Court Opinion

ID: 3208599
Source: CourtListenerOpinion
Date Created: 2016-06-01 20:05:53.137523+00
Date Added: 2024-06-11T14:27:04.851465
License: Public Domain

REPORTED

    IN THE COURT OF SPECIAL APPEALS

                 OF MARYLAND

                      No. 2496

               September Term, 2014

MARYLAND INSURANCE ADMINISTRATION

                          v.

    STATE FARM MUTUAL AUTOMOBILE
          INSURANCE COMPANY

       Berger,
       Reed,
       Rodowsky, Lawrence F.
         (Retired, Specially Assigned),

                                   JJ.

             Opinion by Rodowsky, J.

       Filed: June 1, 2016
*Judge Kevin F. Arthur did not participate, pursuant
to Md. Rule 8-605.1, in the Court’s decision to report
this opinion.
       At issue here are the applicability of the personal injury protection (PIP) coverage

provisions and the validity of the owned but uninsured exclusion from PIP coverage in an

automobile liability policy issued by the appellee, State Farm Mutual Automobile Insurance

Company (State Farm) to its named insured, Alaskan Bundue-Conteh (the Claimant). These

proceedings arise on the Claimant's complaint to the Maryland Insurance Administration

(MIA) that State Farm had denied his claim for PIP benefits. Applying certain trade practice

enforcement provisions, MIA agreed with the Claimant on the merits and, in final agency

action, imposed a penalty on State Farm by ordering payment of the benefits with statutory

interest. In an action for judicial review, the Circuit Court for Baltimore City reversed. This

appeal followed. For the reasons set forth below, we shall affirm the circuit court.

       The facts are undisputed. The Claimant was the owner of two automobiles. His 1997

Jeep Grand Cherokee was insured by State Farm under an automobile liability policy that

included PIP coverage. He also owned a 2006 Ford Crown Victoria that he drove as a

taxicab. It was insured for liability with Amalgamated Casualty Insurance Co. under a

policy that did not contain PIP coverage. On November 14, 2011, while Claimant was

occupying his taxicab, it was rear-ended by another automobile, causing Claimant personal

injuries. Claimant is seeking a recovery of PIP benefits under a policy covering an owned

motor vehicle that he was not occupying at the time of the accident. That State Farm policy

contains the exclusion from PIP coverage that is set forth below:
       "Exclusions
       "THERE IS NO COVERAGE:

       ....

       "3.    FOR YOU OR ANY RESIDENT RELATIVE WHILE
              OCCUPYING A MOTOR VEHICLE OWNED BY YOU OR
              ANY RESIDENT RELATIVE AND WHICH IS NOT INSURED
              UNDER THE LIABILITY COVERAGE OF THIS POLICY."

       There are a number of provisions of the Insurance Article of the Maryland Code that

are relied upon in the arguments of the parties. Some of those statutes are set forth below.

Unless otherwise noted, all references are to sections of Maryland Code (1997, 2011 Repl.

Vol.), Article, "Insurance," Title 19, "Property and Casualty Insurance," Subtitle 5, "Motor

Vehicle Insurance – Primary Coverage."

       "§ 19-501. Definitions.
              "(a) In general. – In this subtitle, the following words have the
       meanings indicated.
              "(b) Motor Vehicle. – ...
                      "(2) 'Motor vehicle' does not include:
                             ....
                             "(ii) a taxicab as defined in § 11-165 of the
       Transportation Article[.]
              "(c) Motor vehicle accident. – (1) 'Motor vehicle accident' means an
       occurrence involving a motor vehicle that results in damage to property or
       injury to a person."

       "§ 19-505. Personal injury protection coverage – In general.
               "(a) Coverage required. – Unless waived in accordance with § 19-506
       of this subtitle, each insurer that issues, sells, or delivers a motor vehicle
       liability insurance policy in the State shall provide coverage for the medical,
       hospital, and disability benefits described in this section for each of the
       following individuals:
                       "(1) ....

                                            -2-
                            "(i) the first named insured, and any family member of
       the first named insured who resides in the first named insured's household,
       who is injured in any motor vehicle accident, including an accident that
       involves an uninsured motor vehicle or a motor vehicle the identity of which
       cannot be ascertained[.]
               ....

              "(c) Exclusions. – (1) An insurer may exclude from the coverage
       described in this section benefits for:
                     ....
                     "(ii) the named insured or a family member of the named insured
       who resides in the named insured's household for an injury that occurs while
       the named insured or family member is occupying an uninsured motor vehicle
       owned by:
                             "1. the named insured[.]"

       "§ 19-513. Limitations on recovery of benefits.
              ....
              "(d) Payment of benefits – Coverage under subtitle not in effect. – (1)
       The insurer under a policy that contains the coverages described in §§ 19-505
       and 19-509 of this subtitle shall pay the benefits described in §§ 19-505 and
       19-509 to an individual insured under the policy who is injured in a motor
       vehicle accident:
                     "(i) while occupying a motor vehicle for which the coverages
       described in §§ 19-505 and 19-509 are not in effect[.]"

       MIA held that State Farm violated §§ 19-505 and 19-513.

                                   Standard of Review

       Where, as here, the facts are undisputed, our review of the agency decision is "limited

to determining if there is substantial evidence in the record as a whole to support the

agency's findings and conclusions, and to determining if the administrative agency's decision

is premised upon an erroneous conclusion of law." United Parcel Serv., Inc. v. People's

Counsel, 336 Md. 569, 576, 650 A.2d 226, 230 (1994). Further, the expertise of the agency

                                             -3-
in interpreting the statute which it administers should be respected. Board of Physician

Quality Assurance v. Banks, 354 Md. 59, 69, 729 A.2d 376, 381 (1999).

                                    Questions Presented

       MIA makes two submissions which we have converted into questions presented.

              I. Does the plain meaning of the statutory provisions relating to
       mandatory PIP coverage require that State Farm pay PIP benefits to its
       insured?

              II. Did MIA correctly determine that the owned but uninsured
       exclusion did not permit State Farm to deny PIP benefits to its Insured?

                                          Discussion
                                               I
       Much of the ground covered by the first issue has been plowed in Nasseri v. GEICO

General Ins. Co., 390 Md. 188, 888 A.2d 284 (2005). There, the named insured under a

GEICO automobile policy, covering the insured's private motor vehicle, was injured in an

automobile collision while driving a taxicab that was owned by a third party. The GEICO

policy included PIP coverage but the policy on the taxicab did not. GEICO denied the

insured's claim for PIP benefits, relying on the policy's exclusion for injuries in an uninsured

automobile which was available for the regular use of the insured. The Court held that PIP

benefits must be paid by GEICO. Essentially, the Court said that, unlike automobile liability

coverage that follows the insured vehicle, PIP coverage follows an insured individual.1

       1
           The Court in Nasseri said:

                                                                                 (continued...)

                                              -4-
       PIP coverage was not negated by the exclusion relied upon by GEICO because the

exclusion was broader than the authorizing statute, § 19-505(c)(1)(ii)1, which required the

vehicle occupied by the insured at the time of the collision to be owned by him, as opposed

to being available for the insured's regular use.

       Despite Nasseri, MIA argues that, because a taxicab is excluded from the definition

of "motor vehicle," the Claimant was not occupying a motor vehicle within the meaning of

§ 19-505(c)(1)(ii), the authorization for the owned but uninsured exclusion from PIP. The

argument undertakes to prove too much.

       1
        (...continued)
               "The language of the Insurance Article, as well as numerous opinions
       by this Court, make it clear that an insured, who has PIP coverage under a
       policy on the insured's motor vehicle, and who is injured in an accident while
       occupying a different motor vehicle owned by someone else, is ordinarily
       entitled to PIP coverage under the policy on the insured's vehicle. If the
       vehicle occupied by the insured also has PIP coverage, that coverage will be
       primary and the coverage under the policy on the insured's vehicle will be
       secondary. If the occupied vehicle has no PIP coverage, the coverage under
       the insured's policy will be primary. See, e.g., Bishop v. State Farm Mutual
       Auto Insurance, 360 Md. 225, 236-238, 757 A.2d 783[, 789-790] (2000);
       MAIF v. Perry, 356 Md. 668, 671-672, 676-677, 741 A.2d 1114, 1115-1116,
       1118-1119 (1999); Travelers Ins. Co. v. Benton, 278 Md. 542, 543, 365 A.2d
1000, 1002 (1976) (The statute 'provides, with respect to a person insured
       under a policy providing PIP coverage who is injured in an accident while
       occupying a motor vehicle for which such coverage is not in effect, that the
       PIP benefits shall be payable by the injured party's insurer providing such
       coverage') (internal quotation marks omitted). See also Pennsylvania Nat'l
       Mutual Casualty Insurance Company v. Gartelman, 288 Md. 151, 154-157,
       416 A.2d 734, 736-739 (1980)."
390 Md. at 196, 888 A.2d at 288.

                                             -5-
        MIA seems to argue that, because the authorization permits exclusion from PIP of

injuries to certain persons "occupying an [owned,] uninsured motor vehicle," and because

a taxicab is, by definition, not a motor vehicle, the exclusion cannot apply. Nasseri,

however, explained the purpose of the definition. It was enacted by Ch. 655 of the Acts of

1977,

        "'[for] the purpose of exempting certain vehicles, as defined in the Vehicle
        Laws, from certain required primary coverage insurance provisions; and
        subdividing a section.'

               "Consequently, the purpose of Ch. 655 was simply to provide that the
        compulsory automobile liability insurance policies on taxicabs and certain
        other vehicles did not have to contain policy provisions for PIP and some
        other statutory coverages. The purpose was not to negate required PIP and
        other required coverages, under policies on all other types of motor vehicles,
        whenever a taxicab happened to be involved in an accident with another type
        of motor vehicle."
390 Md. at 195-96, 888 A.2d at 288.

        The definitional statute tells us that a taxicab is not required to carry PIP coverage as

primary insurance for taxicab occupants, but it does not tell us whether the taxicab

occupant's policy does or does not provide secondary coverage.

        MIA similarly contends that Claimant was not occupying a taxicab that was

"uninsured" within the meaning of § 19-505(c)(1)(ii) because the taxicab was covered for

liability in at least the minimum amounts required by law. In this respect, the agency's

opinion looked to, and relied heavily upon, § 19-509(a) which defines an "uninsured motor

                                               -6-
vehicle." Section 19-509 deals with uninsured motorist coverage.2 This definition applies

only to § 19-509 and has no effect on the exclusion from PIP authorized by § 19-505(c)(1).

In the context of § 19-505(c)(1), "uninsured" refers to uninsured for PIP which ordinarily

(and absent express waiver) will manifest itself in the automobile liability policy of the

claimant by the absence of the owned vehicle from the declaration of vehicles insured

against liability.

       As recognized in Nasseri, PIP coverage follows an insured, even into a taxicab,

principally because of two statutes, each of which uses the term "motor vehicle" as an

element of coverage. The requirement for a motor vehicle liability insurer to provide PIP,

found in § 19-505(a), applies to "an insured who is injured in any motor vehicle accident,

including an accident that involves an uninsured motor vehicle." Nasseri held that the

claimant there was involved in a motor vehicle accident, because the other vehicle was not

       2
        Section 19-509(a) reads:

               "(a) 'Uninsured motor vehicle' defined. – In this section, 'uninsured
       motor vehicle' means a motor vehicle:
                      "(1) the ownership, maintenance, or use of which has resulted
       in the bodily injury or death of an insured; and
                      "(2) for which the sum of the limits of liability under all valid
       and collectible liability insurance policies, bonds, and securities applicable to
       bodily injury or death:
                              "(i) is less than the amount of coverage provided under
       this section; or
                              "(ii) has been reduced by payment to other persons of
       claims arising from the same occurrence to an amount less than the amount of
       coverage provided under this section."

                                             -7-
a taxicab, 390 Md. at 193, 888 A.2d at 287, and the claimant-occupied taxicab was an

"uninsured [for PIP] motor vehicle." Id. Similarly, § 19-513(d)(1)(i) requires a PIP insurer

to pay those benefits "to an individual insured under the policy who is injured in a motor

vehicle accident ... while occupying a motor vehicle for which [PIP] coverages are not in

effect."

                                              II

       Having determined in Nasseri that the claimant's driving a taxicab was not a valid

basis for denying PIP, the Court nevertheless was required to decide whether the scope of

the coverage was restricted by an authorized exclusion. In Nasseri, the exclusion was

unauthorized (policy's "regular use" scope broader than statute's "owned" scope).

       Here, MIA asserts that the Claimant "was not occupying an uninsured motor vehicle

because his taxicab had the required vehicle insurance." But, the taxicab in Nasseri also had

the required (liability) insurance. That did not shortcut the need for the Court to analyze the

PIP exclusion in the policy on which the PIP denial was based against the statutorily

permissible exclusions.

       While we recognize that MIA's opinion on the correct interpretation of the statutes

it administers is entitled to some deference, we conclude on de novo review of the issue of

law before us that MIA has not given effect to the legislative intent. The history of this issue

begins with Pennsylvania Nat'l Casualty Ins. Co. v. Gartelman, 288 Md. 151, 416 A.2d 734

(1980).

                                              -8-
       The automobile policy in that case included an owned but uninsured exclusion

applicable to PIP and to uninsured motorist coverages. Gartelman pointed out that the

statutes at that time did not authorize such exclusions. In response, the General Assembly

enacted Chapter 573 of the Acts of 1982, at the urging of the insurance industry. See

Nasseri, 390 Md. at 200 n.11, 888 A.2d at 291 n.11. Chapter 573 authorized an owned but

uninsured exclusion for uninsured motorist coverage as Maryland Code (1957, 1986 Repl.

Vol.), Article 48A, § 541(c)(1), today § 19-509(f)(1) and a similarly worded exclusion for

PIP coverage as Maryland Code (1957, 1986 Repl. Vol.), Article 48A, § 545(c), today § 19-

505(c)(1)(ii).3

       Maryland appellate courts have sustained applications of the uninsured/underinsured

motorist (UM/UIM) exclusion. Government Employees Ins. Co. v . Comer, 419 Md. 89, 18
A.3d 830 (2011), involved a claimant who incurred over $200,000 in medical expenses due

to injuries suffered in an accident on his motorcycle. The tortfeasor had $100,000 of

liability coverage and the claimant's policy on his motorcycle provided an additional $50,000

       3
        Section 19-509(f)(1) reads:

              "(f) Exclusions. – An insurer may exclude from the uninsured motorist
       coverage required by this section benefits for:
                     "(1) the named insured or a family member of the named
       insured who resides in the named insured's household for an injury that occurs
       when the named insured or family member is occupying or is struck as a
       pedestrian by an uninsured motor vehicle that is owned by the named insured
       or an immediate family member of the named insured who resides in the
       named insured's household[.]"

                                             -9-
in UM/UIM. A policy on an automobile owned by the claimant's father, in whose household

the claimant resided, had single limit UM/UIM coverage of $300,000. The claimant sought

a judgment declaring that, as an insured under his father's policy, he was entitled to

UM/UIM benefits, although his motorcycle was not insured under the father's policy. The

father's policy contained the following UM/UIM exclusion:

              "Bodily injury sustained by an insured while occupying a motor vehicle
       owned by an insured and not described in the declarations and not covered by
       the bodily injury and property damage liability coverage of this policy is not
       covered." (Emphasis omitted).

       The Court of Appeals reversed a judgment in favor of the claimant, despite the

general language in the policy affording coverage, explaining:

               "Comer's and the Circuit Court's reliance upon the basic
       uninsured/underinsured coverage provision, and the paragraph dealing with
       primary/excess insurance, is misplaced. These two provisions, standing alone,
       may well indicate excess coverage for Comer under the GEICO policy. The
       two provisions, however, do not stand alone. The nature of an exclusion,
       dealing with a more specific circumstance, is to modify, or create an exception
       to, the broader coverage provisions. If the two coverage provisions of the
       GEICO policy did not arguably cover Comer's claim, there would be no need
       to consider any exclusions."

Id. at 95, 18 A.3d at 833.

       The Court held that "[t]he exclusion is not ambiguous and clearly precludes coverage

of Comer's claim under the GEICO policy." Id. at 96, 18 A.3d at 834. Section 19-509(f)(1)

authorized the exclusion. Id. at 97-98, 18 A.3d at 835. One of the rationales on which it is

bottomed is set forth below.

                                            -10-
       "One purpose of exclusion 4 in the GEICO policy, as well as a purpose of
       § 19-509(f)(1), is obviously to prevent a family, owning several motor
       vehicles, from insuring only one or two of them with an insurer, leaving the
       other vehicles uninsured, or underinsured under a different policy, and being
       able to claim uninsured or underinsured motorist benefits from the first insurer
       even though no premium was paid to the first insurer for coverage of the other
       vehicles. An interpretation of the Insurance Code that would allow this would
       be unreasonable."

Id. at 98, 18 A.3d at 835.

       This Court had reached the same conclusion on similar facts in Powell v. State Farm

Ins. Co., 86 Md. App. 98, 585 A.2d 286 (1991). We said that present § 19-509(f)(1)

recognized an owned but uninsured exclusion for UM/UIM because,

       "[t]o hold as appellant also urges, i.e., that his wife's vehicle was not
       uninsured because it was covered under another policy, would be to permit an
       owner to buy excess coverage under one policy for one vehicle at a relatively
       small premium and coverage under a separate policy for his other vehicles at
       a lesser cost, and have the excess coverage of the first policy apply to the
       vehicles covered under the subsequent policies."

Id. at 110, 585 A.2d at 291. The Court of Appeals, in Comer, concurred with our opinion

in Powell and quoted, with favor, the above language from Powell.

       MIA has not presented us with any principled distinction between the statutory

authorization of an owned but uninsured exclusion from UM/UIM coverage and the

statutory authorization for an owned but uninsured exclusion from PIP coverage. Nor do

we discern any, particularly in view of the lock-step authorization with which the General

Assembly has treated the two exclusions. For these reasons, we affirm.

                                            -11-
       JUDGMENT OF THE CIRCUIT
       COURT FOR BALTIMORE CITY
       AFFIRMED.

       C O S TS TO   BE   P AID   BY
       APPELLANT.

-12-