Court Opinion

ID: 9709416
Source: CourtListenerOpinion
Date Created: 2023-08-26 03:46:59.930947+00
Date Added: 2024-06-11T18:22:48.653965
License: Public Domain

Justice SAYLOR,
concurring and dissenting.
I join the majority’s holding and general reasoning concerning the limited application of inter-policy stacking under Section 1738 of the Motor Vehicle Financial Responsibility Law and associated waivers. On this point, I note only that, in the absence of a decision by this Court invalidating the household vehicle exclusion commonly included in the uninsured and underinsured motor vehicle provision of automobile insurance policies,1 the concept of inter-policy stacking, as clarified by *526the majority opinion, should have limited application.2
I differ, however, with the majority’s decision to invalidate the “other-insurance” clause contained in Donegal’s policy. The majority offers four reasons in support of its decision. First, the majority invokes the rationale of the Superior Court’s decision in Allwein v. Donegal Mutual Insurance Company, 448 Pa.Super. 364, 671 A.2d 744 (1996), to support its conclusion that second-priority UM/UIM coverage must function as excess coverage relative to first-priority UM/UIM coverage. See Majority Opinion, op. at 522-23, 957 A.2d at 1191. Allwein’s reasoning, however, is specifically addressed to the relationship between liability insurance and UM/UIM coverage. Indeed, the rationale is centered on the statutory definition of an “underinsured motor vehicle” as “[a] motor vehicle for which the limits of available liability insurance and self-insurance are insufficient to pay losses and damages.” Allwein, 448 Pa.Super. at 370-71, 671 A.2d at 747-48 (quoting 75 Pa.C.S. § 1702) (emphasis added). Therefore, while Allwein’s rationale that UM/UIM coverage functions as excess coverage relative to liability coverage may be persuasive, on its terms it simply does not extend to the present circumstances involving coordination of excess coverage as between the first- and second-priority levels.
Second, the majority attempts to address the above weakness by asserting that the priority of recovery provisions of *527Section 1733 of the MVFRL foreclose other-insurance limitations. See Majority Opinion, op. at 522-23, 957 A.2d at 1191.3 Section 1733, however, by its terms, functions as a “priority of recovery” provision which operates “[wjhere multiple policies apply.” 75 Pa.C.S. § 1733. As this Court has previously explained, the statute on its face is subordinate to contractual provisions defining the extent of coverage in the first instance. See Burstein v. Prudential Property and Cas. Ins. Co., 570 Pa. 177, 186 n. 7, 809 A.2d 204, 209 n. 7 (2002) (stating that, “[w]hile Section 1733 contemplates that UM and UIM coverage may be portable in some instances, it does not suggest that UM or UIM coverage would extend where the coverage has been specifically excluded” (emphasis added)); accord Colbert, 572 Pa. at 89 n. 3, 813 A.2d at 751 n. 3 (same). Therefore, Section 1733 cannot be read as foreclosing contractual exclusions or limitations that do not otherwise violate the terms or clear policy of the MVFRL. See id.
Third, the majority references a “substantial deductable” arising from the presence of higher priority coverage, reasoning that this mitigates the application of the “cost-containment” rationale underlying the MVFRL. See Majority Opinion, op. at 524-25, 957 A.2d at 1192. I do not believe, however, that the courts have the means or expertise to quantify the number of occurrences in which the “deductable” attributable to liability and primary UM/UIM insurance will moot the liability of secondary UM/UIM insurance carriers or the impact of such occurrences on the industry costs associated with the voiding of the other-insurance clause.4
*528Finally, the majority reasons that an insured must be provided with coverage for which she paid to avoid a “windfall benefit” to the insurer. See Majority Opinion, op. at 525, 957 A.2d at 1192. However, there is no evidence that premiums charged by Donegal were not calculated with reference to its liability exposure under the policy, as they should be. Thus, I differ with the position that Ms. Generette’s premium payments encompass reimbursement for the expanded measure of coverage afforded upon the majority’s decision to. strike a plainly applicable contractual limitation on that coverage. See generally Newkirk v. United Services Auto. Ass’n, 388 Pa.Super. 54, 60, 564 A.2d 1263, 1266 (1989) (observing that persons pay only for coverage provided for in an insurance policy).
From a broader perspective, the majority opinion appears to accept the idea that, in Section 1738, the statutory provision specifically designed to regulate stacking of uninsured and underinsured motorist benefits, the Legislature did not intend to mandate stacking per se in the present scenario, i.e., where two policies apply because the injured person is covered as a guest-passenger under the accident-vehicle policy and is also insured under her own policy pertaining to a non-accident vehicle.5 The effect of the majority’s decision to invalidate the other-insurance clause, however, is to implement a de facto, mandatory stacking rule pertaining to this scenario.
I have previously expressed the view that the MVFRL was experimental legislation, designed to further cost control in the insurance industry in recognition of spiraling costs, while retaining core remedial objectives of the prior regulatory scheme. Further, I believe that, in this undertaking, the Legislature left substantial gaps to be filled by the Insurance Department in its core administrative role. See Burstein, 570 Pa. at 219-20, 809 A.2d at 230 (Saylor, J., dissenting). As relevant to the present circumstances, the Insurance Depart*529ment has apparently required the industry to extend UM/UIM coverage to the guest-passenger scenario, but also has recognized a concomitant offset via an other-insurance proviso. See, e.g., 31 Pa.Code § 63.2(a) & Exhibit C (reflecting the base uninsured motorist coverage required to be offered in Pennsylvania by reference to a national standard form).6 Thus, under the regulatory scheme, an adjustment of liabilities has been permitted by which the exposure of insurers providing UM/UIM coverage associated with non-accident vehicles may be mitigated by payments from insurers of accident vehicles. Concomitantly, injured persons are provided with at least a full measure of UM/UIM benefits, defined according to the limits of the policy for which they (or their families) have paid a premium.
Notably, neither the extension of UM/UIM coverage to guest passengers (here, under the Nationwide policy) or the portability aspect of UM/UIM insurance permitting it to follow the person outside of insured vehicles (which, here, implicated the coverage by Donegal) is expressly delineated within the MVFRL. With regard to the former, just as Section 1738 centers on the concept of “insureds” (as named insureds and household members), thus omitting any particular reference to the guest-passenger paradigm, so does the core concept of uninsured and underinsured motorist coverage under the Motor Vehicle Financial Responsibility Law. This is reflected in Section 1731, in which the Legislature required the following explanations in rejections of uninsured and underinsured motorist coverage:
Uninsured coverage protects me and relatives living in my household for losses and damages suffered if injury is *530caused by the negligence of a driver who does not have any insurance to pay for losses and damages.
* * :|;
Underinsured coverage protects me and relatives living in my household for losses and damages suffered if injury is caused by the negligence of a driver who does not have enough insurance to pay for all losses and damages.
75 Pa.C.S. § 1731(b), (c) (emphasis added).7 With respect to the portability aspect, as previously noted, this Court has rejected the idea that UM/UIM insurance associated with non-accident vehicles must universally follow the person of the insured. See, e.g., Burstein, 570 Pa. at 186, 809 A.2d at 209 (“UM and UIM benefits do not necessarily ‘follow the person’ in the same manner as first party benefits.”). Indeed, Bur-stein stands squarely for the proposition that the insurance industry may impose reasonable limitations on portability that are in furtherance of the legislative goal of cost containment. See id. at 186-87, 809 A.2d at 209-10.8
*531In summary, other than in terms of priority of recovery where contractual terms apply, I do not believe that the Legislature has addressed the other-insurance scenario in the UM/UIM context. Further, it appears that this substantial void in the statutory scheme is being reasonably addressed in the administration of the regulatory scheme, in furtherance of both the cost-containment and remedial purposes of the MVFRL. Accord Hall v. Amica Mut. Ins. Co., 538 Pa. 337, 347, 648 A.2d 755, 760 (1994) (relying, in part, on Insurance Department regulations and approval in rejecting a public-policy challenge to policy provisions). Under that scheme, coverage is provided to the full extent of the limits selected by an insured (or her named insured), albeit that the source of all or part of the payment may be the insurer of the accident vehicle. The policy concerns at issue in the allowance of such an offset are, in my view, at least mixed, and do not require this Court’s intervention. See generally id. at 347-48, 648 A.2d at 760 (delineating the very limited range of compelling circumstances in which it is appropriate for a court to invalidate contractual provisions based on public policy). If anything, I believe that the substantial gaps in the MVFRL may implicate non-delegation concerns, see Pa. Const, art. II, § 1, given the degree to which legislative-type decision making appears to be falling to the Department and/or the courts, and the pervading confusion and uncertainty regarding basic coverage issues. Cf. Insurance Federation of Pennsylvania, Inc. v. Commonwealth, Dep’t of Ins., 585 Pa. 630, 889 A.2d 550 (2005) (invalidating Department regulations requiring mandatory arbitration of UM/UIM coverage disputes on non-delegation grounds).

. I recognize that there is an appeal pending before this Court questioning whether Section 1738(a)'s proviso that ‘‘[t]he limits of coverages available under this subchapter for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured" precludes the application of the household vehicle exclusion. *526See Erie Ins. Exchange v. Baker, 598 Pa. 1, 952 A.2d 1163 (2008) (per curiam).

. This is so, since the household vehicle exclusion generally forecloses coverage in circumstances in which the claimant is an "insured” under the relevant policy but is injured in another household vehicle (i.e., one as to which the claimant is also an "insured”) that is not covered under that policy. See generally Prudential Property and Cas. Ins. Co. v. Colbert, 572 Pa. 82, 86, 813 A.2d 747, 749 (2002). This seems to me to be the most common scenario in which the claimant will be a statutory "insured” under two policies issued by separate insurers, thus implicating inter-policy stacking. While inter-policy stacking, as recognized in Craley, also is implicated with respect to separate policies issued by the same insurer, in this scenario the insurer will have notice of and will have received premiums pertaining to the independent policies, and therefore, the application of inter-policy stacking seems less problematic.

. In response to the above, the majority clarifies that it is pointing only to Section 1733’s silence. See Majority Opinion, op. at 523 n. 15, 957 A.2d at 1191 n. 15. Whether by the statute’s silence or otherwise, however, the text of the Majority Opinion plainly relies on Section 1733 to bolster its position in light of the fact that Albwein’s statutory-construction rationale, on its terms, simply does not apply. See Majority Opinion, op. at 522-24, 957 A.2d at 1191-92. I have substantial reservations about discerning overarching public policy based upon legislative silence.

. The Insurance Department, however, as the regulatory body charged with the administration of the MVFRL, has been afforded tools to support such judgments. See 75 Pa.C.S. §§ 1799.5-1799.6 (empowering the Department to monitor insurers' profits, undertake market *528studies and random field surveys and pursue other forms of investigation to ensure that rates and premiums charged are lawfully applied).

. Under the majority's rationale, Section 1738 is not concerned with guest-passenger scenarios where the injured person is not an "insured” under the statutoiy definition contained in Section 1702. See Majority Opinion, op. at 520-21, 957 A.2d at 1189-90.

. This regulation was promulgated pursuant to the Uninsured Motorist Act, Act of August 14, 1963, P.L. 909, § 1 (codified as amended at 40 P.S. § 2000). Although it expressly pertains to uninsured motorist coverage, I discern no salient policy that would distinguish UIM from UM coverage in terms of the extension of coverage to guest passengers or the "other insurance” limitation. Accord Burstein, 570 Pa. at 221, 809 A.2d at 231 (Saylor, J., dissenting). Moreover, the sanction of the Insurance Department is also reflected in its approval of policies issued in Pennsylvania, such as Donegal's, containing the clause.

. Since the central concept of UM and UIM insurance centers on "insureds" (i.e. the named insured and defined household members), it is not surprising that the associated concept of UM/UIM stacking is also framed upon the same concept.

. I realize that this Court invalidated an other-insurance exclusion contained in the uninsured motorist provisions of an automobile policy in Harleysville Mutual Casualty Company v. Blumling, 429 Pa. 389, 241 A.2d 112 (1968). However, since Blumling both tire statutory and decisional law have undergone radical revisions. See Burstein, 570 Pa. at 211-18, 809 A.2d at 223-29 (Saylor, J., dissenting) (describing such revisions). Indeed, as developed in my responsive opinion in Burstein, this Court has overturned the result of State Farm Mutual Automobile Insurance Company v. Williams, 481 Pa. 130, 392 A.2d 281 (1978) (invalidating a household vehicle exclusion), in a subsequent line of cases emphasizing the cost-control objective of the MVFRL over the remedial-purposes objective which was afforded predominance in both Williams and Blumling. See Burstein, 570 Pa. at 211-18, 809 A.2d at 225-29 (Saylor, J., dissenting) (citing, inter alia, Windrim v. Nationwide Ins. Co., 537 Pa. 129, 641 A.2d 1154 (1994)); accord Colbert, 572 Pa. at 91-95, 813 A.2d at 753-55. Significantly, in this regard, Williams' central rationale and holding was expressly grounded on Blumling’s. See Williams, 481 Pa. at 140-43, 392 A.2d at 287 (explaining, inter alia, that “[t]he language in [Blumling] is applicable to the 'household' exclusion in this case, as it was to the ‘excess insurance’ exclusion in [Blumling ]").
*531As such, I do not believe that BLumling must be regarded as controlling precedent relevant to the present statutory scheme.