Court Opinion

ID: 9748404
Source: CourtListenerOpinion
Date Created: 2023-08-27 16:01:07.632608+00
Date Added: 2024-06-11T07:25:35.074041
License: Public Domain

Justice CAPPY,
dissenting.
I respectfully dissent. I do not agree with the majority’s determination that the claim for which Appellants seek payment from the Pennsylvania Property and Casualty Insurance Guaranty Association (the “Association”) under the Pennsylvania Property and Casualty Insurance Guaranty Act (the “Act”), 40 P.S. §§ 991.1801-1820, is determined by the allegations in Appellants’ complaint and as such, includes the medical expenses alleged as damages therein. To the contrary, I believe that Appellants’ claim may be defined by the record that existed at the time this case settled, and as such, does not include those medical expenditures. Thus, I would conclude that pursuant to 40 P.S. § 991.1817(a), the Association is not entitled to offset the amount that Appellants received from Aetna, their health care insurer, to pay for the medical treatment James Strickler, Jr. (“James Jr.”) received when his condition was diagnosed.
The record reveals the following. On January 31, 1997, Appellants filed a complaint against Dr. Bharati Desai for medical malpractice. In their Complaint, Appellants alleged that Dr. Desai negligently failed to recognize that James Jr. suffered from a malignant brain tumor, and that Dr. Desai’s negligence caused James Jr. to suffer severe neurological damage, developmental delay, hydrocephalus, malignant tumor growth, and the increased likelihood of metastatic cancer. Appellants further alleged that the results of Dr. Desai’s negligence included and will include expenses for James Jr.’s medical treatment, physical and mental pain, inconvenience, humiliation, impairment of earning powers, and loss of the pleasures of life.
In their Pretrial Statement, Appellants repeated these assertions. However, the expert report that Appellants filed with *634the Pretrial Statement supporting Appellants’ allegations of Dr. Desai’s negligence and the nature of resulting harm to James Jr. did not opine specifically that a prompt diagnosis by Dr. Desai would have made a difference in the medical treatment James Jr. had received. Moreover, the reports filed by Dr. Desai’s experts expressly opined that any delay in diagnosis did not adversely affect James Jr.’s recovery, prognosis, or medical treatment.
When the parties agreed to settle the case, Appellants filed their Petition for Preliminary Approval of Leave to Settle a Minor’s Action. The reports from both Appellants’ and Dr. Desai’s respective medical experts, submitted with the Petition, opined that the medical treatment provided to James Jr. would have been the same no matter when the diagnosis of his brain tumor occurred.
Thus, despite the allegations in Appellants’ Complaint, at the time of settlement, the record demonstrated that Dr. Desai was not legally liable for James Jr.’s incurred medical expenses. See Mitzelfelt v. Kamrin, 526 Pa. 54, 584 A.2d 888, 892 (1990) (“A plaintiff is required to present an expert witness who will testify, to a reasonable degree of medical certainty, that the acts of the physician deviated from good and acceptable medical standards, and that such deviation was the proximate cause of the harm suffered.”). Accordingly, Dr. Desai’s medical malpractice insurer, Physicians Insurance Company (“PIC”), would not have been obligated to pay for those items. See General Accident Ins. Co. of America v. Allen, 547 Pa. 693, 692 A.2d 1089, 1095 (1997) (an insurer’s duty to indemnify arises in the event of liability in the underlying action.).
Whether the Association is entitled to offset the amount Aetna paid to cover James Jr.’s medical expenses is a matter of statutory construction. The Act’s offset provision states:
§ 991.1817. Non-duplication of recovery
(a) Any person having a claim under an insurance policy shall be required to exhaust first his right under such policy. For purposes of this section, a claim under an *635insurance policy shall include a claim under any kind of insurance, whether it is a first-party or third-party claim, and shall include, without limitation, accident and health insurance, worker’s compensation, Blue Cross and Blue Shield and all other coverages except for policies of an insolvent insurer. Any amount payable on a covered claim under this act shall be reduced by the amount of any recovery under other insurance.
40 P.S. § 991.1817(a) (emphasis added).
The term “covered claim” is defined in § 991.1802 of the Act, which provides in relevant part:
§ 991.1802. Definitions.
As used in this article, the following words and phrases shall have the meanings given to them in this section:
* * *
“Covered Claim.”
(1) An unpaid claim ... submitted by a claimant, which arises out of and is within the coverage and is subject to the applicable limits of an insurance policy to which this article applies issued by an insurer if such insurer becomes an insolvent insurer after the effective date of this article....
40 P.S. § 991.1802.
Further, under 40 P.S. § 991.1803(b)(1), the Association stands in the shoes of insolvent insurers.
According to the Act’s offset provision, it is the “amount payable on a covered claim” that “shall be reduced by the amount of any recovery under other insurance.” 40 P.S. § 991.1817(a). What constitutes the covered claim is, therefore, a central issue. Under the statutory definition in 40 P.S. § 991.1802, the covered claim in this case is the claim that was submitted to the Association to cover, in PIC’s stead, the sum that settled Appellants’ malpractice claim. Accordingly, to answer whether § 991.1817(a)’s offset applies, it must be determined whether any amount of the settlement sum, i.e., the covered claim, was recovered from Aetna. It is this inquiry which necessarily causes us to ask whether the medi*636cal expenses Appellants had incurred were part of the parties’ settlement.
In my view, there are two plausible answers. The first is the answer the majority gives — the claim the parties settled is set forth in the allegations the Appellants asserted in their complaint. The second is the answer the majority rejects— the claim the parties settled is reflected in the record as developed at the time of settlement. While the former included the medical expenses, the latter demonstrated that it did not.
The Act does not state which answer is intended. Accordingly, the statute is ambiguous, and statutory interpretation is warranted. 1 Pa.C.S. § 1921(c); O’Rourke v. Commonwealth, 566 Pa. 161, 778 A.2d 1194, 1201 (2001) (citing In re Kritz’ Estate, 387 Pa. 223, 127 A.2d 720, 723 (1956)) (“[R]ules of statutory construction are to be resorted to only when there is [patent or latent] ambiguity”.).
The applicable rules of statutory construction are well-settled. The overriding principle is to ascertain and effectuate the intent of the legislature. 1 Pa.C.S. § 1921(a). When, as here, the words of a statute are not explicit, the intention of the General Assembly may be ascertained by considering the occasion and necessity for the statute, the object to be obtained, and the consequences of a particular interpretation. 1 Pa.C.S. §§ 1921(c)(1),(c)(4),(c)(6). The Act is to be liberally construed to effect its object and to promote justice. See 1 Pa.C.S. § 1928(c).
Generally speaking, the Act aims “[t]o provide a means for the payment of covered claims under certain property and casualty insurance policies, to avoid excessive delay in the payment of such claims and to avoid financial loss to claimants and policyholders as a result of the insolvency of an insurer.” 40 P.S. § 991.1801(1).
In light of the Act’s purposes and the Association’s statutory role, I would not interpret the term “covered claim” as used in 40 P.S. § 991.1817(a) as necessarily limited to the allegations in Appellants’ complaint. Rather, I would allow the record at *637the time of settlement also to determine what items the covered claim encompasses. In this way, the Association would cover only that which PIC would have paid.1
As the record that existed at the time of settlement demonstrates that medical expenses were not legally recoverable, I would conclude that the covered claim in this case does not include James Jr.’s incurred medical expenses. I would, therefore, also conclude that Appellants did not recover any portion of the covered claim from other insurance under 40 P.S. § 991.1817(a). Accordingly, I would hold that the Association is not entitled to § 991.1817(a)’s offset.

. Appellants indicate in their Brief that had they been able to recover the medical expenses, a settlement for $750,000 would likely not have been achievable, and that the likelihood of settlement increased when they recognized that this item of damages was unavailable. (Appellants’ Brief at 11 & n. 1, 13). I agree with Appellants' observation that a decision to allow the offset here may have a chilling effect in the future on the settlement of cases in which the Association stands in for an insolvent insurer.