Pennsylvania Supreme Court Rules No New UIM Waiver Forms Required When a Change Is Made to an Existing Auto Insurance Policy

In the case of Franks v. State Farm Mut. Auto. Ins. Co., No. 42 MAP 2022 (Pa. April 19, 2023) (Op. by Mundy, J.), the court ruled that the removal of a vehicle from a multiple motor vehicle insurance policy, in which stacked coverage had been previously waived through a waiver form executed by the insured, did not require the insurance carrier to secure a renewed expressed waiver of stacked coverage under §1738(c).

At the lower level, the Pennsylvania Superior Court had described the issue in this case as one of first impression.    

By way of background, according to the Pennsylvania Supreme Court's Opinion, the injured parties purchased automobile insurance from State Farm in 2013 for their two (2) vehicles.

The Plaintiffs included underinsured motorist coverage in their policy but completed a form rejecting stacked UIM coverage in compliance with §1738(d)(2) of the Motor Vehicle Financial Responsibility Law (“MVFRL”).

The court noted that, absent any such waiver, stacked coverage would have been the default.

Thereafter, under the history of the insurance policy in question, the Plaintiffs removed one of the original vehicles and added a third vehicle to the policy in 2014. The Plaintiffs again rejected stacked UIM coverage at that point.

The Plaintiffs made another change to the automobile insurance policy in 2015 under which they removed the other of the original insured vehicles and replaced it with a different vehicle. No additional form rejecting stacked UIM coverage was offered or sought to be completed on the occasion of the removal of the last vehicle.

The court emphasized that the ongoing premiums paid by the Plaintiffs reflected the lower rate for non-stacked UIM coverage on the vehicles under the policy.

Thereafter, one of the Plaintiffs was injured in the motor vehicle accident. After pursuing a claim against the tortfeasor, the Plaintiffs pursued a UIM claim against State Farm. The parties disagreed on what the available limits would be.

The Plaintiffs argued that, with the last change to the policy, there was no valid waiver of stacked UIM coverage secured by the carrier and that, as such, the Plaintiffs were entitled to default stacked coverage under Pennsylvania law.

The Superior Court had ruled in favor of the insurance company.

On this appeal, the Supreme Court ruled that the Superior Court did not err when this Superior Court held that the removal of a vehicle from a multiple motor vehicle insurance policy, in which stacked coverage had been previously waived, did not require a renewed express waiver of stacked coverage pursuant to §1738(c).

The basic rationale of the Court was that Section 1738 requires insurance companies to secure a new written waiver of UIM coverage whenever an insurance policy is purchased.  Here, there was a change made to an existing policy.  No new policy was purchased.  As such, there was no requirement under the law for the carrier to secure a new waiver form.    

Anyone wishing to review a copy of this decision may click this LINK.

Pennsylvania Supreme Court Denies Appeal in Case Raising Important Unsettled UM/UIM Issues

In a decision handed down yesterday the Pennsylvania Supreme Court issued a one-line Order denying a petition for allowance of appeal filed by an insurance company from the Superior Court’s decision in the case of Kline v. Travelers, No. 104 MDA 2019 (Pa. Super. 2019 McLaughlin, J., Ford Elliott, P.J.E., Gantman, P.J.E.)(Op. By Gantman, P.J.E.), which involved important unsettled issues, including both the Sackett stacking issue as well as the issue of the retroactive effect of the Pennsylvania Supreme Court's eradication of the household exclusion in the Gallagher v. GEICO decision.

The trial court had ruled in favor of the insured on the Sackett issue but against the insured on the household exclusion issue.. Travelers appealed the Sackett issue, and the insured appealed the household exclusion issue.

In this Kline case, the Superior Court found in favor of the insured on both issues, vacated the lower court's decision and remanded the case for further proceedings. As noted, the Pennsylvania Supreme Court has declined to review the issue further.

The case involved issues surrounding whether the Plaintiff-insured was entitled to stack his UIM coverage on two vehicles that had been added to his policy prior to the accident where the carrier did not secure a new waiver of stacking form from the insured. 

Another issue was whether the Plaintiff-insured was able to further stack coverage under a policy separately issued to his mother. As such, there were inter-policy and intra-policy stacking questions at issue in this case.

With regards to the Plaintiff-insured's own policy, the Superior Court in Kline had ruled that prior precedent under the Bumbarger decision supported its decision that the Plaintiff should be permitted to stack the coverages under his own policy.

Relative to the Household Exclusion and the retroactive effect of the Gallagher decision, the Superior Court in Kline had ruled that, as a general rule, the appellate courts are required to apply the law as it exists as of the time of appellate review before the court. After applying the law of Gallagher, the Superior Court in Kline had ruled that the Gallagher case rendered the Household Exclusion invalid such that the Plaintiff-insured could pursue stacked coverage that included the coverage under his mother's policy.

Here is a LINK to the Tort Talk post on the Superior Court's decision in Kline, which post contains a Link to the Superior Court's decision.


In its one line Order denying the right to appeal, the Pennsylvania Supreme Court did not offer any explanation as to why it was declining to review these important issues that continue to cause differing decisions in the lower state and federal courts.

Anyone wishing to review this Order may click this LINK.

I send thanks to Attorney Scott Cooper for bringing this case to my attention.

Eastern District Federal Court Declines to Exercise Jurisdiction Over Sackett Issue That Is Currently Pending Before PA Supreme Court

In the case of Bransfield v. New Jersey Manufacturers Ins. Co., 2017 WL 714036 (E.D. Pa. 2/23/2017) (mem.), the Eastern Federal District Court declined to exercise jurisdiction over an unsettled Sackett-type issue and remanded the case back to state court for a decision.

In Bransfield, the Plaintiffs filed declaratory judgment action in state court asserting that the insurer owed stacked UIM coverage because when the insured/owner added a vehicle to her single-vehicle auto policy, her insurer was required to obtain new UIM coverage forms and new UIM stacking rejection forms.  According to the Opinion, the insured had rejected UM/UIM and stacking prior to the addition of the second vehicle.

The Plaintiff asserted that since the insurer did not secure new UIM coverage forms or new UIM stacking rejection forms, the Plaintiff should be entitled to stacked UIM coverage.

The Bransfield court declined to exercise jurisdiction after finding that, if it did, the court would need to make a threshold determination on an unsettled question of whether the MVFRL requires new UIM rejection forms when new vehicles are added to a policy. 

The court noted that it would have to predict whether stacked UIM is available pursuant to Sackett, which the court noted was an issue before the Pennsylvania Supreme Court in Toner v. The Travelers Home and Marine Ins. Co., 137 A.3d 583(Pa. Super. 2016), appeal granted No. 29 WAP 2016 (Pa. Sept. 8, 2016).  Part of the reason the Bransfield court declined to decide the issue was to avoid a scenario where its decision could end up conflicting with how the Pennsylvania Supreme Court may ultimately rule upon the issue in Toner.

Ultimately, the Branfield court denied the carrier’s request to reconsider the court’s prior Order remanding the matter back to state court.

Anyone wishing to review this unpublished memorandum opinion in Bransfield may click this LINK.


I send thanks to Attorney Scott Cooper of the Harrisburg, PA law firm of Schmidt Kramer for bringing this case to my attention.


UPDATE:  The Toner case refernced above settled just before the Pennsylvania Supreme Court was set to address the stacking issues raised therein.  As such, the Pennsylvania Superior Court's decision in the matter stands.

Bad Faith Claim Based Upon Sackett Dispute Rejected

In a recent decision out of the Western District Federal Court of Pennsylvania in the case of Trustgard  Ins. Co. v. Campbell, No. 16-CV-1013 (W.D. Pa. Nov. 28, 2016 Schwab, J.), the court rejected a claim of bad faith in the case where the insureds had prevailed upon  previous legal argument as to whether they were entitled to stacking under the policy.  

The insureds were asserting that the court should find that the carrier acted in bad faith on the basis of the insureds’ prevailing on their legal argument with respect to coverage.  

The court found that the bad faith claim failed because the carrier’s position, while unsuccessful on the coverage issue, was reasonable under the circumstances presented.

The court noted that “[t]he crux of the Parties’ disagreement - - whether the [vehicle] was added to the [insureds’] policy by endorsement or by the “newly acquired vehicle” clause of the policy - - was resolved in the [insureds’] favor by this Court, but the authority for both Parties’ positions was reasonably supported by the cases they respectively cited.”  

Accordingly, the court granted summary judgment to the carrier on the bad faith claim presented by the Plaintiff.  

To view this case online, please click this LINK.

 

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman, Krekstein & Harris for bringing this case to my attention through his excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog.  

Pennsylvania Supreme Court Grants Allowance of Appeal in a Sackett Type Case

In the UIM stacking case of Toner v. The Travelers Home and Marine Ins. Co., No. 170 WAL 2016 (Pa. Sept. 8, 2016), the Pennsylvania Supreme Court granted a Petition for Allowance of Appeal to address the following issue:

"Whether the Superior Court correctly determined that an insured, who signed a UM/UIM stacking waiver at the inception of a single vehicle policy, was not entitled to stack UM /UIM benefits, even though the carrier failed to obtain stacking waivers when second and third vehicles were added to the policy?"

Here is a LINK to the Tort Talk post on the Superior Court's decision in this same case, which post contains a link to the Superior Court's Opinion.


I send thanks to Attorney Craig Murphey of the Erie, PA office of McDonald, Illig, Jones & Britton, LLP for bringing this Supreme Court Order to my attention.


UPDATE:  The Toner case refernced above settled just before the Pennsylvania Supreme Court was set to address the stacking issues raised therein.  As such, the Pennsylvania Superior Court's decision in the matter stands.

Latest Take on Sackett Analysis By Pennsylvania Superior Court

Another heady Sackett-type UIM stacking opinion has been handed down by the Pennsylvania Superior Court in the form of Toner v. Travelers Home and Marine Insurance, No. 53 WDA 2015, 2016 Pa. Super. 69 (Pa. Super. March 21, 2016 Ott, Stabile, Shogan, J.J.)(Op. by Ott)(Shogan, Dissenting).

This case involved an automobile insurance policy that originally only had one vehicle on it and under which the insured had waived stacking.  The insured later added two vehicles to the policy, one at a time.  The insured was not provided with a waiver of stacking form either time a new vehicle was added.

After the insured's son was seriously injured in a motor vehicle accident, the carrier paid the UIM limits available for one vehicle.  The Plaintiff filed a declaratory judgment action asserting that the UIM carrier should have provided the insured with new waiver of stacking forms to sign and that, by not doing so the carrier was required to provide stacked coverage for all three vehicles.

The Superior Court majority affirmed the trial court's decision that new waiver forms were not required under the Sackett analysis.

Anyone wishing to tackle the Superior Court's latest take on the Sackett analysis may click this LINK Judge Shogan's Dissenting Opinion can be viewed HERE.



UPDATE:  The Toner case refernced above settled just before the Pennsylvania Supreme Court was set to address the stacking issues raised therein.  As such, the Pennsylvania Superior Court's decision in the matter stands.

Judge Mannion of Federal Middle District Court Tackles Sackett Rejection of Stacking Analysis

In his recent memorandum decision in the case of Mitchell v. Progressive Pref. Ins. Co., No. 3:14-0384 (M.D.Pa. Sept. 29, 2015 Mannion, J.), Judge Malachy E. Mannion  granted summary judgment in favor of the Defendant carrier on a stacking issue after a review of the Sackett line of cases.

As the Sackett analysis can be convoluted, a link to the decision is provided below for review.

Judge Malachy E. Mannion
Federal Middle District Court

Ultimately, the court ruled that the carrier was not required to obtain a new rejection of stacking issue when the Plaintiff added a vehicle (motorcycle) to the policy.  Judge Mannion based his decision upon the application of the continuous "after-acquired" clause contained in the policy.

Anyone wishing to review this decision in detail may click this LINK

I send thanks to Attorney David Friedman of the King of Prussia law office of Forry Ullman for bringing this case to my attention.

Western District Federal Court Applies Sackett Analysis to Find That New Waiver Forms Not Required

In the Western District Federal Court case of Allstate v. Gierlach, No. 2:13-cv-699 (W.D. Pa. Sept. 10, 2015 Cercone, J.), the court granted the Motion for Summary Judgment filed by Allstate in a declaratory judgment matter on a waiver of UIM coverage issue.  
By way of background, the policyholder rejected UIM coverage when the policy was initiated and coverage was provided on one (1) personal automobile vehicle. Thereafter, another vehicle was added and no new form was secured.

In the underlying matter, the insured’s resident son sustained fatal injuries in a motor vehicle accident.

The insured’s attorney attempted to raise a Sackett argument and asserted that a new form should have been secured when another vehicle was added to the policy. Allstate disagreed and filed the declaratory judgment action.

After reviewing the current status of the Sackett analysis under Pennsylvania law, Judge Cercone entered summary judgment in favor of Allstate. The court, relying upon the Pennsylvania Superior Court decision in the case of Smith v. The Hartford Ins. Co., 849 A.2d 277, 280-81 (Pa. Super. 2004) noted that the plain language of §1731 and 1791 under the Motor Vehicle Code evidenced the intent of the Pennsylvania legislature that, once properly waived, UIM coverage need not be reinstated absent affirmative action on the part of the insureds.

Judge Cercone noted that the holding in Smith was reinforced by the Pennsylvania Supreme Court in the Sackett case. Judge Cercone stated that the law can be summarized as establishing that "a decision to reject UIM benefits carries forward until affirmatively changed. [There is nothing in [Section] 1731 counseling otherwise.]" [citation omitted].

Judge Cercone found that due to the uinsured’s wholesale waiver of UIM benefits available under the policy, the addition of cars to the policy at a later date was not considered to be a "subsequent purchase of UIM coverage," and was, therefore, not sufficient to constitute affirmative action by the insured’s reinstate UIM coverage.

Based on this analysis, the court granted the Motion for Summary Judgment on Allstate and found that the insured’s prior valid waiver of UIM coverage carried forward when new cause was added to the policy. 

Anyone wishing to review the Allstate v. Gierlach decision may click this LINK.

Third Circuit Court of Appeals Tackles Sacket Waiver of Stacking Issue

In its recent decision in the case of Seiple v. Progressive Northern Ins. Co., No. 13-3213 (3d Cir. June 12, 2014 Fisher, Van Antwerpen, and Tashima, J.)(Op. by Fisher, J.), the Third Circuit Court of Appeals addressed a waiver of stacking clause case under the Sackett anaylsis. 

Ultimately, the dismissal of the claims for stacking benefits by the lower court was affirmed despite the lack of a waiver in a case where the insured signed a waiver of stacking and the vehicle was added in this matter under an after-acquired vehicle endorsement.  

Anyone wishing to try to wrap their head around this obtuse issue may read the Seiple opinion HERE.

 

Source:  “Court Summaries” by Timothy L. Clawges in the Pennsylvania Bar News (July 21, 2014). 

 

Third Circuit Addresses Sackett UIM Stacking Waiver Form Issue

In an opinion handed down today, May 12, 2009, in the case of State Auto Insurance v. Pro Design, No. 08-3006, the Third Circuit Court of Appeals considered the question of whether new UIM stacking waiver forms must be completed each time an insured adds a vehicle to what was originally a single vehicle policy.

In this case, State Auto Insurance Company filed suit seeking declaratory judgment that insured, who had signed waiver of intra-policy stacking at time he purchased single-vehicle insurance policy, was not entitled to stacking of underinsured motorist (UIM) coverage for accident occurring after additional vehicles were added to policy. The carrier filed a motion for summary judgment.

The District Court, James M. Munley, J., had ruled in favor of the insured, holding that addition of more vehicles to what had been single-vehicle policy was a purchase of multi-vehicle policy that required insurer to obtain waiver of intra-policy stacking. 559 F.Supp.2d 540 (M.D.Pa. 2008).

The Third Circuit reversed and remanded with instructions that summary judgment be entered in favor of the insurance carrier instead. In doing so, the Third Circuit predicted that the Pennsylvania Supreme Court would follow its 2007 Sackett v. Nationwide (Sackett II) decision, holding that the initial stacking waiver remains valid even with the addition of vehicles to a single vehicle policy. See Sackett v. Nationwide Mutual Insurance Co. (Sackett II), 940 A.2d 329, 331 (Pa. 2007).