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GARY ZEPP v. NATIONWIDE INSURANCE COMPANY (08/14/81)

filed: August 14, 1981.

GARY ZEPP, APPELLANT,
v.
NATIONWIDE INSURANCE COMPANY



No. 1767 October Term, 1979, Appeal from Order of the Court of Common Pleas, Trial Division, Civil Section, of Phila. County, July Term 1978, No. 4929.

COUNSEL

Joseph Mellace, Philadelphia, for appellant.

Gerard Bruderle, Philadelphia, for appellee.

Spaeth, Brosky and Hoffman, JJ.

Author: Spaeth

[ 290 Pa. Super. Page 29]

This is an appeal from an order granting summary judgment. Appellant, Gary Zepp, claims benefits under a nofault automobile insurance policy issued by appellee to his father, James Zepp. The lower court acknowledged that there was an "unresolved question of fact concerning whether

[ 290 Pa. Super. Page 30]

    or not the payments sought by [appellant] are in fact 'overdue' under the Act*fn1 and whether or not they have been properly rejected by [appellee]." It nevertheless granted summary judgment because it calculated that even if the payments had been improperly refused, appellee still did not owe appellant anything. Since we find the lower court's calculation in error, we reverse.

The lower court found that based on its interpretation of the policy, appellant had been overpaid on his work loss claim by $134.35. The court then assessed interest against appellant at the rate of 18% from the day after the last day included in the work loss period until the time the suit was started, increasing the amount appellant owed appellee to $183. The amount of unpaid medical bills claimed in appellant's complaint was $409.49. By reducing this amount by a $250 deductible, the court found that the most appellee could owe appellant would be $159.49. Since this was less than the amount the court had determined appellant owed appellee, the court entered judgment in favor of appellee and against appellant.

The court's assessment of 18% interest against appellant was improper. Section 106(a)(2) of the No-fault Act, 40 P.S. ยง 1009.106(a)(2), provides that when no-fault benefits are not paid on time by the insurance company, they bear interest at 18%. The Supreme Court has held that this high rate -- three times the normal legal rate of 6% -- reflects a legislative determination that prompt payment of no-fault benefits is of particular importance and is to be encouraged. Hayes v. Erie Insurance Exchange, 493 Pa. 150, 425 A.2d 419 (1981). Nothing indicates any intention by the legislature to apply this rate to overpayments erroneously made by an insurance company.*fn2

[ 290 Pa. Super. Page 31]

In addition, the court's assumption that the amount of unpaid medical bills claimed in appellant's complaint should be reduced by a $250 ...


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