November 20, 2009

UIM
Update

By Kevin L. Connors

The Pennsylvania Superior Court issued an important UIM decision on September 23, 2009, in Pusl v. Means, et al.

Pusl involved the Plaintiff appealing a trial court judgment in her favor, with the Superior Court affirming the trial court judgment, which judgment had resulted in the Plaintiff’s jury trial verdict being molded to account for a credit/offset against the verdict, by virtue of the Plaintiff having recovered UIM benefits prior to the verdict being rendered by the trial jury.

The relevant factual and procedural background was that the Plaintiff had been injured in a motor vehicle accident in 2002, with the Plaintiff suing the driver and the driver’s employer, for personal injury damages. As would be expected, the Plaintiff alleged that the driver and his employer were negligent, that their negligence had resulted in the Plaintiff’s injuries, and that the Plaintiff was entitled to recover personal injury damages, by virtue of the alleged negligence.

The jury found in favor of the Plaintiff, finding that the Defendants had been negligent.

The Plaintiff’s personal injury claim was then tried in Jefferson County, over a two-day trial in October of 2007. The jury found in favor of the Plaintiff, finding that the Defendants had been negligent, that the Plaintiff was injured as a result of the Defendants’ negligence, and that the Plaintiff should be awarded $100,000 in personal injury damages.

Prior to the trial commencing, the Plaintiff had recovered underinsured motorist benefits from her personal automobile insurance carrier, with the Plaintiff recovering $75,000 in UIM benefits.

After the jury verdict was entered, the Plaintiff filed a Motion for delay damages, with the Defendants filing two motions, one to amend their original New Matter to include an offset/credit for the Plaintiff’s recovery of UIM benefits, and a motion to mold the verdict, reducing the Plaintiff’s verdict by virtue of the Plaintiff’s UIM recovery.

The trial court molded the Plaintiff’s verdict to account for an offset/credit for the UIM benefits received.

The trial court granted the Defendants’ motion, molding the Plaintiff’s verdict to account for an offset/credit for the UIM benefits received by the Plaintiff, with her $100,000 verdict being reduced by her $75,0000 UIM recovery, resulting in the Plaintiff’s verdict being molded to $25,000.

Not surprisingly, the Plaintiff appealed the trial court’s molding of the jury verdict, with the Plaintiff contending on appeal that the Defendants had waived their right to amend their new matter, that the trial court had erred in molding the jury verdict, as the issue of the Plaintiff’s UIM recovery had not been raised prior to the jury verdict being entered, as well as contending that the trial court had erred in granting the credit/offset to the Defendant, on grounds that the UIM recovery was a “collateral source” and was, therefore, barred by the all-too-familiar collateral source rule.

Affirming the trial court’s molding of the verdict to reduce the Plaintiff’s recovery, the Superior Court reasoned that the “set-off” defense raised by the Defendants had not been waived under the Pennsylvania Rules of Civil Procedure prior to the trial and rendering of the jury verdict, as that defense had not been “available” to the Defendants when the Plaintiff’s Complaint was initially answered, and was not, therefore, a consideration during any pre-trial proceeding, to include the filing of any pre-trial pleadings.

Superior Court reasoned that public policy militated against the Plaintiff being entitled to a double recovery.

Moreover, the Superior Court reasoned that public policy militated against the Plaintiff being entitled to a double recovery, and that the Plaintiff was not prejudiced, by the trial court’s molding of the jury verdict to account for the credit/offset of UIM benefits against the jury’s verdict on personal injury damages.

Laboring over the Plaintiff’s appellate arguments that she was not only not prejudiced by the molding of the jury verdict, but that by allowing the Defendants to assert the molding issues post-trial violated the Rules of Civil Procedure, the Superior Court, in an opinion authored by Justice Popovich, clearly reasoned that the Plaintiff should not be entitled to a windfall or double recovery. Moreover, the court held that the alleged Tortfeasor should only be held responsible for damages apportioned against it, such that the Tortfeasor can only be held liable for damages that the Tortfeasor actually caused, and that the Pennsylvania Motor Vehicle Financial Responsibility Law had very strongly-worded provisions articulating legislated public policy against recovering “required benefits,” as set forth under Section 1722 of the PMVFRL, notwithstanding that section dealing with first party benefits, which the Superior Court reasoned included UIM benefits, characterized as “first party” benefits, by virtue of the contractual privity between the policyholder and the insurance carrier.

Plaintiff’s right to sue the Tortfeasor is effectively subsumed, by virtue of the UIM carrier having a right of subrogation over and against the Tortfeasor, for personal injury damages recovered by the Plaintiff.

Disposing of the Plaintiff’s argument that the UIM benefits were “collateral source” benefits, precluded from being credited against the jury verdict, the Superior Court held that, since the UIM carrier has the right to sue the Tortfeasor, to recover the amounts that it paid on behalf of its insured, by virtue of the Tortfeasor being “underinsured”, that it then follows that the Plaintiff’s right to sue the Tortfeasor is effectively subsumed, in the event that the Plaintiff recovers UIM benefits from his/her insurance carrier, by virtue of the UIM carrier having a right of subrogation over and against the Tortfeasor, for personal injury damages recovered by the Plaintiff.

In effect, the Superior Court ruled that the trial court correctly molded the Plaintiff’s verdict, to account for the Plaintiff’s UIM recovery, effectuating public policy by not permitting the Plaintiff to secure a double recovery, and, in so doing, effectuating the statutory purpose behind Section 1722 of the PMVFRL, without violation of the collateral source rule, by virtue of the extinguishment of the UIM carrier’s subrogation claim against the Tortfeasors. The Court further found that the Plaintiff was, by statute and by a legion of decisional authorities, entitled to “only one satisfaction for the harm incurred.”

Moreover, the Superior Court cited to a ruling by the Delaware County Court of Common Pleas in Shankweiler v. Regan, 60 Pa. D. & C.4th 20, 37 (2002), in which the trial court had molded a jury award for a Plaintiff to reflect the Plaintiff’s pre-trial receipt of UIM benefits, reasoning as follows:

“The Defendants, who were solidarily liable with the Plaintiffs underinsured motorist carrier to remit the damages to make the Plaintiffs whole, neither evaded, nor circumvented, their obligations to the Plaintiffs. Under the law governing excess automobile insurance coverage in this Commonwealth, Plaintiffs had already recovered $50,000.00 in damages in the name of the Defendant, and were entitled only to an award exceeding that figure after the jury had calculated the true measure of Plaintiffs’ damages. The Plaintiffs’ UIM carrier, EMCASCO, is left free to pursue its common-law subrogation rights to sums paid, if it chooses.”

Finding that public policy was not violated, that the Defendants were “solidarily liable” with the Plaintiff’s UIM carrier, and that it had been the jury’s true intention to award $100,000.00 to the Plaintiff, with the Plaintiff having recovered that amount, by virtue of the molded jury verdict and her pre-trial UIM benefits settlement, the Superior Court affirmed the trial court’s rejection of the Plaintiff’s post-trial motions and appeal.

Since this is a case of first impression, with there being uncertainty as to whether the Plaintiff seeks further appellate review of these issues before the Pennsylvania Supreme Court, a procedural consideration that might be contemplated, in the course of defending Tortfeasors alleged to be responsible for motor vehicle liability for personal injuries, it is suggested that it be pled in the Tortfeasor’s Answer and New Matter to a Plaintiff’s personal injury complaint, that the Tortfeasor is asserting a credit/”set-off” for the Plaintiff’s recovery of UIM benefits, under the authority of Pusl.

Pleading the credit/”set-off” negates a Plaintiff’s potential arguments of non-conforming pleadings, and prejudice.

Should Pusl result in a decision by the Supreme Court, we will, of course, follow with an update as to any rulings by the highest court of jurisdiction in Pennsylvania.

Questions concerning this decision, or any questions involving casualty litigation, can be directed to our general litigation attorneys.

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