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During oral arguments involving recovery of UIM benefits, the state Supreme Court asked questions about where UIM begins and disability insurance ends. Before the court in Philadelphia Wednesday was Tannenbaum v. Nationwide Insurance Co., a case in which Alan Tannenbaum, a board certified pediatrician and assistant director at Einstein Medical Center who was rendered permanently disabled in a December 2000 car accident, sought recovery of UIM benefits from Nationwide, his insurer, after having already received an award from the tortfeasor. The matter was submitted directly to arbitration under the terms of the policy and arbitrators granted a motion in limine by Nationwide that stopped Tannenbaum from introducing evidence of how much he paid in and was paid from his disability policies. The arbitrators eventually awarded Tannenbaum $1.875 million and credited Nationwide with nearly $985,000, bringing Tannenbaum’s net award to $890,567.He appealed that ruling to the Bucks County Common Pleas Court and Judge Rea B. Boylan vacated the award. Nationwide then appealed to the Superior Court, which ruled in Tannenbaum’s favor, saying that benefits received from a self-paid disability policy do not duplicate underinsured motorist benefits. One of Nationwide’s attorneys, Allan D. Goulding Jr. of Curtin & Heefner in Morrisville, Pa., argued Wednesday that Tannenbaum’s disability insurance should cancel out his UIM insurance because it is “paying him for wages lost as a result of a car accident.” Justice Max Baer said he felt that argument was “a bit unfair,” adding that Tannenbaum’s disability insurance carrier was simply “paying him under the obligation of disability law” and that the cause of his disability was irrelevant to his eligibility to receive that payment. “If what you’re suggesting is true, aren’t you saying to the people of Pennsylvania, ‘Don’t buy disability and UIM insurance because they will just be considered duplicative?’” Baer asked. “I would say that if you like to gamble, try that,” Goulding said. “If disability arises out of a car accident, you get UIM. If you have a stroke and become disabled, UIM will be of no value to you.” Goulding and his co-counsel, James C. Haggerty of Swartz Campbell in Philadelphia, used Chief Justice Ronald D. Castille’s dissenting opinion in the 1996 case Panchelli v. Liberty Mutual Insurance Group, in which he said that the goal of the state’s Motor Vehicle Financial Responsibility law is to make the accident victim “whole,” not provide them with a windfall. In Panchelli, the Supreme Court ruled that sick pay and Social Security benefits were not deductible when it came to calculating benefits under the Motor Vehicle Financial Responsibility Law. The Superior Court in Tannenbaum ruled that the appellee’s disability policies went a step further – as is required by the MVFRL – to state that the benefits are “in excess” of first-party benefits under the MVFRL. Nationwide’s counsel argued before the Supreme Court that Tannenbaum and Panchelli were not comparable because Panchelli dealt only with the recovery of first-party benefits and not tort damages. Haggerty said Tannenbaum is “essentially a case of statutory interpretation” regarding Section 1722 of the MVFRL, which precludes a plaintiff from recovering medical expenses paid by the plaintiff’s private health insurance carrier in a suit against a third party tortfeasor. He added that the Supreme Court has “two clear choices” in deciding this case: Enforce the statute or change it to allow for double recovery of benefits. But Tannenbaum’s lawyer, Leonard A. Sloane of Media firm Eckell Sparks Levy Auerbach Monte & Sloane, said his client paid premiums for three different disability insurance policies, each of which go beyond first-party benefits and have their own unique definitions of what constitutes a “disability.” He said Tannenbaum could not be accused of “double dipping” because Section 1722 was “obviously designed” to apply only to first-party benefits. He also argued that Nationwide had “collected healthy premiums for extra UIM coverage.” “Mr. Tannenbaum paid separate premiums to be compensated in a UIM case,” he said.

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