Steppling v. Pennsylvania Mfrs. Ass'n Ins. Co.

• Decision Date: 18 July 1984
• Citation: 477 A.2d 515,328 Pa.Super. 419
• Parties: Patricia STEPPLING v. PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY, Appellant.
• Court: Pennsylvania Superior Court

Page 515

477 A.2d 515

328 Pa.Super. 419

Patricia STEPPLING v. PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY, Appellant.

Superior Court of Pennsylvania.

Argued Feb. 9, 1984.

Filed May 18, 1984.

Reargument Denied July 18, 1984.

[328 Pa.Super. 422] Joseph J. May, Erie, for appellant.

Girard N. Evashavik, Pittsburgh, for appellee.

Before BROSKY, OLSZEWSKI and JOHNSON, JJ.

JOHNSON, Judge:

This appeal presents an issue of first impression under the Pennsylvania No-fault Motor Vehicle Insurance Act. ¹ We must decide whether Section 203 of the Act, ² when read in conjunction with Section The trial court received the case upon a stipulation of facts and oral cross-motions for summary judgment. On April 23, 1982, the court filed its opinion and entered its order awarding basic loss benefits to Patricia L. Steppling (Claimant), together with 18% interest as provided in Section 106(a)(2) of the Act, and attorney's fees. From the entry of judgment on the award, Pennsylvania Manufacturers' Association Insurance Company (PMA) brings this appeal. We hold that so-called "double recovery" is allowed, that the award of interest and attorney's fees was proper and, accordingly, we affirm.

106 of the Act, ³ permits an insured to recover under the statute for hospital expenses which have been paid previously, on behalf of the insured, by a private Blue Cross plan for collateral coverage. Subsumed under this general issue is the need to determine whether interest must be assessed on the delayed payment of no-fault benefits if found to be due, and whether the facts of this case support the award of attorney's fees.

I.

The stipulated facts disclose that Claimant was an insured residing in the household of a named insured of PMA. On or about February 21, 1977, she was involved in an automobile accident in Erie County, sustaining injuries which resulted in her hospitalization in three separate medical facilities. Her total hospital expenses were $40,919.87. ⁴

On April 4, 1977, PMA issued a check to the first facility in which claimant had been hospitalized to pay for the expenses of Claimant's treatment. The hospital returned the check and advised PMA the bill had already been paid by Blue Cross. Subsequently, PMA attempted to promptly pay the charges incurred by Claimant at the second medical facility, and again was notified by that facility that Blue Cross had already paid the hospital charges in full. The trial court found ⁵ that PMA also attempted to pay the third facility, with the same result.

The original complaint had been filed on behalf of Claimant on October 25, 1978, alleging the accident, the injury, coverage with PMA, repeated demands for payment, and refusal by PMA to pay either the hospital expenses ⁶ or work loss benefits. On October 17, 1980, Claimant received $15,000 for work loss benefits upon PMA's Petition for Court Approval of Partial Settlement and entry of order thereon. At the time of filing the Stipulation in the trial court on February 26, 1982, it was agreed that the amount of hospital expenses were reasonable, fair and medically necessary, and that reasonable attorney's fees owed by Claimant, based on actual time expended, were in the sum of $8,323.95.

II.

Before us, PMA argues that its obligation to pay basic loss benefits can be discharged by paying directly to the service providers. It relies solely on that portion of Section 106 of the No-fault Act which provides, in pertinent part:

An obligation for basic loss benefits for an item of allowable expense may be discharged by the obligor by reimbursing the victim or by making direct payment to the supplier or provider of products 40 P.S. § 1009.106(a)(2). PMA would ask us to hold that since the Claimant had not, herself, paid the hospitals, the obligor could not reimburse her, inasmuch as a dictionary definition of "reimbursement" contemplates the payment back to a person of money spent. The insurer would alternatively ask us to accept its assertion that it has made direct payment to the suppliers of service. We need not linger long on any analysis of PMA's contentions, since the simple fact remains that it neither sought to effect reimbursement of the victim nor has it actually made any direct payment to any of the hospitals.

services, or accommodations within the time mandated by this paragraph.

Under the Act, no-fault benefits are payable monthly as loss accrues. 40 P.S. § 1009.106(a)(1). While we agree that an insurer's obligation may be discharged either by reimbursement to the victim or by direct payment to the service provider, where neither has occurred, Section 106 of the Act affords no protection to PMA and the obligation remains intact. PMA does not even contend that it attempted to make reimbursement to the victim. And the formality of attempting to make direct payment to the hospitals, where tender is refused, falls short of the statutory requirement of actual payment.

III.

Although we have no difficulty in rejecting PMA's contentions, the question remains whether a claimant may recover twice for the same economic losses within the clear meaning and intent of the No-fault Act. We are mindful that our supreme court has only recently held that an insured is precluded from recovering damages for economic detriment under the uninsured motorist coverage required in all liability policies by the Act of August 14, 1963, P.L. 909 ⁷ where that insured has already recovered the same economic losses under the basic loss provisions of a no-fault policy. Tucci v. State Farm Insurance Co., 503 Pa. 447, 469 A.2d 1025 (1983), rev'g Saunders v. State Farm Ins. Co., 294 Pa.Super. 424, 440 A.2d 538 (1982) and companion cases.

In rejecting a "double recovery" in Tucci, our supreme court examined the correlation between the purposes of the No-fault Act and the Uninsured Motorist Act. It determined that a coherent and comprehensive system of compensating and restoring motor vehicle accident victims required that the two acts be construed together as one statute, if possible, and concluded that our legislature intended that the earlier legislation ⁸ "become a rational part of the new comprehensive system." Id. at ---, 469 A.2d at 1028. It thus determined that duplicate recovery would not be allowed beyond the actual special damages an insured may suffer, where the issue of double recovery arises under two complimentary statutes.

However, the principle set forth in Tucci is not controlling on the instant facts. We are not here faced with two legislative enactments which must be construed together, but with a single statute and a private program of insurance. The legislature has provided for situations involving collateral benefits arising under private insurance programs, but only in a limited fashion.

The statutory provision pertinent to our analysis is Section 203 of the No-fault Act, ⁹ which deals with privately provided benefits, typically under some group coverage relating to the insured's employment. Sections 203(b) and (c) provide as follows:

§ 203. Collateral benefits

....

(b) The owner or operator of a motor vehicle may elect to provide for security in whole or in part for the payment of basic loss benefits through a program (c) An insurer providing basic loss benefits and tort liability in accordance with the provisions of subsection (b) above shall reduce the cost of such contract insurance to reflect the anticipated reduction in basic loss benefits payable by the insurer by reason of the election of the owner or operator to provide substitute security.

group, contract or other arrangement that would pay to or on behalf of the victim or members of his family residing with him or the survivor of a deceased victim, allowable expense, loss of income, work loss, replacement services loss and survivors loss. In all such instances, each contract of insurance issued by an insurer shall be construed to contain a provision that all basic loss benefits provided therein shall be in excess of any valid and collectible benefits otherwise provided through such program, group, contract or other arrangement as designated at the election of the owner or operator which shall be primary.

40 P.S. § 1009.203(b) and (c).

These subsections provide that an owner or operator of a motor vehicle may elect to provide security for basic loss benefits through a group or individual program, thus making the automobile insurance policy excess coverage to the private plan for basic loss benefits. When this election is made by the insured, the insurer must then reduce the premium of the insurance contract to reflect the insurer's reduced exposure through payment of basic loss benefits.

There are specific requirements to be met in pursuing this option, as set forth in 31 Pa.Code § 66.53(c). Without enunciating those requisites, suffice it to say that none of them are present here. In this case, the insured made no election and received a policy of insurance which included basic loss benefits. The insured received no reduction in his premium payments, and PMA does not contend otherwise. Because the election designating Blue Cross as the primary insurer and PMA as excess with respect to professional medical treatment and care was not made, we find no bar in Section 203 to the within claimant's right to recover under the PMA policy.

This conclusion is consistent with the analysis of private collateral benefits found in the treatise on the No-fault Act published by the Pennsylvania Trial Lawyers Association. D. Shrager, ed., The Pennsylvania No-fault Motor Vehicle Insurance Act (1979). In that work, the editor states, at page 148:

The "benefits other than no-fault benefits" referred to in Section 203(a) clearly envisions medical and hospitalization plans paid for in whole or in part by the victim's employer. The section does not prevent the victim from realizing a double recovery. It simply requires that any savings which result from an offset...