Brower v. Nationwide Mut. Ins. Co.

• Decision Date: 13 March 1987
• Parties: Dorothy E. BROWER v. NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant.
• Court: Pennsylvania Superior Court

Page 635

522 A.2d 635

361 Pa.Super. 385

Dorothy E. BROWER v. NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant.

Superior Court of Pennsylvania.

Argued Sept. 24, 1986.

Filed March 13, 1987.

Karen E. Pfeffer, Altoona, for appellant.

Richard M. Serbin, Altoona, for appellee.

Before CIRILLO, President Judge, and CAVANAUGH, WICKERSHAM ^*, ROWLEY, WIEAND, OLSZEWSKI, DEL SOLE, POPOVICH and JOHNSON, JJ.

JOHNSON, Judge:

This case presents the question of whether Section 203 of the Pennsylvania No-fault Motor Vehicle Insurance Act, (No-fault Act), Act of July 19, 1974, P.L. 489, No. 176, § 203, 40 P.S. § 1009.203, repealed by the Act of February 12, 1984, P.L. 26, No. 11, § 8(a), effective October 1, 1984, affords any basis for requiring an insurer to pay collateral benefits in excess of the reasonable charges incurred for medical treatment by a motor vehicle accident victim. We think it does not. We reverse the order which granted summary judgment to the victim.

In March of 1983, Dorothy E. Brower (Brower) sustained serious injuries as a pedestrian when struck by a motor vehicle insured by Nationwide Mutual Insurance Company (Nationwide). Brower, who lived alone, did not own a motor vehicle. She did maintain coverage under a medical benefits group policy with Blue Cross/Blue Shield (BC/BS).

As a result of the injuries sustained, Brower received medical treatment and services at the Nason Hospital resulting in total billings of $31,148.35, after subtracting a minor sum for television services ($27) which was paid by Brower. Of this amount, BC/BS paid $9,000 directly to the hospital, following a reduction write-off of $17,106.35 based upon a reduced payment agreement between the hospital and BC/BS. A final payment by BC/BS in the sum of $300 was made to the hospital.

Brower made a demand upon Nationwide for payment to her in the sum of $26,106.35, representing the aggregate of the actual payment first made by BC/BS to the hospital ($9,000) and the write-off or allowance ($17,106.35). In response, Nationwide tendered its check to Brower for $9,000 pointing out that it was prepared to satisfy any final cash balance due the hospital after all BC/BS payments and allowances were completed. Nationwide refused to pay Brower for the amount of the write-off which BC/BS had allowed to the hospital pursuant to the agreement between BC/BS and the hospital.

This suit was instituted against Nationwide to recover the amount of the write-off. Following the close of pleadings, the trial court granted Brower's motion for summary judgment, holding that Section 203(a) of the No-fault Act entitled Brower to receive back from Nationwide "the savings of the $26,106.35 occasioned by her BC/BS insurance coverage." We reverse.

In a companion case Hauck v. Ohio Casualty Group of Insurance Companies, 361 Pa.Super 370, 522 A.2d 628 (1987) (Opinion by Johnson, J.) we determined that double recovery, while permitted under the law set forth in Steppling v. Pennsylvania Manufacturers' Association Insurance Co., 328 Pa.Super. 419, 477 A.2d 515 (1984), is limited to an amount not exceeding the reasonable charges actually incurred by the victim. We held therein that the amount which a provider of goods and services accepts in discharge of all claims against the patient-victim represents the best gauge of the charges incurred.

While appellant Hauck in the companion case did argue that she was entitled to recover an amount above and beyond the actual payments to the hospital on the basis that no election had been made by the insured under Section 203(b) of the No-fault Act, we were not required to construe the language contained in Section 203 since the determination of the "allowable expense" is governed by the definition of that term in Section 103 of the Act.

In the case now before us, both the trial court and Brower, the appellee, have read Section 203 as requiring payment of benefits beyond an amount equal to the charges actually incurred. We reject that analysis. Section 203(a) provides as follows:

If benefits other than no-fault benefits are provided to an individual through a program, group, contract or other arrangement for which some other person pays in whole or in part that would inure to the benefit of a vicitm or the survivor of the deceased victim injured as a result of an accident in the absence of no-fault benefits, then any reduction or savings in the direct or indirect costs to such person of such benefits resulting from the existence of no-fault benefits shall be returned to such individual or utilized for his benefit. (emphasis added).

We read Section 203(a) as a legislative command that a provider of health insurance benefits may not realize a savings in the costs associated with providing a group contract, if those cost savings result from the existence of no-fault insurance benefits, without either passing on those savings in costs to the consumer or enhancing the program of benefits available at the same premium price. Applyin...