Limited Tort Proof: Get the Signed Waiver Election Form!!

By James D. Hilly, Esq.*

Pennsylvania’s Motor Vehicle Financial Responsibility Law (PAMVFRL) (75 Pa.C.S. § 1705) provides that a named insured may elect the “limited tort option,” subject to certain exceptions. An insured can choose to limit the right to sue for noneconomic damages (i.e., pain and suffering) in exchange for a reduction of premium. Choosing this option binds the insured in both liability and UM/UIM claims, and it binds all other resident relative household members of the insured under the policy.

In order to elect the limited tort option, a prescribed waiver form must be signed. The policy declarations issued for the policy will then indicate that the coverage has been issued with a limited tort election, and the premium discount will reflect that.

For a number of years, the limited tort provision operated as intended by the Pennsylvania legislature, and many plaintiffs attorneys refused to take limited tort cases. Production and introduction of the policy declarations reflecting limited tort selection and premium discount were routinely accepted in support of the limited tort application of the verbal threshold. Unfortunately, the courts have somewhat watered down the “serious injury” provision of the limited tort defense by making it largely a question for the fact finder. See, 75 Pa.C.S. § 1705(d)(person who selected limited tort option may maintain action for noneconomic loss when he or she has sustained “serious injury”). This has encouraged more claims by attorneys who believe they will at least get to a fact finder on the limited tort issue. Moreover, plaintiffs counsel have increasingly objected to the prima facia proof of limited tort coverage reflected in the declarations, instead, insisting upon proof of the signed waiver form to sustain the burden of the defense of limited tort. Although, as suggested below, there is still room to argue that prima facia proof of the declarations showing limited tort and premium discount (particularly as to the named insured) should shift the burden to the plaintiff to prove the right to bring a noneconomic damages claim, the best practice in a limited tort case is to nip the argument in the bud by obtaining the signed waiver form at the earliest possible stage in the case. If a first-party carrier insists on a subpoena or authorization, a spoliation-type letter should be sent to the carrier to demand preservation of the signed waiver form for later litigation purposes.

The issue of burden of proof is a significant one. Essentially, a claimant receiving the limited tort premium discount who then testifies that he/she “forgets” or “does not understand” the limited tort selection in later litigation is having his cake and eating it too. Obviously, therefore, if the signed waiver is obtained early on, a plaintiffs attorney may reconsider prosecution of the claim. However, even where the signed waiver is unavailable from the first-party carrier, there may remain some argument, although a weak one, that might shift the burden of proof to the plaintiff upon proof of the declarations and premium discount.

One important practice reminder is that a limited tort defense is an affirmative defense that is waived if not raised in new matter. Pa.R.C.P. 1030; See, Santana v. Wentzien, 26 Pa. D&C 4^th 22, 25--33 (Bucks Co., June 19, 1995) (holding that New Jersey’s verbal threshold was waived when it was not raised in the new matter). Because any statutory defense, such as limited tort, under either Pennsylvania law or the law of another state is likely to be considered waived when not raised, counsel should always raise the affirmative defense of a limited tort (or verbal threshold) in the new matter.

Plaintiff attorneys have argued that, absent the actual signed waiver form, a plaintiff can benefit by a convenient lack of recall on the issue. Their arguments are somewhat difficult to overcome:

• Section 1705 of the statute, “Election of Tort Options,” provides that the first-party insurer must send two notices to the named insured to select a choice of tort option. If the named insured does not return a choice within 20 days of either of these notices, the named insured and those bound by the policy “are conclusively presumed to have chosen the full tort option.” The notices must advise that if no selection is made, those bound under the policy are conclusively deemed to be “full tort.” Therefore, the default setting in the absence of a statutory waiver actually made by the named insured is full tort, and only proof of a knowing waiver will result in a limited tort “selection.”
• Plaintiffs will argue that lack of a signed waiver form would essentially require “proof of a negative” as to the non-existence of a limited tort selection.
• The party raising an affirmative defense has the burden of proving that defense. See, DiLucia v. Clemens, 541 A.2d 765, 768 (Pa. Super. 1988).
• Given the “default setting” of the statute for full tort, it would be illogical to hold that a plaintiff has the obligation to prove that full tort status was selected in the absence of signed forms. (Donnelly v. Bauer, 720 A.2d 447 (Pa.1998)(the Pennsylvania Supreme Court refused to invalidate an actual signed limited tort selection form for lack of required cost comparison on the basis that the appellants had actually signed a waiver form).

Disappointingly, therefore, the third-party case can be determined partially on this very crucial issue by a first-party carrier. The third-party defendant has no real control over the accuracy and completeness of the record supporting the defense.

In an analogous situation involving a signed waiver form for “stacked” UIM coverage, a Philadelphia trial court held that, where the carrier could not produce a signed waiver form, it could not prevail. This decision was reached even though the declarations page stated “non-stacked” coverage. See George v. AIG Ins. Co., C.C.P. Philadelphia, PICS No. 030720.

Consequently, on behalf of defendants, the only apparent argument is the lack of any specific case law requiring production of the actual signed waiver form to prove the limited tort defense. Tort defendants should argue that prima facia proof of the declarations and premium discount, particularly as to a “forgetful” named insured, creates a credibility issue and constitutes some evidence of the defense sufficient to allow a fact finder to determine whether a limited tort selection was or was not made. Testimony will be necessary to document the declarations and premium discount in order to avoid a hearsay objection under a business records exception. Admittedly, this argument will be difficult to make. Therefore, the best practice is to obtain the actual signed waiver form from the first-party carrier at the earliest possible opportunity.

*Jim is a shareholder who works out of our Philadelphia, Pennsylvania office. He can be reached at 215.575.2783 or jdhilly@mdwcg.com.

Defense Digest, Vol. 20, No. 4, December 2014

Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2014 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.