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In a reversal of fortune, a federal judge who previously sent an insurance dispute to arbitration has now overturned an arbitration award that favored a divorced woman who claimed that she should not have been subjected to her ex-husband’s minimal UM/UIM motorist benefits after she took over as the named insured on an automobile policy. In Hartford Insurance Co. of the Midwest v. Green, U.S. District Judge Eduardo C. Robreno found that courts have the power under Pennsylvania law to “review the decision of an arbitrator if the decision implicates whether an insurance policy provision violates public policy or a legislative mandate.” Lawyers for Laverne Green argued that Hartford violated Pennsylvania law since her ex-husband, and not herself, had signed the selection form for UM/UIM coverage of just $15,000 per person and $30,000 per accident. Green argued that when she became the named insured on the policy, Hartford was required under the Pennsylvania Motor Vehicle Financial Responsibility Act to get her signature on a new selection form. In May 2003, an arbitration panel voted 2-1 in favor of Green and ordered Hartford to “reform” her policy “so that uninsured limits are equal to the liability limits of $100,000.” The effect of the decision was that Green was awarded an additional $85,000. One of the three arbitrators dissented but stated no grounds for his dissent. Now Robreno has overturned the award, finding that MVFRL imposes no duty on an insurer to obtain a new selection form when there is a substitution of the named insured. Instead, Robreno found, the burden is on the new named insured to ask for a change in policy limits. “Once Green was substituted as the named insured on the policy, if she desired higher uninsured motorist limits, she was required to notify Hartford that she did not want to be bound by her former husband’s election of lower uninsured motorist coverage limits. Not having done so, Green is bound by the original named insured’s election of lower uninsured motorist coverage,” Robreno wrote. The dispute was first on Robreno’s docket more than three years ago, when Hartford filed suit seeking a declaratory judgment that Green was not entitled to higher UM/UIM coverage. But Green won that round of litigation when Robreno ruled in April 2001 that the dispute should go to arbitration. Robreno concluded that arbitrators are competent to decide not only issues of fact, but also of law, and that the central dispute in the case – the validity of the notice – fell within the arbitration clause. But now Robreno has ruled that the arbitrators simply got it wrong and that their decision must be overturned because it was premised on a misreading of Pennsylvania law and public policy. In his 29-page opinion, Robreno first addressed the question of whether the court had the power to review the arbitrators’ decision. Robreno said the Pennsylvania Supreme Court “has recognized that a court may review the merits of a decision to arbitrate where the claimant attacks a particular provision of an insurance policy as contrary to ‘constitutional, legislative, or administrative mandate, or against public policy or unconscionable.’” In a pair of decisions handed down in the early 1990s – Azpell v. Old Republic Insurance Co. in 1991 and Hall v. Amica Mutual Insurance Co. in1994 – Robreno found that the Pennsylvania justices held that courts may review arbitration decisions when an insured claims that a policy provision violates public policy or argues that the insurer has failed to comply with the provisions of a statute. Although Green and Hartford disagreed about the nature of their dispute, Robreno found that either characterization would allow for court review. Hartford insisted that Green was challenging a provision of its policy on public policy grounds, but Green insisted that she was simply accusing Hartford of failing to comply with MVFRL. But Robreno found that under Azpell and Hall, either view would allow for court review of the merits of the arbitration decision. “Since the only way the arbitrators’ decision to reform Green’s policy to provide uninsured motorist limits equal to the limits of her bodily injury liability coverage can be sustained is if Hartford violated the legislative mandate of the MVFRL, then Green in essence and necessarily has challenged the uninsured motorist provision of her policy as contrary to legislative mandate,” Robreno wrote. “Therefore, the court concludes that because the issue here in essence and necessarily involves a challenge to a legislative mandate, no matter how artfully framed by Green, the court has the power to review the arbitrators’ decision.” Robreno said his next task was to decide whether the uninsured motorist provision of Green’s policy was contrary to a legislative mandate contained in the MVFRL. The issue, Robreno said, was whether Hartford violated the MVFRL by failing to notify Green of her right to elect uninsured motorist limits equal to her bodily injury liability limits when she was substituted as the sole named insured; and failing to obtain a written authorization from Green for lower uninsured motorist coverage limits. Although MVFRL clearly requires that insurers get a request for lower limits in writing, Robreno found that the law is silent on the issue of whether the requirement is triggered again when a named insured is later substituted. Although the Pennsylvania Supreme Court has never tackled the question, Robreno found that the 3rd U.S. Circuit Court of Appeals has. In its 2000 decision in Nationwide Mutual Insurance Co. v. Buffetta, the appeals court faced a nearly identical claim, Robreno said, where a divorced woman argued that she should not be subjected to the limits elected by her ex-husband. Like Green, Rosetta Buffetta claimed that when she became the named insured, she should have received a new form asking her to select coverage. The 3rd Circuit disagreed, saying Buffetta had had “ample opportunity” to alter the terms of her uninsured motorist coverage if she had wanted to do so because the policy been renewed at least three times since she was substituted as the named insured. Robreno found that Green’s claim was legally identical because, “as in Buffetta, she renewed the policy twice with the limits elected by [her ex-husband], the original named insured.” As a result, Robreno said, Hartford “was not required to notify Green that she could elect uninsured motorist limits equal to her bodily injury liability limits, or to obtain a written authorization from Green requesting lower uninsured motorist limits.” Green’s lawyers argued that there was an important distinction between Green’s and Buffetta’s cases because Green was not listed as a driver on her husband’s original policy and was not married to or residing with her ex-husband at the time he elected the lower uninsured motorist benefits. But Robreno found there was no legal significance to the factual differences. “Once Green became a named insured, Hartford had no duty to notify Green, a subsequent named insured, of the availability of higher uninsured motorist coverage limits or to obtain a written request for those lower limits from Green,” Robreno wrote. “Rather, the burden was on Green, whether she was married to the named insured or not, and whether she resided in the household or not, to request an increase in the previously selected uninsured motorist limits, if she wished to do so.” (Copies of the 29-page opinion in Hartford Insurance Co. of the Midwest v. Green , PICS No. 04-0393, are available from The Legal Intelligencer . Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.)

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