Nationwide Mut. Ins. Co. v. U.S. Fidelity & Guar. Co.

• Decision Date: 01 September 1986
• Docket Number: No. 160,160
• Citation: 314 Md. 131,550 A.2d 69
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY v. UNITED STATES FIDELITY & GUARANTY COMPANY et al. ,
• Court: Maryland Court of Appeals

Page 131

314 Md. 131

550 A.2d 69

NATIONWIDE MUTUAL INSURANCE COMPANY v. UNITED STATES FIDELITY & GUARANTY COMPANY et al.

No. 160, Sept. Term, 1986.

Court of Appeals of Maryland.

Nov. 28, 1988.

Rodger O. Robertson (A. Douglas Owens, on the brief), Baltimore, for appellant.

M. King Hill, Jr. (Smith, Somerville & Case, Baltimore, for part of appellee U.S. Fidelity & Guar. Co.; Ralph S. Tyler, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., Baltimore, for other appellee Treasurer of Maryland), all on one brief, for appellee.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, COUCH, ^* McAULIFFE and ADKINS, JJ.

ELDRIDGE, Judge.

In Harden v. Mass Transit Adm., 277 Md. 399, 354 A.2d 817 (1976), this Court held that, under the pertinent provisions of the Maryland Insurance Code and the Maryland Vehicle Law, now codified in Code (1957, 1986 Repl.Vol.), Art. 48A, §§ 539 through 546, and Code (1977, 1987 Repl.Vol., 1988 Supp.), §§ 17-101 through 17-110 of the Transportation Article, the State of Maryland was not required to provide "no fault" Personal Injury Protection (PIP) benefits for persons occupying or injured by state motor vehicles, and that a motor vehicle liability insurance policy covering state motor vehicles did not have to contain coverage for such benefits. The issue in the instant case is whether the decision in Harden remains viable.

I.

Before turning to the facts of this case, it would be useful to review the pertinent statutory provisions and the holding in Harden.

A.

Subtitle 35 of the Insurance Code, consisting of §§ 538 through 547A, relates to required coverages in motor vehicle casualty insurance policies issued in Maryland. Among other things, the subtitle mandates coverage for medical, hospital and disability benefits, for uninsured motorist benefits, and for personal injury and property damage liability. Thus, § 539 states that "[n]o policy of motor vehicle liability insurance shall be issued, sold or delivered in this State ... unless the policy also affords the minimum medical, hospital, and disability benefits set forth herein" for persons injured in motor vehicle accidents. ¹ The benefits prescribed by § 539, commonly known as "Personal Injury Protection" or "PIP" benefits, are payable without regard to fault ( § 540(a)). Section 541(c)(2) requires that "every policy of motor vehicle liability insurance issued ... in this State ... shall contain coverage ... for damages which the insured is entitled to recover from" an uninsured motorist. ² Under § 541(a) of the Insurance Code, every motor vehicle casualty insurance policy issued in Maryland must provide specified minimum liability coverage.

If an insurance policy "issued, sold, or delivered" in Maryland omits or purports to exclude a particular coverage required by law, the omission or exclusion is ineffective, and the insurance policy will be applied as if the minimum required coverage were contained in the policy. See, e.g., Gable v. Colonial Insurance Company, 313 Md. 701, 703, 548 A.2d 135 (1988), and cases there cited; Lee v. Wheeler, 310 Md. 233, 528 A.2d 912 (1987); Tucker v. Fireman's Fund Ins. Co., 308 Md. 69, 517 A.2d 730 (1986).

Whereas subtitle 35 of the Insurance Code relates to the contents of motor vehicle casualty insurance policies issued, sold, or delivered in Maryland, Title 17 of the Transportation Article of the Code, which is part of "the Maryland Vehicle Law," ³ concerns the "required security" which must be maintained on a "motor vehicle that is required to be registered in" Maryland ( § 17-104(b)). Ordinarily the "required security" is a motor vehicle insurance policy ( § 17-103(a)(1)), although the State Motor Vehicle Administration may accept another form of security in place of an insurance policy ( § 17-103(a)(2)). As would be expected, the "minimum benefits" which the required security must provide for under the Transportation Article generally parallel the Insurance Code's required coverages in motor vehicle insurance policies issued in Maryland. They include PIP benefits ( § 17-103(b)(3)), uninsured motorist benefits ( § 17-103(b)(4)), and payment of liability claims ( § 17-103(b)(1), (2)). The sanctions in the Transportation Article for violations of the required security provisions are, inter alia, suspension of vehicle registration and criminal prosecution ( §§ 17-104 through 17-109).

B.

Harden v. Mass Transit Adm., supra, 277 Md. 399, 354 A.2d 817, was a declaratory judgment action by several persons who, while passengers on Mass Transit Administration (MTA) buses, had been injured in motor vehicle accidents. The defendants in the declaratory judgment action were the MTA and the Transit Casualty Company. The MTA was (and is today) a state agency which owned and operated the buses, and the Transit Casualty Company was a private insurer which had issued a motor vehicle liability insurance policy covering the buses at the time of the accidents. The Harden plaintiffs had sought from both the MTA and the Transit Casualty Company PIP benefits on account of their injuries, but the MTA and the Transit Casualty Company had refused to pay the claims. The refusals were based on the defendants' assertions that the insurance policy did not cover PIP claims, that the Insurance Code did not mandate coverage for PIP benefits in policies insuring state owned and operated motor vehicles, and that the MTA, under the required security provisions of the Maryland Vehicle Law, was not obligated to provide PIP benefits for state owned and operated vehicles. Harden v. Mass Transit Adm., supra, 277 Md. at 402-404, 354 A.2d at 818-819. The plaintiffs countered that the plain language of subtitle 35 of the Insurance Code and of the required security provisions of the Vehicle Law covered the insurance policy and the vehicles involved. 277 Md. at 405, 407, 354 A.2d at 819-820.

This Court in Harden agreed with the defendants' position, holding as follows (277 Md. at 413, 354 A.2d at 824):

"We conclude that there was no manifest intention demonstrated on the part of the General Assembly to include MTA within the 'no fault' insurance provisions and that if it had intended to include MTA within those provisions it would have made a specific provision to that effect."

The Court relied chiefly on the principle of statutory construction that a statute regulating or affecting the activity of persons or corporations is ordinarily construed as not encompassing the government itself unless it expressly so provides, 277 Md. at 408-409, 411-413, 354 A.2d at 822-824. See, e.g., United States v. United Mine Workers, 330 U.S. 258, 270-276, 67 S.Ct. 677, 685-687, 91 L.Ed. 884 (1947); United States v. Cooper Corporation, 312 U.S. 600, 61 S.Ct. 742, 85 L.Ed. 1071 (1941); M. & C.C. v. Balto. Gas Co., 232 Md. 123, 135-136, 192 A.2d 87 (1963); State v. Rich, 126 Md. 643, 649, 95 A. 956 (1915), all cited in the Harden opinion. See, in addition, In re Arnold M., 298 Md. 515, 522, 471 A.2d 313 (1984); City of Baltimore v. State, 281 Md. 217, 223, 378 A.2d 1326 (1977), and cases there cited.

As a result of the statutory construction holding of the Harden case, § 539 of the Insurance Code, which generally required PIP coverage in all motor vehicle liability insurance policies issued in Maryland, was not deemed to embrace insurance policies on state owned and operated vehicles. Similarly, the required security provisions of the Maryland Vehicle Law, now codified in § 17-103 of the Transportation Article of the Code, did not require the State of Maryland or state agencies to provide PIP benefits for persons injured in or by state owned and operated motor vehicles.

II.

The facts of the present case are not significantly different from the facts of Harden, although the present case involves state owned and operated automobiles used by various state agencies instead of MTA buses, and this case involves uninsured motorist benefits as well as PIP benefits.

The case grew out of four separate motor vehicle accidents involving state owned and operated automobiles and state employees. In one accident, a State Highway Administration automobile being driven by a state employee, Robert N. Stout, was involved in a collision in Baltimore City, resulting in Mr. Stout's incurring medical expenses and lost wages. Another accident, in Westminster, involved a Maryland State Police automobile driven by Marion K. Bowers, who also incurred medical expenses and/or lost wages. An automobile used by the State Department of Health and Mental Hygiene, in which Vanessa V. Garrett was a passenger, was involved in an accident in Anne Arundel County, causing Ms. Garrett to incur both medical expenses and lost wages.

The fourth accident involved a collision in Baltimore City between a State Department of Transportation automobile, in which Jerome Spann was a passenger, and an uninsured motor vehicle. The collision was allegedly caused by the negligence of the driver of the uninsured vehicle. Mr. Spann suffered personal injuries, and incurred medical expenses and lost wages.

During the period when the accidents took place, the four state automobiles were covered by a motor vehicle liability insurance policy issued to the State of Maryland by the United States Fidelity and Guaranty Company (USF & G). This policy did not contain coverage for PIP or uninsured motorist benefits. Nevertheless, Robert Stout, Marion Bowers, Vanessa Garrett, and Jerome Spann filed PIP claims with USF & G, and Jerome Spann also filed with USF & G a claim for uninsured motorist benefits. USF & G, however, declined to pay the claims.

Throughout the relevant period, the four state employees were covered by personal automobile insurance policies issued by Nationwide Mutual Insurance Company. As required by subtitle 35 of the Insurance Code, these Nationwide policies provided coverage for PIP and uninsured motorist benefits. After their claims were denied by USF & G, the four state...