Nationwide Mutual Insurance v. United States Fidelity & Guaranty Co.

ELDRIDGE, Judge. In Harden v. Mass Transit Adm., 277 Md. 399 , 354 A.2d 817 (1976), this Court held that, under the pertinent provisions of the Maryland Insurance Code and the Maryland Vehicle Law, now codified in Code (1957, 1986 Repl.Vol.), Art. 48A, §§ 539 through 546, and Code (1977, 1987 Repl. Vol., 1988 Supp.), §§ 17-101 through 17-110 of the Transportation Article, the State of Maryland was not required to provide “no fault” Personal Injury Protection (PIP) benefits for persons occupying or injured by state motor vehicles, and that a motor vehicle liability insurance policy covering state motor vehicles did not have to contain coverage for such benefits. The issue in the instant case is whether the decision in Harden remains viable.

I. Before turning to the facts of this case, it would be useful to review the pertinent statutory provisions and the holding in Harden . ¹³³ A. Subtitle 35 of the Insurance Code, consisting of §§ 538 through 547A, relates to required coverages in motor vehicle casualty insurance policies issued in Maryland. Among other things, the subtitle mandates coverage for medical, hospital and disability benefits, for uninsured motorist benefits, and for personal injury and property damage liability. Thus, § 539 states that “[n]o policy of motor vehicle liability insurance shall be issued, sold or delivered in this State ... unless the policy also affords the minimum medical, hospital, and disability benefits set forth herein” for persons injured in motor vehicle accidents. 1 The bene ¹³⁴ fits prescribed by § 539, commonly known as “Personal Injury Protection” or “PIP” benefits, are payable without regard to fault (§ 540(a)). Section 541(c)(2) requires that “every policy of motor vehicle liability insurance issued in this State ... shall contain coverage ... for damages which the insured is entitled to recover from” an uninsured motorist. 2 Under § 541(a) of the Insurance Code, every ¹³⁵ motor vehicle casualty insurance policy issued in Maryland must provide specified minimum liability coverage.

If an insurance policy “issued, sold, or delivered” in Maryland omits or purports to exclude a particular coverage required by law, the omission or exclusion is ineffective, and the insurance policy will be applied as if the minimum required coverage were contained in the policy. See, e.g., Gable v. Colonial Insurance Company, 313 Md. 701, 703 , 548 A.2d 135 (1988), and cases there cited; Lee v. Wheeler, 310 Md. 233 , 528 A.2d 912 (1987); Tucker v. Fireman’s Fund Ins. Co., 308 Md. 69 , 517 A.2d 730 (1986). Whereas subtitle 35 of the Insurance Code relates to the contents of motor vehicle casualty insurance policies issued, sold, or delivered in Maryland, Title 17 of the Transportation Article of the Code, which is part of “the Maryland Vehicle Law,” 3 concerns the “required security” which must be maintained on a “motor vehicle that is required to be registered in” Maryland (§ 17-104(b)).

Ordinarily the “required security” is a motor vehicle insurance policy (§ 17-103(a)(l)), although the State Motor Vehicle Adminis ¹³⁶ tration may accept another form of security in place of an insurance policy (§ 17-103(a)(2)). As would be expected, the “minimum benefits” which the required security must provide for under the Transportation Article generally parallel the Insurance Code’s required coverages in motor vehicle insurance policies issued in Maryland. They include PIP benefits (§ 17-103(b)(3)), uninsured motorist benefits (§ 17-103(b)(4)), and payment of liability claims (§ 17-103(b)(1), (2)). The sanctions in the Transportation Article for violations of the required security provisions are, inter alia, suspension of vehicle registration and criminal prosecution (§§ 17-104 through 17-109).

B. Harden v. Mass Transit Adm., supra, 277 Md. 399 , 354 A.2d 817 , was a declaratory judgment action by several persons who, while passengers on Mass Transit Administration (MTA) buses, had been injured in motor vehicle accidents. The defendants in the declaratory judgment action were the MTA and the Transit Casualty Company. The MTA was (and is today) a state agency which owned and operated the buses, and the Transit Casualty Company was a private insurer which had issued a motor vehicle liability insurance policy covering the buses at the time of the accidents. The Harden plaintiffs had sought from both the MTA and the Transit Casualty Company PIP benefits on account of their injuries, but the MTA and the Transit Casualty Company had refused to pay the claims.

The refusals were based on the defendants’ assertions that the insurance policy did not cover PIP claims, that the Insurance Code did not mandate coverage for PIP benefits in policies insuring state owned and operated motor vehicles, and that the MTA, under the required security provisions of the Maryland Vehicle Law, was not obligated to provide PIP benefits for state owned and operated vehicles. Harden v. Mass Transit Adm., supra, 277 Md. at 402-404 , 354 A.2d at 818-819 . The plaintiffs countered that the plain language of subtitle 35 of the Insurance Code and of the ¹³⁷ required security provisions of the Vehicle Law covered the insurance policy and the vehicles involved. 277 Md. at 405, 407 , 354 A.2d at 819-820 . This Court in Harden agreed with the defendants’ position, holding as follows ( 277 Md. at 413 , 354 A.2d at 824 ): “We conclude that there was no manifest intention demonstrated on the part of the General Assembly to include MTA within the ‘no fault’ insurance provisions and that if it had intended to include MTA within those provisions it would have made a specific provision to that effect.” The Court relied chiefly on the principle of statutory construction that a statute regulating or affecting the activity of persons or corporations is ordinarily construed as not encompassing the government itself unless it expressly so provides, 277 Md. at 408-409, 411-413 , 354 A.2d at 822-824 .

See, e.g., United States v. United Mine Workers, 330 U.S. 258, 270-276, 67 S.Ct. 677, 685-687 , 91 L.Ed. 884 (1947); United States v. Cooper Corporation, 312 U.S. 600 , 61 S.Ct. 742 , 85 L.Ed. 1071 (1941); M. & C.C. v. Balto. Gas Co., 232 Md. 123, 135-136, 192 A.2d 87 (1963); State v. Rich, 126 Md. 643, 649 , 95 A. 956 (1915), all cited in the Harden opinion. See, in addition, In re Arnold M., 298 Md. 515, 522 , 471 A.2d 313 (1984); City of Baltimore v. State, 281 Md. 217, 223 , 378 A.2d 1326 (1977), and cases there cited. As a result of the statutory construction holding of the Harden case, § 539 of the Insurance Code, which generally required PIP coverage in all motor vehicle liability insurance policies issued in Maryland, was not deemed to embrace insurance policies on state owned and operated vehicles.

Similarly, the required security provisions of the Maryland Vehicle Law, now codified in § 17-103 of the Transportation Article of the Code, did not require the State of Maryland or state agencies to provide PIP benefits for persons injured in or by state owned and operated motor vehicles. ¹³⁸ II. The facts of the present case are not significantly different from the facts of Harden , although the present case involves state owned and operated automobiles used by various state agencies instead of MTA buses, and this case involves uninsured motorist benefits as well as PIP benefits. The case grew out of four separate motor vehicle accidents involving state owned and operated automobiles and state employees. In one accident, a State Highway Administration automobile being driven by a state employee, Robert N. Stout, was involved in a collision in Baltimore City, resulting in Mr. Stout’s incurring medical expenses and lost wages.

Another accident, in Westminster, involved a Maryland State Police automobile driven by Marion K. Bowers, who also incurred medical expenses and/or lost wages. An automobile used by the State Department of Health and Mental Hygiene, in which Vanessa V. Garrett was a passenger, was involved in an accident in Anne Arundel County, causing Ms. Garrett to incur both medical expenses and lost wages. The fourth accident involved a collision in Baltimore City between a State Department of Transportation automobile, in which Jerome Spann was a passenger, and an uninsured motor vehicle. The collision was allegedly caused by the negligence of the driver of the uninsured vehicle.

Mr. Spann suffered personal injuries, and incurred medical expenses and lost wages. During the period when the accidents took place, the four state automobiles were covered by a motor vehicle liability insurance policy issued to the State of Maryland by the United States Fidelity and Guaranty Company (USF & G). This policy did not contain coverage for PIP or uninsured motorist benefits. Nevertheless, Robert Stout, Marion Bowers, Vanessa Garrett, and Jerome Spann filed PIP claims with USF & G, and Jerome Spann also filed with USF & G a claim for uninsured motorist benefits.

USF & G, however, declined to pay the claims. ¹³⁹ Throughout the relevant period, the four state employees were covered by personal automobile insurance policies issued by Nationwide Mutual Insurance Company. As required by subtitle 35 of the Insurance Code, these Nationwide policies provided coverage for PIP and uninsured motorist benefits. After their claims were denied by USF & G, the four state employees filed PIP claims with Nationwide. In addition, Mr. Spann filed an uninsured motorist claim with Nationwide.

Nationwide then filed the present declaratory judgment action in the Circuit Court for Baltimore City against USF & G and the four state employees. Nationwide sought the following declaratory relief from the circuit court: “A. Declare that USF & G is not authorized under the laws of Maryland to issue a motor vehicle liability insurance policy which does not afford personal injury protection coverage, pursuant to Article 48A, Section 539, Annotated Code of Maryland. “B. Declare that any policy of automobile insurance issued by USF & G to the State of Maryland does afford personal injury protection as required by Maryland law, specifically Article 48A Section 539, and any other statute relating thereto. “C. Declare that USF & G is obligated to reimburse the medical expenses and lost wages of Robert N. Stout, Marion K. Bowers, Vanessa V. Garrett and Jerome Spann.” Nationwide sought a similar declaration concerning the uninsured motorist claim of Jerome Spann. 4 William S. James, then Treasurer of the State of Maryland, moved to intervene, in his official capacity, as an ¹⁴⁰ additional defendant. The reason for the Treasurer’s requested intervention was stated to be that he is the public official “responsible for all programs of purchased insurance for the State,” that he made the decision not to purchase PIP and uninsured motorist insurance, and that if a judgment were entered against USF & G, “the Treasurer will be required to purchase uninsured motorist coverage and personal injury protection in policies of liability insurance for State vehicles.” The Treasurer’s motion for intervention was granted. Thereafter, USF & G and the State Treasurer filed motions for summary judgment, attaching documents relating to the State’s invitation for bids for “automobile fleet liability insurance.” It was argued that Harden v. Mass Transit Adm., supra, was dispositive.

The circuit court granted the motions for summary judgment and filed a declaratory judgment. The court declared that USF & G “is not required to afford personal injury protection coverage pursuant to Art. 48A, Section 539 [or uninsured motorist coverage pursuant to § 541(c)] in its policy of insurance issued to the State of Maryland,” and that the State is not required to purchase insurance containing PIP and uninsured motorist coverage. Nationwide appealed to the Court of Special Appeals. Before the case was heard in that court, we issued a writ of certiorari.

We shall affirm.

III

Nationwide’s principal argument is that §§ 539 and 541(c) of subtitle 35 of the Insurance Code “plainly require that ¹⁴¹ insurance carriers provide the specified coverages in every automobile liability policy issued in Maryland.” (Appellant’s brief p. 4). Nationwide points out that subtitle 35 of the Insurance Code contains express exceptions to the required coverages, but that an exception for state owned and operated automobiles is “not within those express statutory exceptions.” (Id. at p. 5). Nationwide quotes from Pennsylvania Nat’l Mut. v. Gartelman, 288 Md. 151, 156 , 416 A.2d 734, 737 (1980), that “ ‘[w]here a statute expressly provides for certain exclusions, others should not be inserted.’ ” Nationwide argues that the “exclusion claimed by USF & G is also contrary to the remedial purposes underlying the required coverages.” (Appellant’s brief p. 6). Finally, Nationwide points out that this Court has “consistently disallowed exclusions which are inconsistent with the public policy of providing compulsory automobile insurance with specified required coverages for all Maryland automobiles” (id. at p. 7), citing Jennings v. Government Employees Ins., 302 Md. 352 , 488 A.2d 166 (1985); Pennsylvania Nat’l Mut. v. Gartelman, supra, and other cases.

If in this case USF & G were urging us to imply an exception to the required coverages other than one for state vehicles, there would be much force to Nationwide’s argument. See, e.g., Gable v. Colonial Insurance Company, supra, 313 Md. at 704 , 548 A.2d at 137 (“where the Legislature has required specified coverages in a particular category of insurance, and has provided for certain exceptions or exclusions to the required coverages, additional exclusions are generally not permitted”); Lee v. Wheeler, supra, 310 Md. at 238-239 , 528 A.2d at 915 ; State Farm Mut. v. Nationwide Mut., 307 Md. 631, 637-638 , 516 A.2d 586, 589 (1986); DeJarnette v. Federal Kemper Ins. Co., 299 Md. 708, 725 , 475 A.2d 454 (1984). See also Insurance Com’r v. Prop. & Cas.

Corp., 313 Md. 518, 531-532 , 546 A.2d 458, 464-465 (1988). Nevertheless, the principle applied in the Harden case, that a statute regulating persons and corporations does not include the government itself unless that intention ¹⁴² is clear, has been consistently adhered to in this State for a long time. This Court in State v. Milburn, 9 Gill 105, 118 (1850), quoted Justice Story as follows (United States v. Hoar, 2 Mason 311, 314-315 , 26 Fed.Cas. 329 (Fed.Cas. No. 15,373, Circ.Ct., D.Mass.1821)): “In general, acts of the legislature are meant to regulate and direct the acts and rights of citizens; and in most cases the reasoning applicable to them applies with very different, and often contrary force to the government itself.

It appears to me, therefore, to be a safe rule founded in the principles of the common law, that the general words of a statute ought not to include the government, or affect its rights, unless that construction be clear and indisputable upon the text of the act.” More recently, in City of Baltimore v. State, supra, 281 Md. at 223 , 378 A.2d at 1329 , we reiterated that “the State is not deemed to be bound by an enactment of the General Assembly unless the enactment specifically names the State or manifests a clear and indisputable intention that the State is to be bound.” See, e.g., Nordheimer v. Montgomery County, 307 Md. 85, 100 , 512 A.2d 379 (1986); In re Arnold M., supra, 298 Md. at 522 , 471 A.2d at 316 (“the State does not come within the provisions of a statute unless the enactment specifically names the State or manifests a clear and undisputable intent that it is within the provisions of the statute____ Harden v. Mass Transit Adm. ... ”). The pertinent language of subtitle 35 of the Insurance Code has not changed since the Harden decision. The basic relevant language of § 539, requiring PIP benefits, and § 541(c), requiring uninsured motorist benefits, has remained the same since those provisions were enacted in 1972 and 1975, respectively. The State of Maryland is not mentioned, and the wording shows no “indisputable intention that the State is to be bound.” City of Baltimore v. State, supra, 281 Md. at 223 , 378 A.2d at 1329 .

The same is true concerning § 17-103(b)(3) and (4) of the Transportation Article, providing that PIP and uninsured motorist ¹⁴³ benefits are part of the required security for Maryland registered motor vehicles. Consequently, the principle applied in the Harden case, that state regulatory legislation is not ordinarily construed to bind the State itself, remains fully applicable to §§ 539 and 541(c) of the Insurance Code, and § 17-103(b) of the Transportation Article, relating to PIP and uninsured motorist benefits. There is another reason for not departing from the holding of the Harden case. The General Assembly has reenacted with amendments §§ 539 and 541 of the Insurance Code, as well as title 17 of the Transportation Article, on several occasions since our decision in Harden .

Nevertheless, as pointed out above, the General Assembly has not changed the particular language construed in Harden and relied on by Nationwide in the present case. Under these circumstances, a court should be most reluctant to overrule its prior interpretation of that statutory language. The controlling principle was explained in Williams v. State, 292 Md. 201, 210 , 438 A.2d 1301 (1981), as follows: “The General Assembly is presumed to be aware of this Court’s interpretation of its enactments and, if such interpretation is not legislatively overturned, to have acquiesced in that interpretation. Harden v. Mass Transit Adm., 277 Md. 399, 406 , 354 A.2d 817 (1976).

This presumption is particularly strong whenever, after statutory language has been interpreted by this Court, the Legislature re-enacts the statute without changing in substance the language at issue. Harbor Island Marina v. Calvert Co., 286 Md. 303, 322-323 , 407 A.2d 738 (1979); Director v. Cash, 269 Md. 331, 345 , 305 A.2d 833 (1973) cert. denied sub nom. Vucci v. Boslow, Institution Director, 414 U.S. 1136 , 94 S.Ct. 881 , 38 L.Ed.2d 762 (1974); Macke Co. v. St. Dep’t of Assess. & T., 264 Md. 121, 132-133 , 285 A.2d 593 (1972); Stack v. Marney, 252 Md. 43, 49 , 248 A.2d 880 (1969). Under these circumstances, ¹⁴⁴ it is particularly inappropriate to depart from the principle of stare decisis and overrule our prior interpretation of the statute.

White v. Prince George’s Co., 282 Md. 641, 657-658 , 387 A.2d 260 (1978). See also Flood v. Kuhn, 407 U.S. 258 , 92 S.Ct. 2099 , 32 L.Ed.2d 728 (1972).” Accord: Frank v. Storer, 308 Md. 194, 203 , 517 A.2d 1098 (1986); Farmers & Merchants Bank v. Schlossberg, 306 Md. 48, 60 , 507 A.2d 172 (1986); Foster v. State, 304 Md. 439, 479-480, n. 20 , 499 A.2d 1236 (1985), cert. denied, 478 U.S. 1010 , 106 S.Ct. 3310 , 92 L.Ed.2d 723 (1986); Calhoun v. State, 299 Md. 1, 11 , 472 A.2d 436 (1984). 5 Under the circumstances, therefore, Nationwide’s reliance upon the broad language of §§ 539 and 541(c) of the Insurance Code is misplaced. ¹⁴⁵ IV. In addition to its argument based on the language of §§ 539 and 541(c) of the Insurance Code, Nationwide alternatively relies upon two provisions of the Transportation Article enacted after the Harden case was decided. A. The first of these provisions is § l-101(j)(2) of the Transportation Article, which was enacted in 1977 as part of the original Transportation Article of the Code. 6 That section states: “(j) Person. — ‘Person’ includes: 5}! * * X * * “(2) Unless the context requires