As a matter of first impression, the Pennsylvania Supreme Court held that an insured's recovery under UM/UIM policies may be offset under 75 PA.C.S. §1722 by group/program/arrangement benefits, including disability benefits purchased.

Following an automobile accident, the insured-driver received income-loss benefits under a group plan, paid by his employer, and benefits under two personal disability policies that were purchased privately. Later, the insured-driver sought to recover income-loss benefits under an underinsured motorist policy. The Supreme Court held that the benefits the insured received under his group plan and personal disability policies fell within the group/program/arrangement classification for purposes of § 1722 and, as a result, were subject to the specified statutory offset. Section 1722 specifically directed that its prohibition and offset prescriptions applied relative to "any program, group contract or other arrangement for payment of benefits." Under the plain terms of § 1722, an insured's recovery under uninsured/underinsured policies could be offset by group/program/arrangement benefits, including disability benefits purchased in whole or in part by the insured, at least so long as those benefits were not subject to subrogation.

Case Law Alert - 3rd Qtr 2010