On December 5, 2023, the Pennsylvania Superior Court issued a published decision, Nationwide Property and Casualty Insurance Company v. Castaneda & Castaneda, — A.3d —- (Pa. Super. Ct. 2023), holding that automobile insurers must provide first-party benefits unless those benefits are excluded from coverage under 75 Pa. C.S. § 1718. In Castaneda, the claimant was operating her mother’s Nationwide-insured vehicle when another driver rear-ended her vehicle. Although the claimant was a permissive user of her mother’s vehicle, the claimant did not have a valid driver’s license at the time of the collision. The Nationwide automobile insurance policy had an exclusion for first-party medical benefits if the claimant did not carry a valid driver’s license and was neither a named insured nor a resident relative of the named insured. Because the claimant had no valid driver’s license, Nationwide denied the claim. The claimant challenged the validity of the exclusion, arguing that first-party medical benefits were mandatory under the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”). Following the denial, Nationwide filed a declaratory judgment action seeking judicial affirmation that it did not owe benefits. The trial court ruled for Nationwide, and the claimant appealed.
On review, the Pennsylvania Superior Court examined the history of “No-Fault” automobile insurance in Pennsylvania, currently embodied in 75 Pa. C.S. § 1711, where a minimum of $5,000 in first party medical benefits coverage is required. Despite this requirement, the Court explained that the General Assembly set forth a list of circumstances where the insurer “shall” exclude first party benefit coverage, including when the claimant is committing a felony or evading police. 75 Pa. C.S. § 1718. Importantly, however, there was no “unlicensed driver” exclusion contemplated within 75 Pa. C.S. § 1718.
Next, the Court distinguished first-party medical coverage from other first-party coverages and UM/UIM coverage. Acknowledging that the Pennsylvania Courts previously held that the MVFRL does not set forth a discrete list of permissible exclusions, the Court found that those cases only applied to cases concerning non-mandatory coverages, such as UM/UIM coverage, and not mandatory first-party medical coverage. Instead, the MVFRL dictated that first party medical coverage was not optional but mandatory for all Pennsylvania automobile policies. The Court also expressed concern over the use of exclusions to erode an insurer’s obligation to provide first-party medical benefits under 75 Pa. C.S. § 1711 if the insurer could use exclusions not contemplated under 75 Pa. C.S. § 1718 to deny coverage. In conclusion, the Court held that the claimant was “entitled to coverage for her medical expense claim unless one of the limited exclusions in Section 1718 applied to her claim” and reversed the trial court accordingly. The decision, if not otherwise reversed by the Supreme Court, may have significant industry implications by narrowing the permissible grounds for denial of first party medical benefits and isolating those grounds to only those enumerated in the statutory provisions of the Motor Vehicle Code.
The Castaneda decision can be found here.
For additional questions, please contact Glen Shikunov, Esq., Robert J. Cahall, Esq., and/or Scott Tredwell, Esq.
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