Workers’ Compensation Subrogation Against UIM Proceeds Is Limited to “Boardable” Damages: Delaware Supreme Court Applies Henry II in ProAssurance v. Manz

Introduction

In ProAssurance Group d/b/a Eastern Alliance Insurance Co. v. Edna Manz (Del. Nov. 7, 2025), the Delaware Supreme Court addressed the scope of a workers’ compensation carrier’s subrogation rights against an employee’s underinsured motorist (UIM) recovery. The carrier, ProAssurance, appealed from a Superior Court decision that rejected its lien on Manz’s UIM award from her employer’s UIM carrier, Philadelphia Insurance Companies (PIC).

The core issues were twofold: (1) whether the Court’s earlier decision in Horizon Services, Inc. v. Henry (“Henry II”), 304 A.3d 552 (Del. 2023), applied to the Manz dispute, and (2) if so, whether Henry II guaranteed a subrogation lien to the workers’ compensation carrier over the UIM proceeds, notwithstanding a non-duplication clause in the UIM policy. The Supreme Court held that Henry II applies and clarified that it does not grant a blanket right to subrogation over UIM recoveries; rather, subrogation under 21 Del. C. § 2363(e) is limited to “boardable” damages. The Court reversed and remanded for the Superior Court to determine what portion, if any, of the UIM award is “boardable” and therefore lienable.

Case Background

While acting within the scope of her employment at Apis Services, Inc., Manz was injured in a motor vehicle collision. Apis’s workers’ compensation carrier, ProAssurance, paid Manz $374,070.72 in medical and wage benefits, plus an $80,000 lump-sum commutation for future entitlements. The parties’ settlement preserved ProAssurance’s lien rights “against any recovery by [Manz] from any entity … as a result of the work accident.”

Separately, Manz recovered $8,571 from the at-fault driver and then pursued UIM benefits under Apis’s UIM coverage with PIC. The UIM policy contained a non-duplication clause barring payment for “any element of ‘loss’” if the person was entitled to payment under workers’ compensation or similar law. After arbitration, Manz was awarded $215,000 on her UIM claim. ProAssurance asserted a lien under 21 Del. C. § 2363(e). Manz sought a declaratory judgment that the UIM proceeds were exempt because, given the policy’s non-duplication clause, the award could only reflect items not previously paid by workers’ compensation.

The Superior Court denied ProAssurance’s motion for summary judgment, concluding Henry II did not apply because Manz’s resolution with PIC purportedly predated Henry II. ProAssurance appealed.

Summary of the Opinion

• Henry II governs: The Court held Henry II was decided in September 2023, before Manz’s November 2023 workers’ compensation commutation and UIM arbitration activity. Thus, Henry II was “the law of the land” during the relevant negotiations, and the Superior Court erred by declining to apply it.
• No guaranteed lien: The Supreme Court clarified that Henry II does not confer a guaranteed subrogation right over UIM proceeds. Instead, § 2363(e) subrogation is limited to “boardable” damages. “Non-boardable” damages—including, but not limited to, expenses covered by PIP under 21 Del. C. § 2118—are not subject to lien.
• Remand for allocation: The matter is remanded to determine the portion of Manz’s UIM award, if any, that is “boardable” and therefore lienable under § 2363(e) as interpreted in Henry II.

Analysis

Precedents and Authorities Cited

1) Horizon Services, Inc. v. Henry (“Henry II”), 304 A.3d 552 (Del. 2023): Henry II is the linchpin. It distinguishes between “boardable” and “non-boardable” damages and construes § 2363(e) in tandem with 21 Del. C. § 2118. The Court in Henry II explained that § 2363(e)’s reference to “items of expense” precluded from trial under § 2118 pertains to expenses that are not “boardable.” It held that PIP-eligible expenses are non-boardable and cannot be the subject of a workers’ compensation lien. This opinion reiterates and applies that framework.

2) 21 Del. C. § 2363(e): Governs workers’ compensation subrogation. In essence, after recovery against a third party (or a liability insurer), and after deducting expenses of recovery, the employer or its workers’ compensation carrier is reimbursed for amounts “paid or payable” under the Workers’ Compensation Act. But § 2363(e) also contains an exception for “items of expense” precluded from proof at trial by § 2118—those items are not available for reimbursement from the employee’s recovery, except as limited to the third-party liability insurer’s available coverage in certain circumstances.

3) 21 Del. C. § 2118 and § 2118(h): Delaware’s PIP statute provides no-fault benefits for reasonable and necessary expenses within two years of the accident and limits the introduction of PIP-covered expenses at trial. Under Henry II and this opinion, those PIP-eligible categories are non-boardable and not subject to a workers’ compensation lien.

4) GMG Ins. Agency v. Edelstein, 328 A.3d 302 (Del. 2024) and Paul v. Deloitte & Touche, LLP, 974 A.2d 140 (Del. 2009): Cited for the summary judgment standard (de novo review; grant only when no genuine disputes of material fact). These authorities frame the Court’s review but do not influence the substantive subrogation analysis.

Legal Reasoning

The Supreme Court’s reasoning proceeds in two steps:

• Applicability of Henry II: The Superior Court believed Henry II did not apply because Manz “resolved” her UIM claims before Henry II. The Supreme Court corrected the timeline: Henry II (Sept. 2023) predated Manz’s November 2023 workers’ compensation commutation and her UIM demand/arbitration activity. Thus, the Superior Court erred in refusing to apply the controlling decision. No retroactivity analysis was necessary because Henry II already governed the parties’ transactions.
• Scope of subrogation under § 2363(e): The Superior Court read Henry II as guaranteeing the workers’ compensation carrier reimbursement from UIM proceeds. The Supreme Court rejected that expansive reading. Henry II limits subrogation to “boardable” damages—those that can be introduced to the factfinder as line-item expenses under Delaware law. PIP-eligible expenses are non-boardable and categorically excluded from subrogation. Accordingly, there is no blanket lien over UIM funds; only the portion of a UIM award reflecting boardable damages is potentially subject to § 2363(e).

Importantly, the Court did not decide the independent question of the validity or effect of the UIM policy’s non-duplication clause on the carrier’s statutory lien rights. The Court acknowledged the parties’ arguments on this point but confined its holding to the application of Henry II and the boardable/non-boardable framework. On remand, the Superior Court must make factual findings allocating the UIM award by element of damages and then apply Henry II to determine lienability.

Impact and Practical Implications

This decision reinforces and sharpens Henry II’s rule in the UIM context and will affect claims handling, arbitration, and litigation strategy across Delaware:

• No blanket workers’ comp lien on UIM proceeds: Carriers cannot assume automatic reimbursement from UIM recoveries. They must establish the portion of the award that corresponds to boardable damages.
• PIP-eligible categories are off-limits: Expenses and losses that are PIP-eligible under § 2118 (e.g., certain medical expenses and lost wages within two years) are non-boardable and not subject to a § 2363(e) lien.
• Allocation becomes critical: Arbitrators, mediators, and courts should expect increased emphasis on itemized allocations of UIM awards by damage category. Clear allocations will facilitate post-award determinations of what is boardable versus non-boardable.
• Contract clauses vs. statutory scheme: Non-duplication clauses in UIM policies remain potentially relevant to what the UIM carrier pays, but they do not automatically resolve the workers’ compensation subrogation question. The lien analysis is governed by § 2363(e) as construed in Henry II. The Supreme Court did not adjudicate the validity or preemptive effect of the particular clause here.
• Settlement drafting and reservation of rights: Workers’ compensation carriers should continue to reserve lien rights in settlement agreements, as ProAssurance did. Employees and their counsel should anticipate that any UIM recovery may be subject to a lien to the extent it reflects boardable damages, notwithstanding non-duplication language.
• Evidence on remand: Parties should be prepared to present evidence showing the composition of the UIM award by “elements of loss.” If the award is not itemized, the court may need testimony, records, or expert allocation to determine the boardable portion.

Complex Concepts Simplified

• Subrogation (workers’ compensation): A statutory right allowing the employer or its workers’ compensation insurer to be reimbursed from the employee’s recovery against a third party for benefits the insurer has paid. In Delaware, the governing statute is 21 Del. C. § 2363(e).
• UIM (Underinsured Motorist) coverage: First-party coverage that compensates an insured when the at-fault driver’s liability insurance is insufficient to cover the insured’s damages.
• PIP (Personal Injury Protection): No-fault coverage under 21 Del. C. § 2118 that pays certain medical expenses and lost wages within specified limits and time frames (generally within two years). PIP-eligible expenses are “non-boardable”—they cannot be introduced as line-item expenses at trial and are not subject to workers’ compensation subrogation.
• “Boardable” vs. “Non-boardable” damages: “Boardable” damages are categories of loss that Delaware law allows to be presented to the jury as specific line-item expenses (e.g., certain medical bills, lost wages) at trial. “Non-boardable” damages include PIP-eligible categories barred from such presentation under § 2118. Under Henry II, only the boardable portion of a recovery is subject to a § 2363(e) lien.
• Non-duplication clause: Insurance-policy language preventing payment for losses already covered by another source (e.g., workers’ compensation). While such clauses can affect what the UIM carrier pays, they do not, by themselves, determine whether the workers’ compensation carrier has a statutory lien; that lien analysis is governed by § 2363(e) and Henry II.
• Summary judgment standard: Reviewed de novo on appeal; granted only when there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law (GMG Ins. Agency v. Edelstein; Paul v. Deloitte & Touche).

Guidance for the Remand

The Superior Court must:

• Apply Henry II’s boardable/non-boardable framework to Manz’s UIM award; and
• Make factual determinations identifying which elements of the $215,000 UIM award represent boardable damages (potentially lienable) and which represent non-boardable damages (not lienable, including PIP-eligible categories).

The record should be developed to show the allocation of the UIM award by damage category. If the arbitration award is not itemized, the court may require additional evidence to accomplish a defensible allocation consistent with Delaware law.

Conclusion

ProAssurance v. Manz confirms and operationalizes Henry II’s central teaching in the UIM context: a workers’ compensation carrier’s subrogation under 21 Del. C. § 2363(e) is not automatic and is strictly confined to the portion of a claimant’s recovery that reflects “boardable” damages. PIP-eligible items—by statute non-boardable—are categorically outside the lien’s reach. The decision reverses the Superior Court’s refusal to apply Henry II and rejects an overbroad reading that would have guaranteed reimbursement from UIM proceeds. On remand, the trial court must parse the UIM award to determine the lienable portion, if any.

In the broader Delaware landscape, this opinion incentivizes clear allocation of damages in UIM resolutions and reinforces that private policy provisions (such as non-duplication clauses) cannot supplant the statutory subrogation framework. Litigants should expect deeper attention to the composition of UIM awards and tailored evidentiary showings to establish what is boardable—and thus potentially subject to a § 2363(e) lien—going forward.