Tubner v. State Farm Mutual Automobile Insurance

OPINION

KAUFFMAN, Justice.

Before us is a question of first impression concerning the financial obligations of insurance companies under the No-Fault Motor Vehicle Insurance Act (“No-Fault Act”).¹ At issue is whether a company designated to provide insurance coverage pursuant to the assigned claims plan of the No-Fault Act is required to pay not only “basic loss benefits,” but also uninsured motorist benefits.²

Appellee, Eva Tubner, is administratrix of the estate of Jerry Amey (“decedent”), who died of injuries he received in a motor vehicle accident while a passenger in an uninsured automobile. Decedent did not own a motor vehicle, and thus had no applicable insurance under the No-Fault Act.³ Pursuant to the assigned claims plan, appellant, State Farm Mutual Insurance Co. (“State Farm”), was designated as the participating insurer, and it paid appellee basic loss benefits.⁴

Contending, however, that she was also entitled to uninsured motorist benefits, appellee brought this action against State Farm in the Allegheny County Court of Common Pleas. State Farm argued that the assigned claims plan does not contemplate recovery of uninsured motorist benefits, and both parties moved for summary judgment. The trial court ruled in favor of State Farm. The Superior Court reversed; we granted allocatur, and now affirm the order of the Superior Court 280 Pa. Super. 38, 421 A.2d 392.⁵

The Legislature’s expressed purpose in adopting the No-Fault Act was to create a “low cost, comprehensive, and fair system” which uniformly would provide for “maximum feasible restoration” of all victims of motor vehicle accidents.⁶ As defined in Section 108 of the No-Fault Act, the assigned claims plan departs from the prior system by providing for recovery when no source of insurance coverage otherwise exists.⁷ Under Section 108(b), insurers are assigned to compensate motor vehicle accident victims for whom insurance is not carried as if a policy of basic loss insurance had been issued:

(2) The assigned claims bureau shall promptly:

(A) assign each claim for no-fault benefits to an assignee who shall be a participating insurer; ...

. . . The assignee thereafter has rights and obligations, as if he had issued a policy of basic loss insurance complying with this act applicable to the injury .... (Emphasis added).⁸

Every policy of basic loss insurance issued in this Commonwealth must include all coverage mandated by the No-Fault Act and by the Insurance Department Regulations validly promulgated thereunder. Section 104(a) of the Act requires, inter alia, policy coverage for basic loss benefits and for indemnification in the event of liability for general damages.⁹ Insurance Department Regulation 66.1-104(a) (“Regulation 66.1-104(a)”) additionally requires uninsured motorist coverage providing for payment of general damages to an insured party injured by an uninsured motorist:

§§ 66.1-104(a). Required motor vehicle insurance.

(a) In addition to the coverage required in section 104(a) of the act (40 P.S. § 1009.104(a)), coverage shall include uninsured motorist coverage in limits of $15,000 per person, $30,000 per accident. . . .

31 Pa. Code §§ 66.1-104(a).¹⁰

Because assigned insurers are obligated precisely as if they had issued basic loss insurance policies, and because every policy of basic loss insurance issued in Pennsylvania must include uninsured motorist coverage, the right to uninsured motorist benefits under the assigned claims plan follows a fortiori from a straightforward reading of the statute and the regulation lawfully promulgated thereunder.¹¹

Any other interpretation of appellee’s statutory rights under the assigned claims plan would frustrate the Legislature’s intention, expressed in Section 102 of this remedial legislation, to provide maximum feasible restoration to all accident victims in a comprehensive, fair, and uniform manner.¹² Adoption of State Farm’s view would have the discriminatory effect of affording recovery of general damages to all motor vehicle accident victims injured by uninsured motorists except those covered by the assigned claims plan, and thus would perpetuate many of the harsh results of the outdated fault system by denying general damages to innocent victims of irresponsible drivers.¹³

Accordingly, we affirm the order of the Superior Court.¹⁴

NIX, J., filed a dissenting opinion in which ROBERTS, J., joined.

1 . Act of July 19, 1974, P.L. 489, No. 176, §§ 101 et seq., 40 Pa.S.A. §§ 1009.101 et seq.

2 . Section 108 of the No-Fault Act provides for recovery by motor vehicle accident victims where no issued policy of basic loss insurance is applicable to the claim. 40 Pa.S.A. § 1009.108(a). Under the assigned claims plan, such claims are assigned to a member of a pool of participating insurers. 40 Pa.S.A. § 1009.108(b). Each company providing basic loss insurance coverage in the Commonwealth must participate in the assigned claims plan. Id.

3 . Appellee obtained a default judgment against the driver of the uninsured vehicle, but it remains unsatisfied.

4 . “Basic loss benefits” are defined in Section 103 of the No-Fault Act, 40 Pa.S.A. § 1009.103:

“Basic loss benefits” means benefits provided in accordance with this act for the net loss sustained by a victim, subject to any applicable limitations, exclusions, deductibles, waiting periods, disqualifications, or other terms and conditions provided or authorized in accordance with this act. Basic loss benefits do not include benefits for damage to property. . . .

5 . Jurisdiction is vested in this Court pursuant to the Judicial Code, Act of July 9, 1976, P.L. 586, No. 142, 42 Pa.C.S.A. § 724(a). This opinion was reassigned to this writer on June 25, 1981.

6 . Legislative findings and purposes are set forth in Section 102 of the No-Fault Act, 40 Pa.S.A. § 1009.102. !

7 . Prior to the No-Fault Act, an accident victim without applicable motor vehicle insurance coverage, such as a'passenger or pedestrian, was without recourse if injured by an uninsured driver lacking personal funds to satisfy a tort judgment. The assigned claims plan was designed to provide a source of coverage for such victims.

8 . 40 Pa.S.A. § 1009.108(b).

9 . Section 104(a) provides, in pertinent part:

(a) Security covering a motor vehicle. — Every owner of a motor vehicle which is registered or which is operated in this Commonwealth by the owner or with his permission, shall continuously provide security covering such motor vehicle while such vehicle is either present or registered in the Commonwealth. Security shall be provided for the payment of basic loss benefíts, and for the payment of sums up to a total limit of thirty thousand dollars ($30,000) which the owner or any person operating the vehicle with the express or implied permission of the owner may become liable to pay as damages because of bodily injury or death arising out of any accident (subject to a sublimit of fifteen thousand dollars ($15,000) for damages arising out of the bodily injury or death of any one person) and for the payment of damages for injury to or destruction of property in any one accident of amounts up to a total limit of five thousand dollars ($5,000).... (Emphasis supplied).

10 . The validity of Regulation 66.1-104(a) has remained unchallenged since it was issued in 1975, and is not challenged here. A lawfully promulgated administrative regulation is as valid and binding as the statute under which it was adopted. Girard School District v. Pittenger, 481 Pa. 91, 95, 392 A.2d 261, 262 (1978).

11 . State Farm bases various additional arguments on provisions of the Uninsured Motorist Act, Act of August 14, 1963, P.L. 909, § 1, as amended, December 19, 1968, P.L. 1254, No. 397, § 1, 40 Pa.S.A. § 2000, which codified the requirement of uninsured motorist coverage in liability insurance policies under the previously existing fault system. The coverage contemplated by that Act, however, is distinct from the uninsured motorist coverage required in all policies issued under the No-Fault Act. Accordingly, Johnson v. Yellow Cab Co. of Philadelphia, 456 Pa. 256, 317 A.2d 245 (1974), wherein we held that benefits under the Uninsured Motorist Act are payable only when a valid insurance policy has been issued, is inapposite. Johnson interpreted the law as it existed prior to the No-Fault Act, when there could be no recovery from an insurer without a valid policy. Under the assigned claims plan, however, an insurance company is obligated as if a valid policy had been issued. Thus, benefits under the plan obviously cannot be conditioned on the existence of a policy. See 40 Pa.S.A. § 1009.108(a).

12 . 40 Pa.S.A. § 1009.102(a)(3), (4), (8).

13 . Basic loss benefits and uninsured motorist benefits are separate and distinct, and cannot be set off against one another. See Brader v. Nationwide Mutual Ins. Co., 270 Pa.Super. 258, 411 A.2d 516 (1979); Carnevale v. Sentry Ins. Co., 469 F.Supp. 681 (W.D. Pa. 1979). Because a claimant under the assigned claims plan is covered as if he had obtained a policy of basic loss insurance, his right to uninsured motorist benefits cannot be distinguished from that of holders of valid insurance policies.

14 . State Farm also alleges that appellee violated a provision of the Uninsured Motorist Act by bringing her tort action against the uninsured motorist without first obtaining State Farm’s written consent. Apart from the fact that we have concluded that the Uninsured Motorist Act is not applicable to appellee’s claim, we note that State Farm failed to raise the issue in the courts below, and it therefore has been waived.