Opinion ID: 2275546
Heading Depth: 1
Heading Rank: 4

Heading: The Association Declines to Fund the Settlement and Asserts its Right to Offset Against Funds Paid to Appellants

Text: On December 23, 1999, Appellants moved to compel the Association to fund the settlement. (R. 93a-99a). On February 2, 2000, the Association petitioned for, and the trial court granted it, leave to intervene. (R. 117a-121a, 131a). The Association refused to pay because it claimed that it was entitled to reduce the amount of its obligation by the amount Appellants received from Aetna. The Association explained that Appellants already received payment of medical expenses in excess of the amount that the Association was obligated to pay. (R. 127a). The Association reasoned that because Aetna had already reimbursed Appellants for the medical expenses they sought in the medical malpractice action, requiring the Association to make the $200,000.00 settlement payment would result in duplicate payments to Appellants for the same expense, a result specifically prohibited by the non-duplication of recovery provisions of 40 P.S. § 991.1817(a). Tracking the words of the statute, the Association argued that any amount payable on a covered claim, including the current claim against the Association, must be reduced by the amount of the recovery from other insurance, which it argued should include the Aetna policy. (R. 127a). Because Aetna paid Appellants an amount greater than the amount the Association was required to pay pursuant to its statutory obligation to PIC, the Association claimed no additional payment was required. Specifically, the Association argued that the amount it would have had to pay was properly reduced to zero by the amount Aetna paid on behalf of Appellants. Appellants disagreed. They argued that the amount of medical expenses would have been the same regardless of the medical malpractice because the treatment for the underlying condition and the malpractice injury were the same. (R. 98a, ¶ 13). In their petition for approval of the settlement agreement, Appellants summarized their position as follows: [the Association] is not entitled to the offset because none of the medical expenses are recoverable in this action due to the fact that all of the medical treatment provided to minor plaintiff would have been required irrespective of the negligence of the defendant. R. 82a, ¶ 5. Appellants attached to their motion to compel funding statements of medical experts supporting their contention that treatment for James Jr. would have been the same regardless of when Dr. Desai made the diagnosis. (R. 100a, 101a). Essentially, Appellants argued that because they could not have recovered the medical expenses they claimed in the medical malpractice action, the amount the settlement agreement required the Association to pay was not duplicative. By Order dated February 29, 2000, the trial court agreed with the Association and denied the motion of Appellants to compel the Association to fund the settlement. Appellants appealed to the Superior Court. On January 19, 2001, the Superior Court affirmed the determination of the trial court. Strickler v. Desai, 768 A.2d 862 (Pa.Super.2001). Appellants petitioned for leave to appeal, which we granted.