decided: December 21, 1983.
PATRICIA MODESTA, APPELLANT,
SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY, APPELLEE
No. 49 E.D. App. Dkt. 1982, Appeal from the Judgment of the Superior Court of Pennsylvania, at No. 274, Philadelphia, 1981, dated May 21, 1982,
Roberts, C.j., and Larsen, Flaherty, Hutchinson and Zappala, JJ. Nix and McDermott, JJ., did not participate in the consideration or decision of this case. Hutchinson, J., concurred in the result.
[ 503 Pa. Page 439]
On March 2, 1978, appellant Patricia Modesta was injured when the Southeastern Pennsylvania Transportation Authority (SEPTA) bus in which she was a passenger was struck from behind by an uninsured motorist. On December 17, 1979, appellant demanded arbitration of her uninsured motorist claim with SEPTA. When SEPTA refused to arbitrate, appellant commenced a suit in equity demanding arbitration, uninsured motorist coverage, and judgment in the amount of $50,000.*fn1 The court of common pleas granted SEPTA's preliminary objection and dismissed appellant's complaint. On appeal, the Superior Court affirmed. Modesta v. Southeastern Pennsylvania Transportation Authority, 300 Pa. Super. 6, 445 A.2d 1271 (1982). We granted appellant's petition for allowance of appeal and we now reverse.
[ 503 Pa. Page 440]
In the trial court, SEPTA's sole preliminary objection was that appellant had failed to state a cause of action because SEPTA, as a self-insurer, was not required to provide uninsured motorist coverage. The trial court sustained the objection based upon this Court's 4-3 decision in Johnson v. Yellow Cab Company, 456 Pa. 256, 317 A.2d 245 (1974). Appellant first argues that the holding of Johnson v. Yellow Cab is "unduly narrow and technical" and that Johnson v. Yellow Cab should now be overruled. We agree.
The Uninsured Motorist Act, Act of August 14, 1963, P.L. 909, § 1, as amended, 40 P.S. § 2000, provides that
(a) No motor vehicle liability policy of insurance insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this State with respect to any motor vehicle registered or principally garaged in this State, unless coverage is provided therein or supplemental thereto . . . for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease . . . .
In Johnson v. Yellow Cab, this Court held that the Uninsured Motorist Act does not require self-insurers to provide uninsured motorist coverage because the statute applies only to "liability policies of insurance," and self-insurers do not have or purchase "liability policies of insurance." Id., 456 Pa. at 259, 317 A.2d at 247.
The purpose of the Uninsured Motorist Act is to
"afford financial recompense to persons who receive injuries . . . solely through the negligence of motorists, who, because they are uninsured and not financially responsible, cannot be made to satisfy a judgment." . . . [O]ur determination here is in harmony with the view that the "statute evolves from public policy considerations and must be broadly and liberally construed to accomplish this purpose . . . ."
[ 503 Pa. Page 441]
claims of those individuals for whose protection the insurance laws have been enacted.
Accordingly, we hold that SEPTA is required to maintain uninsured motorist coverage under the Uninsured Motorist Act even though it is self-insured, and we overrule this Court's decision in Johnson v. Yellow Cab to the contrary.
Appellant further argues that Johnson v. Yellow Cab must also be overruled in light of the passage of the No-Fault Motor Vehicle Insurance Act, Act of July 19, 1974, P.L. 489, No. 176, 40 P.S. §§ 1009.101 et seq. Although we have no trouble concluding that Johnson v. Yellow Cab must be overruled based solely upon the provisions of the Uninsured Motorist Act, we note that the error of that decision has only been amplified since the passage of the No-Fault Act.*fn3
Three factors related to the No-Fault Act highlight the unacceptable situation created by this Court's decision in Johnson v. Yellow Cab: 1) the No-Fault Act has made insurance mandatory for all owners of motor vehicles, see 40 P.S. § 1009.104(a); 2) every policy of insurance issued under the no-fault act must provide for uninsured motorist coverage, see 31 Pa.Code § 66.11; and 3) the No-Fault Act provides for insurance coverage, including uninsured motorist benefits, for every victim of an uninsured motorist, either through a policy of insurance or through the no-fault assigned claims plan, see 40 P.S. § 1009.108(a), 40 P.S. § 1009.204(a), Tubner v. State Farm Automobile Insurance Company, 496 Pa. 215, 436 A.2d 621 (1981).
[ 503 Pa. Page 443]
As a result of these changes brought about by the No-Fault Act and this Court's decision in Johnson v. Yellow Cab, until today there were two groups of individuals who received no uninsured motorist protection: uninsured motorists who caused accidents, and uninsured occupants of self-insured vehicles. It is reasonable to deny uninsured motorist coverage to the first group, since they have not only chosen not to comply with the mandatory insurance law, but have also caused the accidents which resulted in their injuries;*fn4 however, it makes no sense in terms of any policy of deterrence, retribution or liberal construction of a remedial statute, to deny uninsured motorist coverage to uninsured individuals who have not caused the accidents which resulted in their injuries, simply because they were occupants of self-insured vehicles.*fn5
Were we to let stand the holding of Johnson v. Yellow Cab, an uninsured passenger would receive more complete compensation if he were involved in a ten-car collision in which no one had any insurance than if he were injured by an uninsured motorist while riding on a self-insured SEPTA bus. The uninsured passenger who was injured in the ten-car collision could file a claim with the no-fault assigned claims plan and would receive both no-fault and uninsured motorist benefits. See 40 P.S. § 1009.108(a); 40 P.S. § 1009.204(a)(5); Tubner, supra.*fn6 However, the uninsured
[ 503 Pa. Page 444]
passenger who was injured on a SEPTA bus when it was hit by an uninsured motorist would get no uninsured motorist benefits: SEPTA's self-insurance would preclude any claim being made through the assigned claims plan, see 40 P.S. §§ 1009.108(a)(1), 1009.204(a)(3); yet applying Johnson v. Yellow Cab, SEPTA would not need to honor any claim for uninsured motorist benefits.
It is thus clear that Johnson v. Yellow Cab must be overruled, not only to accomplish the remedial purpose of the Uninsured Motorist Act, but also to avoid the anomalous situations which have resulted since the enactment of the No-Fault Act. In fact, the provisions of the No-Fault Act also lead us to conclude that SEPTA must provide uninsured motorist coverage.
The No-Fault Act specifically states that the security covering a motor vehicle may be provided through self-insurance. 40 P.S. § 1009.104(a). The Act provides that
Self-insurance, subject to approval of the [Insurance] [C]commissioner and [D]department [of Transportation], is effected by filing with the department in satisfactory form:
(1) a continuing undertaking by the owner . . . to pay basic restoration benefits and any tort liability required in amounts not less than those required, by subsection (a) of this section . . .;
(2) evidence that appropriate provision exists for prompt and efficient administration of all claims, benefits, and obligations provided in accordance with this act; and
(3) evidence that reliable financial arrangements . . . exist providing assurance substantially equivalent to
[ 503 Pa. Page 445]
that afforded by a contract of insurance complying with this act for payment of no-fault benefits, any required tort liability, and performance of all other obligations imposed in accordance with this act.
40 P.S. § 1009.104(b) (emphasis added).
Under the No-Fault Act, the owner of a motor vehicle must insure that vehicle either by purchasing a policy of insurance or by qualifying as a self-insurer. 40 P.S. § 1009.104(a). The approval which a self-insurer receives from the Insurance Commissioner and the Department of Transportation is, therefore, simply a substitute for the policy of insurance which the vehicle owner would otherwise have to buy in order to comply with the No-Fault Act. In fact, the approval received by the self-insurer serves the same function as the liability policy of insurance which an individual purchases: both indicate that the vehicle owner intends to comply with the mandatory insurance law, and both indicate that there is security in at least the amounts required by statute covering the vehicle. Thus, the approval received by a self-insurer allowing it to self-insure is the equivalent of a "liability policy of insurance" within the meaning of the Uninsured Motorist Act, and yet another justification for our holding that self-insurers are required to provide uninsured motorist coverage.*fn7
[ 503 Pa. Page 446]
The order of the Superior Court is reversed and the case is remanded for further proceedings consistent with this opinion.*fn8