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Court finds that amount received from life insurance policy should not be deducted from claim against PIGA in McCarthy v. Bainbridge

(Copies of the 3-page opinion are available at the PaTLA office. Send an e-mail request to [email protected])

The Chester County Court of Common Pleas, in an opinion written by Judge Lawrence E. Wood, has found that a claimant, who has filed an action against the Pennsylvania Property and Casualty Insurance Guaranty Association (PIGA) as a result of the insolvency of a medical malpractice insurer, need not deduct from that claim the amount received from a life insurance policy.

In the case of McCarthy v. Bainbridge, et al, the decedent Plaintiff allegedly received improper care from Defendant physicians and subsequently died. The family of the decedent received $548,000 in life insurance. The family then instituted a Wrongful Death and Survival action against the Defendants. The PIC Insurance Group, Inc. settled the action for $200,000. Following PIC’s insolvency declaration, the claim was then assigned to PIGA.

PIGA claimed that it was entitled to offset the $584,000 the decedent’s family received in life insurance against the $200,000 settlement offer extended by PIC, citing 40 P.S. Section 991.1817 as follows…

"Any person having a claim under an insurance policy shall be required to exhaust first his right under such policy. For purposes of this section, a claim under an insurance policy shall include a claim under any kind of insurance, whether it is a first party or third party claim, and shall include, without limitation, accident and health insurance, workers’ compensation, Blue Cross and Blue Shield, and all other coverages except for policies of an insolvent insurer. Any amount payable on a covered claim under this Act shall be reduced by the amount of any recovery under any other insurance."

PIGA claimed that "any kind of insurance" included life insurance among the appropriate set-offs.

Plaintiffs claimed, and the Court agreed, that at the time the statute was adopted, members of the State House of Representatives were assured that the changes in the legislation would not "make it difficult for a customer to get a refund of his premium, or get his claims paid." In his opinion, the Judge stated…

"I am persuaded from reading the Statute and its legislative history that the legislature did not intend for life insurance to be used an offset against a casualty claim. When Section 1817 gives a list of the kinds of insurance that qualify as "any kind of insurance," it is a list of the types of insurance that are used to compensate for a casualty loss.

. . .

Life insurance is a common form of insurance, and surely the legislature would have referred to it by name had they wanted to include it."

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