Court Opinion

ID: 9906981
Source: CourtListenerOpinion
Date Created: 2023-12-05 17:25:22.646357+00
Date Added: 2024-06-11T09:55:08.791735
License: Public Domain

J-A16007-23

                                  2023 PA Super 253

  NATIONWIDE PROPERTY AND                       :    IN THE SUPERIOR COURT OF
  CASUALTY INSURANCE COMPANY                    :         PENNSYLVANIA
                                                :
                                                :
                 v.                             :
                                                :
                                                :
  ELVIA CASTANEDA AND CHRISTINA                 :
  TAPIA CASTANEDA                               :    No. 1030 MDA 2022
                                                :
                       Appellants               :

                   Appeal from the Order Entered July 14, 2022
                 In the Court of Common Pleas of Dauphin County
                    Civil Division at No(s): 2019-CV-04983-CV

BEFORE: PANELLA, P.J., BENDER, P.J.E., and McCAFFERY, J.

OPINION BY PANELLA, P.J.:                        FILED: DECEMBER 5, 2023

       Christina Tapia Castaneda1 was driving her mother’s car, with her

mother’s permission but without a valid driver’s license, when she was rear

ended by another car. Christina suffered severe injuries in the accident.

Because Christina’s mother had an insurance policy (“the Policy”) covering the

vehicle, Christina submitted a claim for first party medical expense benefits to

the   insurer,    Nationwide     Property      and   Casualty   Insurance   Company.

Nationwide denied the claim. It maintained it had no duty to cover Christina’s

medical expenses under the unlicensed driver exclusion contained in the

____________________________________________

1 While the appellant’s first name is spelled as both Christina and Cristina in

various filings, we will follow the spelling of the name used in the caption.
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Policy. Nationwide eventually sought a declaration and judgment on the

pleadings from the Court of Common Pleas of Dauphin County that it was not

obligated to pay first party medical benefits to Christina under this exclusion.

      The trial court agreed with Nationwide that Nationwide did not have an

obligation to pay the benefits to Christina under the unlicensed driver

exclusion in the Policy and issued a judgment on the pleadings in favor of

Nationwide. Christina argues on appeal that the court erred by finding the

unlicensed driver exclusion relieved Nationwide of its obligation to pay for her

medical expenses sustained in the accident. According to Christina, the

unlicensed driver exclusion is not valid under the Motor Vehicle Financial

Responsibility Law (“MVFRL”), 75 Pa. C.S.A. §§ 1701-1799.7, when that

exclusion is applied in the context of statutorily-mandated first party medical

expense benefits. We agree the exclusion is not valid in such a context, and

we therefore also agree that the trial court erred by entering judgment on the

pleadings in favor of Nationwide. We reverse, and remand for proceedings

consistent with this opinion.

      This Court’s review of an order granting a motion for judgment on the

pleadings is plenary, and we apply the same standard as the trial court. See

Southwestern Energy Production Co. v. Forest Resources, LLC, 83 A.3d

177, 185 (Pa. Super. 2013). When considering a motion for judgment on the

pleadings, a trial court must look only to the pleadings and relevant

documents and must accept as true all well pleaded statements of fact,

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admissions, and any documents to the pleadings presented by the party

against whom the motion is filed. See id. We will affirm the trial court’s order

granting a motion for judgment on the pleadings only when the “moving

party’s right to succeed is certain and the case is so free from doubt that [a]

trial would clearly be a fruitless exercise.” Id. (citation omitted).

      Applying that standard here, we look first to the pleadings and note that

the “parties agree to the following facts as set forth in the pleadings[.]” Trial

Court Opinion, 7/14/2022, at 2. On January 15, 2019, Christina was driving a

2002 Toyota Sienna owned by her mother. Christina was driving the Sienna

with her mother’s permission, and her mother was a passenger in the car. The

Sienna was rear ended by another vehicle, and Christina suffered serious

injuries as a result of the accident.

      The Sienna was covered by the Policy, which Christina’s mother had

purchased from Nationwide and Nationwide had issued to Christina’s mother

as the policyholder. At the time of the accident, Christina was not licensed to

operate a motor vehicle by the Commonwealth of Pennsylvania and “she was

not the named insured on any policy providing first party benefits coverage;

nor was she an insured on any policy other than the Policy providing first party

benefits coverage.” Id. Christina also did not regularly reside with her mother.

      Christina submitted a claim for first party medical expense benefits

under the Policy, which covers first party medical expense benefits up to

$10,000 for a person driving with the permission of a policyholder. Nationwide

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denied the claim. The denial was based solely on the Policy’s Exclusion 14

(“unlicensed driver exclusion”), which states in relevant part:

      Coverage exclusions:

      We will not pay First Party Benefits in certain circumstances, as
      follows:
      …

      14. There is no coverage from the use of any motor vehicle which
      any insured:

         a) uses without a reasonable belief of being entitled to do so;

          b) has stolen; or

          c) knows to have been stolen.

         An insured shall not be held to have a reasonable belief of
         being entitled to operate a motor vehicle if that person’s
         license has been suspended, revoked, or never issued.

         This exclusion does not apply to the use of your auto by:

         a) you;

         b) a relative; or

         c) a business partner, employee, or agent of you or a
         relative.

Complaint, Exhibit A at F3-F4 (emphasis in original).

      “Relative” is defined by the Policy to be a “person who regularly resides

in your household and who is related to you by blood, marriage or adoption.”

Id. at D1 (emphasis in original). As Christina did not regularly reside with her

mother, she was not a “relative” as defined by the policy. Accordingly,

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Nationwide found the exclusion applied to Christina’s claim, and denied her

coverage for first party medical expenses on that basis.

      Christina requested that Nationwide reconsider the denial of her claim.

Essentially, Christina argued that the unlicensed driver exclusion was invalid

under the MVFRL as it was not one of the exclusions listed in Section 1718 of

the MVFRL, which provides an enumerated list of persons who will be excluded

from coverage of first party benefits:

      (a) General Rule.--An insurer shall exclude from benefits any
      insured, or his personal representative, under a policy
      enumerated in section 1711 (relating to required benefits) or 1712
      (relating to availability of benefits), when the conduct of the
      insured contributed to the injury sustained by the insured in any
      of the following ways:

            (1) While intentionally injuring himself or another or
            attempting to intentionally injure himself or another.

            (2) While committing a felony.

            (3) While seeking to elude lawful apprehension or arrest by
            a law enforcement official.

      (b) Conversion of vehicle.—A person who knowingly converts
      a motor vehicle is ineligible to receive first party benefits from any
      source other than a policy of insurance under which he is an
      insured for any injury arising out of the maintenance or use of the
      converted vehicle.

      (c) Named driver exclusion.—An insurer or the first named
      insured may exclude any person or his personal representative
      from benefits under a policy enumerated in section 1711 or 1712
      when any of the following apply:

            (1) The person is excluded from coverage while operating a
            motor vehicle in accordance with the act of June 5, 1968
            (P.L.140, No. 78), relating to the writing, cancellation of or
            refusal to renew policies of automobile insurance.

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            (2) The first named insured has requested that the person
            be excluded from coverage while operating a motor vehicle.
            This paragraph shall only apply if the excluded person is
            insured on another policy of motor vehicle liability
            insurance.

75 Pa.C.S.A. § 1718 (footnote omitted).

      Nationwide filed a complaint requesting declaratory relief in the form of

a judgment declaring that the unlicensed driver exclusion it relied upon to

deny Christina first party benefits was valid and enforceable under the MVFRL.

It averred in its complaint that although Section 1718 sets out a list of

exclusions for first party benefits’ coverage which does not include an

unlicensed driver exclusion, this statutory list is not exhaustive and does not

bar insurers from incorporating other valid exclusions to the recovery of first

party benefits in their policies. Nationwide maintained that the unlicensed

driver exclusion was valid, and it had properly denied benefits to Christina

under this exclusion as she was undisputedly driving without a license at the

time of the accident.

      Christina filed an answer with new matter. She also filed a class-action

counterclaim, requesting, individually and on behalf of a putative class, a

judgment declaring that the unlicensed driver exclusion violated the MVFRL

and public policy when applied to claims for first party medical expenses and

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therefore, that any coverage denial for those expenses under the exclusion

was improper.2

       Nationwide filed a motion for judgment on the pleadings, averring that

it was entitled to judgment as a matter of law. The trial court agreed with

Nationwide, explaining:

              [Christina argues that] exclusions must be explicitly
       included in the [limited set of circumstances prescribed by the
       legislature for exclusion of first party medical expense coverage
       in Section 1718] to be valid and because unlicensed drivers,
       otherwise insured under a policy, have not been statutorily
       excluded under the MVFRL, they cannot be excluded by an insurer.
       This Court disagrees.

             Nationwide accurately points out that Section 1718 does not
       contain an exhaustive list of permitted first party benefit
       exclusions. Rather, it identifies a number of circumstances where
       an insurer shall exclude benefits, and a process by which an
       insurer or insured can limit specific individuals from receiving
       those benefits. Our Superior Court has explicitly recognized this
       proposition, stating “that the MVFRL does not contain an
       exhaustive list of permissible coverage exclusions.” Nationwide
       Mut. Ins. Co. v. Cummings, 652 A.2d 1338, 1342 (Pa. Super.
       1994) (citing Marino v. General Acc. Ins. Co., 610 A.2d 477
       (Pa. Super. 1992)).

____________________________________________

2 Christina sought to represent a class of persons who: “(a) were not the
named insured on a policy providing first party benefits coverage; (b) were
not an insured under a policy providing first party benefits coverage; ( c) were
occupants of a vehicle which was involved in a collision in which the individual
sustained personal injury; (d) received treatment for injuries sustained in the
motor vehicle accident; (e) submitted a claim for recovery of first party
benefits to the defendant on the counterclaim, Nationwide; and (f) had their
claim for recovery of first party benefits denied by reason of the unlicensed
[driver] exclusion in the Nationwide Policy.” Answer to Complaint with New
Matter and Class Action Counterclaim at 11. In addition, Cristina sought
compensatory relief in the form of first-party benefits, interest, attorneys’ fees
and treble damages.

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Trial Court Opinion, 7/14/2022, at 6. The court then went on to state that it

“agree[d] with Nationwide that Section 1718 does not preclude an insurer

from excluding [first party] benefits for additional reasons,” such as for being

an unlicensed driver. Id. at 8.

      The trial court therefore found the unlicensed driver exclusion was valid

under the MVFRL and also that it did not violate public policy and granted

judgment in favor of Nationwide. The court also denied the motion for partial

summary judgment Christina had filed and dismissed her counterclaim with

prejudice.

      Christina filed a timely notice of appeal. On appeal, Christina does not

dispute that the unlicensed driver exclusion, as written, applies to her claim.

Rather, Christina continues to contend the exclusion itself is not valid under

the MVFRL when an insurer uses that exclusion as a basis for denying first

party medical expenses benefits, as Nationwide did here. We agree.

      Christina’s claim that the unlicensed driver exclusion violates the MVFRL

necessarily requires us to interpret the MVFRL and discern the intent of the

legislature when enacting the MVFRL. See Johnson v. Phelan Hallinan and

Schmieg, LLP, 235 A.3d 1092, 1097 (Pa. 2020). Importantly, when doing so,

we must first look to the plain language used in the statute and look to the

statute as a whole. See id. at 1097-1098. Specific to the MVFRL, we note that

the underlying objective of the MVFRL is to provide broad coverage to assure

the financial integrity of the insured, and therefore, the MVFRL is to be liberally

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construed to “afford the greatest possible coverage to injured claimants.”

Danko v. Erie Ins. Exchange, 630 A.2d 1219, 1222 (Pa. Super. 1993).

      In making her claim that she is entitled to medical expense coverage

here, Christina highlights the fact that the MVFRL specifically mandates that

policyholders purchase, and insurers provide coverage for, first party medical

expenses for injuries arising from the use of a motor vehicle. To that end,

Section 1711 of the MVFRL, entitled “Required benefits,” provides:

         (a) Medical benefit.--An insurer issuing or delivering liability
         insurance policies covering any motor vehicle of the type
         required to be registered under this title, except recreational
         vehicles not intended for highway use, motorcycles, motor-
         driven cycles or motorized pedalcycles or like type vehicles,
         registered and operated in this Commonwealth, shall include
         coverage providing a medical benefit in the amount of $5,000.

         (b) Minimum policy.--All insurers subject to this chapter shall
         make available for purchase a motor vehicle insurance policy
         which contains only the minimum requirements of financial
         responsibility and medical benefits as provided for in this
         chapter.

75 Pa.C.S.A. § 1711. See also id. at § 1713 (clarifying that first party benefits

are recoverable for injuries “arising out of the maintenance or use of a motor

vehicle”).

      As Christina points out, the General Assembly made clear from its

language in Section 1711 that its intent was undoubtedly to require

policyholders to purchase a minimum amount of medical expense coverage

for injuries stemming from the use of motor vehicles, while at the same time

requiring insurers to cover that amount should a first party claim for medical

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expenses be submitted. And insurers must do so, Christina explains, without

regard to fault. Such mandatory no-fault first party medical expense coverage,

Christina continues, has historically been an inviolate part of Pennsylvania’s

auto insurance coverage scheme:

            Medical expense coverage is a no-fault coverage mandated
      by the MVFRL. The Legislature, in first mandating this coverage in
      1974 with the enactment of the Pennsylvania No-Fault Motor
      Vehicle Insurance Act, 40 P.S. 10009.101 et seq. (repealed) (“No
      Fault Act”), recognized the importance of the availability of prompt
      medical treatment to innocent motor vehicle accident victims
      without having to await a determination of fault in any tort action.

            ***

            The repeal of the No-Fault Act and its replacement with the
      MVFRL kept the system of mandatory no-fault medical benefits
      coverage intact. The MVFRL, enacted in 1984, and the Act 6
      Amendment to that statute in 1990, while reducing the amount of
      the medical benefit, retained the mandatory no-fault medical
      coverage benefit as a hallmark of Pennsylvania’s system of auto
      insurance. As currently constructed, [Section 1711 of the] MVFRL
      mandates the purchase and provision of first party medical
      benefits.

Appellant’s Brief at 10, 15.

      By making medical expense coverage mandatory in the MVFRL, the

General Assembly chose to treat medical expense coverage different from

other first party benefit coverage. To be sure, there are no other first party

benefits, other than medical expense coverage, listed as a required benefit in

Section 1711. Instead, the following section of the MVFRL, Section 1712,

entitled “Availability of benefits,” lists other first party benefits related to

injury arising out of the use of a motor vehicle that an insurer does not have

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to provide coverage for but instead, must make available for policyholders to

purchase if they so choose. Those optional benefits include: income loss

benefits, accidental death benefits and funeral benefits. See 75 Pa.C.S.A. §

1712. Unlike Section 1711, which requires an insurer to provide an identified

minimum amount of medical expense benefits coverage in any motor vehicle

liability policy it issues, Section 1712 only requires an insurer to provide the

option to purchase the first party benefits listed in that section.

       Of course, also central to this case is the fact that the MVFRL does

identify certain claimants that cannot recover first party benefits. 3 As noted

above, Section 1718 provides enumerated grounds on which an insurer must

exclude a claimant from recovering first party benefits. There is no dispute

that being an unlicensed driver is not one of the permissible grounds included

by the General Assembly in Section 1718 for denying first party benefits. The

dispute, rather, is whether Section 1718 represents a finite set of permissible

exclusions insurers may use to deny first party claims when the claim involves

____________________________________________

3 Section 1714, entitled “Ineligible claimants,” is not at issue here but states:

       An owner of a currently registered motor vehicle who does not
       have financial responsibility or an operator or occupant of a
       recreational vehicle not intended for highway use, motorcycle,
       motor-driven cycle, motorized pedalcycle or like type vehicle
       required to be registered under this title cannot recover first party
       benefits.

Id. at § 1714. Nationwide has never claimed Christina is an “ineligible
claimant” under this section.

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mandatory medical expense benefits, as Christina contends, or whether, as

Nationwide contends, Section 1718 does not represent an exhaustive list of

exclusions insurers may invoke to deny a claim for mandatory medical

expense benefits.

      For her part, Christina argues that we cannot ignore the mandatory

nature of medical expense coverage because doing so would necessarily

ignore the legislature’s clear intent that insurers must provide a minimum

amount of medical expense coverage for injuries sustained in a motor vehicle

accident. She contends it is this mandatory nature of medical expense

coverage that is the lens through which we must view the exclusions set forth

in Section 1718. We agree.

      The MVFRL mandates that insurers provide first party medical expense

coverage for injuries arising from the use of a motor vehicle, such as

Christina’s. In Section 1718, the legislature set out a list of “limited

circumstances where an insurer may exclude persons from the benefits of this

mandatory no-fault medical expense coverage.” Appellant’s Brief at 10. Given

the clear intent of the legislature’s mandate in the context of medical expense

claims, we agree with Christina that the legislature intended that only the

exclusions identified in the statute itself can be used as a means of denying

the otherwise-mandated coverage for first party medical benefits. Indeed, if

we were to permit insurers to add to the statutory list of selected exclusions

and allow exclusion after exclusion to bar coverage for medical expenses, the

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General Assembly’s mandate requiring insurers to pay first party medical

expenses for injuries arising out of the use of motor vehicles could simply be

diluted to the point where it loses all effect.

      Nationwide    counters    that   this   conclusion   is   not   supported   by

Pennsylvania law. It argues the trial court properly found that this Court has

previously stated that the list of permissible coverage exclusions contained in

the MVFRL is not an exhaustive one. Christina readily acknowledges this, but

she emphasizes that such a recognition was in cases involving coverage other

than the mandatory first party medical expense benefits at issue here. As

such, Christina argues, these cases should not serve as pillars for affirming

the validity of an insurer-written exclusion not included in Section 1718’s

limited list of permissible exclusions but nonetheless invoked to deny

mandatory medical expense coverage. Again, we agree.

      In concluding Section 1718 does not create an exhaustive list of

permissible first party benefit exclusions, the trial court first relied on several

cases which upheld the validity of certain exclusions used to deny

underinsured/uninsured motorists coverage, despite the fact that those

exclusions were not specifically included in the MVFRL. Specifically, the cases

cited by the trial court were Cummings, Marino, and St. Paul Mercury Ins.

Co. v. Corbett, 630 A.2d 28 (Pa. Super. 1993).

      These cases, however, are clearly distinguishable from the instant one.

In the first place, these cases involve uninsured and underinsured benefits,

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which are waivable by an insured. See 75 Pa.C.S.A. § 1731. These cases do

not involve first party benefits, much less the non-waivable medical expense

benefits insurers are mandated to cover by the MVFRL. See Burstein v.

Prudential Property and Cas. Ins. Co. 809 A.2d 204, 209 (Pa. 2002)

(discussing the MVRFL’s differing treatment of first party coverage from

uninsured/underinsured coverage). These cases therefore also did not involve

the list of exclusions to first party benefits set forth by Section 1718.

      The trial court then discussed cases that do involve first party benefit

exclusions, and relying on these cases, it concluded that “Pennsylvania courts

have routinely upheld a variety of first party benefit exclusions that are not

specifically set out [in Section 1718].” Trial Court Opinion, 7/14/2022, at 7.

However, none of the cases discussed by the trial court stand for the

proposition that exclusions other than those listed in Section 1718 may

properly be invoked to deny mandatory medical expense benefits.

      In fact, the first two cases cited by the trial court, Byoung Suk An v.

Victoria Fire and Cas. Co., 113 A.3d 1283 (Pa. Super. 2015) and Brosovic

v. Nationwide Mut. Ins., 841 A.2d 1071 (Pa. Super. 2004), do not discuss

first party medical expense benefits at all.

      In Byoung, the appellant argued that a policy which only covered the

named driver of the policy conflicted with the named driver exclusion provided

for in Section 1718. This Court flatly rejected this argument, stating that “the

‘named driver exclusion’ provision contemplated by section 1718(c) and

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‘named driver only’ policies are entirely different creatures.” 113 A.3d at 1290.

Brosovic, meanwhile, involved a claim for optional income-loss benefits and

the issue in that case was whether a “use for hire” exclusion was unambiguous

and applicable to the particular facts of that case. See Brosovic, 841 A.2d at

1073-1074. The case did not mention Section 1718.

      The trial court also cited to a third first-party-benefit case, Huber v.

Erie Ins. Exchange, 587 A.2d 333 (Pa. Super. 1991), which did involve a

claim for first party medical benefits. There, a claimant was denied benefits

based on an exclusion in the relevant policy barring benefits when a person

sustained an injury loading or unloading a motor vehicle. In addressing the

validity of the exclusion, this Court noted that the MVFRL requires that

compensable injuries arise “out of the maintenance or use of a motor vehicle.”

Id. at 334; see also 75 Pa. C.S.A. § 1711, § 1713. The Court found this was

not true of the claim at hand as there was no causal connection between the

motor vehicle and the injury.

      In effect, then, Huber did not implicate the MVFRL’s mandate that

insurers provide coverage for first party medical expense benefits, as they are

only required to do so for injuries arising from the maintenance or use of a

motor vehicle. Here, there is no dispute that Christina’s injuries arose from

the use of a motor vehicle. There is also no dispute that she submitted a claim

as an insured under the Policy for first party medical expense benefits, which,

as emphasized above, are mandated to be covered under the MVFRL.

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      Given this mandatory system the legislature constructed for medical

expense benefits, we agree that Christina was entitled to coverage for her

medical expense claim unless one of the limited exclusions in Section 1718

applied to her claim. Section 1718 does not include an unlicensed driver

exclusion, and therefore it is not a valid exclusion upon which Nationwide can

rely to refuse coverage for Christina’s medical expenses arising from the

accident.

      We stress that our conclusion is confined to claims for first party medical

expense benefits, the only benefits at issue in this case.

      Based on the above, we find the trial court erred by granting judgment

on the pleadings in favor of Nationwide. We therefore reverse its order doing

so, and remand for proceedings consistent with this memorandum.

      Order reversed. Matter remanded for proceedings consistent with this

opinion. Jurisdiction relinquished.

Judgment Entered.

Benjamin D. Kohler, Esq.
Prothonotary

Date: 12/5/2023

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