Should the Underinsured Motorist Carrier Be Identified at the Time of Trial?

By Robert E. Smith, Esq.*

About ten years ago, in what has commonly been referred to as the Koken decision, the Pennsylvania Supreme Court held that the Pennsylvania Insurance Department “does not possess the authority to require mandatory binding arbitration for UM and UIM disputes….” Insurance Fed. of Pennsylvania, Inc. v. Department of Insurance, 889 A.2d 550 (Pa. 2005). Following that decision, most insurance carriers either completely removed binding arbitration clauses or required both parties to “mutually agree” to arbitration with respect to claims for uninsured (UM) or underinsured (UIM) coverages. The impact of Koken is still being felt as many procedural and evidentiary issues continue to work their way through the court system. This article focuses on recent case law discussing whether the UIM carrier should be identified as a party where both the UIM claim and the negligence claim against the driver/tortfeasor are tried at the same time.

Generally, when UM/UIM claims are tried, plaintiffs seek to introduce as much evidence as possible about insurance coverage while defendants seek to preclude as much evidence of insurance as possible. The prevailing thought is that evidence of insurance coverage will drive up jury verdicts.

Two appellate cases have addressed whether the UIM carrier should be identified during trial. In the first, Stepanovich v. McGraw, 78 A.3d 1147 (Pa.Super. 2013), the plaintiff sued both his UIM carrier and the driver/tortfeasor. The trial court ruled that the UIM carrier could not be identified as a party at the time of trial. The case proceeded to trial, and the jury found that the driver was not negligent. The plaintiff appealed, and the trial court reversed itself, holding that the UIM carrier should have been identified at trial. The UIM carrier then appealed to the Superior Court, which reversed the trial court, holding that the plaintiff “would have to show that, but for the jury’s ignorance of (the UIM carrier’s) identity, it would have found (driver) negligent.” The court explained that there was no “legal or logical connection” between the UIM carrier’s status as a defendant and the driver’s alleged negligence. However, the Superior Court did not specifically address the plaintiff’s argument that “due process” required the UIM carrier to be identified.

In the second and very recent case, in a non-precedential decision, the Superior Court once again addressed the issue of whether the UIM carrier must be identified as a party at time of trial. In Zellat v. McCulloch, 2016 Pa.Super.Unpub.LEXIS 213 (Pa.Super. Mar. 9, 2016), the plaintiff’s vehicle was rear-ended, and she sued the driver of the vehicle that struck her. The plaintiff later joined her own UIM carrier as a co-defendant. The court granted a motion by the defendant/driver to preclude any mention of insurance at time of trial. The court also entered an order allowing the claim against the other defendant/driver and the plaintiff’s UIM claim to be tried together and mandating that insurance not be mentioned. Pursuant to that order, the parties were “not permitted to reference that (the UIM carrier) was a named defendant….” The case proceeded to trial, and the jury returned a verdict, finding that the defendant/driver’s negligence did not cause the plaintiff’s alleged injuries. In her appeal, the plaintiff raised several issues, including:

Did the trial court err in permitting a named party’s identity to remain hidden from the jury while simultaneously permitting its counsel to participate in trial under the guise of assisting the counsel to another defendant?

The court held that its prior decision in Stepanovich v. McGraw was “directly on point” and explained as follows:

The Stepanovich decision is directly on point. Herein, the negligent tortfeasor and the plaintiff’s UIM carrier were named defendants, and the tortfeasor successfully prevented mention of the UIM carrier’s status as a party. This was the precise factual scenario at issue in Stepanovich. This court ruled that the jury’s lack of awareness that the UIM carrier was a party defendant does not warrant the grant of a new trial. That holding applies herein.

In Zellat, the plaintiff also argued that the trial court erred in failing to identify the UIM carrier as a party because Stepanovich held that Pa. R.E. 411, which precludes certain evidence of insurance, does not apply to evidence of a plaintiff’s UIM coverage. The court rejected that argument as well and held, in part, “… the fact that Pa. R.E. 411 is inapplicable does not alter the holding of Stepanovich, which is that a new trial is not to be awarded based upon the fact that a jury is not told that the plaintiff’s UIM insurer is a party to the action.”

While the Zellat decision is non-precedential, it does afford some guidance as to how the Superior Court would interpret its prior holding in Stepanovich. Based upon the guidance afforded by the Zellat decision, defense counsel may want to give further consideration to filing a motion to preclude evidence of insurance with respect to the trial of a UIM claim.

*Robert is a shareholder in our Scranton, Pennsylvania office. He can be reached at 570.496.4611 or resmith@mdwcg.com.

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_{Defense Digest, Vol. 22, No. 3, September 2016. 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. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2016 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}