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District Court Holds That Non-fleet Commercial Policies Must Comply With Pennsylvania Motor Vehicle Financial Responsibility LawRecently in Webb v. Discover Prop and Cas Ins. Co, 2009 WL 3053686 (Munley, J. M.D.Pa. Sept. 22, 2009) (mem.) the District Court for the Middle District of Pennsylvania denied a Motion to Dismiss a case where the injured victims are claiming that they are entitled to underinsured motorist (UIM benefits when the insurance company was using an invalid rejection of underinsured motorist form. Suit was filed and in motions to dismiss the Defendants alleged that the Plaintiffs could not recover because the Financial Responsibility law does not apply to commercial vehicles citing Everhart v. PMA, 938 A.2d 301 (Pa. 2007). Also, they alleged that the Pennsylvania Workers Compensation laws bar an employee from seeking any UIM recovery from an employers insurance policy. The District Court denies these Motions to Dismiss.
On the first issue, Judge Munley writes that "[initially, we note that the plaintiff's complaint does not assert that the policies are "commercial fleet policies." Thus, as we must rule on the motion based upon the allegations of the complaint, the motion will be denied." The decision further states: "Moreover, a reading of the statute at issue [Section 1731] reveals that it does not on its face limit its protection to personal policies. Additionally, defendants rely upon Everhart in support of its position. Everhart dealt with the issue of whether stacking is required in commercial fleet policies. The court concluded that mandatory stacking provisions of the Pennsylvania Motor Vehicle Financial Responsibility Law (hereinafter "MVFRL") did not apply to commercial fleet policies. Defendants argue that the reasoning of this case should be extended to apply to the UM/UIM provisions of the MVFRL. The Everhart court examined several factors that led to this conclusion. Not all of these factors are applicable to the issue present in our case. For example, the court indicated that fleet policies cover a multitude of vehicles, therefore, stacking might very well be cost prohibitive and not the reasonable expectation of the contracting parties. The increased cost of stacking multiple vehicles is not present when the issue is merely UM/UIM coverage." Further, "the Everhart court noted that at the time that the stacking provisions were added to the MVFRL, a body of case law had developed holding that stacking did not apply to commercial fleet policies. Statutes are not presumed to make changes to existing law beyond what the statute expressly provides. Therefore, this factor weighed in favor of finding that stacking did not fall under the MVFRL's stacking provisions. The defendants have cited no case law to indicate that the UM/UIM provisions of the MVFRL should not be applicable in the employee/employer situation. Although these factors appear to make Everhart inapplicable to the instant case, we will defer making a complete analysis of this issue to a more appropriate time after discovery has been completed and the nature of the policy is clear."
On the second issue, the decision states: "Defendants argue that the sole remedy an employee has against an employee for an injury sustained during the course and scope of his employment is provided under the Workers Compensation Act. Defendants concede, however, that an employer may purchase UM or UIM insurance coverage for its employees, and if they do, the Workers Compensation Act does not bar a claim for benefits by the employee against the employer's insurer. Regardless, the defendants argue that if the employer chooses NOT to purchase UM or UIM protection as a benefit to its employees, the employee cannot then sue to reform the policy because that would violate the exclusivity provision of the Workers Compensation Act. We are unconvinced by the defendants' arguments. The Third Circuit Court of Appeals has explained that Pennsylvania law allows for the recovery of both Workers Compensation benefits as well as UIM benefits. Travelers Indem. Co. of Illinois v. DiBartolo, 131 F.3d 343, 348 (3d Cir. 1997). We discern no difference at this time between plaintiffs seeking UIM coverage properly provided for in their employer's insurance policy and seeking to void a provision of that policy as in violation of the law and thus obtaining benefits in that manner." Elaborating further, "Defendants argue that section 1731 should be narrowly construed and employees should not be allowed to try to "reform" an employer's insurance contract, which would only serve to increase premiums. We are not convinced. First, we note that defendants have not presented any evidence as to an increase in premiums if the insurance policies are reformed. In fact, at this stage of the litigation such evidence would be premature. Furthermore, the employer will not have to pay for the insurance coverage if they sign appropriate forms." (emphasis added). "Moreover, defendants seem to argue that even if the forms used were inappropriate under the statute, the employee should not be able to void them under the statute. As set forth above, however, employees are entitled to receive benefits under their employer's automobile insurance policies. In the instant case, the plaintiffs assert that they are entitled to benefits because the forms used to waive UIM benefits are void under the law. It would not be appropriate for plaintiff to be entitled to benefits under the law and not able to assert the right to enforce those benefits. Accordingly, this portion of the defendants' motion to dismiss will be denied.
Scott B. Cooper
scooper@schmidtkramer.com
717-232-6300
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