1997 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

11-18-1997

Travelers Indemnity v. DiBartolo

Precedential or Non-Precedential:

Docket

96-2083

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Recommended Citation

"Travelers Indemnity v. DiBartolo" (1997). 1997 Decisions. Paper 261.

http://digitalcommons.law.villanova.edu/thirdcircuit_1997/261
Filed November 18, 1997

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NO. 96-2083

TRAVELERS INDEMNITY COMPANY OF ILLINOIS,

v.

JOSEPH N. DIBARTOLO,

 Appellant

On Appeal From the United States District Court

For the Eastern District of Pennsylvania

D.C. Civ. No. 96-6238

Argued: September 10, 1997

Before: MANSMANN, NYGAARD, Circuit Judges,

and BLOCH, District Judge.*

(Filed November 18, 1997)

 BRUCE MARTIN GINSBURG,

 ESQUIRE (ARGUED)

 JONATHAN J. SOBEL, ESQUIRE

 Ginsburg & Associates

 2112 Walnut Street

 Philadelphia, PA 19103

Attorneys for Appellant

_________________________________________________________________

*Honorable Alan N. Bloch, United States District Judge for the Western

District of Pennsylvania, sitting by designation.

 CONRAD J.J. RADCLIFFE, ESQUIRE

 (ARGUED)

 Marshall, Dennehey, Warner,

 Coleman & Goggin

 1845 Walnut Street

 18th Floor

 Philadelphia, PA 19103-4797

 Attorney for Appellee
OPINION OF THE COURT

MANSMANN, Circuit Judge.

In this appeal, we are asked to predict whether the

Pennsylvania Supreme Court would permit an employee

injured in an on-the-job automobile accident to recover

from both workers' compensation as well as from an

uninsured motorist plan that his employer voluntarily

purchased. The district court held that workers'

compensation was the employee's exclusive remedy. Shortly

after that ruling, the Pennsylvania Superior Court held that

state law did not bar an employee's recovery from both

workers' compensation and an uninsured motorist plan.

Because the Superior Court's reasoning is persuasive, we

will reverse.

I.

In May of 1994, Joseph N. DiBartolo was injured while

occupying an automobile owned by his employer, KnightRidder, Inc.1 At the time of the accident, DiBartolo was

acting in the course and scope of his employment.

Subsequently, DiBartolo recovered workers' compensation

and medical benefits from Knight-Ridder's insurer,

Travelers Indemnity Co. of Illinois. Thereafter, he sought

uninsured motorist benefits under an automobile insurance

policy issued by Travelers to Knight-Ridder, which had

voluntarily purchased the policy. Travelers responded by

bringing this action for declaratory judgment.

_________________________________________________________________

1. The material facts are not in dispute.

 2

Travelers asked the district court to hold that DiBartolo's

recovery of workers' compensation benefits after an on-thejob automobile accident precluded his later recovery on the

uninsured motorist plan purchased by his employer. In the

alternative, Travelers asked the district court to hold that

Knight-Ridder had waived uninsured motorist coverage in

Pennsylvania. After a pre-trial conference, the district court

instructed the parties to file motions solely on the issue of

the exclusivity of workers' compensation in Pennsylvania.

In its Amended Order of November 25, 1996, the district

court granted Travelers' motion for summary judgment. The

court did not issue an opinion, but it cited Ducjai v. Dennis,

636 A.2d 1130 (Pa. Super. Ct. 1994) (en banc), aff'd, 656

A.2d 102 (Pa. 1995), in its order. DiBartolo took a timely

appeal.2
II.

A.

This appeal requires us to determine the effect of the

Pennsylvania legislature's 1993 repeal of Section 17353 and

Section 17374 of the Motor Vehicle Financial Responsibility

Law (MVFRL). Travelers argues that the repeal of these

sections of the MVFRL indicated a clear legislative intent.

Indeed, when these statutes are read, they seem to have

clearly authorized the collection of both workers'

_________________________________________________________________

2. The district court properly exercised subject matter jurisdiction

pursuant to 28 U.S.C. S 1332. Our appellate jurisdiction lies pursuant to

28 U.S.C. S 1291.

3. Section 1735 had provided that "[t]he coverage required by this

subchapter [mandatory uninsured motorist coverage] shall not be made

subject to an exclusion or reduction in amount because of any workers'

compensation benefits payable as the result of the same injury." 75 Pa.

Cons. Stat. S 1735 (repealed).

4. Section 1737 had provided that "[n]otwithstanding anything contained

in the Act of June 2, 1915 (P.L. 736, No. 338), known as the

Pennsylvania Workmen's Compensation Act, no employee who is

otherwise eligible shall be precluded from recovery of uninsured or

underinsured motorist benefits from an employer's motor vehicle policy

under this chapter . . . ." 75 Pa. Cons. Stat. S 1737 (repealed).

 3

compensation and uninsured motorist benefits. Therefore,

the repeal of these statutes would seem to have

unambiguously reinstated the general rule that workers'

compensation is the exclusive remedy available to

employees injured on the job. See 77 Pa. Cons. Stat. S 481(a).5

The Pennsylvania Supreme Court's decision in

Hackenberg v. Southeastern Pa. Transp. Auth., 586 A.2d

879 (Pa. 1991), suggests, however, that Travelers' isolated,

straightforward reading of Sections 1735 and 1737 is

misguided. First, according to the Court in Hackenberg,

Section 1737--the statute that, of the two, seemed to

extend unequivocally to employees the privilege of receiving

both workers' compensation and uninsured motorist

benefits--never affected employers such as DiBartolo's

(Knight-Ridder, Inc.) who voluntarily purchased uninsured

motorist plans. As the Court noted in Hackenberg, Section

1737 was enacted several years after Section 1735. Id. at

880 n.3. Prior to the enactment of Section 1737, the Court

held, Section 1735 did not authorize employees of self-
insured employers to receive both workers' compensation

and uninsured motorist benefits. Id. at 885.

In its earlier resolution of Hackenberg, the Pennsylvania

Superior Court had noted that state law differentiated

between self-insured employers and employers who

purchased uninsured motorist plans. Hackenberg v. SEPTA,

558 A.2d 860, 864 (Pa. Super. Ct. 1989). Under its view of

the law, injured employees who had received workers'

compensation benefits could also recover on uninsured

motorist plans that had been purchased by their employers.

Id. Nonetheless, injured employees were barred from

recovering both types of benefits when their employers were

self-insured. Id. The Supreme Court agreed with the

Superior Court's analysis, holding that self-insured

employers--in the absence of Section 1737--were under a

different set of obligations than were employers who

_________________________________________________________________

5. This statute, the exclusivity provision of the Workmen's Compensation

Act, states that "[t]he liability of an employer under this Act shall be

exclusive and in place of any and all other liability to such employes 

[sic]

. . . in any action at law or otherwise on account of any injury or death

as defined. . . ." 77 Pa. Cons. Stat. S 481(a).

 4

purchased plans. Hackenberg, 586 A.2d at 883-84. The

clear implication of Hackenberg is that prior to the

enactment of Section 1737, employees could receive

workers' compensation and uninsured motorist benefits

from employers' purchased plans. Id. at 883 (discussing

insurance policies). If the Pennsylvania Supreme Court had

thought the Superior Court erred in making the distinction

that undergirded its opinion, surely the Supreme Court

would have said so. It is clear, however, that the Supreme

Court's majority accepted the distinction between selfinsured employers and employers who purchased plans.

See id. at 885-86 (Cappy, J., concurring and dissenting,

arguing that the majority's distinction between self-insured

and other employers was irrational and not dictated by

law).

Therefore, we learn from Hackenberg that the ability of

employees to recover both workers' compensation and

uninsured motorist benefits via employers' purchased plans

did not stem from Section 1737. Employees had that ability

prior to Section 1737. Indeed, it may be that, if anything,

Section 1737 was enacted to ensure that employees whose

employers were self-insured would not be penalized by the

distinction drawn in Hackenberg and other cases such as
Lewis v. School Dist. of Phila., 538 A.2d 862 (1988) (holding

that employees of self-insured employers could not, under

the pre-MVFRL Uninsured Motorist Act, collect uninsured

motorist benefits). See also Hackenberg, 586 A.2d at 883

n.9 (speculating that the legislative purpose behind Section

1737 was to ensure that all employees be able to receive

both workers' compensation and uninsured motorist

benefits). In any event, as Section 1737 did not affect

employers who purchased uninsured motorist plans,

Hackenberg suggests that the repeal of Section 1737 could

not have had any impact on employees such as DiBartolo.

In Hackenberg, the Pennsylvania Supreme Court also

made clear that Section 1735 was not the source of the

ability of employees to recover from employers' purchased

uninsured motorists plans as well as from workers'

compensation. There the Court specifically rejected a

suggestion that Section 1735 was designed to ensure an

employee's access to both workers' compensation and

 5

uninsured motorist benefits. Hackenberg, 586 A.2d at 883

& n.9. Instead, the Court held, Section 1735 was a

restriction on what insurers could include in their

uninsured motorist plans--plans that employers were then

required by law to have, in the absence of self-insurance.

Id. at 883. Therefore, the repeal of Section 1735 was

required by the legislature's decision to make uninsured

motorist plans optional. If, as the Hackenberg opinion

suggests, Section 1735 was not the source of an injured

employee's recovery of both workers' compensation and

uninsured motorist benefits, its repeal could not have

precluded DiBartolo's recovery of both types of benefits.

B.

Despite its analysis in Hackenberg, the Supreme Court

offered a different view of the legislative repeal of Sections

1735 and 1737 in Ducjai v. Dennis, 656 A.2d 102 (Pa.

1995). There an employee filed negligence actions against a

co-worker and the driver of another vehicle involved in an

on-the-job accident. Ducjai, 656 A.2d at 103. In sweeping

language, the Superior Court had held "that worker's

compensation benefits are the sole and exclusive remedy

available to employees injured in a motor vehicle accident

in the course and scope of their employment." Ducjai, 636

A.2d at 1131.

On appeal, the Supreme Court affirmed the Superior

Court's holding. Ducjai, 656 A.2d at 107. It phrased the

final result in much narrower terms, however, holding "that
an employee may not recover both workers' compensation

benefits from her employer as well as damages at common

law from her co-employee . . . when injured in an [on-thejob] automobile accident." Id. (emphasis added).

Nevertheless, in the course of its opinion, the Supreme

Court agreed with the Superior Court that the repeal of

Sections 1735 and 1737 had greatly affected the ability of

employees to collect from sources other than workers'

compensation for on-the-job automobile accidents. Id. at

106. The Supreme Court approvingly cited the Superior

Court's observation that "[t]he legislature has tried time

and again to make it clear that worker's [sic] compensation

benefits are to be the exclusive remedy for employment-

 6

related injuries, save for those intentionally inflicted." Id.

Indeed, the Supreme Court specifically suggested that the

legislative repeal had effectively overturned Superior Court

decisions--Chatham v. Aetna Life & Cas. Co. , 570 A.2d 509

(Pa. Super. Ct. 1989), and Ferry v. Liberty Mut. Ins. Co.,

573 A.2d 610 (Pa. Super. Ct. 1990) -- which had permitted

employees to recover both workers' compensation and

uninsured motorist benefits. Ducjai, 656 A.2d at 106. In

striking contrast to Hackenberg, Ducjai suggests that the

repeal of Sections 1735 and 1737 should bar DiBartolo's

recovery of both workers' compensation and uninsured

motorist benefits.

C.

Although the pertinent observations in the Supreme

Court's Ducjai holding were dicta,6 the Court indicated its

view that Pennsylvania law now completely precludes an

employee's recovering both workers' compensation and

uninsured motorist benefits. Despite Ducjai, two opinions of

the Superior Court issued after the district court's ruling

interpreted the legislative repeal of Sections 1735 and 1737

much differently. In Warner v. Continental/CNA Ins. Co.,

688 A.2d 177, 179 (Pa. Super. Ct. 1996), allocatur denied,

698 A.2d 68 (Pa. 1997), the Superior Court held that an

employee injured in an on-the-job automobile accident

could collect both workers' compensation and

underinsured motorist benefits. There the court concluded

that the exclusivity provisions of the Workmen's

Compensation Act ("WCA") could not, for several reasons,

operate to bar claims on uninsured/underinsured motorist

policies. First, the court noted that the WCA had always

been interpreted to bar employees' claims for uninsured

motorist benefits only from employers who were selfinsured. Id. at 182. Employees' claims on uninsured

_________________________________________________________________
6. As noted, Ducjai involved the issue of whether one employee is

immune from a common-law suit for damages brought by another

employee injured in the course of employment. Ducjai, 656 A.2d at 102-

03. Therefore, the Court's discussion of uninsured motorist coverage was

not necessary for its decision. The Superior Court soon noted that this

language from the Supreme Court's opinion was dictum. Palmosina v.

Laidlaw Transit Co., 664 A.2d 1038, 1041 (Pa. Super. Ct. 1995).

 7

motorist policies purchased by the employer had not been

barred by the WCA. Id.

Secondly, the court rejected the suggestion that the

legislature's repeal of Sections 1735 and 1737 indicated an

intent to bar recovery of both workers' compensation and

uninsured motorist benefits. Id. at 182-83. Instead, the

Superior Court observed that the repeal of Sections 1735

and 1737 had taken place alongside the legislature's repeal

of the portion of Section 1720 that had previously

prevented subrogation against a claimant's tort recovery by

a workers' compensation insurance carrier. Id. at 183.

According to the court, these repeals should be understood

as part of a single plan:

 Thus, before the amendment, a claimant could not

 recover amounts paid or payable under workers'

 compensation and, balanced against that provision, a

 workers' compensation carrier had no right of

 subrogation for workers' compensation benefits. By

 contrast, after the 1993 amendments, a plaintiff 's

 recovery is not reduced by the amount of workers'

 compensation benefits, and the workers' compensation

 carrier has the right of subrogation for any benefits

 paid in connection with the action.

Id. (quoting Schroeder v. Schrader, 682 A.2d 1305 (Pa.

Super. Ct. 1996)). This, of course, is a much different

understanding of the legislature's intent than that

expressed in Ducjai.

Finally, the Warner court noted that legislative intent

must be especially clear for it to conclude the legislature

had intended to forbid employers from buying optional

uninsured/underinsured motorist policies for the benefit of

employees. Warner, 688 A.2d at 183. The court noted that

the Supreme Court has held that such fringe benefits are

"voluntarily bargained for and have an independent

contractual vitality." Id. at 184 (quoting Wagner v. National

Indem. Co., 422 A.2d 1061, 1067 (Pa. 1980). See also

Panichelli v. Liberty Mut. Ins. Group, 669 A.2d 930, 932-33
(Pa. 1996) (holding that an injured employee's recovery of

workers' compensation as well as sick pay and social

security benefits was not unlawful "double dipping").

 8

Moreover, according to the Superior Court, a claim on a

policy purchased by the employer is not a claim against the

employer; therefore, the uninsured motorist carrier cannot

"borrow" the employer's immunity from suit. Warner, 688

A.2d at 184 (quoting Boris v. Liberty Mut. Ins. Co., 515 A.2d

21, 24 (Pa. Super. Ct. 1986)).

The Superior Court did not discuss in Warner its prior

Ducjai holding or the Supreme Court's affirmance, which

contained the strong, pertinent dicta about uninsured

motorist benefits. In a post-Warner case, however, the

Superior Court narrowly read Ducjai as precluding only an

employee's negligence action against a co-employee.

Gardner v. Erie Ins. Co., 691 A.2d 459, 463-64 (Pa. Super.

Ct. 1997). An action against the co-employee's uninsured

motorist carrier, said the court, was not subject to the

WCA's exclusivity provisions and was not precluded. Id. at

464. That was so because the injured employee's suit was

not against the employer or any source attributable to the

employer; instead, the suit was analogized to one against "a

third-party tortfeasor's liability insurance." Id. See also id.

at 464-65 (noting that a suit against even the employer's

uninsured motorist carrier is not, under Warner, a suit

against the employer). Under the Superior Court's analysis,

as enunciated in Warner and Gardner,7 there is no legal

barrier to DiBartolo's receipt of both workers' compensation

and uninsured motorist benefits.

III.

A.

As a federal court sitting in diversity, we must apply the

substantive law as decided by the state's highest court.8

_________________________________________________________________

7. The dissent repeatedly suggests that Warner is the only Superior

Court case that is at odds with the dicta from Ducjai. It is clear from

Gardner, however, that the Superior Court recognized its disagreement

with the Supreme Court's dicta but concluded that its reasoning, first

enunciated in Warner, was more sound.

8. The district court's interpretation of state law is subject to plenary

review. Salve Regina College v. Russell, 499 U.S. 225, 239 (1991).

 9
Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1373 &

n.15 (3d Cir. 1996). Because the Pennsylvania Supreme

Court has not directly addressed the issue before us now,

we must forecast how the Supreme Court would resolve the

issue. Clark v. Modern Group Ltd., 9 F.3d 321, 326 (3d Cir.

1993). Applicable decisions of the Superior Court must be

accorded significant weight. Rolick v. Collins Pine Co., 925

F.2d 661, 664 (3d Cir. 1991). The "carefully considered

statement[s]" of the Supreme Court in dicta in Ducjai also

inform our prediction. McKenna v. Ortho Pharm. Corp., 622

F.2d 657, 662 n.21 (3d Cir. 1980). Although it is a close

case, we are ultimately persuaded by the Superior Court's

compelling reasoning in Warner.9 

B.

First, we note with approval that the Warner court

considered the larger context surrounding the repeal of

Sections 1735 and 1737. In particular, the Superior Court

saw the repeal of Section 1735 as directly related to the

contemporaneous repeal of Section 1720. Warner, 688 A.2d

at 183. Thus, the Superior Court understood the legislature

to have been exchanging one comprehensive system for

another. In the previous arrangement, a workers'

compensation carrier had no right to subrogate against an

employee's claim and the employee could not recover

from the uninsured motorist carrier any amounts payable

_________________________________________________________________

9. Citing McKenna, the dissent states that in making our prediction of

state law we must examine "in order of priority: the decisional law of the

highest state court in analogous cases; the dicta of that court; and to a

lesser degree, the decisional law of lower state courts." The dissent,

however, overstates its argument. McKenna does not hold that the dicta

of a state's highest court must necessarily trump the better-reasoned

decisions of the state's intermediate courts. Indeed, we note that

McKenna explicitly warned that "a federal court should be circumspect

in surrendering its own judgment concerning what the state law is on

account of dicta." 622 F.2d at 662. The rule of McKenna is that we "must

consider relevant state precedents, analogous decisions, considered

dicta, scholarly works, and any other reliable data.. . ." Id. at 663.

McKenna provided no rigid hierarchy that requires us to enforce the

Supreme Court's dicta in the face of a better-reasoned, subsequent

decision of the Superior Court.

 10

under workers' compensation. Id. In the new arrangement,

the employee's recovery from the uninsured motorist carrier
is not to be reduced by the amount of any workers'

compensation benefits payable, but the workers'

compensation carrier is given the right of subrogation for

any benefits paid to the employee under workers'

compensation. Id.

According to the Warner court, the repeal of Sections

1735 and 1720 effected a single plan. Under the post-repeal

law, the injured employee is permitted to recover both

workers' compensation and uninsured motorist benefits,

including a possible recovery from each of these two

sources for the same injury. The collection by the employee

of the uninsured motorist benefits, however, merely creates

a fund against which the workers' compensation carrier can

exert a subrogation lien for amounts it paid the employee

for the already-recompensed injury. Id.; Gardner, 691 A.2d

at 465. Understood in this broader context, the repeal of

Section 1735--like the repeal of Section 1737--did not

affect the ability of employees to recover both workers'

compensation and uninsured motorist benefits. 10 Indeed,

_________________________________________________________________

10. Travelers contends the Warner court misunderstood the significance

of the legislature's decision to allow workers' compensation carriers the

right of subrogation against a claimant's tort recovery. It suggests that

permitting the workers' compensation carrier to subrogate against the

motor vehicle insurer is irrational. Travelers would limit the workers'

compensation carrier's ability to subrogate to situations where a thirdparty tortfeasor has injured the employee.

We do not see a difference between subrogating against a tortfeasor

and a motor vehicle insurer. See Gardner, 691 A.2d at 463-64. In both

instances, the workers' compensation carrier is trying to recover what it

already paid out as a result of harm to an employee caused by some

third party. There is no legal significance to whether that third party 

was

an uninsured motorist or some other malefactor. If there is such

significance, Travelers has not pointed it out.

Here Travelers serves as both the workers' compensation carrier and

the motor vehicle insurer for DiBartolo's employer. In many

circumstances, however, one insurance company will not perform both

roles. We agree with DiBartolo that it is only Travelers' dual role that

makes it appear that DiBartolo wants to "rob Peter to pay Paul." In any

event, if Travelers finds the current arrangement economically inefficient

or unduly complicated, its remedy lies with the legislature.

 11

the repeal of Section 1735 permitted the injured employee

to recover more from these sources, although the workers'

compensation carrier may ultimately be the beneficiary--by
the use of its subrogation lien--of any double recovery. See

Gardner, 691 A.2d at 466 (Hudock, J., concurring).

We note that the Superior Court's interpretation of

Section 1735 in Warner is consistent with the Supreme

Court's statement in Hackenberg that 1735 was only a

limitation on what kinds of policies uninsured motorist

carriers could write. Hackenberg, 586 A.2d at 883.

Travelers argues that Section 1735 actually authorized the

employee's recovery of both workers' compensation and

uninsured motorist benefits. This is not an outrageous

claim, given the Supreme Court's dicta in Ducjai that the

repeal of Sections 1735 and 1737 ended the recovery of

both types of benefits. Ducjai, 656 A.2d at 106. This

interpretation, however, is inconsistent with the Court's

prior treatment of Section 1735 in Hackenberg. Given this

unexplained inconsistency and the fact that the Supreme

Court did not have the issue directly before it in Ducjai (as

did the Supreme Court in Hackenberg and the Superior

Court in Warner), we are persuaded by the Superior Court's

analysis of the repeal of Sections 1735 and 1737.

Thus, we conclude that neither Section 1735 nor Section

1737 was the source of the ability of employees to collect

both workers' compensation and uninsured motorist

benefits. Although it is not clear when employees began to

be able to collect both types of benefits, it is clear that the

ability to collect both types was judicially recognized and

was independent of Sections 1735 and 1737. See, e.g.,

Chatham, 570 A.2d at 512 (Pa. Super. Ct. 1990), aff'd, 605

A.2d 329 (Pa. 1992) (noting that an employee could

apparently have collected both types of benefits even in the

absence of Section 1735). See also State Farm Ins. Cos. v.

Ridenour, 646 A.2d 1188, 1190-91 (Pa. Super. Ct. 1994)

(collecting cases). Given this case law11 and the

_________________________________________________________________

11. Travelers argues that the law prior to the legislature's enactment of

Sections 1735 and 1737 did not permit an employee's recovery of both

workers' compensation and uninsured motorist benefits.

 12

inapplicability of Sections 1735 and 1737, we view the

repeal of Sections 1735 and 1737 as irrelevant to the issue

_________________________________________________________________

Travelers interprets Hackenberg as holding that no employee can

collect both workers' compensation and uninsured motorist benefits. As

we have noted, the Superior Court held in Hackenberg that only selfinsured employers are immune from providing uninsured motorist

benefits. See, e.g., Hackenberg, 586 A.2d at 885 (holding is limited to
"self-insured" employers); Hackenberg, 586 A.2d at 885-86 (Cappy, J.,

concurring and dissenting on the ground that the court's distinction

between self-insured and other employers was irrational). Indeed,

Hackenberg makes clear that neither Section 1735 nor Section 1737 can

be fairly understood as the source of an employee's ability to recover

both workers' compensation and uninsured motorist benefits. Id. at 883

& n.9.

In addition, Travelers argues that the appellate cases that have allowed

an employee to recover both types of benefits have misinterpreted the

Supreme Court's opinion in Selected Risks Ins. Co. v. Thompson, 552

A.2d 1382 (Pa. 1989). See also Ducjai, 656 A.2d at 106 (questioning the

use of Selected Risks by the Superior Court). As Travelers correctly

points out, Selected Risks involved an unusual fact pattern, where the

disputed uninsured motorist plan could not fairly be said to be the

employer's. Hackenberg, 586 A.2d at 882-83 n.8. To the extent the

Superior Court has relied on Selected Risks, however, it has not strongly

relied on a misapprehension that the disputed policy in Selected Risks

was an employer's. In Chatham, 570 A.2d at 512, for instance, the

Superior Court relied instead on the logic of Selected Risks (that 

workers'

compensation and uninsured motorist benefits do not provide for the

same types of damages and that there is no public policy against

employers acquiring policies that more fully cover employees)--not on a

belief that Selected Risks was controlling. See also id. (noting that

Selected Risks spoke to its issue only "in glancing terms"). The cases 

that

followed Chatham relied on it, not directly on Selected Risks. See, e.g.,

Ferry, 573 A.2d at 611.

In the end, Travelers' quibbles are not with the Superior Court's

Warner decision but, instead, with the Supreme Court's own decision in

Hackenberg, where it sanctioned a distinction between self-insured

employers and employers who purchase uninsured motorist plans. 586

A.2d at 881 & n.4, 884-85. See also id., 586 A.2d at 885-86 (Cappy, J.,

concurring and dissenting). Although the Supreme Court seemed in

Ducjai to have qualms about the Superior Court's reliance on Selected

Risks, the Court did not repudiate its previous decision in Hackenberg.

As Hackenberg and Warner more squarely presented the issue now

before us, those holdings are more persuasive than the Ducjai dicta.

 13

we must decide. See Warner, 688 A.2d at 183 (noting that

"[i]n light of the prior case law which the legislature was

well aware of when it enacted [the repeals], we are unable

to conclude that the legislature intended that the

[exclusivity] provisions of the WCA would preclude

recovery"). To end the recovery of both types of benefits, the

legislature would have to take clearer action than the silent

repeal of inapplicable sections.
C.

We also find convincing the Superior Court's emphasis in

Warner on the fact that uninsured motorist coverage is now

optional, and we predict the Supreme Court would adopt

the Superior Court's analysis. Because uninsured motorist

coverage is no longer mandated by the state, the Warner

court viewed an employer's voluntary purchase of such

coverage as a decision to provide employees with a fringe

benefit. Id. at 184. We agree. When viewed as a fringe

benefit that employers provide their employees (or that

employees demand as a condition of employment),

uninsured motorist coverage cannot be subject to the

exclusivity provisions of the WCA. Wagner, 422 A.2d at

1067 (the Supreme Court noting that an employer or

insurance carrier is "precluded from asserting" immunity

for fringe benefits because of their "independent contractual

vitality").12 Since the coverage is purchased for the

employee's benefit and not to protect the employer from any

_________________________________________________________________

12. Travelers argues that the Supreme Court's decision in Wagner

supports its contention that the law never permitted recovery of both

workers' compensation and uninsured motorist benefits. That opinion,

however, interpreted the state's No-Fault Motor Vehicle Insurance Act,

which preceded the MVFRL. Wagner did hold that employees could not

receive both types of benefits, but that holding was premised on the fact

that the No-Fault Act mandated both no-fault and workers'

compensation coverage. Wagner, 422 A.2d at 1067. As uninsured

motorist coverage became optional as the result of legislative actions

including the repeal of Section 1735, Wagner may counsel that

uninsured motorist coverage is now a fringe benefit that can benefit

employees because of its "independent contractual vitality." Id. In any

event, case law interpreting the No-Fault Act is no longer controlling.

Hackenberg, 586 A.2d at 884.

 14

of its own wrongdoing, there is no immunity for the

workers' compensation carrier to borrow from the employer.

Warner, 688 A.2d at 184. Moreover, as the Supreme Court

recently noted, an employee's collection of a fringe benefit

does not "result in double dipping," the harm the

exclusivity provision of the WCA is designed to prevent.

Panichelli, 669 A.2d at 932.13

Travelers suggests that employers likely purchase

uninsured motorist plans only to protect (i) their clients

and customers who ride in company vehicles and (ii) their

employees when they drive company vehicles outside the

course and scope of their employment. While it is obvious

that employers might well purchase uninsured motorist
plans for the reasons Travelers lists, there is no reason why

employers might not also purchase plans to benefit their

on-the-job employees. Indeed, employers may do so

because workers' compensation covers only a small portion

of the types of damages an injured worker might suffer.

Selected Risks Ins. Co. v. Thompson, 552 A.2d 1382, 1388

(Pa. 1989); Chatham, 570 A.2d at 512. Uninsured motorist

plans can cover pain and suffering, wage loss, and

consequential damages that are unavailable under workers'

compensation. Selected Risks, 552 A.2d at 1388. Travelers

does not offer any explanation why Pennsylvania would

wish to bar employers from attempting to shield their

employees from all of the types of on-the-job injuries the

employees might suffer. Since DiBartolo's employer

voluntarily purchased uninsured motorist coverage, we are

satisfied that this fact would cause the Supreme Court to

view the insurance policy as a fringe benefit. As a fringe

benefit, the policy has "independent contractual vitality,"

and DiBartolo's recovery under the policy is not barred by

_________________________________________________________________

13. Indeed, in this regard, DiBartolo notes that he is not seeking 

benefits

for the injuries covered by workers' compensation; instead, he is seeking

coverage for the additional injuries he suffered, injuries that are 

covered

only by the uninsured motorist plan.

Even if DiBartolo received a "double recovery," the repeal of Section

1720 of the MVFRL mandates that the workers' compensation carrier

would have a subrogation lien on any amounts paid the employee for

any already-recompensed injury. Warner, 688 A.2d at 183.

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the exclusivity provisions of the WCA. Wagner, 422 A.2d at

1067.

IV.

In this appeal, we are faced with a difficult choice. On

one hand, there is the clear, recent dicta in Ducjai,

suggesting the Supreme Court would view the repeal of

Sections 1735 and 1737 as dispositive. On the other hand,

there is the even more recent Superior Court opinion,

Warner, that places the legislative repeal in a larger and

much different context. We are persuaded by the Superior

Court's opinion, both because of the depth of its analysis

and because Warner is consistent with the Supreme Court's

own discussion of the repealed sections in Hackenberg. We

find particularly persuasive the Warner court's reasoning

that uninsured motorist coverage is best viewed as a fringe
benefit now that uninsured motorist plans are optional.

Because we predict that the Pennsylvania Supreme Court

would hold that Pennsylvania law does not preclude an

employee's recovery under both worker's compensation and

an employer's voluntarily-purchased uninsured motorist

plan, we will reverse and remand this matter to the district

court for further proceedings.

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NYGAARD, Circuit Judge, dissenting.

The Pennsylvania Supreme Court addressed the issue

before us in well-reasoned dicta: "the repeal of Sections

1735 and 1737 of the MVFRL in 1993 has assured that the

double recovery . . . is no longer permitted." Ducjai v.

Dennis, 656 A.2d 102 (Pa. 1995). The district court cited

Ducjai in its order. I see no reason why this is not a

conclusive statement of Pennsylvania law. Indeed, I suggest

that to do otherwise does violence to a consensus reached

by a majority of the Pennsylvania Supreme Court. I

respectfully dissent.

DiBartolo argues that a single Pennsylvania Superior

Court case is compelling, and should be the basis of our

construction of state law despite the clear statement of the

Pennsylvania Supreme Court in Ducjai. This conclusion is

not supported by case law that dictates our obligations

when reviewing a diversity case.

As a federal court sitting in diversity, we are bound to

either follow the pronouncement of the state's highest

court, or forecast its position if no holding directly

addresses the issue before us. City of Philadelphia v. Lead

Industries Assn. Inc., 994 F.2d 112, 119 (3d Cir. 1993);

Clark v. Modern Group Ltd., 9 F.3d 321, 326 (3d Cir. 1993).

Carefully considered, relevant statements by a state

supreme court, even if technically dicta, provide a federal

court with reliable indicia of how the state tribunal would

rule on a particular question. Nolan v. Transocean Air

Lines, 365 U.S. 293, 296, 81 S.Ct. 555, 557 (1961);

McKenna v. Ortho Pharmaceutical Corp., 622 F.2d 657, 662

(3d Cir. 1980). The Pennsylvania Supreme Court has

discussed the precise issue before us, so we need not

speculate or forecast how it would hold on this issue.

The court in Ducjai discussed whether an employee can

collect benefits under workers' compensation and

uninsured motorist insurance in strongly-worded dicta that

should be controlling. Ducjai, 656 A.2d at 106. Ducjai

prohibited double recovery in the exact fact pattern
presented here.

DiBartolo relies upon Warner v. Continental/CNA

Insurance Co., 688 A.2d 177 (Pa. Super. Ct. 1996), to argue

 17

that he can obtain benefits under workers' compensation

and uninsured driver benefits. Warner analyzes the same

fact pattern presented here. Warner's conclusion regarding

double recovery is at odds with the dicta in Ducjai; yet it

does not discuss Ducjai.

The Pennsylvania Supreme Court opted not to review

Warner. Our task remains to predict whether, in light of

Ducjai, the Pennsylvania Supreme Court would approve of

Warner's rationale. I think it would not.

DiBartolo contends that we should use Warner to

construe Pennsylvania law because it is a more persuasive

consideration of the effect of the repealed statutes. I

disagree, not for the substance of his argument, but

because our standard of review limits our interpretation of

Pennsylvania law. We cannot simply ignore the state

supreme court and cite one intermediate appellate court

case to the contrary.

The central conflict between Ducjai and Warner concerns

the effect of the legislature's repeal of two provisions of the

motor vehicle financial responsibility law. These two

provisions supported case law allowing an individual to

obtain worker's compensation and uninsured motorist

benefits for an on-the-job accident. See Chatham v. Aetna

Life & Cas. Co. 570 A.2d 509 (Pa. Super. Ct. 1989)(declined

to follow by Ducjai); Ferry v. Liberty Mut. Ins. Co., 573 A.2d

610 (Pa. Super. Ct. 1990)(same).

In Ducjai, the Pennsylvania Supreme Court concluded

that by repealing Sections 1735 and 1737, the

Pennsylvania legislature intended to preclude double

coverage and instead treat work-related car accidents like

all other employment-related accidents: compensable under

workers' compensation only. Ducjai, 656 A.2d at 106.

However, Warner held that exclusivity provisions of the

Worker's Compensation Act do not prevent a claimant from

recovering uninsured motorist benefits, despite the repeal

of the statutory provisions that would support this

argument. 688 A.2d at 183.

As a federal court sitting in diversity we predict the state

supreme court's position on an issue by examining, in

order of priority: the decisional law of the highest state
 18

court in analogous cases; the dicta of that court; and to a

lesser degree, the decisional law of lower state courts.

McKenna v. Ortho Pharmaceutical Corp., 622 F.2d 657, 662

(3d Cir. 1980). Decisions of lower state courts should be

accorded proper regard, but not conclusive effect in

interpreting state law, especially when the highest court

has already addressed the issue in dicta. Id.

In this case, the dicta in Ducjai should carry great

weight. Ducjai is a recent case; there has been no

subsequent change in the statute; and there are no

indications that the court is about to abandon this view.

See Cowgill v. Raymark Industries, Inc., 780 F.2d 324, 331

(3d Cir. 1985). We should only diverge from precedent with

caution, and then only when we are given convincing

evidence of a doctrinal trend that the highest state court is

substantially certain to follow. W.A. Wright, Inc. v. KDI

Sylvan Pools, Inc., 746 F.2d 215, 218 (3d Cir. 1984). I

suggest that one lower state court case, even if it is well

reasoned, does not constitute a trend. See Scotts African

Union Methodist Protestant Church v. Conference of African

Union First Colored Methodist Protestant Church, 98 F.3d

78, 92 (3d Cir. 1996) (five cases from lower appellate courts

are sufficient to show the doctrinal trend required by

McKenna).

In sum, the Pennsylvania Supreme Court decided the

effect of the repeal of Sections 1735 and 1737 on double

recovery in Ducjai. Even though it discussed the issue in

dicta, it is a clear manifestation of the sentiments of the

court regarding the issue in this case: the repeal of Sections

1735 and 1737 prevents an employee from recovering

benefits from workers' compensation and an uninsured

motorist policy. That is the precise issue in before us;

therefore I would affirm.

A True Copy:

Teste:

 Clerk of the United States Court of Appeals

 for the Third Circuit

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