Pennsylvania – Automobile Liability
Key Points:
- Pennsylvania Supreme Court holds that an uninsured driver injured in a motor vehicle accident with an insured driver may sue the insured driver for "economic damages."
- By extension, the Supreme Court's decision would appear to permit the uninsured driver to sue an insured driver for "non-economic damages" if he/she has sustained a "serious injury."
In Corbin v. Khosla, 2012 Pa. LEXIS 350, the Pennsylvania Supreme Court, in ruling upon a certified question of law from the United States Court of Appeals for the Third Circuit, held that §1714 of the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) does not preclude an uninsured motorist from recovering tort damages in the form of economic losses from the third-party tortfeasor's liability insurance coverage. The Supreme Court expressly abrogated any Pennsylvania lower court decisions that have ruled to the contrary. Although the precise issue before the Pennsylvania Supreme Court was limited to economic damages, such as medical expenditures and wage loss, this decision would appear to open the door for an uninsured motorist to recover non-economic damages, such as pain and suffering, if the plaintiff can show that he has sustained a "serious injury" as that term has been defined by Pennsylvania case law.
The facts underlying the Supreme Court's decision in Corbin are relatively simple and straightforward. On February 6, 2006, Ms. Corbin was traveling southbound on Route 413 in Bristol, Pennsylvania in an uninsured vehicle uninsured while Mr. Khosla was driving northbound on Route 413 in his insured vehicle. Mr. Khosla allegedly made a left turn in front of Ms. Corbin, resulting in an accident in which Ms. Corbin claimed to have sustained bodily injuries. Ms. Corbin filed suit in the United States District Court for the Eastern District of Pennsylvania (based upon diversity of citizenship) wherein she sought to recover both economic and non-economic damages.
Mr. Khosla filed a motion for partial summary judgment in the District Court wherein he sought to dismiss the plaintiff's claims for economic damages under §1714 of the MVFRL for the plaintiff's failure to carry the required motor vehicle liability insurance. Mr. Khosla also sought a declaration from the court that the plaintiff should be barred from asserting claims for non-economic damages since, as an uninsured driver, she was deemed to be subject to the limited tort option pursuant to §1705(a)(5) of the MVFRL. The District Court held that the plaintiff was precluded from recovering non-economic damages under §1705, but it predicted that "[T]he Pennsylvania Supreme Court would hold that a Plaintiff can recover economic damages from an alleged third-party tortfeasor. A Plaintiff would be prohibited, however, from recovering such damages from an insurance company." The District Court then certified this curious holding on the issue of economic damages directly to the Third Circuit Court of Appeal for review. In a relatively unusual procedural twist, the Third Circuit petitioned the Pennsylvania Supreme Court for certification to address the following question of Pennsylvania law:
Does §1714 of the Motor Vehicle Financial Responsibility Law preclude an uninsured motorist from recovering tort damages for economic losses from an alleged third-party tortfeasor? See, Swords v. Harleysville Ins. Co., 883 A.2d 562 (Pa. 2005); Bryant v. Reddy, 793 A.2d 926 (Pa. Super. 2002, allocator denied, 805 A.2d 518 (Pa. 2002); McClung v. Breneman, 700 A.2d 495 (Pa. Super. 1997).
In accepting the Third Circuit's request to address this question, the Pennsylvania Supreme Court began by noting that the MVFRL requires all drivers in Pennsylvania to carry motor vehicle insurance. The Court further noted that §1714 of the MVFRL prohibits an owner of a registered but uninsured vehicle from recovering first-party benefits. The Court explained that, despite the MVFRL's prohibition against an uninsured driver receiving first-party benefits, an uninsured driver shall be "deemed" to have chosen the limited tort alternative pursuant to §1705(a)(5). Under §1705, a person who is subject to the limited tort option is eligible to seek economic losses – such as medical and wage loss payments – from the tortfeasor but is barred from recovering non-economic losses – pain and suffering – unless they have sustained "serious injury." It was this perceived "tension" between §1714 and §1705 of the MVFRL that the Pennsylvania Supreme Court addressed.
The Supreme Court then reviewed its decision in Swords v. Harleysville Ins. Co., wherein it held that §1714 of the MVFRL "clearly and unambiguously" prohibited the owner of a registered but uninsured vehicle from recovering first-party benefits. Swords involved a claim for first-party benefits by the owner of an uninsured vehicle who was operating his father's insured vehicle when he was injured in an accident.
In reviewing it's decision in Swords, the Supreme Court noted the "fundamental difference" between a claim for first-party benefits and a claim against a third-party tortfeasor for damages. The Court went on to note that the Pennsylvania Superior Court had not "recognized consistently" the distinction between a claim for first-party benefits and a claim for damages against a third-party tortfeasor, with the Superior Court often treating these claims as "one and the same." The Court referenced the Superior Court's decisions in McClung and Bryant where it affirmed the trial courts' determination that the uninsured plaintiffs could not recover either non-economic damages, reimbursement for medical expenses and/or wage loss benefits from the third-party tortfeasor.
Notably, the Court in Corbin solicited input from the Insurance Commissioner of Pennsylvania to weigh in on this issue. In response, the Insurance Department filed a brief in which it suggested that there is no ambiguity in the MVFRL and that claims for first-party benefits and claims for economic damages are "clearly separate and distinct claims." As a result, the Insurance Department suggested that prior holdings by the Superior Court, to the extent that they denied any recovery to an injured uninsured motorist, should be overturned.
The Pennsylvania Supreme Court agreed with the Insurance Department and specifically held that §1714 of the MVFRL "does not preclude an uninsured motorist from recovering tort damages for economic loss from an alleged third-party tortfeasor under the tortfeasor's liability coverage. We now expressly abrogate any decisions of the lower courts that have ruled to the contrary." In reaching its decision, the Court, while noting Pennsylvania's attempts to encourage motorists to obtain insurance through the imposition of fines, possible loss of driving privileges, restrictions on claims for first-party benefits and relegating them to limited tort status, indicated there was nothing in the MVFRL precluding an uninsured driver from making a claim for economic damages against the third-party tortfeasor.
In summary, the Pennsylvania Supreme Court's decision in Corbin has clearly removed one major deterrent to drivers who choose not to obtain financial responsibility – the right to sue the alleged third-party tortfeasor for economic damages. The decision also implicitly recognizes that there is nothing to prevent the uninsured driver from suing the third-party tortfeasor for non-economic damages, such as pain and suffering, if they are able to establish the relatively low threshold of having sustained a "serious injury." Given the Pennsylvania Supreme Court's decision on this issue, it would now be up to the Pennsylvania Legislature to address this issue in the form of amendments to the Pennsylvania Motor Vehicle Financial Responsibility Law.
*Dave is a shareholder and works in our Bethlehem, Pennsylvania, office. He can be reached at 484.895.2320 or dawilliams@mdwcg.com.
Defense Digest, Vol. 18, No. 2, June 2012
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