{"id":1832,"date":"2024-04-10T14:59:27","date_gmt":"2024-04-10T18:59:27","guid":{"rendered":"https:\/\/mccormickpriore.com\/?p=1832"},"modified":"2024-04-10T14:59:27","modified_gmt":"2024-04-10T18:59:27","slug":"collateral-damage-heads-i-win-tails-you-lose","status":"publish","type":"post","link":"https:\/\/mccormickpriore.com\/2024\/04\/collateral-damage-heads-i-win-tails-you-lose\/","title":{"rendered":"Collateral Damage: Heads I Win, Tails You Lose"},"content":{"rendered":"

The Double Recovery \u00a7 1722 Forgot<\/strong><\/p>\n

In personal injury cases seeking damages, questions arise about whether a Plaintiff can plead, prove, and recover damages that were already paid for by another source. Normally you would have to worry about the application of the \u201ccollateral source rule\u201d that prevents the fact finder from hearing that certain damages were already paid for and allows for the possibility of double payment. But the collateral source rules is not absolute. 75 Pa. C.S. \u00a7 1722 prohibits such double recovery, and you can offset any such payments from collateral sources from your end-of-the-day bill. But is it that simple\u2014have the tort reform advocates won a complete victory? Unfortunately, \u00a7 1722 and related double recovery principles are not always so simple. Below, we will discuss how the collateral source rule in Pennsylvania applies to cases in general and the differences in how it applies in the automobile context.<\/p>\n

Pennsylvania Collateral Source Rule and \u00a7 1722<\/strong><\/p>\n

Pennsylvania recognizes the collateral source rule under its common law. The collateral source rule is a plaintiff-friendly rule that allows a plaintiff to collect \u201cthe damages caused by the tortfeasor\u2019s misconduct regardless of compensation the victim has received from other sources.\u201d Denardo<\/em> v. Carneval<\/em>, 444 A.2d 135, 140 (1982). <\/em>The rule only excludes evidence of those benefits that were already paid by a collateral source. Consequently, defendants cannot offset claimed damages by a plaintiff\u2019s earlier receipt of benefits from another source paying for the same injuries which are alleged to have been caused by the defendant. Simmons v. Cobb,<\/em> 906 A.2d 582, 585 (Pa. Super. Ct. 2006).<\/em><\/p>\n

In the insurance arena, such application of the collateral source rule has the impact of increasing insurance premiums and providing plaintiffs with a windfall that could exceed the value of a loss. So, seeking to limit automobile insurance premiums in Pennsylvania, the Pennsylvania General Assembly enacted the Pennsylvania Motor Vehicle Financial Responsibility Law in 1984, which was then substantially amended in 1990. The text at issue is as follows:<\/p>\n

\u201cIn any action for damages against a tortfeasor, or in any uninsured or underinsured motorist proceeding,\u00a0arising out of the maintenance or use of a motor vehicle, a person who is eligible to receive benefits under the coverages set forth in this subchapter, or workers’ compensation, or any program, group contract or other arrangement for payment of benefits as defined in section 1719 (relating to coordination of benefits) shall be precluded from recovering the amount of benefits paid or payable under this subchapter, or workers’ compensation, or any program, group contract or other arrangement for payment of benefits as defined in section 1719.<\/em><\/p>\n

75 Pa. C.S. \u00a7 1722 (emphasis added). Section 1722 of the MVFRL abrogates the common law collateral source rule. This means in the context of automobile accidents, there is no collateral source rule so there is no double recovery by automobile accident victims. The provision works in tandem with 75 Pa. C.S. \u00a7 1720, limiting the right of subrogation for a collateral source\u2019s recovery. Therefore, plaintiffs are prevented from trying to collect damages that they have already received benefits under another policy. <\/p>\n

Even still, there are some exceptions to this. Due to federal preemption issues, plaintiffs can \u201cdouble recover\u201d Medicare, ERISA, and Social Security benefits because of federal preemption. See<\/em>, e.g.<\/em>, Klinefelter v. Faultersak<\/em>, 31 F.Supp.2d 457, 459 (E.D. Pa. 1998) (\u201c[42 U.S.C. \u00a7 1395y(b)(2)(A)(ii)] preserves Medicare’s right to reimbursement when and if medical benefits are paid by a private insurer. Medicare thus also preempts \u00a7 1722.\u201d). Part of this rationale likely stems from the fact that Medicare and other federal programs have rights of reimbursement from insurers and other parties, unlike non-federal programs whose right of subrogation is barred by \u00a7 1720. See also In re Avandia Mktg.<\/em>, 685 F.3d 353, 367 (3d. Cir. 2012) (\u201c[Medicare Advantage Organizations] have the same right to recover as the Medicare Trust fund does.\u201d). In other words, by virtue of having to reimburse these types of payments the plaintiff avoids \u201cdouble recovery\u201d and, in turn, equitable consideration compel the ability to put forth these benefits before a fact finder due to the plaintiff\u2019s reimbursement obligations.\u00a0<\/p>\n

Workers\u2019 Compensation Liens and Household UM\/UIM Policies<\/strong><\/p>\n

Yet we warn of one less obvious, more convoluted, exception wrought by the unforeseen impact of statutory amendments. In 1993, the Pennsylvania General Assembly repealed both \u00a7 1720 and \u00a7 1722 as it relates to workers\u2019 compensation benefits. So, for liability lawsuits, the plaintiff can plead, prove, and recover medical and wage loss paid for by a workers\u2019 compensation carrier. Additionally, if the plaintiff is injured in a work vehicle insured with uninsured or underinsured motorist (UM\/UIM) coverage, the plaintiff can likewise plead, prove, and recover the medical and wage loss expenses paid for by the workers\u2019 compensation carrier.<\/p>\n

For household UM\/UIM policies, however, the logic behind the framework falls short. In Standish v. American Mfrs. Mut. Ins. Co.<\/em>, 698 A.2d 599, 601 (Pa. Super. 1997), the Pennsylvania Superior Court held that a workers compensation carrier’s subrogation lien does not apply against the proceeds of an uninsured motorist provision of an injured worker’s personal automobile insurance policy because the plaintiff exclusively paid premiums for their insurance and the automobile benefits received were not duplicative with the workers compensation benefits received by the plaintiff. Id.<\/em> at 601. Citing its prior precedent in Rhodes v. Automotive Ignition Company<\/em>, 275 A.2d 846 (1971) and 77 P.S. \u00a7 671 (concerning an employer\u2019s right of workers\u2019 compensation subrogation), the Court distinguished subrogation against third party tortfeasors and uninsured motorist benefits of a given employee-plaintiff\u2019s personal policy. The Standish<\/em> Court held that where the uninsured motorist coverage was the employee’s personal automobile insurance policy, which was maintained exclusively by him, any award of benefits pursuant thereto was in the nature of an accident policy for the benefit of the insured rather than a liability policy covering the uninsured motorist. Thus, this personal policy was not subject to the statutory subrogation rights for worker\u2019s compensation liens.\u00a0 Reliance Insurance Company v. Richmond Machine Co.<\/em>, 309 Pa. Super. 430 (1983); American Red Cross v. W.C.A.B.<\/em>, 745 A.2d 78 (Pa. Cmwlth. 2000).<\/p>\n

You might think that because of the lack of workers\u2019 compensation subrogation in the household UM\/UIM policy context that a plaintiff cannot \u201cdouble recover\u201d benefits paid by a workers\u2019 compensation carrier. Despite this policy rationale, the Pennsylvania Superior Court has held otherwise. In Ricks v. Nationwide Ins. Co.<\/em>, 879 A.2d 796 (Pa. Super. 2005). In Ricks<\/em>, the plaintiff received workers compensation and UM benefits under his employer\u2019s insurance and was also seeking UM benefits from his own policy which was denied coverage by the defendant in the case. Id.<\/em> at 798. An arbitration panel did not allow the plaintiff to plead, prove, and recover the amount of workers\u2019 compensation benefits he received apparently due to the lack of subrogation per Standish<\/em>. Id.<\/em> Nonetheless, despite the sensible subrogation-based rationale, the Superior Court reversed on the basis that the revised section 1722 expressly does not include workers\u2019 compensation benefits under its exception to the collateral source rule and permitted this collateral-source \u201cdouble recovery.\u201d<\/p>\n

Conclusion <\/strong><\/p>\n

The above is just a brief overview of the complexities of the collateral source rules and its implications in Pennsylvania tort and insurance lawsuits. The applications of the collateral source rule in automobile and non-automobile accidents are vastly different in Pennsylvania. These differences implicate the types of evidence pleaded and recovery in personal injury cases. If you or your insured is sued for a personal injury claim in an automobile or non-automobile context, consider retaining Pennsylvania counsel to guide you in your legal process.<\/p>\n

\n

For additional information, contact Christopher S. Regan, Esq. and\/or Glen Shikunov, Esq.<\/p>\n

This article was prepared by McCormick & Priore, P.C. to provide information on recent legal developments of interest to our readers.\u00a0 This publication is in no way intended to provide legal advice or to create an attorney-client relationship.\u00a0 All Rights Reserved. This article may not be reprinted without the express written permission of McCormick & Priore, P.C.<\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Double Recovery \u00a7 1722 Forgot In personal injury cases seeking damages, questions arise about whether a Plaintiff can plead, prove, and recover damages that were already paid for by another source. Normally you would have to worry about the application of the \u201ccollateral source rule\u201d that prevents the fact finder from hearing that certain […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[13],"tags":[],"_links":{"self":[{"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/posts\/1832"}],"collection":[{"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/comments?post=1832"}],"version-history":[{"count":1,"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/posts\/1832\/revisions"}],"predecessor-version":[{"id":1833,"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/posts\/1832\/revisions\/1833"}],"wp:attachment":[{"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/media?parent=1832"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/categories?post=1832"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mccormickpriore.com\/wp-json\/wp\/v2\/tags?post=1832"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}