Lawyers’ Solution to Auto Insurance

The following article was taken from the Delaware County Daily Times on Thursday, September 14, 1989. Editor’s Note This column originally ran on Tuesday, September 12. But due to some technical omissions, we are rerunning it in its entirety.

Guest column

By Leonard A. Sloane.

Shortly before the legislature recessed for the summer, Sen. F. Joseph Loeper (R-Del) took the lead in crafting an automobile insurance reform package that delivers to consumers guaranteed mandated savings, while still protecting the basic Constitutional rights of access to the courts for innocent victims of automobile accidents. The measure received an overwhelming majority vote from both parties. To speed its ultimate passage, Sen. Loeper, the state Senate majority leader, led the move to amend the plan into House Bill 121.

In the process, Sen. Loeper and his colleagues from both parties in the Senate rejected another automobile insurance proposal, the so-called “Casey/Freind plan”. The principal premium relief in that measure was only available to policy holders who would give up access to the courts when injured by a reckless driver. In essence, those who cause accidents – including virtually all drunk drivers — would benefit at the expense of good drivers and accident victims.

The Casey/Freind plan also would have inaugurated an unconstitutional “means” test – a kind of archaic caste system for Pennsylvanians. The poor would be forced to sell their rights to hold those who cause injuries responsible in a court of law – in return for a lower premium. Meanwhile, the rich could continue to buy those rights. This right to pursue a just claim is the only real leverage average people have to get fair treatment and fair compensation from insurance companies. Not just for personal injury claims, but also for property damage.

For those who would opt to retain the right of access to the courts under the Casey/Freind plan, little savings would be realized. More likely, costs would increase.

Rep. Stephen Freind (R-Del) has mounted a publicity campaign over the past few months questioning the motives of the GOP-controlled Senate and the Pennsylvania Trial Lawyers Association (PaTLA). Instead of debating the merits of the different proposals, Mr. Freind is trying to make his case on the superficial assertion of trial-lawyer self-interest.

The facts tell another story. Any auto insurance reform will adversely affect the pocketbooks of all trial lawyers. Yet, because we understand the political reality which demands change to reduce auto insurance rates – we have chosen not to take the easy way out by championing the status quo which our members would clearly prefer.

What Mr. Freind neglects in his rhetoric is to say that trial lawyers have an absolute coincidence of interest with our very large, important and otherwise unrepresented constituency – thousands of Pennsylvania consumers who are injured in automobile collisions, victims whose lives have been altered by reckless, drunk and uninsured drivers. We represent not only current victims, but also those who will become victims in the future and will want and need access to the courts.
Thus, we have a duty to our clients to oppose legislation that would restrict their individual rights. Under House Bill 121, policy holders would have the choice of not purchasing some coverages (including medical, wage loss and funeral) currently mandated by law. It’s important to point out that about 90 percent of Pennsylvanians already have substitutes for these coverages in the form of health insurance, sick leave, disability insurance, and life insurance. These substitutes are normally paid for with tax-free dollars as an employee benefit. In contrast, auto insurance is typically paid for out of hard-earned after-tax dollars.

Consumers who exercise this choice under House Bill 121 will reap state-wide, on average, a mandatory premium reduction of at least 26 percent and substantially more under certain circumstances. That exceeds the 21 percent statewide average savings merely promised by the Casey/Freind plan in return for heaving overboard invaluable rights for which there are no substitutes.

House Bill 121 gets to the root of the problem of high insurance costs. It attacks unmeritorious suits, fraud, and abuse. It helps control spiraling health-care costs, a key factor contributing to rising rates. House Bill 121 allows relief for consumers victimized by insurance company bad faith and much more.

The alternative is to accept the unproven claims by Mr. Freind and others who would deny full access to the courts for those of limited means. Ask yourself whose special interests Mr. Freind really represents. Does he represent the consumer or factions of the insurance industry who consistently seems to get his vote?

Ask yourself why Mr. Freind has routinely opposed insurance reforms in his role as minority chairman of the House Insurance Committee. The record clearly shows Freind voted against an auto insurance rate freeze, mandatory reductions for anti-theft and passive restraint systems, creation of the Philadelphia Auto Insurance Authority to offer auto insurance to “all responsible drivers” in urban areas. He voted also against a market study to determine whether the insurance industry’s rating system is equitable. And he said no to creation of a uniform policy for review by the Insurance Commissioner of rate and policy filings by insurance companies.

Ask yourself why Mr. Freind, the self-proclaimed friend of the consumer, voted against a bill which would have created a “consumer advocate for insurance” in Pennsylvania.

If Mr. Freind wins his war against the consumer, Pennsylvania’s law would promote rather than eliminate over-utilization, abuse, and fraud on the part of unscrupulous claimants, lawyers, doctors and repair shops. Pennsylvania consumers would be the recipients of a “double whammy” – insurance companies would continue to pass these costs through to the policy holders, and consumers would have less leverage to get fair treatment than exists today.

Bottom line— Sen. Loeper’s carefully crafted legislation  amended into House Bill 121 – unlike the Casey/Freind measure  is clearly Constitutional and much fairer to the vast majority of Pennsylvanians. There is a world of difference between giving up insurance coverage which can be done by contract and for which most people have substitutes  and giving up important Constitutionally guaranteed rights for which there are no substitutes.

Leonard A. Sloane, a Delaware County attorney, is president of the Pennsylvania Trial Lawyers Association