A divided Pennsylvania Supreme Court has ruled that insurers do not need to use the exact uninsured and underinsured motorist coverage rejection forms set forth in the Motor Vehicle Financial Responsibility Law, so long as any changes to the forms' language are "inconsequential."
In Ford v. American States Insurance, the justices ruled 5-2 to affirm a Superior Court decision upholding a Westmoreland County trial judge's grant of summary judgment to defendant American States Insurance Co.
Sections 1731(b) and (c) of the MVFRL set forth forms for insurers to use when seeking an insured's rejection of UM or UIM coverage, respectively. Specifically at issue in this case was the UIM coverage rejection form provided in subsection (c), which notes that "underinsured coverage protects me and my relatives living in my household for losses and damages" caused by the negligence of an underinsured driver. But a form that American States provided to plaintiff Audrey Ford—and which she signed—added the word "motorists" between "underinsured" and "coverage," leading to a legal battle over the extra word's significance.
Ford argued that the addition of that word meant American States' coverage rejection form did not "'specifically comply'" with Section 1731(c), as mandated by the MVFRL, but the Supreme Court said the statute should not be read so rigidly.
Justice Max Baer, writing for the majority, did note that "it is ill-advised for an insurer to present an insured with a UIM coverage rejection form that changes the statutory form in any way."
"However, when a UIM rejection form differs from the statutory form in an inconsequential manner, the form will be construed to specifically comply with Section 1731 of the MVFRL," he added.
Baer was joined by Chief Justice Thomas G. Saylor and Justices Kevin M. Dougherty, David N. Wecht and Sallie Updyke Mundy.
Justice Christine L. Donohue penned a dissent, joined by Justice Debra Todd, arguing that the majority's decision ignored the actual instructions of the MVFRL, as well as the rules of statutory construction.
"Rather than require specific compliance with the dictates of Section 1731, as subsection (c.1) plainly instructs, the majority opts for a 'close is good enough' approach," Donohue said. "According to the majority, an insurer need not have the insured sign the precise rejection forms the legislature set forth in subsections (b) and (c), as the insurer may use any form that adequately conveys the substance of the statutorily prescribed forms."
Ford's daughter, Alisha Ford, was in a March 19, 2013, accident with a vehicle driven by Carl Showalter, suffering an ankle fracture and mild traumatic brain injury in the process, according to the Superior Court's December 2015 memorandum opinion in the case, written by Judge Judith Ference Olson. After the accident, Alisha Ford gave notice to American States that she was pursuing a UIM claim under her mother's policy. Showalter's insurance carrier paid Ford his liability policy limit of $25,000, and American States informed Ford that her mother had rejected UIM coverage.
Ford challenged this assertion based on the subtle difference between American States' form and the MVFRL form, but Westmoreland County Court of Common Pleas Judge David A. Regoli granted summary judgment in favor of the insurer.
Regoli noted that Pennsylvania courts have not been uniform in their interpretations of the phrase "'specifically comply'" in the MVFRL. In support of her position, Ford pointed to the Superior Court's 2006 ruling in American International Insurance v. Vaxmonsky.
In that case, the court found that the insurer's deletion of the word "all" from the phrase "'all losses and damages'" in its UIM rejection form rendered the form void because it improperly limited coverage and created ambiguity.
Ford also cited the Superior Court's 2012 ruling in Jones v. Unitrin Auto and Home Insurance, in which the court voided an insurer's UIM rejection form because it added the line, "'By rejecting this coverage, I am also signing the waiver on P. 13 rejecting stacked limits of underinsured motorist coverage.'"
But Regoli, in granting summary judgment for American States, instead found persuasive the U.S. Court of Appeals for the Third Circuit's 2013 ruling Robinson v. Travelers Indemnity, which examined an identical form to the one at issue in Ford and found that the insurer's addition of the word "motorist" actually helped to eliminate, rather than exacerbate, ambiguity and therefore did not void the form.
The Superior Court, in an unpublished memorandum opinion, affirmed the ruling by adopting Regoli's opinion.
The Supreme Court majority agreed with the lower courts that changes to the language on a UM or UIM rejection form only render the form void if they alter the scope of the coverage or create ambiguity.
Forms like the one at issue in Ford, Baer said, do not rise to that level.
"Unlike the forms at issue in Vaxmonsky and Jones, such a form does not modify coverage or inject ambiguity into the statutory form, and an insured's signature on the slightly altered form demonstrates that the insurer offered UIM coverage to the insured and that the insured understood what she was doing when she declined that coverage," Baer said.
Addressing the dissent's criticism that the majority read Section 1731 too loosely, Baer argued in a footnote that it was the dissenting justices who misinterpreted the statutory language.
"The legislature directed that rejection forms 'specifically comply' with this statute," Baer said. "If the legislature wanted to provide that UIM forms used by insurers must be 'verbatim,' then it certainly could have said so. Instead, the legislature requires UIM rejection forms to specifically comply with the statutory rejection form, and consistent with this requirement, we conclude that specific compliance allows for forms that contain de minimis, inconsequential deviations from the statutory rejection form, i.e., typos."
Ford's attorney, Scott B. Cooper of Schmidt Kramer in Harrisburg, said he was disappointed by the ruling but was encouraged by the fact that the majority seemed to narrowly define what constitutes "'de minimis deviations'" from the statutory forms, leaving the door open for future challenges.
"I still am going to be telling people, 'You have to read the forms carefully,'" Cooper said.
Counsel for American States, Edward A. Schenck of Cipriani & Werner in Pittsburgh, could not be reached for comment.