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HEUSLE v. NATIONAL MUT. INS. CO.

September 26, 1979

Patti A. HEUSLE et al., Plaintiffs,
v.
The NATIONAL MUTUAL INSURANCE COMPANY et al., Defendants, and The United States of America, Involuntary Plaintiff or in the alternative, Defendant.



The opinion of the court was delivered by: MUIR

Patti A. Heusle and her parents, George and Joyce Heusle, filed this action against the National Mutual Insurance Company, Celina Group, (National Mutual) and the Travelers Insurance Company (Travelers) seeking recovery of certain insurance benefits to which Patti A. Heusle claims entitlement under policies of insurance issued on behalf of her parents and on behalf of Yvonne DiStasi. The United States of America, the United States Coast Guard and the United States Department of Health, Education and Welfare have been joined as involuntary Plaintiffs or in the alternative as Defendants. On June 14, 1979, the parties filed an agreed statement of facts which was supplemented on August 2, 1979. On June 14, 1979, Plaintiffs, Travelers and National Mutual filed motions for summary judgment. On June 18, 1979, Travelers filed a motion to enlarge its time to file a brief in support of its motion accompanied by a brief. All parties having concurred in the motion, the Court will grant it. On June 29, 1979, Plaintiffs and National Mutual filed briefs in support of their motions. On July 6, 1979, Travelers filed a brief in support of its motion and an addendum thereto was filed by Travelers on July 10, 1979. On July 16, 1979, Plaintiffs and National Mutual filed briefs in opposition to each other's motions. On July 23, 1979, Plaintiffs filed a brief in opposition to Travelers' motion and a brief in reply to National Mutual's brief in opposition to Plaintiffs' motion. On July 24, 1979, National Mutual filed a brief in response to Travelers' brief in support of its motion for summary judgment. On July 30, 1979, Travelers filed a brief in reply to Plaintiffs' brief in opposition to Travelers' motion. For the reasons which follow, the Court will issue an order granting National Mutual's motion and granting in part and denying in part Plaintiffs' and Travelers' motions for summary judgment.

 Plaintiffs' claim for no-fault benefits is based on three theories. First, they allege that Patti Heusle is entitled to benefits under the Travelers' policy as a relative of George Heusle, the named insured. Second, they allege that if Patti Heusle is not entitled to benefits under the Travelers' policy, then she is entitled to benefits under the National Mutual policy pursuant to § 204(a)(3) of the Pennsylvania No-Fault Insurance Act as a passenger in DiStasi's car. Third, Plaintiffs have asserted claims on behalf of the United States alleging the United States is an insured under both policies or is a third party beneficiary under the policies. Plaintiffs had asserted a claim on behalf of the United States based on the Federal Medical Care Recovery Act, 42 U.S.C. § 2651, et seq. On February 20, 1979, the Court issued an order dismissing that claim.

 It is the Court's view that Patti Heusle was an insured under the Travelers policy. National Mutual, therefore, is entitled to summary judgment. Section 204 of the Pennsylvania No-Fault Insurance Act provides that no-fault benefits shall be paid first by the victim's insurance company if the victim is insured under a no-fault policy. Although Patti Heusle was not the named insured, the Travelers policy provided protection for any relative of the named insured, George Heusle. Relative, in turn, is defined by the policy as any person related to the named insured by blood who resides in the same household whether or not temporarily residing elsewhere. Prior to the time Patti Heusle enlisted in the Coast Guard, she resided with her parents. The parties agree that at the time Patti Heusle was injured she maintained no residence other than at her parents' residence. The Court, therefore, concludes that Patti Heusle was insured by Travelers' insurance policy. National Mutual would be liable to the Plaintiffs for Patti Heusle's damages only if Patti Heusle was not insured by Travelers. Since the Court determines that she was so insured, there is no basis on which to impose liability on National Mutual.

 Travelers contends that § 206(a) of the Pennsylvania No-Fault Insurance Act provides that the government benefits received by Patti Heusle must be deducted from the amount to which she is entitled under the Pennsylvania No-Fault Insurance Act. Section 206(a) provides:

 
". . . (A)ll benefits . . . that an individual receives . . . from social security (except those benefits provided under Title XIX of the Social Security Act and except those medicare benefits to which a person's entitlement depends upon use of is so-called "life-time reserve' of benefit days) workmen's compensation, any State-required temporary, nonoccupational disability insurance, and All other benefits . . . received by . . . an individual because of the injury from any government, unless the law authorizing or providing for such benefits or advantages makes them excess or secondary to the benefits in accordance with this act, shall be subtracted from loss in calculating net loss." (emphasis supplied)

 Travelers contends that (1) the benefits Patti Heusle received on account of her service in the Coast Guard are included within the phrase "all other benefits . . . received . . . from any government" and (2) the statute authorizing the payments, 10 U.S.C. § 1071 et seq. does not make the benefits excess or secondary to the benefits provided by the Pennsylvania No-Fault Insurance Act. It is the Court's view that Travelers is correct.

 Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938) requires that the Court apply Pennsylvania law in construing the Pennsylvania No-Fault Insurance Act. The Pennsylvania Supreme Court has not construed section 206(a) of the act. The Commonwealth Court of Pennsylvania, in Erie Insurance Exchange v. Sheppard, 39 Pa.Cmwlth. 30, 394 A.2d 1075, 1076-77 (1978) has construed this section as has the Court of Common Pleas of Philadelphia County, in Bowdren v. State Farm Insurance Company, 6 D&C 3d 292 (1977). In Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 87 S. Ct. 1776, 18 L. Ed. 2d 886 (1967), the Supreme Court of the United States stated that decisions of lower state courts should be afforded some weight but that they are not controlling when the highest court in the state has not spoken on the point. Accord National Surety Corp. v. Midland Bank, 551 F.2d 21, 29 (3d Cir. 1977). The Court, therefore, will give due weight to these lower court decisions but is not bound by them. In any event, it is the Court's view that the facts of this case are distinguishable from the facts in Erie Insurance and Bowdren.

 The Court notes that the language of § 206(a) is all-inclusive. Unless the government benefits are excess or secondary, all benefits received from any government must be subtracted from the amount recoverable under the no-fault act. Plaintiffs argue that the phrase "all other benefits" must be construed in light of the specific examples listed in the statute: social security, workmen's compensation, and state required temporary non-occupational disability insurance. It is Plaintiffs' position that only these government benefits available to an extremely large number of people were intended by the legislature to diminish the no-fault benefits received. Plaintiffs claim that benefits such as Patti Heusle received are related specifically to her employment by the Government and, therefore, are not benefits to be subtracted from no-fault benefits pursuant to § 206(a). This argument was accepted by the courts in Bowdren and Erie Insurance.

 It is the Court's view, however, that there is no basis in the statute for this added exception to § 206(a). The examples set forth in § 206(a) are by way of illustration but not of limitation. The exception suggested by Plaintiffs is contrary to the policy of the Pennsylvania No-Fault Insurance Act. Section 203 of the Pennsylvania No-Fault Insurance Act provides for a reduction in no-fault premiums if an insured obtains other insurance he designates as the primary source of benefits in the event of an injury covered by the No-Fault Insurance Act. In Singer v. Sheppard, 33 Pa.Cmwlth. 276, 381 A.2d 1007, 1012 (1978), the Commonwealth Court of Pennsylvania found that § 203 was intended to encourage people to purchase collateral insurance which in turn would reduce the risks borne by no-fault insurers presumably leading to lower insurance rates for all motorists. Similarly, § 206, by requiring recourse to government benefits before permitting the recovery of no-fault benefits, has the effect of reducing the risk which must be borne by no-fault insurers and presumably results in lower premiums for motorists. This goal is consistent with the stated policy of the Pennsylvania No-Fault Insurance Act: to provide adequate basic loss benefits at a reasonable cost to the purchaser of motor vehicle insurance. 40 P.S. § 1009.102.

 Sections 203 and 206 are compatible because in each the legislature contemplated that benefits other than no-fault benefits would be the primary sources from which an injured person recovers. If a person purchases such insurance and designates it to be his primary source of recovery, § 203(c) provides that his no-fault insurance premiums must be reduced to reflect the anticipated reduction of basic loss benefits. If, however, the no-fault premiums are not reduced, a person carrying two types of insurance is entitled to receive benefits under both plans. In the case of government programs in § 206, however, there is no direct reduction in insurance premiums.

 This case is also distinguishable on its facts from Erie Insurance. The Government benefits involved in Erie Insurance were sick pay received by government employees. In that case, the sick pay benefits were exhaustible and the Commonwealth Court relied on that fact in reaching its decision. Erie Insurance Exchange v. Sheppard, 39 Pa.Cmwlth. 30, 394 A.2d 1075, 1077 (1978). The Commonwealth Court noted that exhaustible sick pay is similar to the medicare payments excluded from Section 206 because the medicare payments so excluded are also exhaustible. This distinction further reduces the persuasiveness of Erie Insurance.

 The Bowdren opinion does not clearly indicate whether the wage continuation plan under which the plaintiff continued to receive his salary while he was injured was exhaustible. The insurance company in Bowdren had refused to pay the wage loss contending that § 206 was applicable. The Court of Common Pleas rejected this argument in part because of its interpretation that the only government benefit programs included within § 206 were general programs such as social security or workmen's compensation and in part because § 103 specifically includes as loss of income that which would have been lost but for any wage continuation plan. This indicates that the legislature did not intend to reduce no-fault benefits on account of a worker's wage continuation plan. In the ...


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