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DAVID M. JOHNSON v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (02/15/85)

filed: February 15, 1985.

DAVID M. JOHNSON
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, APPELLANT



No. 932 Pittsburgh 1984, Appeal from the Order entered June 20, 1984 in the Court of Common Pleas of Allegheny County, Civil No. GD 83-10814.

COUNSEL

Charles W. Kenrick, Pittsburgh, for appellant.

Ruth A. Zittrain, Pittsburgh, for appellee.

Rowley, Olszewski and Popovich, JJ.

Author: Olszewski

[ 339 Pa. Super. Page 114]

In this appeal, State Farm Mutual Automobile Insurance Company seeks to overturn a declaratory judgment of the Court of Common Pleas of Allegheny County. The court held that the plaintiff, David M. Johnson, was entitled to reimbursement, with interest, from State Farm for medical expenses incurred after a car accident, and that the insurer must pay the plaintiff's attorney's fees pursuant to Sec. 107(3) of the No-Fault Motor Vehicle Insurance Act, 40 Pa.C.S. Sec. 1009.101-701 (Purdon's 1984-85 Supp.). We affirm the order of the lower court.

David M. Johnson, a high school student, was injured in a car accident on July 7, 1981. His father, Philip, held a Blue Cross/Blue Shield health insurance policy; he also held a State Farm Mutual automobile insurance policy.*fn1 David's sister, Anna, also held a State Farm policy of automobile insurance. David's father had elected to coordinate benefits under his auto insurance policy, making Blue Cross/Blue Shield the primary payor of benefits in the event of an accident. David's sister had made no such election.

[ 339 Pa. Super. Page 115]

After incurring medical expenses, David received reimbursement from Blue Cross/Blue Shield. He then sought to recover the same expenses from State Farm under his sister's policy.*fn2 Although, under his sister's policy, David was a covered person, State Farm refused full reimbursement, maintaining that Blue Cross/Blue Shield's involvement permitted State Farm to share with the health insurer the net cost of medical expenses and that David was not entitled to full basic loss benefits under the auto insurance policy.*fn3 David sued for a declaratory judgment on benefits due; when the court below held for him, State Farm appealed.

The issue may be stated as follows: When a person has medical insurance under both automobile insurance and health plans, does the No-Fault Act restrict recovery to the net loss, split equally between the covering insurers? State Farm maintains that the No-Fault Act may be interpreted so as to make health insurers "obligors" within the meaning of the No-Fault Act, and that when two or more obligors exist, the insured may be reimbursed for only the net loss and the obligors may divide the cost between them.

Appellee, on the other hand, maintains that health insurers cannot be "obligors" under the Act, and thus the provision allowing contribution among multiple sources of equal property, 40 Pa.C.S. Sec. 1009.204(b), is inapplicable. Thus, appellee argues, an insured may receive more than his net loss when covered by a health policy and an automobile policy.

We do not believe that the legislature, when it enacted the No-Fault Act, meant to denote health insurers as "obligors" to which the Act applied. 40 Pa.C.S. Sec. 1009.103 defines ...


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