Manolakis v. Transamerica Insurance

578 A.2d 503, 396 Pa. Super. 256

• Court: Supreme Court of Pennsylvania
• Decided: January 4, 1991
• Docket: 01067
• Status: Published

Opinions

HUDOCK, Judge:

This is an appeal from an order granting judgment on the pleadings in favor of Appellee, Transamerica Insurance Company, and against Appellant, a named insured under the Transamerica policy. The trial court concluded that Appellant was seeking to “stack” the benefits under the Transamerica policy with those he obtained under a policy issued by Allstate Insurance Company. Because stacking is prohibited under Section 1717 of the Motor Vehicle Financial Responsibility Law, (“MVFRL”), 75 Pa.C.S.A. § 1701 et seq., the trial court entered judgment on the pleadings.

This action was precipitated by an automobile accident which caused Appellant to suffer certain injuries. At the time of the accident, Appellant was the named-insured on two policies of automobile insurance, both covering the vehicle he owned and operated at the time of the accident. A policy issued by Allstate provided first-party medical coverage of $10,000 and income loss coverage of $50,000. The second policy issued by Transamerica contained limits of $100,000 for medical expenses and $15,000 for loss of income.

Appellant sought to recover first-party benefits against Transamerica by the filing of a Complaint. Transamerica in response filed an Answer and New Matter alleging that, as a result of the same accident, Appellant had made application to Allstate for its limits of first-party medical and wage loss coverage, and had recovered these $10,000 and $50,000 limits. Because of this payment, Transamerica alleged that under § 1717(2) of the MVFRL, Appellant was not entitled to receive benefits under its policy. Appellant’s Reply admitted that Allstate paid its policy limits for medical and wage loss benefits arising out of this accident, but denied that this recovery fully compensated Appellant for the losses he sustained in the accident. Transamerica filed a Motion for Judgment on the Pleadings which the court granted. The trial court concluded that Appellant was seeking to “stack” the benefits available under the two separate policies, and ruled that the benefits could not be increased by such “stacking” under § 1717(2) of the MVFRL.

The section of the MVFRL which the trial court utilized in reaching its decision speaks directly to stacking. It states:

§ 1717. Stacking of benefits

First party benefits shall not be increased by stacking the limits of coverage of: ...

(2) multiple motor vehicle policies covering the individual for the same loss.

Appellant acknowledges that this case does concern multiple motor vehicle policies which provide him with coverage for the same loss. Although the situation is as described in subsection (2), Appellant claims that he is not violating the provisions of § 1717 because he is not seeking to “stack” the limits of these coverages. Appellant claims that where there are two sources for payment of first-party benefits and these sources are of equal priority under § 1713(b) of the MVFRL, both sources are required to make a pro rata payment of the total loss sustained by the insured, the pro rata share being determined by policy limits, and that this procedure does not constitute the “stacking” prohibited by § 1717. We disagree.

Section 1713(b), relied on by appellant, provides as follows:

(b) Multiple sources of equal priority—The insurer against whom a claim is asserted first under the priorities set forth in subsection (a) shall process and pay the claim as if wholly responsible. The insurer is thereafter entitled to recover contribution pro rata from any other insurer for the benefits paid and the cost of processing the claim ...

From this, Appellant concludes that Allstate would not have fulfilled its obligation until the Transamerica policy limits were also exhausted, notwithstanding that Allstate had already paid its medical benefits limit of $10,000 and income loss benefits of $50,000. In effect, Appellant contends that Allstate, as the insurer against whom the claim was first asserted, has the obligation to pay the claim “as if wholly responsible”, without regard to any policy limit, and then it may seek contribution from Transamerica.

We do not read § 1713(b) as creating rights against any carrier in excess of the limits of its own policy. The section provides a procedure for processing claims where there are multiple sources of equal priority, putting the burden on the first source against whom the claim is asserted, and then giving that first source pro rata contribution rights against other equal priority sources, subject always to contractual limits of liability. To adopt Appellant’s argument would require rewriting the contract of the parties and implying an obligation on the part of the first carrier to make the insured whole no matter what its policy limits, but allowing it contribution from other equal priority sources. This we decline to do. When Allstate paid its policy limits, it fulfilled its obligation and extinguished Appellant’s claim for first-party benefits.

The argument of Appellant would also emasculate the clear language of 75 Pa.C.S.A. § 1717 which prohibits stacking. A similar argument was made and rejected by our Court in Laguna v. Erie Insurance Group, 370 Pa.Super. 308, 536 A.2d 419 (1988). The plaintiff there was the named insured in a policy with Federal Kemper Insurance Co., (“Kemper”), with medical benefit limits of $10,000. The insured was involved in an accident which resulted in medical expenses in excess of $10,000. Kemper paid the $10,000 limit of its coverage. The insured then claimed under a separate policy issued by Erie Insurance Group, (“Erie”), to his wife, but which covered him also. The medical benefit limits of this policy were $100,000. This Court affirmed the grant of summary judgment in favor of Erie. There, as here, the insured conceded the validity of § 1717, but contended that he was not trying to “stack” coverages because he was not seeking duplicate benefits for the same loss. Rather he contended that the same loss was not involved in his claims against the two carriers. He contended that he did not seek recovery against Erie for the $10,000 in medical bills which was covered by Kemper, and that Erie was liable for those medical bills which remained unpaid after the exhaustion of the Kemper policy limits. Our Court rejected this interpretation of “loss”, and instead declared that “loss” refers to the physical injury suffered by the insured. “Where the insured is involved in a single accident which necessitates medical treatment for injuries suffered in the accident, all medical expenses incurred are part of the 'same loss’ for purposes of determining the applicability of Section 1717.” Laguna, at 314, 536 A.2d at 422.

If it is unfair to require an insured to choose carefully when submitting a claim against several insurers,¹ or if anti-stacking legislation is unfair, relief must come from the Legislature, not the courts.

In summary, we hold that where a claim for first party benefits is made against one of several carriers of equal priority under 75 Pa.C.S.A. § 1713, and that carrier makes payment which exhausts the limits of its coverage, a claim for first-party benefits against another carrier of equal priority for losses incurred as the result of injuries sustained in the same accident is precluded.

Judgment affirmed.

DEL SOLE, J., files a dissenting opinion. BEFORE: CAVANAUGH, DEL SOLE and HUDOCK, JJ.

1 . It may be that Appellant’s decision was carefully considered. The first policy of Allstate, while containing a lower medical benefit limit, did contain a much higher income loss benefit than the policy issued by Transamerica. It may be that Appellant decided that income loss benefits were likely to be the major item of expense and he chose to claim against Allstate first for that very reason.