PROPOSED RULEMAKING
[52 PA. CODE CH. 32]
[28 Pa.B. 2146] [L-970124]
Passenger Carrier Insurance The Pennsylvania Public Utility Commission (Commission) on August 28, 1997, adopted a proposed rulemaking to clarify in § 32.11 (relating to passenger carrier insurance) that the amount of minimum third-party coverage refers to split coverage. The contact person is Kathryn G. Sophy, Assistant Counsel, Law Bureau (717) 772-8839.
Executive Summary
In 1994, the Commission issued a statement of policy in an attempt to quiet confusion in the passenger carrier industry concerning the minimum requirements under the Commission's regulation regarding insurance coverage for passenger carriers. Since then, it has become apparent that the statement of policy did not meet the intended goal. In an effort to formalize the Commission's intent and clarify the language of the regulation, the Commission proposes to amend § 32.11(b).
Section 32.11(b) has been amended to clarify that the amount of minimum third-party coverage refers to split coverage.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 28, 1998, the Commission submitted a copy of this proposed amendment to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Consumer Affairs and the Senate Committee on Consumer Protection and Professional Licensure. In addition to submitting the proposed amendment, the Commission has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Commission in compliance with Executive Order 1996-1. A copy of this material is available to the public upon request.
If the Legislative Committees have objections to any portion of the proposed amendment, they will notify the Commission within 20 days of the close of the public comment period. If IRRC has objections to any portion of the proposed amendment, it will notify the Commission within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the regulation, by the Commission, the General Assembly and the Governor of objections raised.
Public Meeting held
August 28, 1997Commissioners Present: John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; John Hanger; David K. Rolka; Nora Mead Brownell
Proposed Rulemaking Order By the Commission:
By order adopted October 28, 1994, Docket No. L-940087, we issued a final policy statement interpreting the minimum insurance requirements for passenger carriers transporting fewer than 16 passengers. The final policy statement was published at 25 Pa.B. 681 (February 25, 1995). See § 41.21 (relating to insurance coverage for common or contract carriers of less than 16 passengers--statement of policy).
The issuance of the statement of policy was the culmination of a request to issue a declaratory order in Petition of Damone Clayter, Docket No. P-00930722. In Damone Clayter, the petitioner was a passenger in a taxi owned by Jenny Cab Company and involved in a motor vehicle accident. Clayter was injured in the accident and was at risk of losing rights to underinsured motorist coverage because of a controversy as to the amount of liability coverage required by § 32.11 of the Commission's regulations. Clayter petitioned the Commission requesting a declaratory order which detailed the third-party insurance limits that a cab company must maintain in this Commonwealth and approved as valid the liability policy of Jenny Cab Company. In response to Clayter's petition, the Commission ordered an investigation into insurance claims, State liability coverage requirements and driver safety records.
At the conclusion of the investigation, the Commission issued a policy statement detailing its interpretation of § 32.11 codified in § 41.21. In issuing the statement of policy, the Commission's intent to put to rest any confusion or controversy regarding third-party insurance coverage as required by § 32.11(b).1
Unfortunately, as evidenced by the recent Federal case Adams v. Clarendon, confusion and controversy remains. Adams v. Clarendon, Civil Action No. 95-6392 (U. S. District Ct. (E. D. Pa.)). Adams, who was injured in a Philadelphia taxicab insured by Clarendon Insurance Co., filed a class action suit against Clarendon charging, inter alia, that Clarendon had issued policies at less than the minimum amounts required by § 32.11(b). Under Metro, insurance carriers may be liable for more than the policy limits if the carrier issued insurance at less than the minimum amount required by law. Metro Transp. Co. v. North Star Reinsurance Co., 912 F.2d 672 (3rd. Cir. 1990).
Adams argued that § 32.11(b) requires a minimum of $35,000 in third-party liability coverage, $25,000 in first-party medical benefits coverage and $10,000 in work loss benefits coverage for each individual passenger/pedestrian injured in a taxicab accident, regardless of the number of individuals injured in a particular accident or of the aggregate required minimum amount of insurance coverage.2 This interpretation is at odds with our interpretation in the statement of policy in § 41.21.
To avoid future controversies regarding the minimum amount of insurance required by this Commission, changes are proposed to the existing regulation covering motor vehicles capable of carrying fewer than 16 passengers in an attempt to remove doubt as to the required minimum amount of insurance coverage and how it is applied. By amending the existing regulation, we will formalize our intent as expressed in the policy statement.
Specifically, the proposed change clarifies the Commission's intent that third-party benefits refer to ''split'' coverage. That is, the $35,000 minimum amount of coverage required for bodily injury, death or property damage must be split in the amounts of $15,000 bodily injury per person, $30,000 bodily injury per accident and $5,000 property damage per accident.
We believe that the proposed changes will promote ease of application as well as fairness while greatly reducing the confusion evidenced in the recent Adams lawsuit. We encourage those affected by these changes to file comments which address these and related questions, and to give concrete suggestions for specific revisions to better achieve the delicate balance of compensating those injured in an accident while maintaining affordable insurance rates.
Accordingly, under sections 501, and 512 of the Public Utility Code, 66 Pa.C.S. §§ 501 and 512, and the Commonwealth Documents Law (45 P. S. § 1201 et seq.) and the regulations promulgated thereunder, we shall institute a rulemaking proceeding to accomplish the objectives described in the body of this order. Therefore,
It is Ordered that:
1. A rulemaking proceeding is hereby instituted at this docket.
2. The Commission's regulations are hereby proposed to be amended by amending § 32.11.
3. The Secretary shall submit this order and Annex A to the Office of Attorney General for approval as to legality.
4. The Secretary shall submit this order and Annex A to the Governor's Budget Office for review of fiscal impact.
5. The Secretary shall submit this order and Annex A for informal review by the designated standing committees of both houses of the General Assembly, and for informal review and approval by IRRC.
6. The Secretary shall deposit this order and Annex A with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin. Interested persons may submit written comments, an original and 15 copies, to the Secretary's Office, Pennsylvania Public Utility Commission, and shall have 60 days from the date this order is published to submit comments.
7. A copy of this order shall be served upon the Insurance Department.
8. A copy of this order shall be served upon the Pennsylvania Taxicab & Paratransit Association.
9. A copy of this order shall be served upon the Delaware Valley Limo Association.
10. A copy of this order shall be served upon the NorthEastern Limo Association.
11. A copy of this order shall be served upon the Western Pennsylvania Limousine Association.
12. A copy of this order shall be served upon the Radio Associations in this Commonwealth.
JAMES J. MCNULTY,
SecretaryFiscal Note: 57-189. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PENNSYLVANIA PUBLIC UTILITY COMMISSION
Subpart B. CARRIERS OF PASSENGERS OR PROPERTY
CHAPTER 32. MOTOR CARRIER INSURANCE
Subchapter B. INSURANCE REQUIREMENTS § 32.11. Passenger carrier insurance.
* * * * * (b) The liability insurance maintained by a common carrier of passengers on each motor vehicle capable of transporting fewer than 16 passengers shall be in an amount not less than $35,000 to cover liability for bodily injury, death or property damage incurred in an accident arising from authorized service. The $35,000 minimum coverage is split coverage in the amounts of $15,000 bodily injury per person, $30,000 bodily injury per accident and $5,000 property damage per accident. This coverage shall include [first party] first-party medical benefits in the amount of $25,000 [,] and [first party] first-party wage loss benefits in the amount of $10,000 for passengers and pedestrians. Except as to the required amount of coverage, [first party] first-party benefits shall conform to 75 Pa.C.S. [§§ 1701--1798] Chapter 17 (relating to Motor Vehicle Financial Responsibility Law). [First party] First-party coverage of the driver of certificated vehicles shall meet the requirements of 75 Pa.C.S. § 1711 (relating to required benefits).
(c) The liability insurance maintained by a common or contract carrier of passengers on each motor vehicle capable of transporting 16 to 28 passengers shall be in an amount not less than $1 million to cover liability for bodily injury, death or property damage incurred in an accident arising from authorized service. Except as to the required amount of liability coverage, this coverage shall meet the requirements of 75 Pa.C.S. [§§ 1701--1798] Chapter 17.
(d) The liability insurance maintained by a common or contract carrier of passengers on each motor vehicle capable of transporting more than 28 passengers shall be in an amount not less than $5 million to cover liability for bodily injury, death or property damage incurred in an accident arising from authorized service. Except as to the required amount of liability coverage, this coverage shall meet the requirements of 75 Pa.C.S. [§§ 1701--1798] Chapter 17.
* * * * *
[Pa.B. Doc. No. 98-726. Filed for public inspection May 8, 1998, 9:00 a.m.] _______
1 Specifically not addressed in the statement of policy was any interpretation of first-party benefits.
2 Although the Federal suit settled, Clarendon Insurance Co. has petitioned the Commonwealth Court of Pennsylvania for a declaratory judgment as to the proper interpretation of § 32.11(Ib). Clarendon v. Pa. P.U.C., 369 M.D. 1997 (Pa. Cmwlth. Ct.).
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