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The Quarterly Dose

Reshaping Applicability of The Pennsylvania Fair Share Act: The Impact of Spencer v. Johnson

The Quarterly Dose – November 2024

November 1, 2024

by John C. Farrell

Under Pennsylvania law, a defendant’s exposure in a multi-defendant case depends upon more than just the extent of fault and total damages at stake. Now, under a more recent interpretation of the Pennsylvania Fair Share Act by the Pennsylvania Superior Court in Spencer v. Johnson, 249 A.3d 529 (Pa. Super. 2021), that exposure may be amplified. 

Before delving into the specifics of the Fair Share Act, codified in 42 Pa. C.S. § 7102, it is helpful to understand three key legal terms: joint and several liability, several liability, and comparative negligence.

“Joint and several liability” means that any one defendant who is found liable may be required to pay the full extent of the plaintiff’s damages. For example, a jury awards the plaintiff $10,000. The jury finds that Defendant A is 40% liable and Defendant B is 60% liable. The plaintiff may recover the entire $10,000 from Defendant A, leaving Defendant A to seek contribution from Defendant B for the $6,000 for which Defendant A was not actually at fault. 

Under “several liability,” each defendant who is found liable will only be required to pay their proportionate share of liability. Using the same example as above, Defendant A would only be required to pay their 40% share, in this case $4,000, to the plaintiff in a several liability system. 

“Comparative negligence” in Pennsylvania means that a plaintiff’s recovery will be reduced in proportion to the percentage of negligence attributed to the plaintiff (unless the plaintiff is greater than 50% liable, in which case the plaintiff is barred from recovering). For example, if a jury awards a plaintiff $10,000 in damages but finds that the plaintiff was 30% causally negligent, the plaintiff will only be entitled to recover $7,000 in total. 

Prior to 2011, Pennsylvania was a joint and several liability jurisdiction. Then, in June 2011, the Fair Share Act became law. In short, the Fair Share Act states that a defendant who is found less than 60% liable will only be responsible to pay damages proportional to the fault attributed to that defendant by the jury. Consequently, many in the legal community thought that the Fair Share Act had implemented several liability in cases where a defendant was found less than 60% liable.  

Ten years later, the Pennsylvania Superior Court suggested in Spencer that in order for the Fair Share Act to apply, the plaintiff’s comparative negligence must be an issue in the case. While this portion of the Spencer opinion is arguably dicta, it has ultimately been treated as binding precedent by courts in Pennsylvania. See, e.g., Snyder v. Hunt, 268 A.3d 416 (Pa. Super. 2021) (unpublished) (holding that because the defendants “did not appear to allege, much less to prove, that [plaintiff] was contributorily negligent, the Fair Share Act ... does not shield them from the common law of joint and several liability under Spencer.”). This means that a defendant who is found less than 60% liable will be subject to joint and several liability unless there is causal negligence attributed to the plaintiff. 

Defendants in health care liability cases are undoubtedly affected by the recent interpretation of the Fair Share Act. To illustrate how consequential these changes can be, here is another example. 

Dr. X is an orthopedic surgeon. Dr. X has privileges at Noname Hospital, which does not employ Dr. X or hold him out as their employee. Dr. X’s patient, John Doe, agrees to undergo knee replacement surgery, to be performed by Dr. X at Noname Hospital. On the evening before the surgery, and unbeknownst to the hospital and John Doe, Dr. X suddenly cancels his malpractice insurance policy and loses all of his savings at a casino. The next morning, he fails to meet the standard of care when performing John Doe’s knee replacement surgery, causing John Doe to sustain serious injuries. 

John Doe sues Dr. X for negligence, and also sues Noname Hospital for corporate negligence, alleging that they failed to create and enforce adequate policies to ensure quality care. At trial, the jury finds in John Doe’s favor against both defendants. The jury apportions 95% of liability to Dr. X and 5% of liability to Noname Hospital. The jury also awards John Doe $10,000,000 in damages. Under the previous, literal interpretation of the Fair Share Act, the hospital would only be required to pay damages proportional to the fault attributed to it, which would be $500,000. After Spencer, however, the Fair Share Act does not apply because John Doe was not comparatively negligent. John Doe would therefore be entitled to recover the full $10,000,000 from Noname Hospital. Furthermore, given Dr. X’s recent financial woes, the hospital would have trouble seeking contribution from Dr. X.  

Let’s take that same example and add one twist: before the surgery, John Doe failed to take pre-operative antibiotics, without disclosing this to hospital staff, which exacerbated his injuries. At trial, Noname Hospital presents evidence of John Doe’s comparative negligence, but the jury returns the same $10,000,000 verdict. This time, however, the jury apportions 94% of liability to Dr. X, 5% of liability to Noname Hospital, and 1% of liability to John Doe for failing to take his pre-operative medication. Now, because the plaintiff’s comparative negligence is at issue, the Fair Share Act will apply, and Noname Hospital’s liability will be several. John Doe can only recover $500,000 from the hospital, and will have to seek recovery of the remaining $9,400,000 from Dr. X. 

Ultimately, a health care defendant’s exposure in Pennsylvania depends on the financial solvency and amount of insurance covering the co-defendants, and the comparative negligence of the plaintiff. In cases where comparative negligence is not at issue, liability is joint and several, and the plaintiff can recover all of their damages from any one defendant. When there is good evidence of comparative negligence, defendants should present that evidence at trial in order to potentially obtain the protection of several liability pursuant to the Fair Share Act. 

 

The Quarterly Dose – November 2024, has been prepared for our readers by Marshall Dennehey. It is solely intended to provide information on recent legal developments and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. If you receive the alerts in error, please send a note to tamontemuro@mdwcg.com. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2024 Marshall Dennehey. All Rights Reserved.

Firm Highlights

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Florida Supreme Court Rules Florida Statute §627.70152 Does not Apply Retroactively

In a decision that resolves years of appellate uncertainty and confirms that insurers and insureds alike can rely on the legal framework in place when a policy is issued, the Supreme Court of Florida last week found that Florida Statute §627.70152, which involves an insured’s requirement to provide an insurer with pre-suit notice before filing a suit, cannot be applied retroactively. In Universal Property & Casualty Insurance Company v. Hughes, the Court was presented with the issue of whether the statutory pre-suit notice requirement applied retroactively and whether it would apply to a breach of contract of an insurance policy that was issued before the statute went into effect. Before the Court was an appeal from a homeowner, Ms. Hughes, who sued her insurance carrier, Universal Property & Casualty Insurance Company (Universal) for breach of contract under an insurance policy that was in effect from April 24, 2019 through April 24, 2020. During the policy period, Ms. Hughes suffered a loss and, on May 29, 2019, made a claim for water damage. The carrier investigated the loss and issued payment; Ms. Hughes disputed the payment, finding the amount insufficient for repairs. On July 1, 2021, Florida Statute §627.70152 went into effect, which required insureds to provide notice of intent to initiate litigation against the carrier prior to filing a lawsuit; if an insured filed the lawsuit without complying with §627.70152, a court must dismiss the case without prejudice. On August 4, 2021, Ms. Hughes filed her lawsuit against Universal for breach of contract. Universal moved to dismiss based on her failure to comply with §627.70152. Ms. Hughes contended the notice requirement could not be applied retroactively. The trial court disagreed and dismissed the lawsuit without prejudice, and Ms. Hughes appealed. During the appeal, the Fourth District Court of Appeal, in Cole v. Universal Property & Casualty, 363 So. 3d 1089 (Fla. 4th DCA 2023), ruled that Florida Statute §627.70152 did apply retroactively to policies issued before the effective date of §627.70152. However, the Sixth District Court agreed with Ms. Hughes and overturned the trial court’s ruling, finding the statute could not retroactively apply to policies issued prior to the statute effective date. Thereafter, the other district courts weighed in, with the Third District Court agreeing with the Fourth District Court, and the First, Second and Fifth District Courts agreeing with the Sixth District Court. In resolving the conflict amongst the district courts, the Supreme Court advised “as a general rule, ‘the statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract.’ Hassen v. State Farm Mut. Auto. Ins. Co., 674 So. 2d 106, 108 (Fla. 1996). The Court applied the two-step test when deciding whether a statute has retroactive application: “First, the Court must ascertain whether the Legislature intended for the statute to apply retroactively. Second, if such an intent is clearly expressed, the Court must determine whether retroactive application would violate any constitutional principles.” Menendez v. Progressive Exp. Ins. Co., 35 So. 3d 873, 877 (Fla. 2010). In analyzing the Legislature’s intent, the Court must determine whether the Legislature has manifested a clear command for retroactivity in the statutory text.  In review of the statutory text, the Court found nothing in the language of the statute to indicate that the phrase “all suits” was serving another purpose of expanding its reach to suits based on policies that both predate and postdate the enactment of the statute. Buis v. Universal Prop. & Cas. Ins. Co., 394 So. 3d 738, 741 (Fla. 2d DCA 2024). Further, the Court noted the statute has an effective date, which has long been considered to be evidence against retroactive application of a statute. The Court concluded that, on its face, no provision of §627.70152 speaks to application of the statute to insurance policies issued before the statute’s effective date and therefore, the Legislature did not clearly command retroactivity of the statute to include insurance policies issued prior to the enactment of the statute. The Court briefly reviewed Universal’s argument that the presuit notice requirement was procedural, not substantive, and therefore should be applied retroactively; however, the Court agreed with the Sixth District Court’s finding that, in its entirety, §627.70152 transformed an insured’s ability to sue an insurance company under a property insurance policy and an insurer’s obligations to respond to and pay insurance claims, thus making the requirement a substantive change. The Court thereby upheld the decision of the Sixth District and disapproved the decision of the Fourth District in Cole.

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CLM 2026 Focus Conference

Allison joins three insurance industry leaders to discuss how cyber coverage disputes, the growing impact of social inflation on bodily injury claim valuation, and the use of artificial intelligence are reshaping the bad faith landscape. The panel will examine emerging sources of extra-contractual exposure, including evolving cyber insurance coverage issues and the challenges of accurately valuing bodily injury claims. Practical approaches to claim evaluation using AI, along with defense strategies designed to help prevent or successfully defend against bad faith litigation, will also be addressed. 

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The Tolling Trap: Filing Alone Will Not Toll the Statute Without Good-Faith Service

The Eastern District of Pennsylvania recently reinforced a critical limitation on bad faith claims, holding that a timely filing alone will not preserve a cause of action absent a good-faith effort to serve the original process. The plaintiff had presented a claim for underinsured motorist benefits to his auto insurer. The insurer evaluated the claim and determined that the plaintiff’s accident-related damages did not exceed the bodily injury liability insurance limits of the at-fault driver and denied his claim. Among other claims, the plaintiff sought to present a claim for insurance bad faith under 42 Pa. C.S.A. § 8371, to which a two year statute of limitation applies. He first filed a praecipe for writ of summons before the expiration of the statute of limitation. However, the plaintiff did not attempt to serve the praecipe or writ until after the statute of limitations had expired. Additionally, the service failed as the plaintiff had mailed the original process to an incorrect address. Despite receipt of the Postal Service’s failure to deliver the original process, the plaintiff did not attempt to re-serve the writ. Two months later, the plaintiff filed a complaint and then successfully served that complaint. The insurer sought to dismiss the plaintiff’s bad faith claim as time-barred by the statute of limitations. The district court agreed. Though the plaintiff had filed a praecipe for a writ of summons prior to the expiration of the statute of limitations, the statute is only tolled if there is a good faith effort to serve that original process. In this case, the court determined that the plaintiff had failed to perform a “good faith effort to serve the original process”. Additionally, though the filing and service of a complaint can serve as alternative original process when the lawsuit is commenced by the filing of a praecipe for a writ of summons, the plaintiff filed his complaint after the statute of limitations had expired. The plaintiff’s bad faith claim was therefore determined to be barred by the statute of limitations and dismissed by the court, with prejudice. A key takeaway for the defense is not to assume that the statute of limitations has been successfully tolled by a plaintiff merely because a praecipe for a writ of summons or complaint has been filed prior to the expiration of the statute. A filed complaint or writ is only part of the equation. The defense should carefully review the docket and filings to confirm that the plaintiff also performed the requisite good faith effort to serve that original process. A thorough review of the docket may reveal that the plaintiff failed to make the good-faith service efforts necessary to toll the statute of limitations.

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