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Signs of Possible Reconsideration of Sackett v. Nationwide

On June 27, 2007, the Supreme Court of Pennsylvania, on the Court’s own initiative, issued an order inviting the Insurance Commissioner to submit an amicus curiae (“friend of the court”) brief regarding whether the Court should reconsider the recent decision in Sackett v. Nationwide. That unusual development is a strong sign that the Court will reconsider the Court’s prior decision—an extremely rare procedural step.

Sackett v. Nationwide, decided on April 17, 2007, has had major repercussions in the motor vehicle insurance industry in Pennsylvania. The Pennsylvania Supreme Court held that insureds are entitled to stack the 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.

On April 30, 2007, Nationwide applied for reargument, basically on the grounds that the Court was mistaken or uninformed as to the enormous impact of the decision. Reargument of a Supreme Court decision is rarely granted—reportedly, it has been allowed only a handful of times throughout the Court’s 285 year history. PDI, the Insurance Federation and PaTLA have asked the Court for permission to file briefs. The recent order inviting the insurance Commissioner to file a brief is, at the least, an indication that the Court is giving serious consideration to reconsideration—at best it is an indication that the Court will give the issue a fresh look, in light of better information, as to its impact.

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

Burger v. Blair Medical Associates, Inc.
2007 PA Super 164
Decided: June 6, 2007

The Pennsylvania Superior Court holds an action for the breach of physician-patient confidentiality is not merely a “re-labeling” of the tort of invasion of privacy (governed by a one-year statute of limitation), and instead is governed by a two-year statue of limitation.

Background:  Burger treated with Blair Medical Associates for a work-related injury from 1996 to 2001 and authorized Blair to release medical records to her employer’s workers compensation consultant “for the purposes of review for payment of medical expenses incurred due to work-related injury or illness.” Burger alleged that Blair breached physician-patient confidentiality by releasing records revealing Burger’s marijuana and prescription medication use, although these records allegedly had no relationship to the work injury. Her employer, then terminate her employment, based on the drug use information in the records.

Blair asserted that the one-year statute of limitations for privacy actions barred Burger’s lawsuit. The trial court held that Pennsylvania recognizes a separate action for breach of physician-patient confidentiality which is governed by a two-year limitations period applicable to tortious conduct in general.

Holding:  The Superior Court holds that there is a cause of action for breach of physician-patient confidentiality which is separate from an invasion of privacy claim. However, the court then considers whether each cause of action can be sufficiently distinguished in a substantive manner such that different statutory periods of limitation should apply. The court reviews the different species of invasion of privacy and concludes that breach of physician-patient confidentiality is not merely a “re-labeling” of the tort of invasion of privacy, and is governed by a two-year statue of limitation.

Any questions regarding this case can be directed to Paul Walker at 717-441-7061 (pwalker@tthlaw.com).

Attix v. Lehman
2007 Pa.Super. 153, 2007 Pa.Super. LEXIS, 1542
(May 31, 2007)

Pennsylvania Rule of Civil Procedure 237.3(b), pertaining to relief from a Judgment of Non Pros or by Default, does not require the litigant seeking relief to provide a reasonable excuse for the late filing, as long as the proposed Complaint or Answer states a meritorious claim or defense.

This Philadelphia County case involved an accident between Plaintiff Jeffrey Attix, who was riding a bicycle, and Defendant Patricia Lehman who was operating a motor vehicle. The case was instituted by a Writ of Summons, with a Complaint filed on October 27, 2005. On April 17, 2006, Plaintiffs served Defendant with a Notice of Intention to Take Default Judgment (10 day notice) if Defendant did not answer the Complaint within 10 days. Thereafter, on June 27, 2007, Plaintiffs filed a Praecipe for Entry of Default Judgment, which was entered by the Trial Court the same day. On July 6, 2006, Defendant filed a Petition to Open the Default Judgment, which was denied by the Trial Court.

On appeal to the Superior Court, Plaintiffs argued that Defendant failed to provide a reasonable excuse for her delay in timely answering the Complaint and that the Default should stand. In reversing the denial of the Petition to Open the Default Judgment, the Superior Court held that Pennsylvania Rule of Civil Procedure 237.3(b) eliminates the common law “reasonable excuse” requirement, as long as the Petition to Open Default Judgment is filed within 10 days of the Entry of Default Judgment, and the Petition to Open Default Judgment states a meritorious claim or defense.

If you have any questions, or wish to discuss this case, please call Jody A. Mooney at (610) 332-7013 or email her at jmooney@tthlaw.com.

Fidelity National Title Insurance Company of New York v. United Settlement Services, Inc.
2007 PA Super 147
Decided May 24, 2007

A discovery order compelling a wife to answer questions pertaining to an alleged fraud involving her husband, which may impinge on spousal privilege, is not an appeallable order where the court would have to determine the merits of the underlying fraud claim to determine if the claimed privilege applies.

In an underlying fraud action, a wife appealed the Trial Court’s order compelling her to answer questions regarding communications between her and her husband. The wife argued that the spousal immunity privilege applied because any fraud had ceased as of a certain date, and any communications after that date were protected by the privilege. The Plaintiff asserted that the alleged fraud continued beyond that date, and communications after that date included efforts to conceal the alleged fraud. The Superior Court noted that spousal privilege does not apply to communications made to perpetuate a fraud. Thus, the Court would have to examine the merits of the fraud allegations and the date the fraud allegedly ceased, in order to determine whether the privilege applied. Accordingly, the issue of whether the privilege applied was not separable from the underlying claim and the Trial Court’s order was not appeallable as a collateral order.

Any questions regarding this case can be directed to Corey J. Adamson at 717-255-7639 or cadamson@tthlaw.com.

Zappile v. Amex Assurance Company
2007 Pa.Super. 171
Decided: June 8, 2007

Pennsylvania Superior Court reverses bad faith verdict against insurer that arguably undervalued an underinsured motorist claim.

Background: Mr. Zappile was struck and injured by a car while walking his dog. He settled his underlying claim with the driver for her coverage limit and presented a claim to Amex demanding the full limit of his underinsured motorist coverage, $150,000. Amex evaluated the total claim value as $32,000, which was offered promptly, but no further offers were made prior to arbitration. The arbitration award was $105,000.

Mr. Zappile and his wife then sued Amex alleging that the company undervalued the case and forced them into arbitration instead of negotiating in good faith. The Zappiles retained an insurance expert who offered several opinions at trial with respect to the insurer’s conduct, including that Amex unnecessarily treated this “first party” case as adversarial litigation, that Amex should have tendered un-reimbursed lost wages and its reserve as undisputed amounts due, and that Amex did not make a partial payment despite the fact that its claims manual dictates that partial payments should be made.

The Trial Court accepted the Zappile’s position and found that they had proven bad faith by clear and convincing evidence. The judge awarded the Zappiles $75,000 in damages.

Holding: The Superior Court reversed, holding that the Plaintiffs’ expert was wrong in several key respects, including each of the areas mentioned above. The Court chastised the parties for not communicating better and remarked that the case had been undervalued by Amex, but not out of ill will or without reasonable basis. This case dispels the myth that UM/UIM claims are non-adversarial in nature and clarifies when partial payments are due and not due on disputed claims.

Any questions regarding this case can be directed to Kevin McNamara at 717-237-7132 or kmcnamara@tthlaw.com.