Court Opinion

ID: 9755391
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:36:55.852215+00
Date Added: 2024-06-11T07:28:06.809631
License: Public Domain

DISSENTING OPINION BY
Judge FRIEDMAN.
I respectfully dissent. The majority holds that the Court of Common Pleas of Venango County (trial court) erred in concluding that it is a violation of public policy to exclude from underinsured motorists (UIM) coverage a claim by anyone eligible for workers’ compensation (WC) benefits. For the following reasons, I cannot agree.
On October 31, 2002, Frank D. Heller (Heller) was injured in an auto accident while working as a police officer for Sugar-brook Borough (Borough). The Borough paid WC benefits to Heller as a result of the accident. The company providing insurance for the other driver paid Heller the driver’s policy limit of $25,000.
The Borough has UIM coverage up to $100,000 per person or per accident through the Pennsylvania League of Cities and Municipalities, i/d/b/a Penn Prime Trust (Penn PRIME). The Borough has WC coverage through the State Workers’ Insurance Fund (SWIF), which has a sub-rogation lien on any UIM funds paid to Heller under the Borough’s policy with Penn PRIME.
On April 23, 2004, Heller submitted a claim to Penn PRIME for UIM benefits. Penn PRIME denied the claim pursuant to a policy provision which states that the UIM coverage does not apply to “[a]ny claim by anyone eligible for [WC] benefits .... ” (Stipulations, No. 20, R.R. at 18a; Policy, ¶ V.B.3(e), R.R. at 51a.) Heller sought a declaratory judgment that the exclusion from UIM coverage of anyone eligible for WC benefits is invalid as con*372trary to public policy. The trial court agreed, and Penn PRIME filed an appeal with this court.
My analysis begins with a brief historical review of the applicable law. In Selected Risks Insurance Company v. Thompson, 520 Pa. 130, 552 A.2d 1382 (1989), our supreme court held that a UIM policy issued by an insurer in 1981 was void as being contrary to public policy because it gave the insurer a set-off for WC benefits. Our supreme court gave four reasons for its holding but also pointed out that section 1735 of the new Motor Vehicle Financial Responsibility Law (MVFRL)1 specifically states that UIM coverage “shall not be made subject to an exclusion or reduction in amount because of any worker’s compensation benefits payable as a result of the same injury.” Selected Risks, 520 Pa. at 143, 552 A.2d at 1388 (bold emphasis added). Thus, when Selected Risks was decided in 1989, it was against public policy for UIM coverage to exclude anyone, or reduce benefits, based on the receipt of WC benefits.
The next year, by the act of February 7, 1990, P.L. 11, the legislature added section 1737 to the MVFRL.2 Section 1737 stated that, notwithstanding anything in the WC statute, no employee who is otherwise eligible shall be precluded from the recovery of UIM benefits from an employer’s motor vehicle policy. Thus, in 1990, it was against public policy for a UIM insurer to exclude from an employer’s UIM coverage anyone who was eligible for WC benefits.
Also in 1990, the legislature amended section 1722 of the MVFRL3 to state that a person who is eligible to receive WC benefits shall be precluded from recovering the amount of those benefits in a UIM proceeding. In other words, perhaps in reaction to the Selected Risks holding, the legislature allowed UIM insurers to take a set-off for WC benefits. Moreover, the legislature amended section 1720 of the MVFRL to state that a WC carrier shall have no right of subrogation with respect to certain benefits recovered under the MVFRL.4 This court has noted that the obvious legislative intent was to place the ultimate burden for benefits on the WC insurance carrier rather than the auto insurance carrier. Updike v. Workers’ Compensation Appeal Board (Yeager Supply, Inc.), 740 A.2d 1193 (Pa.Cmwlth.1999).
The legislature altered this legislative scheme with the passage of the act of July 2. 1993, P.L. 190, known as Act 44. Act 44 repealed sections 1735 and 1737 of the MVFRL and repealed sections 1720 and 1722 of the MVFRL as they relate to WC benefits. Thus, under Act 44, an employee’s recovery from a UIM carrier is no longer reduced by the amount of WC benefits; however, the WC carrier now has the right of subrogation with respect to the UIM benefits paid to a claimant. Hannigan v. Workers’ Compensation Appeal Board (O’Brien Ultra Service Station), 860 A.2d 632 (Pa.Cmwlth.2004), appeal denied, 582 Pa. 712, 872 A.2d 174 (2005). This court has explained that Act 44 shifted the ultimate burden for benefits from innocent employers and their WC *373carriers to responsible tortfeasors and the insurers who pay in their stead. Id.
In this regard, our supreme court pointed out in Selected Risks that WC benefits cover only a fraction of the damages available to an employee through UIM coverage. Selected Risks. By shifting the burden of paying from the WC carrier to the UIM carrier in cases where an uninsured or underinsured third party tortfeasor has caused a work-related injury, the legislature has enabled an employee to be made whole. Indeed, instead of recovering only medical expenses and loss of wages through WC benefits, an employee can recover all applicable damages from the carrier representing the uninsured or un-derinsured tortfeasor.
Of course, if a UIM carrier excludes from its UIM coverage anyone who is eligible for WC benefits, a WC carrier cannot assert a subrogation interest against UIM payments and an employee cannot recover all applicable damages. This defeats the two-pronged public policy of: (1) shifting the burden of paying from WC carriers to UIM carriers where an uninsured or un-derinsured third party tortfeasor causes a work-related injury; and (2) enabling the employee to recover all applicable damages.
Here, the Borough’s WC carrier, SWIF, has a subrogation lien on any UIM benefits paid to Heller under the Borough’s UIM policy with Penn PRIME. As a matter of public policy, Penn PRIME is to bear the burden of paying for Heller’s work-related injury because the injury was caused by an underinsured third party tortfeasor. However, the effect of Penn PRIME’S UIM policy exclusion for anyone eligible for WC benefits is to keep the burden of paying for the work injury on SWIF. Moreover, to the extent that Heller may have suffered damages other than medical expenses and loss of wages, the WC exclusion prevents Heller from being made whole. Because the WC exclusion in Penn PRIME’S UIM policy prevents the fulfillment of public policy, I agree with the trial court that the WC exclusion is invalid.
Accordingly, I would affirm.

. Section 1735 of the MVFRL, formerly 75 Pa.C.S. § 1735, was added by the act of February 12, 1984, P.L. 26, and was repealed by section 25(a) of the act of July 2, 1993, P.L. 190, known as Act 44.

. Formerly 75 Pa.C.S. § 1737. Like section 1735 of the MVFRL, section 1737 was repealed by Act 44 in 1993.

. 75 Pa.C.S. § 1722. Act 44 repealed section 1722 of the MVFRL only as it relates to WC benefits.

. 75 Pa.C.S. § 1720. Act 44 repealed section 1720 of the MVFRL only as it relates to WC benefits.