Brown v. Travelers Insurance

513 A.2d 1051, 355 Pa. Super. 535, 1986 Pa. Super. LEXIS 12312

• Court: Supreme Court of Pennsylvania
• Decided: August 15, 1986
• Docket: 02619
• Status: Published

Opinions

OLSZEWSKI, Judge:

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).¹ Appellee, Travelers Insurance Company, was designated the assigned claims insurer, but refused to honor the claim for uninsured motorist benefits.² 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,³ he was not an “innocent victim” entitled 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.

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 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.⁴ 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 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.⁵ 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 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 301,⁶ 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 the Uninsured Motorist Act.⁷ 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).

Harleysville Mutual Insurance Co. v. Schuck, 302 Pa.Super. 534, 538-539, 449 A.2d 45, 47 (1982).

Nor do we find it persuasive, as appellant argues, that neither section 601⁸ of the No-fault Act nor the Uninsured Motorist Act, 40 P.S. Sec. 2000 explicitly prohibits an uninsured owner-operator from recovering uninsured motorist benefits. Whereas section 601 expressly outlines the criminal penalties to be imposed upon those who violate the compulsory provisions of the Act, we would not expect this prohibition to be included in this section. In response to the second half of appellant’s argument, it is noteworthy that “our supreme court has reiterated on several occasions that the Uninsured Motorist Statute is 'designed to give monetary protection to that ever changing and tragically large group of persons who while lawfully using the highways themselves suffer grave injuries through the negligent use of those highways by others.’ ” (citations omitted) Adel-man v. State Farm Mutual Automobile Insurance Company, 255 Pa.Super. 116, 127, 386 A.2d 535, 540 (1978). This act was intended to provide the insured who was injured by an uninsured motorist, with the ability to recover those damages which he would have received had the uninsured motorist maintained liability insurance. Id., 255 Pa. Superior Ct. at 128, 386 A.2d at 541. (emphasis added). As a result, the act by itself did not establish any rights in an uninsured, motorist; it was only with the advent of the No-fault Act, that the uninsured victim of a motor vehicle accident could recover these benefits.⁹ Consequently, we cannot find that the Uninsured Motorist Act, standing by itself, provides the coverage demanded by appellant.

In his final attempt to persuade us in molding our decision, appellant urges us to disregard the language of section 501¹⁰ from our analysis. In interpreting this provision, our Court in Harleysville Mutual Insurance Company v. Schuck, 302 Pa.Super. 534, 449 A.2d 45 (1982), found that under section 501 of the Act, an insurer who had paid “basic loss benefits” to the uninsured owner-occupant of a motor vehicle may recover those benefits paid out from the owner of the vehicle. Thus, the Court determined that the ultimate loss was to be borne by the uninsured owner and not by the assigned claims insurer. The following year, this Court again decided that the assigned claims insurer was not obligated to pay benefits to the estate of a deceased uninsured owner-operator, since the insurer immediately would have a claim for recoupment for all such benefits paid.¹¹ The following remarks were offered by the Court in support of its decision:

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, J., files concurring statement. BROSKY, J., files dissenting opinion.

1 . Act of July 19, 1974, P.L. 489, No. 176, 40 P.S. Secs. 1009.101-701, repealed Act of February 12, 1984, P.L. 26, No. 11, Sec. 8(a), effective October 1, 1984. (Hereinafter, the prefix “1009” will be eliminated when citing to section numbers in the textual material, e.g., section 101, not section 1009.101).

2 . Appellee, however, did pay the claims submitted by appellant for basic loss benefits.

3 . Section 104(a) in pertinent part provides:

Every owner of a motor vehicle which is registered or which is operated in this Commonwealth by the owner or with his permission, shall continuously provide security covering such motor vehicle while such vehicle is either present or registered in the Commonwealth. Security shall be provided for the payment of basic loss benefits ...

4 . For instance, several years ago, one of our brethren made the following comments about the newly enacted Pennsylvania No-fault Motor Vehicle Insurance Act:

Unfortunately for ... the plaintiff ... his case is an example of the causes of ‘growing complaints’ and ‘widespread dissatisfaction’ with the administration of the Act____ The plaintiff finds himself between the proverbial rock and a hard place. He is caught in the middle of a dispute between two insurance companies litigating the question of which one is obliged to pay the plaintiff those benefits which he is entitled to receive under the Act____

Blocker v. Motorists Mut. Ins. Co., 37 Beaver Co. L.J. 87, 87 (C.P.1978) (Judge Rowley).

5 . It is noteworthy that under the No-fault Act, a victim’s legal right to recover in tort and hence the amount of his recovery is dependent upon the status of the parties (and in part on the nature of the vehicle) rather than on the nature of the conduct of the parties. Shrager & Applebaum, The Pennsylvania No-fault Motor Vehicle Insurance Act: Constitutional Analysis, 48 Temp.L.Q. 475, 485 (1975).

6 . Section 301(a)(1) of the Act, in pertinent part, provides:

An owner of a motor vehicle involved in an accident remains liable if, at the time of the accident, the vehicle was not a secured vehicle.

7 . In distinguishing the type of recoveries available under the two Acts, our Supreme Court quoted with approval the perceptive comments of Judge Teitelbaum in Carnevale v. Sentry Insurance, A Mutual Company, 469 F.Supp. 681 (W.D.Pa.1979):

The purpose of Pennsylvania’s No-fault law is to create a first party contractual right of action against one’s own insurer for economic loss and to preserve the common law cause of action for non-economic loss where certain threshold conditions have been met. Uninsured motorist coverage is designed to provide protection against being left with a worthless cause of action against the uninsured driver for non-economic loss. Absent the set-off provision, plaintiff is reimbursed for his economic losses under the no-fault coverage and reimbursed for his non-economic losses up to the policy limit by the uninsured motorist coverage. In this manner, the legislatively intended distinction between economic and non-economic losses is preserved. Public policy is also furthered in that premiums paid for uninsured motorist coverage will provide protection against non-economic losses occasioned by an uninsured motorist’s actions.

8 . Section 601. OPERATION OF A VEHICLE WITHOUT SECURITY.

Any owner of a passenger vehicle, for which the existence of security for basic loss benefits and tort liability insurance is a requirement for its legal operation upon the public highways of this State, under either section 104 or 110 of this act or sections 418, 419 or 420, act of April 29, 1959 (P.L. 58, No. 32), known as The Vehicle Code, who operates such motor vehicle or permits it to be operated upon a public highway in this State without having in full force and effect security complying with the terms of section 104 is guilty of a misdemeanor. And any other person who operates such a motor vehicle upon a public highway in this Commonwealth with the knowledge that the owner does not have such security in full force and effect is guilty of a misdemeanor. And each person convicted of a misdemeanor under the terms of this section may be fined not less than one hundred dollars ($100) or more than five hundred dollars ($500) or may be imprisoned for not more than six months or both.

9 . The new comprehensive system incorporated in the no-fault scheme should be viewed as complementing the earlier policy incorporated in the uninsured motorist act of requiring all motorists to carry liability protection against personal injury losses caused by uninsured motorists. Tucci v. State Farm Ins. Co., 503 Pa. 447, 469 A.2d 1025 (1983).

10 . Section 501 of the Act in pertinent part provides:

The obligor obligated to pay basic loss benefits ... to a person occupying a motor vehicle, the owner of which is uninsured pursuant to this act ... shall be entitled to recover all the benefits paid

11 . These following factors were listed in support of the court’s decision denying benefits to the estate: (1) the practical ability of the insurer to obtain full reimbursement from the estate of the uninsured driver; (2) the insurer’s chances of recovery would be adversely affected by the preference accorded the claim under the Probate, Estate and Fiduciaries Code; (3) motorists would be discouraged from maintaining automobile insurance coverage; (4) the estates of irresponsible vehicle owners would profit through the decedent’s wrongdoing; (5) responsible drivers would suffer higher insurance premiums. Ostronic v. Insurance Co. of North America, 314 Pa.Super. 146, 156, 460 A.2d 808, 813 (1983).