*1 in the first instance and Evers Drs. Greenbaum against ment for Dr. Evers’s surrogate capacity its against PPCIGA Co., Farm Fire & Cas. v. State Craley insurer. See insolvent (2006) 530, that this 484, (holding 532-33 Pa. basis). any affirm on may Court proceedings remanded for further affirmed. Case
Order this Opinion. consistent with in the participate did not
Former Justice NEWMAN decision of this case. CAPPY, and EAKIN and CASTILLE Justice
Chief Justice join opinion. BALDWIN Justice in the concurs result. SAYLOR Justice 916A.2d 569 NATIONAL MUTUAL PENNSYLVANIA COMPANY, Appellant, CASUALTY
v. BLACK, Individually and Execu L. and as Administratrix Ellen Black, Black, Deceased, Randy L. the Estate of Eric L. trix of Myers, Individually Myers and as Ad L. and Diane E. Roscoe Deceased, Appel Myers, R. ministratrix of the Estate of John lees.
Supreme Pennsylvania. Court
Argued May 2006. Feb. Decided *3 Harrisburg, Pennsylvania Peter Speaker, Esq., James National Mutual Insurance Co. Jr., Bahl, Esq., E. Ann Harris- Kelly, Begene Esq.,
Robert *4 curiae Defense Institute. burg, Pennsylvania amicus D. Ellen L. Black. Young, Harrisburg, James Cosentino, for Roscoe Philip Esq., Chambersburg, Samuel L. and E. Myers. Diane CAPPY, C.J., CASTILLE, NEWMAN,
BEFORE: and SAYLOR, BAER, EAKIN and JJ.
OPINION Justice BAER. in this case to determine review whether granted
We provi in that a “setoff’ Superior concluding Court erred in insurance unenforceable as sion an automobile was A against generally, provides public policy. provision, one potential recovery for the of a claimant’s under reduction of an such as underinsured motorist part policy, insurance the amount the recovered under another by claimant such as portion bodily injury of the same insurance policy, conclude that the setoff coverage. We policy. Accordingly, issue does not we reverse public violate the decision of the and reinstate the order of Superior Court the Court of Common Pleas. 15, 1999, undisputed. May
The facts of the case are On an (John) automobile R. and his by Myers by driven John owned mother, Myers, Diane E. collided with automobile driven (Jamison). and Todd L. owned Jamison John and his (Eric), injuries Eric L. Black died from passenger, sustained injuries during the accident. Jamison but survived. suffered below, Eric,1 As in detail in parents acting discussed estate, their capacity representatives own and as their son’s in part claimed that Eric’s death resulted from Jamison’s his car at an negligence driving speed. excessive Accord- ingly, they sought recovery negligence based on Jamison’s pursuant policies. to various insurance The Blacks also claimed that the part negli- accident John’s resulted a gence failing stop sign. Consequently, to observe Blacks based on sought recovery negligence.2 John’s Black, mother, pursued 1. The matter has been Ellen Eric's individu- Black, ally by Randy and as administratrix of the Estate of Eric and Black, opinion, parties Eric’s father. In this we will refer to these Similarly, collectively parents, we will refer as “the Blacks.” to John’s Myers, Myers collectively Roscoe and Diane the Estate of John Myers.” Myers Appellees “the The Blacks and are before this Court. injured Jamison that he as a result of John's also contended was against Myers negligence, brought hope suit recovering Myers' policy. under the Jamison settled his against August $1000. claims John's estate in 2003 for While the *5 declaratory The before this Court arises from a dispute insurer, Penn- judgment by Myers’ Appellant action filed (Penn National Insurance sylvania Casualty Company Mutual National), the limits of under the regarding Myers’ to the Blacks a result of Eric’s death policy available as while Myers’ recovery a car. Blacks seek passenger Myers’ policy’s bodily liability from Penn National under the based on John’s accord with coverage provision negligence, tort a principals permitting traditional victim recover The Blacks also seek from Penn Na- a tortfeasor. Myers’ under the underinsured motorist cover- policy’s tional negligence, insufficiency based on Jamison’s age provision, (and Black’s) recompense insurance to the Blacks Jamison’s by and Eric’s status as a “class insured”3 virtue of fully, two a in the car. being passenger Myers’ his accident, At the time of the insured under a Jamison was by Casualty issued Progressive Company providing bodily injury liability coverage per person and $15,000 accident. tendered the per Progressive per person $30,000 in July Similarly, limit of to the Blacks State $15,000 Blacks, Farm Insurance insured the tendered Company, which to them which was the limit of the underinsured $60,000, under the Blacks’ insurance It is policy. that the undisputed losses suffered the Blacks exceeded aggregate paid Progressive under the and State $75,000 Farm the Blacks un- policies. Accordingly, sought coverage the Myers’ der issued Penn National alia, inter providing, bodily injury liability coverage with $100,000 limit of per accident underinsured motorist cov- case, plays part only Jamison it will lawsuit some be mentioned us, necessary, directly as it is collateral to the issue before including unnecessary history pertaining to that action would confuse than more elucidate. Contrisciane, (1984) 3. See Utica Mut. Ins. Co. v. 1010-11 vehicles, (noting occupants are who not named insureds or insureds, resident relatives of named are class two insureds who do not relationship they paid have a contractual with the insurer as have not premiums specifically for the and are not intended beneficia policy). ries of As erage per previously with a limit of accident.4 noted, Eric class qualified under the as a two insured policy, guest passenger Myers’ because he was a ear. The injury liability provi- Blacks under the bodily claimed based on an that John’s Myers’ policy sion assertion *6 negligence injuries. They additionally caused Eric’s claimed Myers’ the motorist of the coverage policy under underinsured alleged negligence insufficiency based on Jamison’s and the his insurance. Myers’ coverage
The underinsured policy’s provi- damages sion stated that National pay Penn would which an the legally insured “is entitled to recover from owner or of an operator ‘underinsured motor because of ‘bodily vehicle’ (R.R.) injury.’” Record at Reproduced policy R50a. de- fined motor “underinsured vehicle” to exclude vehicles “for is liability coverage provided policy.” which under ... this Id. John, Accordingly, the driven Eric by vehicle within which was passenger, be could not considered an underinsured motor policy under the Myers’ by vehicle because it was covered that Prior policy. recovery under the underinsured motorist provision, required the also the party seeking recovery first of liability exhaust limits under any “[t]he applicable bodily bonds or Id. The injury policies.” policy also prohibited duplicate “No one be payments: will entitled to receive duplicate for the same elements of payments loss under this and ... [a]ny Underinsured Motorist Coverage provided by policy.” Significant- R.R. R23a. at the ly, “setoff’ underinsured motorist cover- age provided, issue “The limit of liability under this cover- age is paid reduced amount to the by any person same for the policy provided The Penn National on stacked three vehicles, $300,000 up providing thus of underinsured motorist cover- However, age. parties agree that Black not is entitled to the rather, guest only passenger stacked limit but as a entitled to the limit Additionally, on the vehicle in the involved accident. letters between Myers counsel included in the record indicate that the settled their $200,000 claims for stacked underinsured motorist negligence based on remaining Jamison’s and waived their to the claim $100,000, $100,000 leaving potential coverage thus for the vehicle involved in the accident. Coverage] under Part A or Part C. [Liability
same accident Coverage].” R.R. at R51a. Motorist [Underinsured $200,000 sought The Blacks from Penn National they policy’s per person were not bound claiming mother, separate limits Eric’s father and estate were because thus, $100,000 “person” up one could claim to “personfs],” bodily “person” under and another could liability provision, claim to under the underinsured motorist cover- up violating recovery or the age duplicate without Penn National person provision. limitations of per that the maximum under responded $100,000.5 Black injuries suffered was engaged negotia- Penn and the Blacks Although National tions, Despite unable to reach an they agreement. were offers, the details disagreements regarding timing parties paid that Penn National had to Jamison stipulated bodily injury liability coverage based on John’s $1000 negligence. Additionally, Penn National offered settle *7 injury liability upon claims John’s bodily premised Blacks’ $99,000 of negligence by offering remaining available Penn National later offered to settle the Blacks’ coverage. $1,000, claims coverage arguing for underinsured motorist $99,000 that remaining coverage of underinsured motorist $99,000 already had tendered to properly been setoff bodily the policy’s injury the Blacks under 2001, In a complaint against Blacks filed Jamison May wrongful and estate forth claims of death and setting John’s negli- based on Jamison’s and John’s survivorship alleged a In November Penn National filed gence.6 complaint against Myers seeking declaratory the Blacks and the $100,000 to to judgment limiting its total the Blacks exposure Superior to 5. The Blacks failed convince either the trial court or the argument. Additionally, Court the merits of the Blacks filed a of this Superior cross-petition appeal challenging the for allowance of Court's Although argue separate recoveries. the Blacks denial continue issue, Opinion. will it in we declined review and not address sought damages additionally Pennsylvania 6. De- The Blacks dangerous partment Transportation allegedly based on condition 8522(4). highway pursuant of a 42 Pa.C.S. and the underin- liability coverage bodily injury under the and the Blacks to exhaust requiring sured before policies other relevant insurance coverage provided by under Penn Nation- pursuing to the discovery, parties stipulated al’s After policy. summary judgment. cross-motions for facts and filed relevant summary the trial court granted In December and the Blacks’ motion for to Penn National denied judgment the bodily The court observed summary judgment. policy prohibited duplicate injury coverage portion for the to the uninsured motorist payments pursuant that the unambiguous element of The court found same loss.7 any of insurance to limit intent of the contract was individual’s regardless potential recovery total scenario.8 to the Court and filed a appealed Superior
The Blacks complained of matters of on timely appeal concise statement Pa.R.A.P.1925(b). court response, trial pursuant to its December 2003 opinion referring drafted a second the Blacks’ claim that the opinion additionally addressing in the Penn National was void set forth in the Motor Finan- against public policy Vehicle (MVFRL), §§ cial 75 Pa.C.S. 1701 et. Responsibility seq. Law court, seek, “The Blacks as a According to the trial matter court, agree While we with the result reached the trial we note that stated, plain language duplicate payments the trial court "The of [the unequivocally provides that underinsured motorist is section] pursuing liability not available in instances where claimant 12/31/03, policy.” Op., (quoting under the See Tr. Ct. at 9 provision: duplicate payments "No one will be entitled to receive duplicate payments [bodily for the same elements loss under this [ajny injury liability] coverage Coverage ... Underinsured Motorist *8 provided by policy.”). provide As Penn National has offered to bodily injury liability coverage $1000 under and under the it is clear that can be at- may provisions, both tained one claimant under but not exceed $100,000, applicability stacking provi- total limit of absent the of the sion. competing 8. The court noted that it did not address the merits of the it, merely regard- liability, opined but claims of which were not before ing policy. of the Penn National insurance limits 230 of the minds and bestow ignore meeting
public policy,
in
contemplated
beyond
themselves a windfall
what was
upon
5/19/04, at 2. The trial
Op.,
Tr. Ct.
establishing premiums.”
in Prudential Property
this Court’s observation
quoted
court
Colbert,
82,
Pa.
Insurance
v.
572
Casualty
and
Co.
(2002),
not be
language
that clear contractual
will
752
in
“definitive indications
the law
invalidated absent
a contract as
justify
contrary
the invalidation of
sovereignty
5/19/04,
trial court
Tr.
at 3. The
also
policy.”
Op.,
Ct.
in
reiterated that the primary
noted that this Court
Colbert
to limit the increases
public policy
MVFRL was
by “protect[ing]
against
insurers
premiums
part
that insureds
underwriting
the forced
of unknown risks
have
5/19/04, at 2
Op.,
nor
to insure.” Tr. Ct.
paid
neither disclosed
754).
Colbert, 813 A.2d at
The court relied
(quoting
upon
see
enforcing
provisions,
cases
prior Superior Court
(Pa.Su-
Co.,
Ins.
part part, and reversed The the trial court’s Superior agreed court.10 Court with separate that the did not permit determination recover- court, each of his parents. ies for Eric’s estate and however, regarding with the trial court enforce- disagreed the court provision. Initially, highlighted ment of the setoff recovery provision provided, may "The 9. The dual insured Cosenza bodily injury Liability coverage under the Auto or the recover policy, but not under both Underinsured Motorist of this coverages.” F.3d at 204. Judge Tamilia concurred in the result.
231 provision distinction Penn National’s setoff and a the between Nevertheless, analysis, little the recovery provision. dual with upon found the unenforceable based the provision court setoff Cosenza, holding declaring of a dual appeals’ recovery court against public policy. Specifically, unenforceable as provision Superior the Court stated: this,
In a case such as disallow the dual exclu- company sion while the insurance invoke the permitting set-off in a fiction provision, legal whereby results the theoretically secondary insured is allowed recover [under- where, insured but in actuality, benefits because of motorist] the set-off the provisions, secondary insured recovers either or nothing some nominal sum.
Super. Ct. at 11. the Op. Accordingly, court found that the setoff the provision public policy underlying violated the MVFRL, entered in summary judgment reversed favor of National, Penn and for further proceedings. remanded court, however, to specify failed what or public policy what section of the the setoff provision MVFRL violated.
Penn National petition filed allowance of appeal with Court, this granted following which we limited to the question: Did the Superior err in ruling Court that standard setoff (which the Penn National Insurance policy reduces the amount recoverable as underinsured motorist benefits the amount under paid coverage of accident) the same to the same policy person for the same void as against public policy? Black,
Penna. Nat’l Mut. Ins. v. Cas. Co. A.2d (2005) curiam). (per
Initially, Penn National observes that this when Court has deemed policy public void as language against relevant language has conflicted specific language with MVFRL. Penn argues National that the setoff provision issue does not any language conflict with the MVFRL. Instead, Penn National contends that supports cost policy, MVFRL’s containment emphasizing recognized Court repeatedly has the primary Law No-Fault
purpose repeal prior reduction enactment the MVFRL was rejecting National cites our caselaw Penn premiums. injured party feasible restoration” of the of “maximum embracing the MVFRL’s aims the No-Fault Law and under their allowing consumers choose reducing premiums *10 Co., Pa. Paylor Hartford, v. Ins. 536 level of insurance. See (1994). National, 583, 1234, Penn A.2d 1235 to According 640 to the allows reduce provision companies setoff the total expectation potential based on the that premiums the limit the not exceed underinsured payout will stated premiums than increase to cover the coverage motorist rather bodily of the combined limits of greater potential payout coverage. injury Additionally, upon Pennsylvania National relies Penn regulations. it notes that Department’s Although Insurance not addressed the situation as Department specifically has it motorist it has included a coverage, relates underinsured for setoff in its standard form uninsured motorist provision § See 63.2 Exh. Penn National coverage. 31 Pa.Code C. contrary that a be persuasively argues provision setoff cannot if the of the MVFRL includes public policy Department coverage a for uninsured motorist a stan- dard form. Blacks’ that the setoff rejecting argument MVFRL, Penn Nation- coverage
undermines mandated al that the the offer of underinsured obligates *11 Bowersox, recovery. See at 1243 n. 10. Penn Nation al explains that a “dual recovery provision” prohibits any of underinsured motorist benefits if the plaintiff benefits, any received the provision” whereas “setoff merely upward sets the limit of recovery both under provisions $100,000.13 of the contrast,
In the argue Blacks the Superior Court correctly found that the setoff unenforceable was against public policy the The MVFRL. Blacks assert that the Superior Court that in “correctly recognized multiple cases, permitting tortfeasor the insurance company to invoke frustrates both the purpose [underbi- 11. Penn National also notes that the Blacks are receiving the benefit of $100,000 Myers’ purchase de spite only purchasing policy. under their own insurance Although granted Broughton, Court review of the decision in parties appeal. discontinued the Pennsylvania 13. The Defense Institute filed an in amicus curiae brief support echoing many points by of Penn National raised Penn National. the dictates of coverage] [MVFRL]” sured to this Honorable Court’s according “impermissible thus is Blacks at 5-6. The Appellees Brief for in holding [Colbert ].” Colbert, an insurance setting aside on our decision rely “insured” that conflicted with definition of an policy’s term. of the same definition MVFRL’s Colbert, questions accepted for review two this Court Appeals the United States Court certified to this Court Colbert, Claimant, suffered The Adam Third for the Circuit. exhausting car. After driving his own injuries while Colbert, policy, and the tortfeasor’s on his own father, a resident coverage as sought his resided with who underinsured motorist cov- policy’s under his father’s relative father’s to consider whether erage. granted We review “insured,” resident encompassed of an which policy’s definition insured a vehicle only they occupied relatives when conflicted the defini- narrowed and with impermissibly policy, relatives coverage to resident providing tion in the MVFRL generally that courts acknowledged generally. Although we language unambiguous contractual should enforce clear and we also observed public policy, of a the absence violation with, or of insurance in conflict in a contract “stipulations to, and to, applicable are statutory provisions which repugnant contract, of, to the yield must part form a consequently invalid, change existing statute, since contracts cannot and are omitted). (internal Ac- at 751 citations statutory laws.” Id. definition of the policy’s found that the narrower cordingly, we the MVFRL.14 violated impermissibly term insured supplants that our decision Colbert The Blacks claim setoffs. upholding decision in Bowersox Court Superior decision of the Bowersox concluding paragraph Blacks cite the enforcing the its discomfort with expressed the court which *12 analysis emphasize our of the Understandably, the Blacks do not 14. Colbert, policy’s in which we held that the question addressed in second public policy and therefore was family exclusion did not violate car below, rejected plaintiff’s fully we the discussed more enforceable. As holding would result part the exclusion unenforceable claim in because containment premiums and thus would hinder the cost in increased purpose of the MVFRL. to motorist benefits deny setoff underinsured provision paid, by had been but found itself constrained premiums which setoff absent con- precedent enforcing provisions any its own Bowersox, or the trary legislature.15 action this Court 1243. it the entirely A.2d at is not clear Although how the changed Superior decision in Colbert have would Court’s Bowersox, in rely it that the Blacks on analysis appears to support argument Colbert to their that courts can refuse provisions contrary enforce setoff to the MVFRL. align
The Blacks fail to their case with our decision by repeating Superior develop Colbert the Court’s failure to alleged provision any conflict between setoff and Instead, specific they that MVFRL. contend public favors a construction of the policy liberal MVFRL embody underinsured motorist to the core remedial provisions purpose injured individuals motor compensating vehicle accidents.
The Blacks
attempt
distinguish
to
cases which this Court
has enforced
deny
insurance
exclusions
or limit
coverage
arguing
multiple
instant case involves
tortfeasors
the various
triggering
coverages purchased by
Myers. They
$100,000
assert
policy provides
bodily injury liability coverage
Myers’
for the
negligence
$100,000 of
coverage
compensate
underinsured
fully compensated by
insured who cannot be
other available
coverages. Essentially, they argue
that the policy
from,
clearly
one,
was
“designed
protect Appellees
just
not
but
negligent
injury
two
drivers who caused
to Appellees.”
Appellees
Brief for
They
at 12.
contend that unlike other
Bowersox,
application
of the setoff
in no
resulted
$50,000
recovery under
coverage
underinsured motorist
because
the claimant received the
entire
under
expressed
provision "operates
The court
in that the
discomfort
(as
entirely
eliminate
or
uninsured
Bowersox,
greater
liability coverage).”
cannot be
than the
recognize
The Blacks (3d Cir.2001), Cosenza, v. which Mutual Ins. Co. F.3d 197 recov- prohibition against an insurance dual policy’s declared and that the decision ery against public policy, argue void as Blacks the federal The precedent. this case should mirror and each an that the instant case involve observe Cosenza allegedly negligent collision with two drivers automobile automobiles, one of the policy covering turn on an insurance injured are as passengers under covered non-negligent which Cosenza, recov- non-negligent passengers insureds. but liability sought also policy’s ered under coverage due to the monies under the underinsured motorists other The policy deficiencies of the tortfeasor. that, recovery providing a dual prohibition against included under the Auto may bodily injury recover insured “[t]he or Motorist of Liability coverage the Underinsured not Id. 204. policy, coverages.” but under both The of held that the was void appeals policy court injured of individuals against public policy protecting of underinsured tort- purchasing from the insurance decisions case, a feasors. In that the court considered MVFRL liberally compen- remedial statute be construed should The of concluded that enforce- appeals sate victims. court of violate the recovery prohibition ment the dual would The found tortfeasor cases.16 court multiple MVFRL that the benefits result denial would paid in the for which the insureds had denial allege recovery prohibi- the dual premiums. Blacks in this have the tion the setoff case Cosenza in a injured occupants same effect of denying Presumably, only if involved then one of the accident one tortfeasor coverage provisions applicable would not be either because triggered negligence provision would not be there be no other tortfeasor insured under or because would trigger the underinsured motorist multiple Accordingly, urge tortfeasor case. the Blacks Court to affirm the decision of the Court. Superior case,
In this must determine the setoff we whether provision violates are public policy. Accordingly, present we ed of law as to our question scope with which review our standard of is de novo. plenary and review See Buffalo *14 Jones, (2002). 637, 659, Township v. 571 Pa. 813 A.2d 664 n. 4 courts “Generally, give plain meaning must to a clear and contract to unambiguous provision unless do so would be Colbert, contrary clearly expressed public policy.” to a 813 In recent years, A.2d this Court has addressed unambiguous provisions several claims that in automobile in policies they surance are unenforceable because public violate in or In policies expressed underlying response, the MVFRL. emphasized we have our reticence to repeatedly throw aside language clear contractual based on “the often formless face of public policy.” Id. at 752.
Public is to be reference to the laws ascertained legal precedents and and not general considerations of supposed public “public interest. As the term is policy” must vague, there be found indications in the definite law the sovereignty justify to the invalidation of a contract as contrary to that policy.... Only dominant public policy justify would such action. In the plain absence of a indica- tion of policy through long governmental practice or enactments, statutory or of violations of obvious ethical or standards, moral the Court not assume to should declare contracts ... contrary public policy. The courts must be content to await legislative action.
Id. See Burrstein v. Prudential
and
Property
Casualty Insur.
Co.,
177,
204,
(2002);
570 Pa.
809 A.2d
Eichelman v.
Co.,
(1998).
N’wide Insur.
551 Pa.
As the Blacks
recognize, we concluded Colbert that the
insurance claimants demonstrated that the policy defined the
term
narrowly
“insured” more
than the definition of the term
MVFRL, and,
in the
in so
denied
mandated
doing,
Accordingly,
MVFRL.
portion
invalidated that
we
contrary
express
contract,
clarity,
its
despite
through the
manifested
of the Commonwealth
public
in a
“stipulations
held that
We
MVFRL.
language
to,
with,
statuto-
or repugnant
in conflict
contract of insurance
to,
form a
consequently
applicable
are
which
ry provisions
invalid,
statute,
contract,
and are
of,
to the
yield
must
part
statutory laws.” Col-
change existing
cannot
since contracts
omitted).
(internal
bert,
citations
In policies responsibility' approving charged with 477b, Commonwealth, § and for adminis- in the 40 P.S. issued Burstein, MVFRL, 809 A.2d at see enforcing tering by including a provisions its of setoff approval indicated setoff in its form for standard uninsured motorist C(“(c) 63.2 Exh. coverage.17 [A]ny payment See Pa.Code made under this endorsement to Uninsured Motorist [related coverage] any to or for insured shall be in reduction of applied damages amount of which he be entitled to may recover any insured under the person Bodily Injury Liability Coverage of the policy.”). Accordingly, we conclude that the not expressly does contradict the statutory of the language MVFRL.
nextWe consider the more amorphous question wheth er the setoff provision violates the public policy underlying the generally MVFRL specifically to its respect provi with relating sions The Blacks rely on the court of appeals’ claim in that “Pennsylva Cosenza nia courts are unanimous that the legislative intent underlying MVFRL was establish a liberal scheme compensatory of underinsured motorist protection.” Brief of Appellees at 16 208). (quoting 258 F.3d at
Although it is beyond cavil that one purpose of the underinsured motorist provisions of the MVFRL is to provide injured those a tortfeasor who lacks adequate coverage, we also have held this is not a public policy “overriding other every consideration in contract construc Eichelman, tion.” contrast, A.2d we have emphasized the cost containment policy underlying the enact ment of the MVFRL: “The repeal No-Fault Act and the enactment of the MVFRL reflected a legislative concern for the spiraling consumer cost of automobile insurance and the resultant increase in the number of uninsured motorists on driving public highways.” Paylor, 640 at 1235. A.2d cost containment objective [W]hile not the only statute, it one, has become an increasingly significant and it is apparent that the General Assembly has been employing *16 the vehicle of free consumer greater choice with latitude and frequency furtherance objective.... of this con- [C]ost suggested 17. The Blacks public have not policy supporting that the (hat coverage supporting differs from uninsured coverage. motorist inextricably to and unin- tainment is linked [underinsured coverage. motorist sured] Schneck, v. 572 Pa.
Progressive N. Insur. Co. (2002) omitted). (internal Our role is not to citation but weigh competing public policies, the benefits of these two provision rather to whether the setoff violates determine public policy. either case, ques-
In this we conclude that the setoff Burstein, Paylor, tion neither In Col- policy. conflicts with bert, cases, enforced insurance other recent this Court a of policy provisions absolutely excluded subset cover- injuries of in a age, coverage riding such as sustained while policy. household not insured under the relevant vehicle case, exclusion, this are not faced with an but rather with we on the provision imposing cap contractual unambiguous by the coverage provided policy. Applying total the insurance not the provision, deny setoff Penn National did Blacks cover- to limit of age pay coverage purchased but rather offered $100,000 Myers liability The of Myers. purchased injured for as a provide to those result of a negligence policy, of a driver insured under the vehicle case, $100,000 such as car of underin- Myers’ this injuries sured motorist to insureds provide injuries result irom the an underin- negligence where driver, sured such as Jamison this case. premiums Myers paid on
were calculated based the inclusion setoff in the entitled “Limit at R51a. The Liability.” section R.R. “limit of provision unambiguously provides liability” “is re under underinsured duced the same for the same any paid person amount Ac bodily accident” Id. injury under limit cordingly, clearly recovery the terms of total $100,000. under these facts To allow any despite unambiguous guest passenger individual provide coverage the insurance be to language would
241
paid.18
repeated-
for
have not been
We have
premiums
which
language
gratis coverage.
contractual
to avoid
ly enforced
Moreover, the setoff
furthers the cost containment
provision
in-
consumers to
the benefits of
purpose
allowing
weigh
the related
increases.
coverage against
premium
“By
creased
risk,
its
and the cost of
limiting coverage, the insurer lowers
public
insurance is lessened. The outcome does not violate
Sehneck,
rather it is
813 A.2d at policy;
favored.”
While
Myers may
negotiate
policy
the
have been unable
without
in
provision,
nothing
suggest
a setoff
there is
the record to
accept
analysis presented by
Cappy
18. While we
the
Chief Justice
provision
support of the conclusion that the MVFRL favors the
“gap”
it would
“excess" rather than
underinsured motorist
require
assumptions
provision,
still
several
to conclude that the setoff
as
case,
applied
contrary
long-standing
clearly expressed
in this
is
to a
public policy
justify
voiding
unambiguous
sufficient to
lan-
Colbert,
First,
guage agreed
by
parties.
See
to the setoff provision. the decision in not to the merits of Although speak will we Cosenza, readily that the setoff issue we note in that case. prohibition from the dual distinguishable insureds cannot recover recovery prohibition, the dual Under they if the underinsured motorist anything under *18 liability provision, one under the received even dollar have In con- for underinsured motorist despite paying under the trast, for some the setoff allows liability to the addition underinsured case, offered to Penn National example, For provision. damages liability coverage under the pay Jamison $1000 of negligence, leaving due to thus $99,000 John’s The Blacks then recover may to the Blacks. coverage payable for Jami- another under $1000 Penn National Significantly, suggests negligence. son’s Penn National could pattern whereby of a fact have potential liability coverage compensation of paid Jamison $99,000 liability coverage the Blacks negligence John’s $1000 scenario, there is no indica- Under negligence. for John’s $99,000 under Blacks not have recovered tion that the would negli- policy the underinsured motorist based on Jamison’s either sce- provision. the setoff Under gence applying after nario, the Blacks would receive $100,000. guarantees up as written $100,000 injured in an accident source to an insured whatever If identity negligent parties. or number
regardless coverage, they desired of total could Myers had bodily injury liability coverage that amount of have purchased motorist cov- and the commensurate amount of underinsured not, however, did premium. They for a we erage higher Instead, enforce policy. not rewrite we will will consistently as written with individuals to balance the benefits added MVFRL allow absent resulting premiums, increases coverage against statutory Accordingly, we reverse any contrary provision. decision of the Superior Court and reinstate the trial court’s grant of summary judgment Penn Appellant National and the denial of summary judgment to Appellees.
Justice not participate BALDWIN did in the consideration or decision of this case.
Former Justice NEWMAN did not participate decision of this case. CASTILLE,
Justices join SAYLOR and EAKIN opinion.
Justice CAPPY files a dissenting opinion. CAPPY,
Chief Justice dissenting. The majority concludes that there is no public policy in the Motor Vehicle Financial Responsibility (“MVFRL”), Law Pa.C.S. seq., et that is offended application of the set-off provision in the automobile insurance policy (“Policy”) that Appellant Penn National Mutual Casualty Insurance (“Penn National”) Company issued, and that the cost contain- objective ment of the statute is reason enough to allow set- off’s I therefore, enforcement. disagree, and respectfully *19 dissent.
This Court has articulated a test for determining whether an insurance contract term is unenforceable because it violates “ public policy, stating that ‘[i]n absence of a plain indica- tion of public [a policy through dominant] long governmental practice or statutory enactments, or of violations of obvious standards,’ ethical or moral the Court should not assume to ” declare contrary contracts to public policy.’ Eichelman v. Co., 558,
Nationwide Ins. 551 1006, (1998). Pa. 1008 addition, In this Court has instructed that the application of public policy concerns in determining whether an insurance contract provision is invalid is fact dependent. Burstein v. Co., Prudential Prop. 177, Cas. Ins. Pa. 570 809 A.2d 207 (2002). case, (“Eric”) the present Eric Black -was a in passenger
a vehicle by driven John R. Myers (“Myers”). Eric was killed L. a driven Todd by was struck vehicle
when vehicle (“Jamison”). negli- and Myers Both Jamison were Jamison Eric an insured under and caused Eric’s death. was gent The Policy insuring Myers Policy provides vehicle. $100,000 $100,000 and in underinsured liability coverage (“UIM”) Those entitled to coverage to insureds. (the “Blacks”) recovered for Eric’s death have compensation $15,000 benefits, liability coverage including insurance a tender of They insurer. have also received Jamison’s $99,000 liability from Penn National. Neverthe- coverage less, uncompensated. the Blacks have losses are reduces, dollar, Policy’s set-off dollar to the Policy provides UIM $99,000 in of negligence Blacks as a result Jamison’s liability that Penn National has tendered to Myers’ a Policy negligence. Blacks under the as result is particular I that when this result measured believe objective Assembly to ad- against the the General intended into the Pennsylvania by incorporating vance in UIM MVFRL, declaring against the test for a contract term void as is met. public policy any coverage typically protects purchaser
UIM as person designates other the insurance contract an insured injuries to the they from the risk that will sustain due of another driver who sufficient negligence without specific nature Despite typical approach, insurance. state, of UIM differs from state to insofar two nationwide, developed basic categories UIM have fundamentally objective different view of the reflecting each (“Ronca ”) James R. Ronca operation UIM al, Analysis Insurance —An Pennsylvania et Motor Vehicle (2d the Financial Law 6.2 112-114.1 Responsibility (3d Tabor, ed.2005); F.2d North River Ins. Co. v. Cir.1991) law); Donegal Allwein v. (applying Pennsylvania *20 (1996). Co., Ins. Pa.Super. Mutual category coverage, first is referred as “excess” UIM compensation and to maximize the for full potential aims Thus, injured gives to the the insured. Id. excess UIM provided by supplements a fund that fund injured insured injured up to the insured’s liability coverage, tortfeasor’s he for his losses. compensated limits or until is UIM coverage. to as “gap” The second is referred UIM category Id. in the he injured position same place It aims insured carried occupied liability had the tortfeasor cover- would have injured insured’s UIM in an amount that matches age Thus, injured to the coverage gives Id. UIM coverage. gap any gap a fund that fills in between the tortfeasor’s insured limit. injured and the insured’s UIM liability coverage Id.1 are realized categories coverage
These distinct of UIM two are based on differ- statutory provisions, distinct and through constitutes an underinsured statutory ent notions what and Ronca at liability coverage. motor vehicle insufficient provide 113. Under those statutes that excess UIM liability a is underinsured its coverage, vehicle deemed when compensate injured limits are insufficient to insured for limitation on is damages, explicit recovery his and no UIM provide gap stated. Id.2 Under those statutes that UIM deemed coverage, tortfeasor’s vehicle is underinsured when following example 1. The demonstrates the difference between excess coverage. gap Suppose injured legally an UIM insured is $100,000; damages liability entitled tortfeasor's $20,000; injured is and that insured's UIM limit is $50,000. coverage, injured Under excess UIM recov- insured's total $70,000, ery being paid is with UIM in addition to $20,000. liability coverage, the amount the insured receives under gap coverage, injured Under UIM insured's total is $50,000, $20,000 coming liability with the first from the tortfeasor's $30,000, remaining coming injured and the from the insured's gap liability UIM to fill in the between the tortfeasor’s injured insured’s UIM Ronca at 113-114. 48-22.030(1) (“Underinsured e.g., Washington 2. See Rev.Code Ann. respect ownership, motor vehicle' means a motor vehicle with to the maintenance, bodily injury property or no use of which either or liability damage accident, policy applies bond or insurance at the lime of an respect or with to which the sum of the limits of bodily injury damage liability property under all or and insur- bonds policies applicable person ance to a covered after accident is less applicable damages person legally than the which the covered enti- recover.”) tled to *21 246 injured of the than the UIM limits liability limits are less
its Id.3 insured. MVFRL, the held that in the General courts have
Several North River excess Assembly UIM provided 747; Tabor, 464; Allwein, 671 A.2d at v. 934 F.2d at Ins. Co. Co., 48 Pa. D. & C.3d 71 Progressive v. Cas. Ins. Conrad Ronca, (Pa.Com.Pl.1987); at 113-14. accord are clear. regard of the MVFRL agree. I words 1921(b). has inception, § From its the MVFRL 1 Pa.C.S. .coverage provide motorist shall stated that “[u]nderinsured out of the injury arising suffer persons who protection legally motor and are entitled maintenance or use of a vehicle of the or operators therefor from owners damages to recover vehicles[,]” has defined an “underin motor underinsured the motor for which limits sured motor vehicle” as vehicle “[a] are and self-insurance liability of available insuffi 1731(c), §§ 1702 damages.” losses and 75 Pa.C.S. pay cient to Allwein, Tabor, 465; added); F.2d at 671 A.2d (emphasis 749-19; Ronca at 113-114. MVFRL, in the of UIM insurance Accordingly, by way Assembly plain language, the statute’s General through only of a source of policy providing chose to foster the not injured by negligent to those insureds' are who compensate is insufficient to liability coverage driver whose also, losses, in the case of for his but UIM insured for a full coverage,- policy maximizing potential recovery.4 38a-336(e) ("For purposes e.g. Gen Stat. of this
3. See Conn. section, with an ‘underinsured motor vehicle’ means a motor vehicle liability bodily injury respect under all to which the sum of the limits policies applicable time and insurance at the bonds applicable liability under unin- accident less than the limits of portion policy against which claim is made under sured (b) section.") of this subsection Assembly acknowledge departed from the I that the General in the now defunct No-Fault "maximum feasible restoration” embodied Co., Paylor Hartford, MVFRL. v. Ins. 536 Pa. Act when it enacted the so, (1994). Assembly Even the General chose type incorporate into the MVFRL the of UIM that serves Application set-off this case frustrates these choices. It eliminates the UIM insurance the General Assembly gave Myers right for their buy passengers; precludes it recovering Blacks from for the Jamison, negligence of driver;5 the second and underinsured prevents it UIM its having statutory desired effect of compensating fully the Blacks as as possible; and it affords the Blacks with less UIM than the MVFRL such, intends them to have. As the set-off violates Pennsylva *22 nia public policy, 1702, and cannot §§ be enforced. 75 Pa.C.S. 1731.
Moreover, grounds that underlie the majority’s conclu- sion to the contrary do not dissuade me of my position. The majority upholds the set-off of because the MVFRL’s cost objective. containment Although enactment of the MVFRL grew out of a legislative concern for the spiraling costs of insurance, automobile see Progressive Northern Ins. Co. v. Schneck, 572 Pa. (2002), 832 the cost objective containment cannot permitted be to contradict or undo the nature of UIM insurance that the General Assembly Further, enacted. as this Court has recognized, since the policy concern of cost containment can be used to defend virtually any contractual provision that restricts it cannot lead to the any validation of every contractual term that arguably Burstein, results in costly less insurance. “ A.2d at ‘[R]ather, it to protect functions insurers against forced underwriting risks unknown that insureds have neither disclosed nor paid to insure.’ If Id. the Policy’s set-off provision invalidated, were to be Penn National would not be forced to underwrite an unknown risk for which it received no premium, Burstein, as would have occurred had
compensate
injured
fully
possible.
insured as
as is
75 Pa.C.S.
1702, 1731(c).
§§
drivers,
presence
Jamison,
5. Due to
negligent
Myers
of two
in a
accident,
two-vehicle
appeal
present
this
does not
us with a claimant
attempting
who is
to convert UIM insurance benefits into additional
insurance,
as would be the
if
only
case
the accident involved
Therefore,
Myers
Pennsylvania
vehicle.
upholding
decisions
auto-
mobile
provisions
prevent
insurance contract
that
such a conversion
See,
occurring
inapplicable.
e.g., PayLor,
are
Based offends presented, Policy’s public policy set-off hence, I Accordingly, uphold cannot be enforced. would Court, and affirm its Superior Order. A.2d Pennsylvania, Appellee, COMMONWEALTH
v. MARKMAN, Appellant. Beth Ann Supreme Pennsylvania. Court of 11,
Argued May 2004.
Re-Submitted Nov. 2006.
Decided Feb.
notes
MVFRL
reject
every policy,
but allows insureds to
1731(a), (c)
§
named
coverage.
(allowing
See 75 Pa.C.S.
reject
resid-
“myself
insured to
for
and all relatives
household”). Moreover, Penn
ing my
National observes
that
guest
does not define “insureds” to include
MVFRL
1702,
only
see
but
passengers,
requires
75 Pa.C.S.
that
term include named insureds and resident relatives of
asserts,
it
named insureds.
“the MVFRL does
Accordingly,
not
offer
require
[underinsured motorist]
insurers even
Brief
at 11.
guest passengers.”
Appellant
Myers
purchase
Penn National notes
were free
233
so,
accordingly
increased
but chose not to do
If a court
insurers to
paid
premium.11
required
lower
provide
pre-
this additional
insurers would increase
miums in
of the aim of the MVFRL to reduce
contravention
premiums
insureds
by providing
option
purchase
with
lower levels of
Penn National contends that the
in the case
Superior Court
departed
at bar
from prior Superior
approving
Court decisions
Bowersox,
similar setoff provisions, including
Pempkowski v.
Co.,
Farm
State
Mutual Automobile Insurance
451 Pa.Super.
61,
(1996),
curiam,