Heller v. Pennsylvania League of Cities & Municipalities
32 A.3d 1213
| Pa. | 2011Background
- Heller, a police officer for Sugarcreek Borough, was seriously injured in a 2002 work-related automobile accident; workers' compensation covered medical expenses and two-thirds of wages, with the Borough paying the remaining salary.
- Heller recovered the tortfeasor’s policy limits ($25,000) but his losses exceeded available liability coverage, prompting a potential UIM claim against Penn PRIME.
- Penn PRIME denied UIM benefits based on a workers' compensation exclusion stating UIM does not apply to claims by anyone eligible for workers' compensation benefits that are the statutory obligation of the member.
- A declaratory judgment action was filed; the trial court granted Heller summary judgment, recognizing repeal of MVFRL § 1735 did not foreclose dual recovery and that exclusion conflicted with public policy.
- Commonwealth Court reversed on grounds that the exclusion was not expressly prohibited by statute and did not violate public policy; Judge Friedman dissented, arguing the exclusion undermines Act 44’s coordination framework.
- This Court granted review to decide whether the workers' compensation exclusion in Penn PRIME's UIM policy violates public policy, with Williams v. GEICO cited as controlling on related issues of coverage and public policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the workers' compensation exclusion violate public policy? | Heller argues exclusion defeats MVFRL goals and creates illusory coverage. | Penn PRIME contends exclusion is consistent with MVFRL and cost-containment policy; coverage remains optional and tailored. | Yes; exclusion violates public policy and is unenforceable. |
| Does Act 44 coordination framework require invalidating the exclusion? | Act 44 shifts burden to tortfeasor/UM-UIM carrier; exclusion frustrates subrogation and the dual-recovery scheme. | Act 44 does not mandate universal UIM coverage and exclusion merely reflects contract and cost-containment choices. | Yes; exclusion undermines the statutory coordination of benefits and is void. |
Key Cases Cited
- Gardner v. Erie Insurance Co., 555 Pa. 59, 722 A.2d 1041 (1999) (repeal of §1735 did not erase dual recovery rights; informs public policy balance)
- Selected Risks Insurance Co. v. Thompson, 520 Pa. 130, 552 A.2d 1382 (1989) (voided exclusionary provision conflicting with MVFRL)
- Heller v. Pennsylvania League of Cities & Municipalities, 950 A.2d 362 (Pa.Cmwlth.2008) (public policy limits on cost-containment exclusions in UIM context)
- Williams v. GEICO Gov't Employees Ins. Co., 32 A.3d 1195 (Pa.2011) (regular-use exclusion upheld; refusal to underwrite unknown risk contradicting public policy only in specific contexts)
- Burstein v. Prudential Property & Casualty Insurance Co., 570 Pa. 177, 809 A.2d 204 (2002) (public policy requires balancing insured protections with cost containment)
- Paylor v. Hartford Insurance Co., 536 Pa. 583, 640 A.2d 1234 (1994) (policy exclusions to prevent gratis coverage where not elected)
- Eichelman v. Nationwide Insurance Co., 551 Pa. 558, 711 A.2d 1006 (1998) (public policy limitations on broad contractual exclusions in auto insurance)
- Gregory v. ???, 601 Pa. 355, 972 A.2d 507 (2009) (noted for public policy and legislative public-enterprise context (Erie Ins. Exch. v. Baker))