Saunders v. State Farm Ins. Co.
| Decision Date | 19 January 1982 |
| Citation | 294 Pa.Super. 424,440 A.2d 538 |
| Parties | Barbara SAUNDERS v. STATE FARM INSURANCE COMPANY, Appellant. |
| Court | Pennsylvania Superior Court |
Argued June 24, 1981.
Alan Dion, Philadelphia, for appellant.
Richard C. Angino, Harrisburg, for appellee.
Before HESTER, CAVANAUGH and DiSALLE, [*] JJ.
The sole issue for our determination in this case may be stated as follows: Where an insured has received reimbursement for all of his medical expenses and lost earnings under the personal injury protection coverage contained in his no-fault insurance policy, may an arbitrator also make an award for the same medical expenses and lost earnings in addition to an award for pain and suffering as part of the insured's recovery under the uninsured motorist coverage?
In this case the appellee, Barbara Saunders, was insured by the appellant State Farm Insurance Company. The policy contained personal injury protection under the no-fault coverage and uninsured motorist coverage. According to appellant's brief, the appellee paid two premiums, one for personal injury coverage and one for uninsured motorist coverage. The appellee was injured in a motor vehicle accident and the appellant paid her $2,478.00 for medical expenses and lost earnings under the personal injury protection within the no-fault provisions of the policy. The parties agreed to the appointment of an arbitrator, A. Arthur Hanamirian, Esquire with respect to a dispute under the uninsured motorist coverage. Following a hearing the arbitrator awarded the appellee $9,987.00 representing an award of $7500.00 for pain and suffering and $2,487.00 for medical expenses and lost earnings. The court below denied the insurance carrier's petition to modify the arbitrator's award and granted the appellee's petition to confirm the award.
The policy issued by the appellant to the appellee provided for no-fault coverage and stated:
What We Pay.
We will pay in accordance with the No-Fault Act for bodily injury to an insured, caused by accident resulting from the maintenance or use of a motor vehicle as a vehicle:
The policy also contained uninsured motorist coverage which stated:
We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance or use of an uninsured motor vehicle.
With respect to the uninsured motorist coverage the policy contained a set-off clause which stated the following:
2. Any amount payable under this coverage shall be reduced by any amount paid or payable to or for the insured:
a. by or for any person or organization who is or may be held legally liable for the bodily injury to the insured;
b. for bodily injury under liability, or no-fault coverages or
Our first determination is whether the set-off provision in the uninsured motorist coverage is valid. A similar set-off provision in the uninsured motorist section was found to be invalid by a unanimous panel in Brader v. Nationwide Mutual Insurance Company, 270 Pa.Super. 258, 411 A.2d 516 (1979). In that case the set-off provision stated:
"Any amount payable to or for an insured under the Uninsured Motorist coverage of any policy will be reduced by the amount of any Personal Injury Protection benefits paid or payable, and any benefits that would have been paid or payable except for a deductible provision."
270 Pa.Super. 260, 411 A.2d 517.
In the Brader case the decedent maintained an insurance policy which provided for the following coverage: family compensation benefits up to $5,000; no-fault benefits up to $5,000 for survivor's loss and the first $1500 of funeral expenses; and uninsured motorist coverage up to $15,000. The insurance carrier paid the decedent's estate the full amounts of coverage with respect to the family compensation benefits and the no-fault benefits of the survivor's loss and funeral expenses for a total of $6500 but refused to pay the full amount of coverage provided in the decedent's uninsured motorist provision. The insurance company desired to reduce the $15,000 payment under the uninsured motorist provision by the $6500 which had been paid under the no-fault provisions of the policy. This court held that the set-off provision was invalid. The court stated the issue involved in the case at 270 Pa.Super. 261, 411 A.2d 517 as follows:
Simply stated, the question presented by this case is whether the policy provision in issue is contrary to public policy and legislative intent, i.e., may an insurance company reduce the statutorily mandated minimum benefits of its uninsured motorist insurance provisions by setting off those amounts received by the insured under his no-fault coverage? We hold that it may not, and therefore affirm the order of the court of common pleas.
The court held that with reference to the Uninsured Motorist Act of August 14, 1963, P.L. 909, § 1, 40 P.S. § 2000 as amended that:
The only exemptions from the mandatory coverage of the act are to damages compensable through workmen's compensation, to property damage and to "bodily injury sustained by the insured with respect to which the insured or his representative shall, without the written consent of the insurer, make any settlement with or prosecute to judgment any action against any person who may be legally liable therefor."
270 Pa.Super. 262, 411 A.2d 518.
Concerning legislative intent the court stated:
Indeed, if the legislature intended to allow a dollar-for-dollar set-off of no-fault benefits against benefits payable under uninsured motorist coverage, it could have expressly so provided as it did in the case of the No-fault Act with respect to social security benefits (with exceptions) and workmen's compensation benefits. See Act of July 19, 1974, P.L. 489, No. 176 § 206, 40 P.S. § 1009.206.
270 Pa.Super. 264, 411 A.2d 519.
The Brader case is not directly on point with our own since in Brader the denial of set-off did not necessarily result in double payment of survivor's losses and funeral expenses as the total damages to the decedent's estate exceeded the total amount of coverage provided under the decedent's insurance policy.
Both the appellant and appellee rely on Brader. Appellant relies on the court's statement in Brader that: "... the insured should be allowed to recover under the uninsured motorist provisions of his insurance policy (up to the policy's limits) those actual damages suffered which exceed the amount of no-fault insurance benefits received or owing." This quoted sentence must be read in the context of the preceding sentence which states: "We therefore hold that the exclusionary clause employed in appellant's uninsured motorist policy allowing set-off of no-fault benefits received by the insured against benefits payable under the uninsured motorist policy is invalid." 270 Pa.Super. 265, 411 A.2d 519. The appellee relies on Brader in that it holds the set-off provision similar to that found in the instant case to be invalid. We read the Brader decision to mean that a set-off clause which reduces benefits payable under the uninsured motorist coverage is invalid notwithstanding that in some cases the insured will receive recovery for economic detriment as lost wages and medical expenses under both the personal injury provisions of his no-fault policy and also under the uninsured motorist provisions of his policy.
The Uninsured Motorist Act provides:
(a) No motor vehicle liability policy of insurance insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this State with respect to any motor vehicle registered or principally garaged in this State, unless coverage is provided therein or supplemental thereto in limits for bodily injury or death as are fixed from time to time by the General Assembly in section 1421 of article XIV of "The Vehicle Code," act of April 29, 1959 (P.L. 58), under provisions approved by the Insurance Commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom, Provided, that:
(d) In the event of payment to any person under the coverage required by this section, the insurer making such payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury for which such payment is made, including the proceeds recoverable from the assets of the insolvent insurer.
Act of August 14, 1963, P.L. 909 § 1, 40 P.S. § 2000.
The Uninsured Motorist Act is very specific in the protection it grants to an insured who is involved in a motor vehicle accident with an uninsured motorist. Where there is a valid contract of insurance which contains uninsured motorist coverage an insurance carrier is obligated to compensate the insured for damages inflicted upon the insured because of the conduct of the owner and/or operator of the uninsured motor vehicle except for three statutory exclusions: (1) Property damage; (2) bodily injury damages where the insured has settled or prosecuted to judgment any action against any person liable for such injuries without written consent of the insurance carrier and (3) any damage the payment of which would be for the direct or indirect benefit of a workmen's compensation carrier or any person who would qualify as a...
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