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HomeMy WebLinkAbout94-3266 CivilMEDIQ INCORPORATED, Plaintiff Ve JAMES A. ELLIS, USAA CASUALTY INSURANCE COMPANY, JOSHUA R. TOTH, a minor, SUSAN E. TOTH, individually and as guardian of JOSHUA R. TOTH, AETNA CASUALTY COMPANY and JAMES J. TOTH, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 94-3266 CIVIL TERM IN RE: MOTION OF PLAINTIFF FOR SUMMARY JUDGMENT AND MOTION OF DEFENDANTS JAMES A. ELLIS AND USAA CASUALTY INSURANCE COMPANY FOR SUMMARY JUDGMENT BEFORE BAYLEY and OLER, JJ. ORDER OF COURT AND NOW, this ~Lday of June, 1996, upon consideration of Plaintiff's motion for summary judgment against all Defendants, and of the motion of Defendants James A. Ellis and USAA Casualty Insurance Company for summary judgment against Plaintiff, and for the reasons stated in the accompanying opinion, both motions are DENIED. BY THE COURT, esley Oler~r., J. Clark DeVere, Esq. P.O. Box 93 Harrisburg, PA 17108-0093 Attorney for Plaintiff James G. Nealon, III, Esq. 3631 North Front Street Harrisburg, PA 17110 Attorney for Defendants James A. Ellis and USAA Casualty Insurance Company Richard A. Sadlock, Esq. 4503 North Front Street Harrisburg, PA 17110 Attorney for Defendants Susan E. and Joshua R. Toth Gary Lysaght, Esq. 1350 Fishing Creek Valley Road Harrisburg, PA 17112 Attorney for Defendant James J. Toth Todd Narvol, Esq. P.O. Box 999 Harrisburg, PA 17108-0999 Attorney for Defendant Aetna Casualty Company : rc MEDIQ INCORPORATED, Plaintiff JAMES A. ELLIS, USAA CASUALTY INSURANCE COMPANY, JOSHUA R. TOTH, a minor, SUSAN E. TOTH, individually and as guardian of JOSHUA R. TOTH, AETNA CASUALTY COMPANY and JAMES J. TOTH, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 94-3266 CIVIL TERM IN RE: MOTION OF PLAINTIFF FOR SUMMARY JUDGMENT AND MOTION OF DEFENDANTS JAMES A. ELLIS AND USAA CASUALTY INSURANCE COMPANY FOR SUMMARY JUDGMENT BEFORE BAYLEY and OLER, JJ. OPINION and ORDER OF COURT Oler, J. In this civil case a provider of medical insurance coverage for a child injured in an accident is suing various parties for failing to protect its subrogation interests when the child's claims arising out of the accident were settled. At this time, Plaintiff has filed a motion for summary judgment against all of the Defendants, and two of the Defendants have filed a motion for summary judgment against Plaintiff. For the reasons stated in this opinion, both of the motions for summary judgment will be denied. STATEMENT OF FACTS The allegations contained in Plaintiff's complaint are as follows: The Plaintiff in this action is MEDIQ, Inc.~ MEDIQ Plaintiff's complaint, paragraph 1. 94-3266 CIVIL TERM provided health care coverage to the minor's father, James Toth, and his dependents, through the MEDIQ Incorporated Health Plan.2 Defendants are James A. Ellis, the minor's cousin and driver of the car in which the minor was a passenger;3 USAA Casualty Insurance Company, which provided automobile liability insurance coverage to Ellis;4 Joshua R. Toth, the minor who suffered injuries as a result of the accident;s Susan A. Toth and James J. Toth, the mother and father of the minor;6 and Aetna Casualty Company, which provided underinsured motorist coverage to Susan A. Toth and her dependents.7 The origin of this action may be traced to an automobile accident occurring on August 19, 1993, in which Defendant Joshua Toth suffered injuries while riding as a passenger in a car driven by James Ellis.8 Susan Toth, acting on behalf of Joshua, brought 2 Id. at paragraph 10. The MEDIQ Incorporated Employee Heath Plan is, according to Plaintiff's complaint, a self-funded health and welfare plan under the Employee Retirement Income Security Act. Id. at paragraph 9. Id. at paragraphs 2, 11. Id. at paragraph 3. 5 Plaintiff's complaint, paragraphs 4, 11. Id. at paragraphs 5, 7. Id. at paragraph 6. Id. at paragraph 11. 2 94-3266 CIVIL TERM a negligence action against James Ellis.9 The claim was eventually settled for $95,000 payable by USAA, Defendant Ellis' automobile insurance company.~° After the settlement, Defendant Susan Toth, acting as Joshua's guardian, signed a general release in favor of Defendant USAA and Defendant Ellis as to all claims, including medical expenses.~ A settlement was also reached between Susan Toth, on behalf of the minor, and her insurance company, Aetna Casualty Company. The settlement consisted of $30,000, attributed to compensation for pain and suffering and general damages.~2 Susan Toth, acting as guardian of Joshua, signed a general release in favor of Defendant Aetna.~3 Before the Toths had settled any claims against Ellis and USAA or Aetna, Plaintiff had sent the Toths' attorney a letter notifying him about alleged medical subrogation rights of Plaintiff and asking for reimbursement out of any recovery that might be received from any responsible third party.TM Id. at paragraph 18. Plaintiff's complaint, paragraphs 20-22. Id. at paragraph 27. Id. at paragraph 43. Id. at paragraph 45. Plaintiff's complaint, paragraph 17. 3 94-3266 CIVIL TERM DISCUSSION Two separate motions for summary judgment have been filed in this case brought by MEDIQ -- one by MEDIQ against all Defendants, and one by Defendant James Ellis and his insurance company, USAA, against Plaintiff. We will discuss each motion in turn. Pennsylvania Rule of Civil Procedure 1035(b) provides that summary judgment shall be "rendered if the pleadings, depositions, answers to interrogatories, admissions and affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 204, 412 A.2d 466, 468 (1979). In this regard, "[t]he moving party has the burden of proving the nonexistence of any genuine issue of fact." Id. at 204, 412 A.2d at 468-69. "A fact is 'material' if its determination could affect the outcome of the case, and a dispute concerning a material fact is 'genuine' where the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Barlow v. Greemridge Oil Co., 744 F. Supp. 108, 110 (W.D. Pa. 1990), citing Anderson'v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91L. Ed. 2d 202 (1986). Additionally, "[t]he record must be examined in the light most favorable to the non-moving party." Schacter v. Albert, 212 Pa. Super. 58, 62, 239 A.2d 841, 843 (1968). "All doubts as to the existence of a genuine issue of a material fact must be resolved 4 94-3266 CIVIL TERM against the moving party." Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 204, 412 A.2d 466, 469 (1979). A court should grant summary judgment "only in the clearest of cases, where the right is clear and free from doubt." Id., 412 A.2d at 468. Motion for Summary Judqment of Plaintiff MEDIQ. In its claim against the Defendants, Plaintiff MEDIQ alleges that it never received notice of, nor did it consent to, any settlement negotiations between the Toths and either USAA and James Ellis or Aetna.~s Plaintiff alleges that the Defendants fraudulently concealed, misrepresented or hid settlement negotiations from the Plaintiff with the intention of defeating Plaintiff's subrogation rights.~6 Accordingly, Plaintiff claims it is entitled to reimbursement from the aforementioned Defendants because they settled and obtained a release without notifying Plaintiff or obtaining its consent, despite the fact that Defendants had notice of Plaintiff's medical subrogation rights.~7 The right of subrogation is not self-executing once payment has been made to - or on behalf of - the legal plaintiff and notice has been given to the defendant; rather, the subrogee must exercise Plaintiff's complaint, paragraphs 28, 46. Id. at paragraphs 35, 55. Id. at paragraphs 36, 50. 5 94-3266 CIVIL TERM reasonable diligence to protect its interest.~8 In commenting on the lack of specificity of the "reasonable diligence" standard, the Superior Court has stated: [C]ases leave us in somewhat of a quandary as to what constitutes 'reasonable diligence' .... [T]he authorities state that mere notice to the third party tortfeasor is insufficient to protect the employer's subrogation rights .... [T]he employer is not bound to intervene in the action against the wrongdoer in order to protect its claim. Where between these two extremes 'reasonable diligence' lies has not been decided as a matter of law.~9 Examining the record in the light most favorable to the Defendants, the court believes that summary judgment is inappropriate as to Plaintiff's claims regarding a subrogation lien and right to reimbursement. An examination of the record reveals that a factual dispute exists as to whether Plaintiff's actions constituted reasonable diligence in protecting its subrogation interest. In other words, this court is not in a position to determine, as a matter of law at this stage of the proceedings, that alleged communications between MEDIQ and Defendants represented sufficiently diligent behavior on the part of MEDIQ to warrant the entry of judgment in favor of Plaintiff. Motion for Summary Judqment of Defendats Ellis and USAA. In the motion of Defendant Ellis and USAA for summary judgment against ~ Travelers Ins. Co. v. Hartford Accident and Indemnity Co., 222 Pa. Super. 546, 550, 294 A.2d 913, 915 (1972). Id. at 550 n.3, 249 A.2d at 915 n.3. 6 94-3266 CIVIL TERM MEDIQ, Defendants allege that (1) Pennsylvania courts do not recognize a duty on the part of a party in the capacity of either Defendant to protect subrogation rights such as MEDIQ's; and (2) the general release executed in the Defendants' favor effectively barred the Plaintiff's subrogation claim against Ellis or USAA. In suits by or for the benefit of insurance companies against wrongdoers allegedly responsible for damage to insured property, a number of courts have stated, applied, or recognized the following general rule: [W]here, after the insurer has paid the claim, the tortfeasor, with knowledge or notice of the insurer's payment, interest, or subrogation rights, procures a full or general release by voluntarily making a settlement with the insured to which the insurer is not a party and without the consent of the insurer ... such release and settlement will not bar an action to enforce the insurer's right to subrogation .... 20 In accordance with the above rule, the Court of Common Pleas of Cambria County has stated: Where, after an insurance carrier has paid a claim to the injured party, the tortfeasor, with knowledge and notice of the carrier's payment and subrogation rights procures a full release by voluntarily making a settlement with the carrier's insured, to which the carrier is not a party and without the consent of the carrier, such release and settlement 20 Annot., Rights and Remedies of Property Insurer as Against Third-Person Tortfeasor who has Settled with Insured, 92 A.L.R.2d 102, 124 (1963). 94-3266 CIVIL TERM does not bar an action to enforce the insurance carrier's right to subrogation.2~ The settlement between an alleged tortfeasor and the insured "is regarded as having been made subject to, and with a reservation of, the rights of the insurer, and the tortfeasor is deemed to have consented to a separation of the rights of the insured and the insurer, although such rights may originally have been part of a single indivisible cause of action."2~ Examining the record in the light most favorable to the Plaintiff, the court cannot say with certainty that principles of law or the release obtained by Defendants Ellis and USAA from the Toths preclude MEDIQ from enforcing its right of subrogation against the Defendants. entered: Accordingly, the following order will be ORDER OF COURT AND NOW, this 13th day of June, 1996, upon consideration of Plaintiff's motion for summary judgment against all Defendants, and of the motion of Defendants James A. Ellis and USAA Casualty Insurance Company for summary judgment against Plaintiff, and for 2~ Donegal Mutual Ins. Co. v. Silverblatt, 36 D. & C.2d 394, 397 (Cambria County 1964). Id. at 397-98. 94-3266 CIVIL TERM the reasons stated in the accompanying opinion, both motions are DENIED. BY THE COURT, s/ J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. Clark DeVere, Esq. P.O. Box 93 Harrisburg, PA 17108-0093 Attorney for Plaintiff James G. Nealon, III, Esq. 3631 North Front Street Harrisburg, PA 17110 Attorney for Defendants James A. Ellis and USAA Casualty Insurance Company Richard A. Sadlock, Esq. 4503 North Front Street Harrisburg, PA 17110 Attorney for Defendants Susan E. and Joshua R. Toth Gary Lysaght, Esq. 1350 Fishing Creek Valley Road Harrisburg, PA 17112 Attorney for Defendant James J. Toth Todd Narvol, Esq. P.O. Box 999 Harrisburg, PA 17108-0999 Attorney for Defendant Aetna Casualty Company : rc 9