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Children of uninsured motorists have rights to full tort coverage when involved in an accident where their parent was not at fault, a fractured Pennsylvania Supreme Court has ruled, even though the parent is deemed to have limited tort coverage. In Holland v. Marcy, the court relied on Section 1705(b)(3) of the Motor Vehicle and Financial Responsibility Law to determine that children may not be considered a “named insured” if the parent is not even insured, Justice Max Baer said in the majority opinion. “The children clearly fall within Section 1705(b)(3) and may pursue economic and non-economic damages in that the parties do not dispute that the children were not owners of an uninsured vehicle and that neither child was a named insured or insured under any other actual private passenger motor vehicle policy,” Baer said, upholding a deeply divided en banc Superior Court panel. The high court was also deeply split. Although at face value it was a 5-2 decision to uphold the Superior Court, two of the five justices in the majority concurred and expressed concern over the impact of the decision. Section 1705(b)(3) states that a person who is not the owner of a car nor the named insured for any other vehicle, may not be precluded from maintaining an action for non-economic losses for injuries or suffering at the fault of another person, according to the opinion. The majority expressed interest in wanting to avoid punishing individuals, in this case children, who did not make the choice to drive without car insurance. “Not only is the language clear, but it is consistent with other provisions of MVFRL which punish only the owner,” Baer said. “[O]ur immediate appellate courts have refused to apply the penalties of these sections to individuals who do not possess an ownership interest in a registered but uninsured vehicle.” According to the opinion, appellant Edward Marcy, who hit the Holland car while driving in Erie County, Pa., injuring their two children, relied heavily on an opinion from the Commonwealth Court, Hames v. Philadelphia Housing Authority that found children of uninsured motorists may not receive full tort coverage. He argued the children were bound by their mother’s choice to be uninsured and they were themselves insureds under Section 1705(f), according to the opinion. That section defines insureds as “any individual residing in the household of the named insured,” including a minor in the custody of the insured, the court said. Marcy argued that because an owner of an uninsured car is deemed to have selected limited tort, and in a sense given insured status, her children must also be insureds, Baer said. The court instead agreed with attorneys for Holland who argued that equating Theresa Holland, owner of the car, to a named insured would be creating a fictitious policy, according to the opinion. In a hesitant concurring opinion, Justice Sandra Schultz Newman, who was joined by Justice Russell M. Nigro, said the unambiguous nature of Section 1705(b)(3) left her no other choice but to find with the majority. She said she did not agree with the outcome, however. “[T]his court confers greater benefits on children of parents who have not maintained financial responsibility than on those with financially responsible parents,” Newman said. “The direct result of the majority’s decision is to encourage and reward failure to comply with the law, an outcome that the legislature surely did not intend when it implemented the MVFRL.” Baer disagreed that the ruling would encourage parents to remain underinsured in order for their children to collect full tort benefits. He said in a case where the tortfeasor was underinsured and a parent had no insurance, the family would still have no means to collect UIM benefits from its own insurer, nor could they collect first party benefits from any other insurer. “Moreover, the owner would be subject to the penalties, including criminal charges, fines and suspension of operating privileges,” Baer said. “These disincentives could result in significant costs to the uninsured owner, which would in turn cause hardships on the family.” Holland’s attorney, Anthony John Sciarrino of Sciarrino TeWinkle & Miller in Erie, said an argument that suggests people will choose not to have car insurance based on this ruling is ridiculous. “The people who allow their insurance to lapse don’t do it knowingly,” Sciarrino said. “They do it unknowingly or by error.” The attorney for Marcy, Joanna Kay Budde of Knox McLaughlin Gornall & Sennett in Erie disagreed and said, “It certainly doesn’t discourage them.” Justice J. Michael Eakin, joined by Justice Ronald D. Castille, dissented from the majority opinion on grounds that the sections of MVFRL pertaining to this case should be looked at as a whole, not separately as done by the majority, according to the dissent. “While the meaning of the words in Section 1705 might appear unambiguous when each subsection is plucked from the statute and read in isolation, statutes are not to be interpreted in such a manner,” Eakin said. Budde said she understands the majority is looking at the case from a statutory analysis standpoint. “But they failed to step back and look at the big picture,” she said. Budde said the ruling is just one more example of the courts eroding limited tort. In Holland, minors Joel and Heather Holland were injured in an accident in August 1997 in a vehicle owned by their mother and driven by their father, according to the opinion. Joel suffered a laceration to his forehead, leaving a permanent scar. He also suffered cervical strain and sprain. Heather suffered cervical strain and sprain, contusions to her face and recurrent nosebleeds, the court said. Theresa Holland initiated suit on her children’s behalf against Marcy, according to the opinion. After an Erie County judge dismissed the case, finding the Holland children’s injuries not serious enough to override a deemed limited tort election, the Hollands appealed. In a divided en banc ruling, the Superior Court reinstated the case, concluding that only the owner of an uninsured, registered vehicle may be “deemed” to have chosen the limited tort option for allowing insurance to lapse on a vehicle, Baer said. The ruling departed from the Commonwealth Court’s decision in Hames. In that case, the court held that children, injured in a vehicle owned by their mother who had allowed the vehicle’s policy to lapse, were bound by the mother’s deemed election of limited tort, according to the opinion. The Superior Court in Holland opted rather to follow its own precedent — the decision in Ickes v. Burkes, in which the court declined to hold the plaintiff to the deemed limited tort option of her husband, who allowed insurance to lapse on his vehicle. Sciarrino said Holland will have broad applicability, as he is already working on another case with a very similar fact pattern. He said that unfortunately, it happens all too often that people who are not affluent let their insurance lapse. Sciarrino said he had at least one lawyer a month call to ask him about this case while waiting for a Supreme Court ruling, indicating that several other potential cases are out there. Budde disagreed, and said this is a relatively limited set of circumstances. Baer was joined by Justice Thomas G. Saylor and Chief Justice Ralph J. Cappy. The Pennsylvania Defense Institute submitted an amicus curiae on behalf of Marcy. The Pennsylvania Trial Lawyers Association wrote an amicus curiae on behalf of the Hollands.

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