Maryland Automobile Insurance Fund v. Perry

WILNER, Judge. In January, 1994, respondent, Ralph Perry, owned two cars—a 1991 Chevrolet that was insured by the Maryland Automobile Insurance Fund (MAIF) and a 1990 Chevrolet that was uninsured. On January 24, while driving the insured vehicle, he was in an accident and, as a result, incurred medical expenses and wage losses aggregating $1,373. His MAIF insurance policy contained Personal Injury Protection (PIP) coverage that provided for the payment of up to $2,500 for such medical expenses and wage losses.

Notwithstanding that coverage, MAIF refused to pay the benefits, contending that (1) Perry’s ownership of an uninsured vehicle caused him to be in violation of Maryland Code, § 17-103 of the Transportation Article, and (2) as a result of that violation, payment of the PIP benefits was precluded by Maryland Code, Article 48A, § 543(b)(2), which appears now as § 19—513(c)(2) of the Insurance Article. 1 Aggrieved at that response, Perry sued MAIF in the district court and lost. On appeal, however, the Circuit Court for Baltimore City reversed and entered judgment for Perry. We granted MAIF’s petition for certiorari to consider whether Perry’s ownership of an uninsured vehicle bars him from recovering PIP benefits under the MAIF policy. We shall affirm the judgment of the circuit court. ⁶⁷⁰ Maryland law requires that the owners of motor vehicles required to be registered have certain minimum insurance coverage (or comparable security acceptable to the Motor Vehicle Administration).

It requires insurance companies writing motor vehicle insurance in Maryland to offer that minimum coverage as well as certain other coverages that an insured may opt to decline or limit. The requirements imposed upon vehicle owners to have the mandated security are provided for in title 17 of the Transportation Article. The requirements imposed upon insurance companies to offer the specified coverages are found in title 19, subtitle 5 of the Insurance Article. In a nutshell, the Transportation Article focuses on the owners and drivers of motor vehicles; the Insurance Article focuses on insurance companies and their insureds.

The two parts of the Code obviously need to be read together, in harmony. Section 17-104 of the Transportation Article requires the owners of motor vehicles subject to registration in Maryland to maintain certain required security during the registration period and prohibits the Motor Vehicle Administration from issuing or transferring the registration of a motor vehicle unless the owner or prospective owner furnishes satisfactory evidence that the required security is in effect. 2 The nature and extent of the required security is set forth in § 17-103. With exceptions not relevant here, that section requires the security to be in the form of an insurance policy providing (1) liability coverage for bodily injury or death arising from an accident of up to $20,000 for one person and up to $40,000 for two or more persons; (2) liability coverage for damage to the property of others of up to $10,000; (3) unless waived, the benefits described under § 19-505 of the Insurance Article as to basic primary coverage (PIP coverage); and (4) the benefits ⁶⁷¹ required under § 19-509 of the Insurance Article as to required additional coverage (uninsured/underinsured motorist coverage). A person who fails to maintain the required security is subject to a variety of civil penalties, including suspension of the person’s driving privileges and monetary fines.

See § 17-106. A person who knowingly drives an uninsured motor vehicle or an owner who knowingly permits one to be driven is subject as well to criminal penalties. See §§ 17-107, 27-101(h). For a first offense, the person is subject to a $1,000 fíne and a year in jail.

Title 19, subtitle 5 of the Insurance Article, as noted, sets forth the kinds of primary coverages that motor vehicle insurers are required to offer in Maryland policies. There are three such coverages: PIP benefits, provided for in §§ 19-505 through 19-508; uninsured/underinsured motorist coverage, provided for in §§ 19-509 through 19-511; and collision coverage, provided for in § 19-512. We are concerned here with the PIP coverage. Section 19-505 requires that, unless waived by the insured in accordance with § 19-506, each insurer who sells motor vehicle insurance in Maryland must provide PIP coverage of at least $2,500 for (1) the first named insured under the policy and any family member of that insured who resides in the insured’s household, who is injured in any motor vehicle accident, including an accident that involves an uninsured motor vehicle; (2) any other individual who is injured in a motor vehicle accident while using the insured vehicle with the permission of the named insured; (3) an individual injured in a motor vehicle accident while occupying the insured vehicle as a guest or passenger; and (4) an individual injured in a motor vehicle accident that involves the insured vehicle, either as a pedestrian or while in, on, or alighting from a vehicle operated by animal or muscular power.

Section 19-505(c)(l)(i) allows insurers to exclude from PIP coverage certain individuals who otherwise would be required to be covered. They include an individual who (1) intentionally causes the accident resulting in the injury; (2) is a nonresident injured as a pedestrian in an accident that occurs ⁶⁷² outside Maryland; (3) is injured while operating or voluntarily riding in a vehicle the person knows is stolen; or (4) is injured in a motor vehicle accident while committing a felony or fleeing or eluding the police. Section 19-505(c)(l)(ii) provides further that PIP coverage will not extend to: “the named insured or a family member of the named insured who resides in the named insured’s household for an injury that occurs while the named insured or family member is occupying an uninsured motor vehicle owned by ... the named insured; or ... an immediate family member of the named insured who resides in the named insured’s household.” (Emphasis added). It is evident, if we just consider these provisions, that Perry would be entitled to PIP benefits.

He was the named insured under a policy that, absent a waiver, was required to contain, and did contain, PIP coverage, and he fell within none of the permissible exclusions. Although he owned an uninsured motor vehicle, he was not occupying it when the injury occurred. MAIF’s defense arises from § 19-513, which sets forth certain limitations on the recovery of benefits provided for in the subtitle. Subsection (c) provides: “(1) The insurer of a motor vehicle for which the coverage described in § 19-505 of this subtitle is in effect shall pay the benefits described in § 19-505 of this subtitle to an individual who is injured in a motor vehicle accident: (i) while occupying the insured motor vehicle; or (ii) by the insured motor vehicle as a pedestrian, while in, on, or alighting from a vehicle powered by animal or muscular power, or while on or alighting from an animal.

(2) An insurer may not pay benefits under paragraph (1) of this subsection to an individual who is in violation of § 17-103 of the Transportation Article.” (Emphasis added). MAIF’s argument is that Perry’s ownership of an uninsured motor vehicle—the 1990 Chevrolet—constituted a violation of ⁶⁷³ § 17-103 and that, because he was in violation of that section when the injury occurred, MAIF was forbidden to pay him the PIP benefits to which he otherwise would have been entitled. Citing Van Horn v. Atlantic Mutual, 334 Md. 669 , 641 A.2d 195 (1994) and Pennsylvania Nat’l Mut. v. Gartelman, 288 Md. 151 , 416 A.2d 734 (1980), MAIF stresses the strong legislative policy designed to assure that people who own or operate motor vehicles in Maryland are financially responsible and urges that the provision in § 19-513(c)(2), which it regards as precluding the payment of PIP benefits to one who owns an uninsured vehicle, is in furtherance of that policy and should be enforced. It relies as well on three intermediate appellate court decisions from Pennsylvania construing what MAIF regards as a comparable statute to require the denial of PIP benefits to one who owns an uninsured vehicle.

See Kresge v. Keystone Ins. Co., 389 Pa.Super. 548 , 567 A.2d 739 (1989); Mowery v. Prudential Prop. & Cas. Ins., 369 Pa.Super. 494 , 535 A.2d 658 (1988); Allen v. Erie Ins. Co., 369 Pa.Super. 6 , 534 A.2d 839 (1987).

We believe that the Pennsylvania statute is not comparable to § 19—513(c)(2) and that the Maryland provision was not intended to create the result MAIF seeks. The Pennsylvania statute, 75 Pa.C.S.A. § 1714, is part of that State’s Motor Vehicle Financial Responsibility Law. It provides, in relevant part, that “[a]n owner of a currently registered motor vehicle who does not have financial responsibility ...