Court Opinion

ID: 9713873
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:24:38.19364+00
Date Added: 2024-06-11T18:23:21.165889
License: Public Domain

TODD, J.,
dissenting.
¶ 1 I respectfully dissent. The Majority concludes in the Panea and Bell cases that application of the non-duplication of recovery provision of the Pennsylvania Property and Casualty Insurance Guaranty Association Act (“the Act”)10 does not violate basic contract law principles. (Majority Opinion, at 788.) Similarly, in the Baker case, the Majority implicitly concludes that molding the verdict to reflect the offset is not an improper interference with a lawfully-rendered jury verdict. As I disagree with each of these conclusions, I must dissent.
¶ 2 The Paneas agreed to resolve their claims against Dr. Isdaner in return for a settlement in the amount of $75,000. The *798release which was intended to memorialize this agreement apparently was drafted by Dr. Isdaner’s counsel and submitted to the Paneas’ counsel for their signature. It contains neither a contingency provision regarding, nor any discussion of, the source of those funds. The release does contain an integration provision stating that the written document represents “the complete release agreement.” Although PIC, as the physician’s insurer, was named in the release, among numerous others including Dr. Isdaner’s counsel, PIC was not a party to the action.
¶ 3 Similarly, the Bells settled with Dr. Slezak and the CAT fund in return for a total payment of $500,000, with $200,000 to be paid by Dr. Slezak and $300,000 to be paid by the CAT fund.11 The joint tortfea-sor release executed by the Bells contains an integration clause providing, “it is further understood and agreed that there are no written or oral understanding [sic] or agreements, directly or indirectly, connected with this release and settlement, that are not incorporated herein.” (Bell Release, ¶ 9, R.85a). Aside from setting forth the apportionment of settlement funds between Dr. Slezak and the CAT fund, the release is silent as to the ultimate source of the funds to be paid. The only contingency in the Bell release referred to court approval, if required. PIC was not a party to the action and was not mentioned specifically within the release.
¶ 4 It is axiomatic that settlement agreements are contracts between the parties and are to be enforced under general contract law principles, absent fraud, accident or mutual mistake. Clark v. Philadelphia College of Osteopathic Medicine, 693 A.2d 202, 207 (Pa.Super.1997). Fundamental among those principles “is the directive that ‘the effect of a release must be determined from the ordinary meaning of its language.’” Id. (quoting Buttermore v. Aliquippa Hospital, 522 Pa. 325, 328-29, 561 A.2d 733, 735 (1989)).
¶5 In these cases, a review of each releases’ plain language reveals nothing regarding the source of the funds to be paid by the physicians. Nor does it contain any contingency based on insurance coverage. Moreover, there has been no allegation that any contingency regarding the source of the funds to pay the defendant physicians’ obligations was a part of the explicit agreement between the parties and was intended by the parties to be included in the release. Thus, there are no claims of fraud, accident or mutual mistake in these cases.
¶ 6 The Majority reasons that “defendants are merely asserting a statutory right to either limit or extinguish their obligations to pay on the claims.” (Majority Opinion, at 789.) If there is such a statutory right, however, it is held not by the defendant physicians, but by the Pennsylvania Property and Casualty Insurance Guaranty Association (“PPCIGA”) and, as noted above, neither PIC nor PPCIGA was a party to either of these actions or settlements.
¶ 7 The Majority concludes that despite the presence of an integration clause, we must find an unwritten term of the settlement agreement, i.e., the parties’ mutual understanding that insurance coverage for the amount to be paid by the physician necessarily was contemplated by the parties. (Majority Opinion, at 789.) I acknowledge that plaintiffs below may have been aware the physicians had insurance coverage, and may even have known the *799limits of that coverage. However, I do not agree that we may therefore conclude that these plaintiffs considered that the insurer’s failure to pay would result in the deduction of any shortage from their settlement receipts. Nor can I conclude that these plaintiffs considered that any such payments were not the ultimate responsibility of the defendant physician who was a party to the agreement. Thus, whatever the defendant physicians’ unilateral expectations regarding payment by their insurer, there simply is no evidence that any such understanding was part of the mutual agreement between the parties to these settlement agreements. Instead, I believe it is more reasonable to conclude the injured plaintiffs understood they would receive the full amount of the physician’s share of the settlement whether paid directly by him or by an insurer on his behalf. Had the physicians wished to make these settlements contingent upon full payment by their insurer, they certainly could have done so. They did not.
¶ 8 In his thorough and well-reasoned Opinion in the Bell case, the Honorable Gary P. Caruso concluded:
[I]t is beyond reason to ask the Court to ignore the fact that both parties, at the time the settlement was negotiated, were aware that [Dr.] Slezak was insured and that the primary limits payable by the insurer was $200,000.00. However, even with this awareness, neither party made reference to the requirement that $200,000.00 of the $500,000.00 settlement amount was to be paid by Slezak’s now insolvent insurer and further it did not provide that Sle-zak would be relieved of his/its obligation if the insurer became insolvent before payment was made.
(Bell Trial Court Opinion, 5-6.) Judge Caruso went on to explain:
The factual pattern here is that both the plaintiffs and the defendant, Slezak, were, at the time of arriving at the settlement agreement, represented by attorneys experienced in medical malpractice cases. Certainly each counsel understood that, under present law, before the C.A.T. fund would participate in any settlement, the physician must promise to pay the first $200,000.00 of the settlement amount. The plaintiffs’ counsel was successful in extracting from defense counsel Slezak’s promise to pay $200,000.00. This was the primary limit of Slezak’s insurance policy. Certainly, Slezak fully intended that the amount he promised to pay would be paid by his insurer and would not be his personal responsibility. However, this was not the concern of the plaintiffs. Their only concern was to receive an offer of payment of $200,000.00 in order to look to the C.A.T. fund for additional monies. Their concern was not the source of the $200,000.00 but only the promise of its payment.
(Id. at 7 (emphasis added)).
¶ 9 The Majority dismisses the assertion by the Paneas and the Bells that application of the offset against their settlement proceeds represents an improper reformation of their settlement agreements by stating that neither party has sought to reform or to rescind the agreements. (Majority Opinion, at 789.) In my view, the Paneas and Bells fulfilled their obligations under the settlement agreements and then, understandably, desired and sought enforcement of their agreements by their terms. If there was a basis in law for reformation or recission,12 the onus was on *800the defendant physicians, the parties who sought to avoid their obligations after agreement had been reached and the injured plaintiffs had fulfilled their obligations thereunder, to seek such a remedy. In the absence of reformation or rescission, I believe the physician defendants remain liable for the full amount of the settlements they agreed to pay to the injured plaintiffs. I would, therefore, reverse the Order of the Philadelphia County Court of Common Pleas which denied Appellants/Plaintiffs Paneas’ Petition to Enforce settlement against Defendants/Appellees’ Neil Isdaner, M.D. and Neil Isdaner, M.D., P.C., and affirm the Order of the Westmoreland County Court of Common Pleas which granted Appel-lees/Plaintiffs Bells’ Petition to Enforce Settlement against Appellants/Defendants Joseph A. Slezak, M.D. and Joseph A. Slezak, M.D., Ltd.
¶ 10 With respect to the Baker case, I similarly would conclude that Robert Baker is entitled to enforce a judgment against Donald Myers, M.D. for the full amount of the jury’s verdict, and I would reverse the Order of the. Philadelphia Court of Common Pleas which molded the jury verdict in favor of Baker and against Dr. Myers in the amount of $65,662.91 (including delay damages) to zero. Baker’s right to recover against Dr. Myers was adjudicated at trial by a jury which rendered a verdict based upon the evidence presented. Neither PIC nor PPCIGA was a party to this action. I believe that it represents an unprecedented and unwarranted intrusion by the judiciary to inquire into a defendant’s expectations regarding possible insurance coverage to satisfy a judgment and to mold a verdict accordingly if expected funds are not forthcoming.
¶ 11 In sum, contrary to the holding of the Majority, I would find that in each of these three cases, the injured plaintiffs should receive the full amount of their settlement or judgment against the defendant physicians.
¶ 12 The Majority, in Judge Orie Melvin’s exhaustive Opinion, holds that the Act mandates that amounts already received by the injured plaintiffs as health insurance benefits be deducted from the amount to be paid by PPCIGA. The Majority’s conclusion prevails because in its view, these plaintiffs must be viewed as “claimants” under the Act.13 I cannot agree with the Majority’s conclusion that “[t]he instant Act provides a clear and adequate remedy for a loss due to the insolvency of a property and casualty insurer.” (Majority Opinion, at 789.) I further disagree with the Majority’s implicit conclusion that as between the policyholder and an injured plaintiff, the Act mandates that any loss be borne by the plaintiff. '
*801¶ 13 As noted by the Majority, one of the Act’s stated purposes is “to avoid financial loss to claimants or policyholders as a result of the insolvency of an insurer.” 40 P.S. § 991.1801(1) (emphasis added). The so-called offset provision of the Act, entitled “Non-duplication of recovery,” provides, inter alia, “[a]ny 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). Strict application of the Act, mandating the Majority’s rejection of the injured plaintiffs’ claims on appeal, thus requires us to act in contravention of one of the Act’s stated purposes because in so doing we are, in effect, ignoring the goal of “avoid[ing] financial loss to claimants .... ” Certainly, under the Majority’s analysis, we are fulfilling part of the Act’s purpose, for the application of its statutory terms results in the “avoid[ance] [of] financial loss to ... policyholders,” i.e., the physicians. Despite entering into legally binding settlement agreements with the injured plaintiffs, due to the insolvency of their insurer, the defendant physicians are now “off the hook” for the amounts to which they agreed.
¶ 14 The Majority also concludes that applying a set-off in the amount of received health insurance has no effect on the actual proceeds of the settlement to be realized by the injured plaintiffs because the settlement proceeds otherwise would be subject to the health insurer’s subrogation lien. With this conclusion, I must disagree. In the Panea and Bell cases, settlements were negotiated prior to PIC’s insolvency. We do not know whether in reaching the agreed upon settlement amounts, counsel was successful in obtaining compromises or even waivers of subro-gation interests, or whether such a compromise or waiver might be reached in the future, thus dramatically impacting the net amounts these plaintiffs actually were to receive under the settlement agreements. Indeed, the entire statutory offset amount may have been waived, thus leading plaintiffs to have anticipated receiving the entire settlement amount with no subrogation to follow.14 As discussed above, the Majority acknowledges there may have been a basis to rescind the settlement, perhaps alluding to the possibility of a compromised or waived subrogation lien, but that plaintiffs below chose not to do so. Again, the Majority’s application of the Act results in our placing the burden on plaintiffs below to seek to enforce a settlement with the now inherent risk of statutory setoff or forego the settlement and begin anew their efforts to obtain a recovery directly from the doctors.
¶ 15 Under the Majority’s analysis, application of the Act pursuant to its terms requires us to penalize one of the parties it purports to protect, i.e., claimants.15 Surely the Act was not intended to immunize policyholders, in these cases physicians, completely from any personal liability. However, through the Act’s application by our Court today, such immunity has been achieved. As between an injured victim and a tortfeasor, when only one is to suffer a financial penalty, I do not believe this result to be the proper one. We have long recognized, “as between two innocent parties ... liability should be borne by the *802one ... who made the loss possible.” Triffin v. Dillabough, 448 Pa.Super. 72, 670 A.2d 684, 693 (1996) (citation omitted), aff'd 552 Pa. 550, 716 A.2d 605 (1998). Accord Rothman v. Fillette, 503 Pa. 259, 469 A.2d 543 (1983); Rykaczewski v. Kerry Homes, Inc., 192 Pa.Super. 461, 161 A.2d 924 (1960). It is not sound public policy to make the victim of negligent conduct pay for the tortfeasor’s unfortunate choice of insurance carrier.16 I believe the public policy of this Commonwealth supports the conclusion that the risk of loss caused by the physicians’ insurance company be borne by the physicians, not by the injured victims of their negligence.
¶ 16 Finally, I note that the result reached by the Majority may lead to absurd results, as plaintiffs who suffer more serious physical injuries, and who therefore receive more extensive medical treatment and thus greater medical insurance benefits, may ultimately receive less cash compensation from their agreed upon settlements with the physicians than plaintiffs with less severe physical injuries. This is an anomalous result that could not have been intended by the legislature.
¶ 17 For these additional reasons, I respectfully dissent.
¶ 18 As the Majority has concluded that the result reached by it today is the one required under the Act, I urge the legislature to revisit the mandates of the Act in light of its stated purposes and the longstanding public policy of this Commonwealth.

. 40P.S. §§ 991.1801-1820.

. While Dr. Slezak argues in his brief that the release was not signed until after PIC was declared insolvent, it is clear that the parties reached a settlement agreement prior to the declaration of insolvency. (See Brief for Appellant Slezak, at 5.)

. I express no opinion as to whether these remedies may be appropriate in these cases. However, as the Bells point out, instead of seeking such a remedy, Dr. Slezak has relied *800upon the validity of the settlement in subsequent court filings and otherwise acted as though the settlement agreement remains valid and enforceable in all other respects. (Brief for Appellees Bell, at 16.)

. The Majority assumes that plaintiffs below are to be deemed claimants under the Act. To the contrary, the record does not reveal that the injured plaintiffs made any claim for payment directly to PPCIGA. Instead, they have brought actions against the defendant physicians who sought defense and indemnity coverage from their now-insolvent insurer, PIC. As discussed above, neither the insurer nor PPCIGA was a party to any of these actions. As noted by Judge Caruso in the Bell case, the term "claimant” is not defined. These plaintiffs did not have any contractual relationship with PIC, nor any basis upon which they could have made a claim against PIC. Their only cause of action exists against the tortfeasor. Thus, the plaintiffs may not even be the type of claimant referred to in the Act and to which the Act's purpose would apply.

. Likewise, we cannot rale out the possibility that such subrogation could be asserted against settlement proceeds other than those at issue here.

. I am assuming for purposes of this analysis the Majority is correct that the injured plaintiffs are to be viewed as claimants.

. Indeed, the result reached by the Majority encourages the choice of the cheapest possible premium without regard to an insurance company's financial soundness since, in the event of a claim, the insured retains the savings in premiums and passes the loss to PPCI-GA and the injured party.