Gardner v. Erie Ins. Co.

• Decision Date: 26 January 1999
• Citation: 722 A.2d 1041,555 Pa. 59
• Parties: Lorren R. GARDNER, Appellee, v. ERIE INSURANCE COMPANY, Appellant.
• Court: Pennsylvania Supreme Court

555 Pa. 59

722 A.2d 1041

Lorren R. GARDNER, Appellee, v. ERIE INSURANCE COMPANY, Appellant.

Supreme Court of Pennsylvania.

Argued September 14, 1998.

Decided January 26, 1999.

James B. Courtney, Somerset, for Erie Ins. Co., appellant.

Vincent J. Barbera, Somerset, for L.R. Gardner, appellee.

Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN and SAYLOR, JJ,

OPINION

SAYLOR, Justice.

This appeal presents the issue of whether an employee's receipt of workers' compensation benefits relating to injuries sustained while driving a co-employee's automobile and arising out of wrongful third-party conduct bars him from recovering uninsured motorist benefits from the co-employee's insurance carrier. We hold that such recovery is not precluded.

On October 23, 1994, while driving an automobile owned by Steven J. Ward ("Ward"), Appellant Lorren Gardner ("Gardner") was injured in an accident with another driver who fled after impact. At the time of the accident, the same company employed both Gardner and Ward, and Gardner was acting within the scope of his employment. Gardner obtained workers' compensation benefits from his employer, as well as uninsured motorist benefits in the amount of $15,000 from his own insurer, Progressive Insurance. He then sought uninsured motorist benefits under Ward's insurance policy with Appellant Erie Insurance Company ("Erie").

Following Erie's denial of benefits, Gardner filed a complaint for declaratory judgment with the Court of Common Pleas of Somerset County, seeking a declaration that Erie was obligated to provide him with uninsured motorist benefits under Ward's insurance policy. After Erie filed an answer and the parties proceeded with discovery, Erie filed a motion for judgment on the pleadings. In the motion, Erie contended that Gardner's receipt of workers' compensation benefits precluded the subsequent receipt of uninsured motorist benefits under Ward's insurance policy.¹ On May 21, 1996, following oral argument, the trial court granted the motion for judgment on the pleadings. In its memorandum opinion, the trial court opened its substantive analysis with Section 205 of the Workers' Compensation Act (the "Act"),² entitled "Liability of Fellow Employee," which provides that:

[i]f disability or death is compensable under this act, a person shall not be liable to anyone at common law or otherwise on account of such disability or death for any act or omission occurring while such person was in the same employ as the person disabled or killed, except for intentional wrong.

77 P.S. § 72. In construing the breadth of this co-employee immunity provision, the trial court found this Court's decision in Ducjai v. Dennis, 540 Pa. 103, 656 A.2d 102 (1995), to be controlling. The trial court initially cited Ducjai for the decision's narrow holding that an on-the-job employee injured in an automobile accident may not recover, in addition to workers' compensation benefits from her employer, damages at common law from her co-employee. Acknowledging that the present case involves the attempt to obtain uninsured motorist benefits from a third-party insurer under the provisions of the Motor Vehicle Financial Responsibility Law (the "MVFRL"),³ rather than an action in tort for recovery of damages from the co-employee, the trial court nevertheless found that this was a distinction without a difference. Thus, the trial court concluded that Gardner's receipt of benefits under the Act precluded recovery under Ward's insurance policy.

Of particular relevance to Erie's arguments in this appeal, the trial court also considered the effect of the Act of July 2, 1993, P.L. 190, No. 44 ("Act 44"), which, among other things, repealed Sections 1735 and 1737 of the MVFRL. Section 1735 stated that uninsured and underinsured motorist coverage could not be made subject to an exclusion, or benefits made subject to reduction, because of workers' compensation benefits payable;⁴ Section 1737 stated that nothing in the Act would prevent an employee from recovering uninsured or underinsured motorist benefits from his employer's motor vehicle insurance policy.⁵ Viewing these provisions as the legislative source of authority for concurrent recovery of both workers' compensation and uninsured motorist benefits, the trial court concluded that their repeal evidenced a clear legislative purpose to preclude an employee in Gardner's situation from obtaining "a double recovery" of both forms of benefits.

On appeal to the Superior Court, the trial court's order was reversed. See Gardner v. Erie Ins. Co., 456 Pa.Super. 563, 691 A.2d 459 (1997). The Superior Court reasoned that the plain language of Section 205 of the Act limited the reach of co-employee immunity to employment-related claims directed at a co-employee arising out of his negligence. Thus, the Superior Court concluded that the co-employee immunity provision created no bar to recovery of uninsured motorist benefits from a third-party insurer predicated upon the negligence of a third-party tortfeasor. The Superior Court also disagreed with the trial court's conclusion that the repeal of Sections 1735 and 1737 of the MVFRL evidenced a legislative intent to preclude actions such as Gardner's, declining to follow dictum to the contrary set forth in Ducjai. Rather, the Superior Court essentially adopted the view concerning the import of such changes that it had previously espoused in William A. Warner Jr. v. Continental/CNA Ins. Cos., 455 Pa.Super. 295, 688 A.2d 177 (1996),appeal denied, 548 Pa. 660, 698 A.2d 68 (1997).

In its appeal to this Court, Erie states the question presented as follows:

After the [r]epeal of Sections 1735 and 1737 of the [MVFRL] in 1993, and in light of this Court's pronouncements in [Ducjai], . . . did the Superior Court err when it held that an employee, who sustained injuries in the scope of his employment, and received workers' compensation benefits, can, in addition, claim uninsured motorist benefits against his co-employee's policy of motor vehicle insurance?

Thus, the linchpins of Erie's arguments are Ducjai and the repeal of Sections 1735 and 1737 — Erie contends that Ducjai essentially compels the view that such repeal evidences a clear legislative intent to make workers' compensation benefits the exclusive remedy available to an injured employee as against his employer, co-employees, and all of their insurers. Gardner counters that the dictum of Ducjai sweeps too far in that the legislative purpose underlying the repeal of Sections 1735 and 1737 of the MVFRL was not to preclude an employee's dual recovery of workers' compensation and uninsured motorist benefits. In this regard, Gardner refers this Court to Warner and Travelers Indem. Co. of Illinois v. DiBartolo, 131 F.3d 343 (3d Cir.1997).

The arguments thus framed, we begin our analysis with Ducjai. There, this Court was presented with a contention that, despite the plain language of Section 205, an employee receiving workers' compensation benefits could also recover damages in tort from a co-employee. In support of such argument, the appellant relied upon several decisions that had permitted the simultaneous receipt of workers' compensation and uninsured motorist benefits under the then-effective version of the MVFRL. See Ducjai, 540 Pa. at 107,656 A.2d at 104 (citing Selected Risks, Ins. Co. v. Thompson, 520 Pa. 130, 552 A.2d 1382 (1989); Chatham v. Aetna Life & Cas. Co., 391 Pa.Super. 53, 570 A.2d 509 (1989)(permitting an injured employee to recover uninsured motorist benefits from an employer's insurer), aff'd per curiam, 529 Pa. 494, 605 A.2d 329 (1992); and Ferry v. Liberty Mut. Ins. Co., 392 Pa.Super. 571, 573 A.2d 610 (1990)(same)).⁶

In addressing this argument, the Court first examined the law regarding co-employee liability before the passage of the MVFRL, focusing upon Section 205 of the Act, which "clearly provide[d] that a co-employee [was] immune from liability for his negligent act resulting in injury to his fellow employee." Ducjai, 540 Pa. at 108, 656 A.2d at 104 (quoting Apple v. Reichert, 443 Pa. 289, 292, 278 A.2d 482, 483 (1971)). After noting the absence of any "manifest intention" of the General Assembly that the MVFRL should prevail over this immunity provision, the Court examined the cases cited by the appellant for the proposition that dual recovery of workers' compensation and uninsured motorist benefits was permitted. The Court took a narrow view of the holding of the Supreme Court precedent cited (Selected Risks) and questioned the correctness of the Superior Court cases (Chatham and Ferry). See Ducjai, 540 Pa. at 112, 656 A.2d at 106.

Remaining on the collateral subject of uninsured motorist benefits, the Court stated that the holdings of Chatham and Ferry created a narrow exception to the employer exclusivity provision.⁷ The Court then indicated that such exception had been eliminated by the repeal of Sections 1735 and 1737 of the MVFRL in 1993. The Court interpreted the effect of those amendments as follows:

[T]hese changes in the law were intended by the legislature to proclaim the supremacy of the [Act's] exclusivity provision and to reaffirm the principle that an employee may not seek double recovery for a work-related injury. The legislature has tried time and again to make it clear that worker[s'] compensation benefits are to be the exclusive remedy for employment-related injuries, save for those intentionally inflicted.

Ducjai 540 Pa. at 112-13, 656 A.2d at 106 (quoting Ducjai v. Dennis, 431 Pa.Super. 366, 379, 636 A.2d 1130, 1137 (1994)).

Based upon its analysis, the Court in Ducjai rejected the appellant's arguments and confirmed the long-standing principal that an employee could not recover damages in negligence from a co-employee for injuries for which he is receiving workers' compensation benefits. Because uninsured motorist benefits were not at issue in the case, however, the Court's discussion...