In 2005, in the matter of Insurance Federation of Pennsylvania, Inc. v. Commonwealth, Department of Insurance, 889 A.2d 550 (Pa. 2005), the Pennsylvania Supreme Court decided that the Pennsylvania Department of Insurance did not have authority to require the mandatory arbitration of uninsured and underinsured motorist coverage disputes.  As a result of this decision, also known as the Koken decision, automobile insurance policies throughout the state have been amended to require injured plaintiffs who wish to pursue uninsured or underinsured motorist benefits to file lawsuits against the insurers, rather than proceed to non-judicial arbitrations, as had previously been required.  Unfortunately for the litigants and the courts, this change has resulted in protracted litigation, as the law surrounding exactly how these cases may be brought is, at best, unclear.

As a result of the Koken decision, plaintiffs= attorneys are faced with interesting decisions when it comes to the filing of a lawsuit on behalf of an injured client who was involved in a car accident.  Included in the decision is whether to file separate lawsuits against the tortfeasor and the UIM carrier, whether to file a single lawsuit against both the tortfeasor and the UIM insurance carrier, and whether any suit filed against the UIM carrier should include a claim for insurance bad faith pursuant to 42 Pa.C.S.A. section 8371.  When separate suits are filed, issues of res judicata and collateral estoppel raise concerns.  Additionally, venue selection clauses in the insurance policies also wreak potential havoc with obtaining jurisdiction over the tortfeasor when a single suit on all claims is brought.  Moreover, the propriety of alleging bad faith in a complaint for UIM benefits will almost always result in protracted litigation, including the hiring of multiple firms to act as defense counsel on the UIM and bad faith issues, as well as the filing of preliminary objections and motions to dismiss the allegations of bad faith.

In our experience, allegations of bad faith coupled with a UIM claim will undoubtedly result in the filing of some of motion early in the case seeking to either dismiss or significantly limit the bad faith claim, or to sever the bad faith claim from the UIM claim entirely.  A review of the numerous Common Pleas court decisions throughout the Commonwealth reveals that there is anything but a consensus on how such motions will be decided.  In Lackawanna County, Judges Minora and Mazzoni have held that claims breach of insurance benefits and allegations of bad faith are permitted to move forward simultaneously in one suit, see Decker v. Nationwide Ins. Co., 2008 WL 6653069 (2008)(Minora, J.); Augustine v. Erie Ins. Exchange, 2006 Civil 416 (Mazzoni, J.).  The Honorable A. Richard Caputo of the United States District Court for the Middle District of Pennsylvania reached a similar decision in the matter of Calestini v. Progressive Casualty Ins. Co., No. 3:09-CV-1679.

Due to the fact that this area of the law is relatively new, the procedural issues concerning the filing of claims against a tortfeasor and UIM carrier simultaneously, as well as the issue of also making a claim for bad faith, have not, to our knowledge, reached the appellate courts in Pennsylvania.  Until that happens, it is likely that claims for UIM benefits will continue to get bogged down in protracted motions practice, ultimately delaying the just and proper compensation to which injured plaintiffs are entitled. 

Abrahamsen, Conaboy & Abrahamsen, P.C., a Scranton, Pennsylvania law firm, offers free consultations for personal injury, auto accidents, products liability, workers' compensation, social security claims and social security disability appeals. DON’T GO IT ALONE!  Call or e-mail one of our experienced attorneys to learn about your rights.