REVERSED.

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