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Case Notes - Autmobile Law

To strike Down Insurance Policy Provision Which Excludes Uninsured And Underinsured Motorist Coverage For Injured Police Officer Injured In The Course And Scope Of His Employment).

In a divided opinion the Commonwealth Court upheld an exclusion in insurance policy that resulted in a police officer not being allowed to recover uninsured or underinsured motorist benefits from his employer’s own insurance policy when he was injured in the course and scope of his employment while occupying the employer’s vehicle. At trial court level the exclusion was set aside but in 2008 the Commonwealth court in a 2-1 opinion reversed. See Heller v. Pennsylvania League of Cities, 950 A. 2d 362 (Pa. Commw. 2008)

Heller filed a Petition for Allowance of Appeal and the Pennsylvania Supreme Court granted the Petition on the following issue: Whether or not the Honorable Court should strike down an exclusion in (Respondents’) policy providing that any person receiving worker’s compensation benefits was ineligible for UM/UIM benefits?

Thus, the validity of the Commonwealth Court decision is now in doubt. As of now, the brief of the Appellant Heller was die on August 18, 209. No date has been set for argument.

Erie Insurance Exchange v. Baker, 972 A.2d 507 (Pa. 2009) (Plurality Decision Of Pennsylvania Supreme Court Upholds Household Exclusion In Case Where Different Insurance Companies Insure Household Vehicles).

Eugene Baker (“Baker”) was injured in a motorcycle accident with an underinsured motorist. He collected the liability coverage from the third party and the initial underinsured motorist coverage from his motorcycle insurance policy. Underwritten by Universal. He did not reject stacking on any policy, and sought underinsured motorist coverage on household vehicle policy insured with Erie Insurance Exchange (“Erie”). Erie denied the claim based on the household exclusion, The Trial Court and Superior Court (Memorandum Decision) enforced the exclusion. Baker appealed to the Supreme Court, and the appeal was granted on the single issue:

Whether Section 1738(a) of the MVFRL precludes the application of the so called “household exclusion” to prevent inter-policy UIM stacking when there has been no valid waiver of stacking by the insured?

On June 22, 2009 the Pennsylvania Supreme Court, in a Plurality opinion, held that under the “circumstances of this case” the household exclusion is valid and enforceable.

The lead, three-Justice opinion, authored by Justice Greenspan (and joined by C.J. Castille and Justice Eakin) mainly relies upon the Pennsylvania Supreme Court decisions in Prudential Prop & Cas. Ins. Co. v. Colbert, 813 A.2d 747(Pa. 202) and Eichelman v. Nationwide Ins. C., 711 A.2d 1006 (Pa. 1998). They believe that this is not a stacking case, but really an issue that the insured has not gotten coverage to begin with so there is nothing to stack. Thus, the exclusion prevents any coverage and is valid under the facts of the case.

Justice Saylor joins the other three Justices to uphold the exclusion, but concurs in the result only and writes that Baker argument is stronger that the lead opinion portrays. He notes that the issue may not be one of stacking, but seems to imply or indicate that under some circumstances and sets of facts the exclusion would be invalidated, The lead opinion and concurrence both repeatedly mention the fact that Erie never knew of the risk of a motorcycle place on a different company’s policy.

A three-Justice dissent authored by Justice Baer (and joined by Justices Todd and McCaffery) says that the exclusion is a violation of one’s right to stack and the policyholder is not getting what coverage for which they paid. They would find this is a stacking case under Section 1738 and strike down the exclusion.

Six v. Phillips and Nationwide, No. 12227 of 2008 (Beaver Co. 2009) (Trial Court Denies Individual Defendant Preliminary Objection Seeking To Sever Third Party And Underinsured Motorist Claims).

This is a case where the Plaintiff Carlie Six (“Six”) filed a third party and underinsured motorist case in the same proceeding arising out of a car accident that occurred on August 13, 2006, in Beaver County. Six filed suit against the Defendant Mark Phillips(“Phillips”), who was insured with Erie Insurance Group, as well as her underinsurd motorist carrier Nationwide Mutual Insurance Company since the insurance policy did not allow for arbitration of her claim under the circumstances.

Phillips filed Preliminary Objections to the joinder alleging that it is impermissible to introduce evidence of insurance in the trial of the third party case.

The trial court relies upon Pennsylvania Rule of Civil Procedure 2229(b), which states that it is permissible to join action involving the same transaction or occurrence and the same factual questions of liability and damages. In this case, the court finds the third party and underinsured motorist claims arise out of the same occurrence, which is the August 13, 2006 accident, and involves the same factual questions of liability and damages, the injuries to the plaintiff.

The trial court also notes that introducing evidence of insurance does not mandate that the cases be severed. Under the law, it writes that evidence of insurance is not barred where it might be prejudicial. The court notes that both Erie and Nationwide should have known and anticipated that the third party insurance policy would be relevant to the contract claim. Also, Nationwide is still entitled to a credit in the amount of the third party policy before nationwide would have to pay. Thus, the Preliminary Objections are denied.

By Scott B. Cooper, Esq. (PAJustice News)

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