This blog post is a follow-up to the February 5, 2019 post on the Gallagher decision. What happens when an insured plaintiff wants to be able to retroactively apply a clarification that has come out of a recent decision? That is the question under discussion in the Eastern District of Pennsylvania case, Butta v. GEICO Casualty Co.. This case is an extension of the recent decision, Gallagher v. GEICO Indemnity Co., where the Pennsylvania Supreme Court decided that the “household exclusion” clause in vehicle insurance policies within the same household was a violation of the state’s Motor Vehicle Financial Responsibility Law (MVFRL), which was enacted in 1990.
In this case, the court discusses how the Gallagher decision has changed how stacking of vehicle insurance policies can be applied across different members of one household. Under § 1738 of the MVFRL, after paying a higher premium, members of the same household who have the same insured can stack their uninsured/underinsured insurance policies, so that if one member is in an accident, the coverage of other household members can be counted toward his or her claim. Insured parties can choose to waive this stacking feature. However, as opposed to stacking, some insurance companies have a provision in their policy where members of the same household cannot stack their insurance policies for their individual vehicles unless every vehicle is listed on every policy across the household. Gallagher challenged the “household exclusion” rule as imposing a de facto waiver and the court ultimately ruled that it was a violation of the MVFRL. In Butta, the plaintiff was injured in a motorcycle accident on a motorcycle that had underinsured coverage protection with Geico. The plaintiff lived with his parents who also had underinsured coverage through Geico for their own vehicles but had a “household exclusion” provision in their policies. The issue in this case is whether Gallagher could be applied retroactively since the plaintiff’s insurance claim occurred prior to the Gallagher decision in January 2019.
In order to make that decision, the court went through two analyses. First, it revisited previous court decisions that applied the household exclusion policy and prevented stacking coverage in vehicle accidents. Second, since it was making a decision based on a case that was decided in the Pennsylvania Supreme Court, the court had to address the issue of retroactive application from the perspective of the Pennsylvania Supreme Court. The defendant argued that the Gallagher decision could not be applied retroactively because the decision established a new rule of law. However, the court rejected this argument by stating that Gallagher does not change case precedent, but reflects what the MVFRL intended when it was introduced in 1990. The case does not deliver a new rule, but provides an explanation of what already existed under the statute. Additionally, the court states that the defendant based its arguments on non-precedential opinions, so there is no evidence that Gallagher was not meant to be applied retroactively. As a result, the plaintiff was able to apply Gallagher to his motorcycle accident.
This case is a lesson that sometimes in the law, it takes more discussion and court decisions before the rules are fully understood and before we get to the ultimate point that the legislature intended. Therefore, for certain parties, while it may seem that a rule of law is stacked against you, you may find over time that it actually falls in your favor.
Thanks to Gabrielle Outlaw for her contribution to this post. Please email Vito A. Pinto with any questions.