Section 1722 of the motor vehicle financial responsibility law does not prohibit a double recovery of first-party benefits and UIM payments.

The Superior Court recently overruled the decision of Pusl v. Means, 982 A.2d 550 (Pa.Super. 2009), in addressing the amount of damages recoverable where a plaintiff is making claims for both first-party and underinsured (UIM) benefits. Pusl had previously stood for the proposition that where a plaintiff first obtained a UIM recovery of benefits in a motor vehicle accident case from the plaintiff's motor vehicle insurance carrier, the defendant-tortfeasor in the third-party liability lawsuit was entitled to a credit against the verdict up to the UIM amounts already received by the plaintiff. The policy behind this ruling was to prevent a double recovery by the plaintiff in accordance with Pennsylvania's Motor Vehicle Financial Responsibility Law.

In Smith v. Rohrbaugh, the trial court applied a UIM credit against a jury's verdict entered against the tortfeasor defendant-driver. On appeal, the Superior Court stated that the Pusl Court had correctly decided that Section 1722 of the Motor Vehicle Financial Responsibility Law prevented a double recovery of first-party benefits in motor vehicle accident matters. However, UIM benefits are distinguishable from the type of first-party benefits that are defined in the MVFRL. Therefore, the Section 1722 ban against a double recovery of first-party benefits does not apply to UIM payments. Consequently, the credit as defined by Puls no longer exists, and it appears that a plaintiff may now obtain UIM benefits prior to pursuing a claim against the third-party tortfeasor on a negligence/liability claim. If this holding is left undisturbed by the Supreme Court, insurance carriers should certainly take this new interpretation of the MVFRL into consideration in evaluating the potential value of a claim.

Case Law Alert, 1st Quarter 2013