At the urging of the Insurance Department, the Pennsylvania Supreme Court has agreed to reconsider Sackett v. Nationwide. As discussed in prior eNotes, Sackett v. Nationwide, decided on April 17, 2007, has had major repercussions in the Pennsylvania motor vehicle insurance industry, on the issue of stacking.

In Sackett, the Court held that insureds are entitled to stack UM/UIM coverages on all vehicles, despite an otherwise valid rejection of stacking, if the first named insured did not sign a new rejection form upon the addition of vehicles that increases the number of vehicles under the policy. Insurers immediately began studying ways to deal with the Court’s ruling—ranging from payment of substantial additional benefits on recent claims, to mass mailings of updated selection forms, to withdrawal from motor vehicle insurance business in the state.

In the October 16, 2007 Order, which granted Nationwide’s application for reargument, the Court indicated that it would reconsider the matter based on the prior briefs and arguments of Nationwide and amici curiae (“friends of the court,” including the Insurance Department, PDI and PaTLA), except that the Sacketts would be allowed to respond to the substantive arguments made by Nationwide and the Insurance Department in support of the request for reconsideration.

The author of the Sackett decision, Justice Baldwin, joined by Chief Justice Cappy – (neither of whom will remain on the Court after this year) dissented emphatically on the grant of reargument. Justice Baldwin criticized the majority for giving Nationwide “another bite at the apple,” noting that its “doomsday prognostications,” relating primarily to commercial coverage, may be relevant in the pending Everhart v. PMA appeal, but are not relevant in Sackett. (In Everhart, the Superior Court held, generally, that “fleet” coverage cannot be stacked at all.)

We are concerned that the Supreme Court ultimately may pass up this opportunity to correct the ill‑informed Sackett decision, but instead will compromise by leaving Sackett intact, while affirming the Superior Court decision in Everhart. Such a compromise might be based on a belief that the worst “Sackett problems” could be solved in that fashion, while avoiding the discomfort associated with the Court actually “reversing itself” in Sackett.

Any questions regarding this case can be directed to Peter Speaker at 717-237-7644 or pspeaker@tthlaw.com.