3 CIR 20 (1975)


Plaintiff, |
County of Johnson, State of |
Nebraska, a/k/a Tecumseh Public |
Schools, |
Defendant. |

Appearances; For Plaintiff, Theodore L. Kessner

For Defendant, L. Bruce Wright

Heard before Judges Wall, Rudolph and Green


In our prior opinion in this case, we directed that:

"The school district shall provide long term income protection insurance which provides income continuation in the event of disabling accident or sickness after a sixty (60) day elimination period..." Tecumseh Education Association v. The School District of Tecumseh, 2 CIR 119-13 (1975).

The School District has now moved for modification of that portion of the order upon the grounds that despite good faith efforts on its part, it has not been able to procure such insurance. The Union resisted the order upon the grounds that good faith had not been shown, and that in any event, the teachers should be provided with a sum equal to premium dollars not paid.

In our view, at the entry of our order, the District had the obligation within a reasonable period of time to procure the insurance coverage ordered. While our decree is not a contract, it founds enforceable obligations. Section 48-819. If a degree is breached, that is a District does not procure insurance within a reasonable period of time, it would be liable in an enforcement proceeding for appropriate damages. In our view, a failure to procure insurance within a reasonable period of time, if an insured event had occurred, would leave the District liable to provide to the injured teacher the benefits which he would have received had the appropriate policy been procured. The District's liability in this regard would be analogous either to the liability of an insurance carrier who failed to act with reasonable dispatch upon an application, Keeton, Insurance Law, Basic Text, section 2.4(a), pp. 45-46; or an agent who unreasonably failed to procure insurance, Keeton, op. cit., section 2.5(a), pp. 52-53. Thus, if the District had unreasonably failed to procure insurance coverage at the time of a disabling event, it would be liable, in economic impact, as a self-insured to provide the benefits out of its own funds.

If the District cannot, despite good faith effort, obtain the insurance coverage ordered, it should promptly return to this court for modification of the original order. If it fails to seek prompt modification, and the time within which insurance could reasonably have been expected to be procured has expired, it is in the breach of the order.

If despite good faith effort, the District cannot provide insurance coverage, that is an appropriate grounds for a motion for modification. In our view, the decisions of this Court are analogous to the decrees of courts of equity regulating continuing conduct. As such, they are subject to modification upon a showing of changed circumstances. Section 48-818. Practical impossibility of procuring a fringe benefit would amount to a change in circumstances. Where such a change in circumstances occurred, the Court would be required to make appropriate adjustments in the compensation allowed to teachers to reflect the economic benefit lost by the lack of fringe benefits. The appropriate adjustment would depend upon acceptance of the appropriate adjustment, and in default of such acceptance, the District would remain liable on the original decree.

However, here the teachers have lost no benefit. Until a motion for modification is granted, the decree is outstanding. It would found a duty enforceable in an appropriate judicial proceeding. Section 48-819. Under our order, as we have construed it here, until the grant of the motion to modify, the School District would be a self-insurer. Since the school year has now expired, the teachers for the full year had the benefit of income guarantee insurance through the District's obligation under the decree to fund benefits, where insurance had not yet been procured. That being the case, the teachers have lost no economic benefit. The District did not pay premiums, but because it did not pay premiums to another, it bore the insurer's burden. Thus, in the absence of modification of the decree, the teachers received the economic benefit to which they were entitled.

The motion for modification was filed in July. A grant of the motion could be appropriately back dated to the date of its filing. Whether a modification of an order could be back dated so as to wipe out an obligation which had accrued because of the occurrence of an insured event, for example disability of a teacher prior to acquisition of income guarantee insurance, is a more difficult question. Fortunately, this case does not present that question.

Under the circumstances of this case, and the decree as we have construed it, until the date of the motion for modification, the teachers had lost no economic benefit. If we grant the motion, and back date our grant to the date of the motion, the loss of protection to the teachers appears to be de minimis. The affidavits filed by the parties leave us in no doubt that the defendant proceeded in good faith to attempt to procure the income protection insurance. Under the circumstances, we grant the motion of defendant as from the date of its filing.

Filed November 19, 1975.