SMITH v. PROGRESSIVE SPECIALTY INSURANCE COMPANY

Filing 44

MEMORANDUM OPINION AND ORDER denying the 36 Motion for Partial Summary Judgment filed by Defendant Progressive Specialty Insurance Company. Signed by Judge Terrence F. McVerry on 02/17/16. (mcp)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
)
)
)
Plaintiff,
) 2:15-cv-528
)
v.
)
)
PROGRESSIVE SPECIALTY INSURANCE
)
COMPANY,
)
)
Defendant.
)
MEMORANDUM OPINION AND ORDER OF COURT
FRANCINE SMITH,

Pending before the Court is a MOTION FOR PARTIAL SUMMARY JUDGMENT
(ECF No. 36) filed by Defendant Progressive Specialty Insurance Company (“Progressive”),
with a brief in support (ECF No. 38). Plaintiff has filed a response (ECF No. 40) and brief in
opposition (ECF No. 41); Progressive has filed a reply (ECF No. 43). The factual record has
been developed via Progressive’s Concise Statements of Material Facts and accompanying
exhibits (ECF No. 37).1 Accordingly, the motion is ripe for disposition.
I. Background
The following background is taken from the Court’s independent review of the partial
motion for summary judgment, the filings in support and opposition thereto, and the record as a
whole.
On February 23, 2012, Plaintiff was a pedestrian walking in the parking lot of a Shop-NSave when she was struck by a motor vehicle operated by an underinsured motorist, John
Cameron. Plaintiff sustained serious injuries as a result. At this time, Plaintiff maintained two
1. Plaintiff did not file a responsive concise statement as required by the Local Rule of Court. See LCvR 56.C.1
(“[T]he opposing party shall file . . . [a] separately filed concise statement, which responds to each numbered
paragraph in the moving party’s Concise Statement of Material Facts . . . .”). Be that as it may, the Court notes that
the relevant fact(s) – i.e., that Plaintiff applied for and received Social Security Disability benefits due to injuries she
sustained in the accident – are not in dispute.

automotive insurance policies issued by Progressive, which included stacked underinsured
motorist (“UIM”) coverage.
After the accident, Plaintiff claimed that she was unable to return to work and applied for
Social Security Disability benefits. The Social Security Administration deemed Plaintiff totally
disabled from employment and awarded her benefits which total $1,174.00 per month. Plaintiff
also reached a settlement with Cameron’s insurance carrier following the accident for $100,000 –
the policy limits – to which Progressive waived its right to subrogation and consented to
settlement.
Plaintiff thereafter asserted a UIM claim against her Progressive automotive insurance
policies for damages, including for lost wages due to her permanent disability.

This suit

followed.
Plaintiff commenced this action by filing a Complaint in the Court of Common Pleas of
Allegheny County, Pennsylvania on March 23, 2015, asserting a breach of contract and a bad
faith claim against Progressive. Progressive removed the action to this Court on April 22, 2015.
Progressive has since moved for partial summary judgment, to which the Court now turns.
II. Standard of Review
Summary judgment must be granted when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). The movant must identify those portions of the record which demonstrate the
absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). A material fact is one “that might affect the outcome of the suit under the governing
law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

2

To withstand summary judgment, the non-movant must show a genuine dispute of
material fact by “citing to particular parts of materials in the record, including depositions,
documents, electronically stored information, affidavits or declarations, stipulations (including
those made for purposes of the motion only), admissions, interrogatory answers, or other
materials.” Fed. R. Civ. P. 56(c)(1)(A); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586–87 (1986). “The mere existence of some factual dispute between the parties will
not defeat an otherwise properly supported motion for summary judgment.” Anderson v, 477
U.S. at 247-48. Rather, a dispute is “genuine” only if “there is sufficient evidence favoring the
nonmoving party for a jury to return a verdict for that party.” Id. at 249.
III. Discussion
Progressive contends that, under Pennsylvania law, “Plaintiff is precluded from
recovering UIM benefits for lost wages in the amount of the Social Security disability benefits
she now receives” (in other words, Progressive seeks an offset). In response, Plaintiff argues that
Social Security disability benefits are a collateral source which cannot reduce the UIM benefits
that are otherwise payable and characterizes Progressive’s position as an unwarranted extension
of current Pennsylvania law. For the reasons that follow, the Court will deny Progressive’s
partial motion for summary judgment.
“The Pennsylvania General Assembly enacted the Motor Vehicle

Financial

Responsibility Law (‘MVFRL’), 75 Pa.C.S. §§ 1701-99, ‘in large part’ to check the rapidly
rising cost of automobile insurance.” Rupert v. Liberty Mut. Ins. Co., 291 F.3d 243, 246 (3d Cir.
2002). The underlying aim of the statute is, however, “‘to provide broad coverage to assure the
financial integrity of the policyholder.’” Id. (quoting Danko v. Erie Ins. Exch., 630 A.2d 1219,
1222 (Pa. Super. Ct. 1993)). As such, “Pennsylvania courts have held that ‘the MVFRL is to be

3

construed liberally to afford the greatest possible coverage to injured claimants.’” Id. (quoting
Sturkie v. Erie Ins. Group, 595 A.2d 152, 157-58 (Pa. Super. Ct. 1991)). At the same time,
courts are to refrain “from rewriting the MVFRL under the pretext of pursuing its spirit.” Id.
(citations omitted).
The MVFRL includes an offset provision that precludes double collection of benefits in
certain instances. See 75 Pa. Cons. Stat. § 1722; Smith v. Rohrbaugh, 54 A.3d 892, 895 (Pa.
Super. Ct. 2012). Section 1722 of the MVFRL – entitled “Preclusion of recovering required
benefits” – provides as follows:
In any action for damages against a tortfeasor, or in any uninsured or
underinsured motorist proceeding, arising 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 1719.2
Id. (emphasis added). In Progressive’s view, the statutory language – “any program, group
contract or other arrangement for payment of benefits” – embraces Social Security disability

2. “The ‘subchapter’ referred to in Section 1722 is Subchapter B, regarding first-party benefits.” Smith v.
Rohrbaugh, 54 A.3d 892, 895 (Pa. Super. Ct. 2012). As for the cross-reference to section 1719, it provides as
follows:
(a) General rule.--Except for workers’ compensation, a policy of insurance issued or delivered
pursuant to this subchapter shall be primary. Any program, group contract or other arrangement
for payment of benefits such as described in section 1711 (relating to required benefits) 1712(1)
and (2) (relating to availability of benefits) or 1715 (relating to availability of adequate limits)
shall be construed to contain a provision that all benefits provided therein shall be in excess of and
not in duplication of any valid and collectible first party benefits provided in section 1711, 1712 or
1715 or workers’ compensation.
(b) Definition.--As used in this section the term “program, group contract or other
arrangement” includes, but is not limited to, benefits payable by a hospital plan corporation or a
professional health service corporation subject to 40 Pa.C.S. Ch. 61 (relating to hospital plan
corporations) or 63 (relating to professional health services plan corporations).
75 Pa. Cons. Stat. § 1719 (emphasis in original).

4

benefits, and therefore, requires that any award to Plaintiff for lost wages be reduced by an
amount corresponding to same. The Court does not agree.
In Tannenbaum v. Nationwide Ins. Co., the Supreme Court of Pennsylvania interpreted
the scope of the MVFRL’s offset provision, addressing “whether Appellee’s group plan and
personal disability policies are group/program/arrangement vehicles for payment of benefits
within the meaning of Section 1722.” 992 A.2d 859, 861 (Pa. 2010). There, Appellee “sought to
recover income-loss benefits under the [UIM] provisions of a vehicle policy issued by Appellant,
Nationwide Insurance Company (‘Nationwide’). Nationwide countered that it was entitled to
offset the benefits Appellee received under his group plan and personal disability policies.” Id.
The Tannenbaum Court ultimately held “that the relevant disability benefits received by
Appellee fall within the group/program/arrangement classification for purposes of Section
1722.” Id. at 866. The Court first rejected Appellee’s position that the General Assembly
“contemplated that Section 1772’s reach would be limited to health insurance benefits.” Id. at
865. Next, the Court focused on the relevant express language of the governing statute: “‘[I]n
any [UM/UIM] proceeding, . . . a person who is eligible to receive benefits under . . . any
program, group contract or other arrangement for payment of benefits . . . shall be precluded
from recovering the amount of [such] benefits[.]’” Id. (quoting 75 Pa. Cons. Stat. § 1722)
(alterations and emphasis in original)). In doing so, the Court explained, “[o]nce it is accepted
that

the

relevant

income-loss

benefits

received

by

Appellee

fall

within

the

group/program/arrangement classification, it becomes apparent that they are subject to the
specified statutory offset.” Id. Thus, this Court must decide whether Plaintiff’s Social Security
disability benefits qualify as a group/program/arrangement under Section 1772.

5

The Superior Court of Pennsylvania addressed this question in Browne v. Nationwide
Mut. Ins. Co., 674 A.2d 1127 (Pa. Super. Ct. 1996). There, the Court stated as follows:
Because Social Security disability benefits were never subject to subrogation they
do not fall within the purview of Sections 1720 and 1722. Historically they have
not been viewed as an item for which a traditional tort award would be reduced.
Had the legislature wished to include Social Security disability payments within
the preclusions of § 1722 it could have specifically named these payments, as was
done with workers’ compensation benefits. Section 1722 was obviously designed
to refer to only those benefits which are specifically recoverable as first party
benefits under the MVFRL, 75 Pa.C.S.A. § 1701 et seq., or which had historically
been subject to subrogation. Social Security disability payments do not fit within
either category.
Id. at 1129. Tannenbaum did not expressly disavow this rationale. See 992 A.2d at 862. Rather,
it disapproved of Browne based upon the “paid-for litmus” the Superior Court referenced in
holding that where benefits were paid for / earned by an insured through his employment, there
should be no offset. See id. at 868-69; see also id. at 862 (noting that Browne referenced
Panichelli’s contribution-based reasoning but advanced a primary rationale resting on the
recognition that such benefits were not subject to subrogation in the first instance).
As such, the Court cannot agree with Progressive’s novel theory that, under Tannenbaum,
any award to Plaintiff for lost wages must be reduced to the extent that she receives Social
Security disability benefits. Accordingly, the Court will deny Progressive’s partial motion for
summary judgment.
IV. Conclusion
For the reasons hereinabove stated, the Court will deny the partial motion for summary
judgment. An appropriate Order follows.

McVerry, S.J.

6

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
)
)
)
Plaintiff,
) 2:15-cv-528
)
v.
)
)
PROGRESSIVE SPECIALTY INSURANCE
)
COMPANY,
)
)
Defendant.
)
ORDER OF COURT
FRANCINE SMITH,

AND NOW, this 17th day of February, 2016, in accordance with the foregoing
Memorandum Opinion, it is hereby ORDERED, ADJUDGED and DECREED that the
MOTION FOR PARTIAL SUMMARY JUDGMENT (ECF No. 36) filed by Defendant
Progressive Speciality Insurance Company is DENIED. IT IS FURTHER ORDERED that a
Post-Discovery Status Conference / Pretrial Conference in this matter is hereby scheduled on
Wednesday, March 2, 2016 at 1:30 p.m.

BY THE COURT:
s/Terrence F. McVerry
Senior United States District Judge

cc:

All Counsel of Record