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JOSEPH BROWN v. TRAVELERS INSURANCE COMPANY (08/15/86)

SUPERIOR COURT OF PENNSYLVANIA


filed: August 15, 1986.

JOSEPH BROWN, APPELLANT,
v.
TRAVELERS INSURANCE COMPANY, APPELLEE

Appeal from the Order Entered September 6, 1984 in the Court of Common Pleas of Philadelphia County, Civil No. 658 April Term 1984.

COUNSEL

Joseph Grossman, Philadelphia, for appellant.

David M. McCormick, Philadelphia, for appellee.

Cirillo, President Judge, and Cavanaugh,*fn* Brosky, Wieand, Olszewski, Del Sole, Montemuro, Beck and Tamilia, JJ. Montemuro, J., files concurring statement. Brosky, J., files dissenting opinion.

Author: Olszewski

[ 355 Pa. Super. Page 536]

This matter comes before this en banc panel on appeal from an order of the lower court granting appellee's motion for judgment on the pleadings. The relevant events giving rise to this plea occurred on June 10, 1983, when appellant, Joseph Brown, the owner-operator of an uninsured motor vehicle was involved in an accident with another uninsured motorist. Appellant alleges that he was totally without fault in causing the accident. Since neither motor vehicle was insured at the time of the accident, appellant submitted his claim for basic loss and uninsured motorist benefits under the assigned claims plan of the Pennsylvania No-fault Motor Vehicle Insurance Act (hereinafter the Act or the No-fault Act).*fn1 Appellee, Travelers Insurance Company, was designated the assigned claims insurer, but refused to honor the claim for uninsured motorist benefits.*fn2 Consequently, appellant commenced an action against appellee, but on a motion by the latter party, the lower court dismissed the complaint. The court reasoned that since appellant failed to maintain the coverage mandated by section 104(a) of the Act,*fn3 he was not an "innocent victim" entitled

[ 355 Pa. Super. Page 537]

    to recover uninsured motorist benefits under Tubner v. State Farm Mutual Automobile Insurance Co., 496 Pa. 215, 436 A.2d 621 (1981). Moreover, the court refused to award these benefits to appellant inasmuch as he ultimately was liable under section 501 of the Act for all payments made on his behalf. Appellant now challenges this decision and contends that he is entitled to receive uninsured motorist benefits for the following reasons: (1) the Pennsylvania Supreme Court, in Tubner and Modesta v. Southeastern Pennsylvania Transportation Authority, 503 Pa. 437, 469 A.2d 1019 (1983), guarantees all innocent victims the right to receive uninsured motorist benefits under the assigned claims plan; (2) neither the Uninsured Motorist Act, 40 P.S. Sec. 2000, nor section 601 of the No-fault Act expressly prohibits an uninsured owner-operator from acquiring uninsured motorist benefits; and (3) an uninsured owner-operator should not be denied these benefits merely because the insurer has a right to reimbursement under section 501 of the Act. We will address these arguments seriatim.

[ 355 Pa. Super. Page 538]

Undoubtedly, this Court is no stranger to that piece of legislation which was enacted to cure the inadequacies of a prior system of insurance which distributed justice and compensated injuries based upon a fault finding process. While in retrospect, it now may be easy for us to condemn the system which was intended to be the panacea for the problems of the pre-No-fault era, nevertheless, it should not be forgotten that the Act embodied many noble goals. With its advent, the Act not only afforded accident victims the certainty of knowing that their losses would be covered by their own insurance, but it also suppressed the disparities of an arbitrary recovery system. In addition, the Act eliminated the need for jury trials in establishing liability, thereby avoiding the excessive costs of litigation and the lengthy delays in compensating and restoring accident victims. See Comment, Whose Fault is No-fault? The Pennsylvania Page 538} No-fault Motor Vehicle Insurance Act, 41 U.Pitt.L.Rev. 27 (1979). See also Shrager & Applebaum, The Pennsylvania No-fault Motor Vehicle Insurance Act: Constitutional Analysis, 48 Temp.L.Q. 475 (1975).

Notwithstanding these carefully articulated intentions, the Act was riddled with many problems.*fn4 Yet, despite these inadequacies, we are certain that the legislators never intended an uninsured owner-operator to recover uninsured motorist benefits under the assigned claims plan. Moreover, when this Court was before confronted with the same issue, it decided that an uninsured owner-operator of a motor vehicle may not recover uninsured motorist benefits from an assigned claims plan insurer. Johnson v. Travelers, 343 Pa. Super. 560, 495 A.2d 938 (1985); Aagesen v. The Travelers Companies, 346 Pa. Super. 45, 498 A.2d 1363 (1985).

Now, in defense of his position, appellant argues that the Pennsylvania Supreme Court in Tubner not only established the rights of all uninsured victims of motor vehicle accidents to receive uninsured motorist benefits under the assigned claims plan, but it also reaffirmed this position in Modesta and limited it to exclude from coverage only those uninsured owner-operators who cause accidents. We disagree with these interpretations.

In Tubner, the Court was presented with the problem of deciding whether the administratrix of the victim's estate would be allowed to recover both basic loss and uninsured

[ 355 Pa. Super. Page 539]

    motorist benefits under the assigned claims plan. It is significant to our analysis that the victim who was injured in an uninsured automobile was himself an uninsured passenger.*fn5 Although it did not become an explicit part of the Tubner Court's decision, it is noteworthy that the victim was uninsured, not for the reason that he willfully or negligently failed to maintain his own automobile insurance, but simply because he did not own an automobile, and therefore was not obliged to maintain the compulsory no-fault coverage. See also Drusak v. Insurance Company of North America, 340 Pa. Super. 205, 489 A.2d 914 (1985) (pedestrian who was struck by a motorcycle was entitled to recover uninsured motorist benefits, as well as "basic loss" benefits, under the assigned claims plan); Prudential Property & Casualty Insurance Company v. Falligan, 335 Pa. Super. 195, 484 A.2d 88 (1984) (uninsured pedestrians who were injured after being struck by uninsured motorists were entitled to recover uninsured motorist benefits). Appellant, in the instant case, however, cannot proffer the same excuse, since he violated the express mandates of the Act by failing, whether through intent or neglect, to maintain the compulsory insurance.

Likewise, appellant's argument that Modesta only forbids coverage to that limited class of uninsured motorists who cause accidents is without merit. The Court in Modesta was confronted with the issue of whether the transportation authority, a self-insurer, was required to provide uninsured motorist coverage to its uninsured passengers. In dicta, the Court noted that prior to its decision there were two groups of individuals who received no uninsured motorist protection: uninsured motorists who cause accidents, and uninsured occupants of self-insured vehicles. In denying

[ 355 Pa. Super. Page 540]

    recovery to the former group, but affording it to the latter, the Court stated:

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, 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.

Modesta v. Southeastern Transportation Authority, 503 Pa. 437, 443, 469 A.2d 1019, 1023 (1983).

On the basis of these comments, it is illogical for us now to conclude that the Court meant to deny coverage only to that group of motorists who cause accidents and award benefits to everyone else. As part of its analysis, the Court noted that not only are these motorists at fault in causing the accident, but they also have failed to maintain the compulsory insurance. It would be inconsistent for us to afford appellant recovery merely because he did not cause the accident when the no-fault system has eliminated the need to determine fault in awarding benefits. While appellant's innocence in causing the accident is commendable, it is more significant that appellant failed to maintain that insurance which was designed to award him benefits in the event that he would be involved in an accident with another uninsured motorist. This observation, we believe, is reinforced by the legislature's inclusion in the Act of section 601, which sanctions those who fail to comply with the mandatory provisions of section 104, and section 301,*fn6 which places ultimate liability upon the uninsured owner.

Moreover, there is a recognizable difference between the type of injuries compensated for under the No-fault Act and

[ 355 Pa. Super. Page 541]

    the Uninsured Motorist Act.*fn7 Our Supreme Court in Tucci v. State Farm Insurance Co., 503 Pa. 447, 469 A.2d 1025 (1983), defined basic loss or no-fault benefits to include payment for economic loss or "special damages," i.e., medical expenses and loss of earnings, whereas uninsured motorist benefits were composed of awards attributable to non-economic loss or "general damages," i.e., pain and suffering. Id., 503 Pa. at 450, 469 A.2d at 1026. It is noteworthy that under the No-fault Act, even an uninsured owner-operator who had been injured in a motor vehicle accident was entitled to receive full and immediate professional treatment. Since appellant in the instant case has already been compensated for his economic losses in the form of basic loss benefits, we would not offend the policy provisions of the No-fault Act by denying him the right to recover uninsured motorist benefits.

Compensating an injured victim of a vehicular accident is a paramount purpose of the legislatively adopted no-fault scheme. Thus, an injured victim, even if he or she is an uninsured owner, can receive "prompt and comprehensive professional treatment" and thus be rehabilitated and returned as a productive member of society as quickly as possible. See Section 102(a)(9) of the No-fault Act, 40 P.S. Sec. 1009.102(a)(9).

[ 355 Pa. Super. Page 542]

In the situation of a deceased victim, the justification of speeding treatment and rehabilitation simply does not apply. We can perceive no other legislative intent in the Act to support a rule requiring payment to an uninsured deceased owner's estate in such a case, with undeserved enrichment for the estate and unrecoverable losses by the assigned risk insurer being the probable results in such circumstances.

Ostronic v. Insurance Company of North America, 314 Pa. Super. 146, 157, 460 A.2d 808, 814 (1983).

We too believe that in the instant case, there is no just reason for us to provide uninsured motorist benefits to a motorist who has violated the compulsory insurance law. Inasmuch as appellant already was compensated for his economic losses, we are unsympathetic to his present pleas. If we were to award these benefits in this instance, we would not only insult those motorists who have paid the high insurance premiums protecting against such catastrophes, but we would also impose an undue burden upon insurers to recover these benefits without any difficulties, i.e., insolvency of the owner-operator. Thus, in denying the rights of an uninsured owner-operator to receive uninsured motorist benefits under the assigned claims plan, we note the profound words of our late President John F. Kennedy when he said, "Our privileges can be no greater than our obligations. The protection of our rights can endure no longer than the performance of our responsibilities."

Order affirmed.

MONTEMURO, Judge, concurring:

I heartily join in the well-reasoned Opinion by Judge Olszewski. I wish to add only that my deliberations and resolve have been significantly influenced by the thoughtful

[ 355 Pa. Super. Page 545]

Opinion of our esteemed colleague Judge James E. Rowley in Johnson v. Travelers Insurance Co., 343 Pa. Super. 560, 495 A.2d 938 (1985).

BROSKY, Judge, dissenting.

This case is before us on appeal from judgment entered in favor of the defendant, Travelers Insurance Company. The sole issue for our determination is whether appellant, the owner/operator of an uninsured motor vehicle, allegedly innocent of causing an accident, is entitled to receive uninsured motorist benefits from the insurance company designated by the Pennsylvania Assigned Claims Plan*fn1 to process appellant's claim. Although I agree to a large extent with the majority Opinion, I believe dicta in Supreme Court cases should lead us to reach a different result.

In Tubner v. State Farm Mutual Auto Ins. Co., 496 Pa. 215, 436 A.2d 621 (1981), our Supreme Court decided the issue of "whether a company designated to provide insurance coverage pursuant to the assigned claims plan of the No-Fault Act is required to pay not only 'basic loss benefits,' but also uninsured motorist benefits." In that case, a passenger in an uninsured automobile was killed in an accident, and the administratrix of his estate brought an action against the appellant insurance company to recover uninsured motorist benefits. Appellant had been designated as the participating insurer under the assigned claims provisions of the No-Fault Act, and had paid basic loss benefits. The company refused, however, to pay uninsured motorist benefits. The Supreme Court ruled that the administratrix was entitled to the benefits.

The court found that section 108(b)*fn2 of the Act required assigned insurers to compensate motor vehicle accident victims who were not otherwise covered by insurance, just

[ 355 Pa. Super. Page 546]

    as if a policy of basic loss insurance had been issued. The court stated: "Because assigned insurers are obligated precisely as if they had issued basic loss insurance policies, and because every policy of basic loss insurance issued in Pennsylvania must include uninsured motorist coverage, the right to uninsured motorist benefits under the assigned claims plan follows a fortiori from a straightforward reading of the statute and the regulation lawfully promulgated thereunder." 496 Pa. at 219, 436 A.2d at 623 (emphasis in original). The court reasoned that adopting a contrary view would have the effect of affording recovery of general damages to all motor vehicle victims injured by uninsured motorists except those covered by the assigned claims plan, with harsh results. The court added that because a claimant under the assigned claims plan is covered as if he had obtained a policy of basic loss insurance, his right to uninsured motorist benefits cannot be distinguished from that of holders of valid insurance policies.

In Modesta v. SEPTA, 503 Pa. 437, 469 A.2d 1019 (1983), a bus passenger, injured when the bus in which she was

[ 355 Pa. Super. Page 547]

    riding was struck from behind by an uninsured motorist, sought uninsured motorist benefits from the transportation authority. The Supreme Court held on appeal that the transportation authority, as a self-insurer, was required to provide uninsured motorist coverage. The court stated:

[U]ntil 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; 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. 503 Pa. at 443, 469 A.2d at 1022-23 (footnotes omitted; emphasis added).

The court went on to hold that the uninsured occupant of the self-insured vehicle was entitled to uninsured motorist coverage. Although the quoted language does not constitute the holding of Modesta, it seems to indicate the Supreme Court's feeling that only uninsured motorists who are actually responsible for accidents are to be denied uninsured motorist coverage.

Accepting the result that an innocent but uninsured owner/operator may recover uninsured motorist benefits, there are two ways to proceed. We might find that a party claiming uninsured motorist benefits should be entitled to receive such benefits from the assigned claims carrier, who could later recover the amounts paid if the claimant was found to have caused the accident. This approach would be supported by a broad interpretation of Section (d) of the Uninsured Motorist Act. That section provides: "In the event of payment to any person under the coverage required by this section, the insurer making such payment

[ 355 Pa. Super. Page 548]

    shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury for which such payment is made . . . ." (Emphasis added.)

Arguably, this section would give the insurance company the right to recover from the claimant any uninsured motorist benefits paid to the claimant if the claimant was responsible for causing the accident. Such an approach would be analogous to that followed by our court in Harleysville Mutual Insurance Co. v. Schuck, 302 Pa. Super. 534, 449 A.2d 45 (1982), in which a panel of our court approved the payment of No-Fault basic loss benefits to an owner/operator of an uninsured vehicle, and held that the insurance company was entitled to recover those benefits. In Schuck, our court noted that compensating an injured victim of a vehicular accident was one of the main purposes of the No-Fault Act, "[t]hus an injured victim, even if he or she is an uninsured owner, can receive 'prompt and comprehensive professional treatment' and thus be rehabilitated and returned as a productive member of society as quickly as possible." 302 Pa. Super. at 538, 449 A.2d at 47.*fn3

The other, and I believe better, approach would be to not require that uninsured motorist benefits be paid until such time as a determination has been made that the claimant was not at fault in causing the accident. The considerations of Schuck do not apply in the context of uninsured motorist benefits, since basic loss benefits have, in at least the vast majority of cases, already been paid, frequently directly to the provider of medical services or supplies, and since the uninsured motorist benefits will therefore in most cases be compensation for non-economic detriment, rather than being required for the claimant's rehabilitation. Payment of uninsured motorist benefits can, without causing undue hardship,

[ 355 Pa. Super. Page 549]

    await a determination of fault. Uninsured motorist benefits paid to a claimant would very likely be put to use by the claimant, and the insurance company would not be certain to obtain the money that it had paid out. The more sensible of the two approaches would therefore appear to be to require the insurance company to pay the uninsured motorist benefits only after a determination had been made that the claimant would not be required to return some or all of such payments to the insurance company.


*fn* CAVANAUGH, J., did not participate in the decision in this case.


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