PRINTER'S NO. 1706

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 1446 Session of 1987


        INTRODUCED BY FOSTER, DeLUCA, GEIST, JOHNSON, HALUSKA, DALEY,
           DISTLER, BOWSER, J. L. WRIGHT, NOYE, ANGSTADT, KENNEY,
           CIVERA, MILLER, DORR, SAURMAN, S. H. SMITH, FARGO, FOX,
           STAIRS, BOOK, PHILLIPS, MELIO, BURD AND GODSHALL, JUNE 3,
           1987

        REFERRED TO COMMITTEE ON TRANSPORTATION, JUNE 3, 1987

                                     AN ACT

     1  Amending Title 75 (Vehicles) of the Pennsylvania Consolidated
     2     Statutes, providing for a compensation system for persons
     3     injured in motor vehicle accidents; requiring insurance for
     4     all motor vehicles required to be registered in Pennsylvania;
     5     defining compensable damage in motor vehicle accident cases;
     6     establishing an assigned claims plan; providing for
     7     arbitration; imposing powers and duties on courts, the
     8     Department of Transportation and the Insurance Commissioner;
     9     prohibiting certain discrimination; and providing penalties.

    10     The General Assembly of the Commonwealth of Pennsylvania
    11  hereby enacts as follows:
    12     Section 1.  Chapter 17 of Title 75 of the Pennsylvania
    13  Consolidated Statutes is repealed.
    14     Section 2.  Title 75 is amended by adding a chapter to read:
    15                             CHAPTER 17
    16                      FINANCIAL RESPONSIBILITY
    17  Subchapter
    18     A.  Preliminary Provisions
    19     B.  Right to Benefits
    20     C.  Tort Liability

     1     D.  Examination, Treatment and Rehabilitation of
     2         Injured Persons
     3     E.  Insurance
     4     F.  Penalties
     5     G.  Miscellaneous Provisions
     6                            SUBCHAPTER A
     7                       PRELIMINARY PROVISIONS
     8  Sec.
     9  1701.  Findings and declarations.
    10  1702.  Definitions.
    11  1703.  Required motor vehicle insurance.
    12  1704.  Availability of insurance.
    13  1705.  Payment of claims for no-fault benefits.
    14  1706.  Attorney fees and costs.
    15  1707.  Assigned claims plan.
    16  1708.  Rates.
    17  1709.  Motor vehicles in interstate travel.
    18  1710.  Rights and duties of obligors.
    19  § 1701.  Findings and declarations.
    20     The General Assembly finds and declares as follows:
    21         (1)  Motor vehicles are the primary instrumentality for
    22     the transportation of individuals.
    23         (2)  The transportation of individuals by motor vehicle
    24     over Commonwealth highways and other highways significantly
    25     affects intrastate commerce, particularly in metropolitan
    26     areas.
    27         (3)  The maximum feasible restoration of individuals
    28     injured and compensation of the economic losses of the
    29     survivors of individuals killed in motor vehicle accidents on
    30     Commonwealth highways, in intrastate commerce and in activity
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     1     affecting intrastate commerce, is essential to the humane and
     2     purposeful functioning of commerce.
     3         (4)  To avoid any undue burden on commerce during the
     4     intrastate transportation of individuals, it is necessary and
     5     proper to have a Statewide low-cost, comprehensive and fair
     6     system of compensating and restoring motor vehicle accident
     7     victims and the survivors of deceased victims.
     8         (5)  Exhaustive studies by the United States Department
     9     of Transportation, the Congress of the United States and the
    10     General Assembly have determined that the present basic
    11     system of motor vehicle accident and insurance law, which
    12     makes compensation and restoration contingent upon a victim's
    13     showing that someone else was at fault and that the victim
    14     was without fault, and upon the person at fault having
    15     sufficient liability insurance and other available financial
    16     resources to pay for all the losses, is not such a low-cost,
    17     comprehensive and fair system.
    18         (6)  Careful studies, intensive hearings and some State
    19     experiments have demonstrated that a low-cost, comprehensive
    20     and fair system would be a basic system of motor vehicle
    21     accident and insurance law which does all of the following:
    22             (i)  Assures a victim payment of basic medical and
    23         rehabilitation costs and recovery of a reasonable amount
    24         of work loss, replacement services loss and survivor's
    25         loss.
    26             (ii)  Eliminates the need to determine fault except
    27         when a victim is very seriously injured.
    28         (7)  Adoption of the system described in paragraph (6) in
    29     place of the system described in paragraph (5) would remove
    30     an undue burden on commerce.
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     1         (8)  Throughout this Commonwealth there should be
     2     uniformity as to the essential elements of the system of
     3     motor vehicle accident and insurance law to avoid the
     4     confusion, complexity, uncertainty and chaos which would be
     5     engendered by a multiplicity of noncomplementary systems. The
     6     need for a basic system does not require that the
     7     Commonwealth itself directly administer, operate or direct
     8     the administration or operation of the system.
     9         (9)  A Statewide low-cost, comprehensive and fair system
    10     of compensating and restoring motor vehicle accident victims
    11     can save and restore the lives of countless victims by
    12     providing and paying the cost of services so that a victim
    13     has the opportunity to receive prompt and comprehensive
    14     professional treatment and be rehabilitated to the point
    15     where the victim can return as a useful member of society and
    16     a self-respecting and self-supporting citizen.
    17         (10)  It is necessary to afford required coverages for
    18     motor vehicles to economically disadvantaged individuals at
    19     rates not so great as to deny these individuals access to
    20     insurance which it is necessary for them to have in order to
    21     earn income and to be or remain gainfully employed.
    22         (11)  It is the policy of the General Assembly to
    23     establish at reasonable cost to the purchaser of insurance a
    24     Statewide system of prompt and adequate basic loss benefits
    25     for motor vehicle accident victims and the survivors of
    26     deceased victims.
    27  § 1702.  Definitions.
    28     The following words and phrases when used in this chapter
    29  shall have the meanings given to them in this section unless the
    30  context clearly indicates otherwise:
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     1     "Added loss benefits."  Benefits provided by added loss
     2  insurance under section 1727 (relating to added loss benefits).
     3     "Allowable expense."
     4         (1)  Reasonable charges incurred for or, where no charges
     5     are incurred, the reasonable value of reasonably needed and
     6     used products, services and accommodations for all of the
     7     following:
     8             (i)  Professional medical treatment and care.
     9             (ii)  Emergency health services.
    10             (iii)  Medical and vocational rehabilitation
    11         services.
    12             (iv)  Expenses directly related to the funeral,
    13         burial, cremation or other form of disposition of the
    14         remains of a deceased victim, not to exceed $1,500.
    15         (2)  The term does not include that portion of a charge
    16     for a room in a hospital, clinic, convalescent home, nursing
    17     home or other institution engaged in providing nursing care
    18     and related services in excess of a reasonable and customary
    19     charge for semiprivate accommodations unless more intensive
    20     care is medically required nor any amount includable in work
    21     loss, replacement services loss or survivor's loss.
    22     "Basic loss benefits."  Benefits under this chapter for the
    23  net loss sustained by a victim, subject to applicable
    24  limitations, exclusions, deductibles, waiting periods,
    25  disqualifications and other terms and conditions. The term does
    26  not include benefits for damage to property or benefits for net
    27  loss sustained by an operator or passenger of a motorcycle.
    28     "Commissioner."  The Insurance Commissioner of the
    29  Commonwealth.
    30     "Deceased victim."  A victim suffering death resulting from
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     1  injury.
     2     "Department."  The Department of Transportation of the
     3  Commonwealth.
     4     "Emergency health services."  Services which are necessary to
     5  mitigate injury to a victim during the period immediately and
     6  proximately following an accident, including, but not limited
     7  to, communications, transportation and treatment by medical and
     8  paramedical personnel, and which are supplied or provided by a
     9  person accredited or certified by an emergency health services
    10  system.
    11     "Emergency health services system."  A system which provides
    12  for the arrangement of personnel, facilities and equipment for
    13  the effective and coordinated delivery in an appropriate
    14  geographical area of health care services under emergency
    15  conditions arising out of the maintenance or use of a motor
    16  vehicle; which is administered by a public or nonprofit private
    17  entity that has the authority and the resources to provide
    18  effective administration; and which is operating in accordance
    19  with applicable requirements, conditions and regulations.
    20     "Government."  The Federal Government, a state, a political
    21  subdivision or an instrumentality of two or more states. The
    22  term includes an agency of a government and a corporation or
    23  other association organized by a government for the execution of
    24  a government program and subject to control by a government or
    25  organized under an interstate compact or international treaty.
    26     "Injury."  Accidentally sustained bodily harm to an
    27  individual which results in that individual's illness, disease
    28  or death.
    29     "Insurance."  A contract, self-insurance or other legally
    30  binding obligation to pay or provide no-fault benefits or
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     1  required tort liability.
     2     "Insured."  One of the following:
     3         (1)  An individual identified by name as an insured in a
     4     contract of basic loss insurance complying with this chapter.
     5         (2)  A spouse or other relative of a named insured, a
     6     minor in the custody of a named insured or a minor in the
     7     custody of a relative of a named insured if all of the
     8     following apply:
     9             (i)  The spouse, relative or minor is not identified
    10         by name as an insured in any other contract of basic
    11         restoration insurance complying with this chapter.
    12             (ii)  The spouse, relative or minor is in residence
    13         in the same household with a named insured. An individual
    14         is in residence in the same household if the individual
    15         usually makes his home in the same family unit, even
    16         though the individual temporarily lives elsewhere.
    17     "Insurer."  A legally constituted entity, other than a self-
    18  insurer or an obligated government, which is authorized under
    19  state law to provide security covering a motor vehicle in the
    20  state.
    21     "Loss."  Accrued economic detriment resulting from injury
    22  arising out of the maintenance or use of a motor vehicle
    23  consisting of and limited to allowable expense, work loss,
    24  replacement services loss and survivor's loss.
    25     "Loss of income."  Gross income that is actually lost by a
    26  victim or that would have been lost but for an income
    27  continuation plan, reduced by all of the following:
    28         (1)  Eighty percent of income which the individual earns
    29     from substitute work.
    30         (2)  Income which the individual would have earned in
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     1     available substitute work the individual was capable of
     2     performing but unreasonably failed to undertake.
     3         (3)  Income which the individual would have earned by
     4     hiring an available substitute to perform self-employment
     5     services but unreasonably failed to do.
     6     "Maintenance or use of a motor vehicle."  Maintenance or use
     7  of a motor vehicle as a vehicle, including, incident to its
     8  maintenance or use as a vehicle, occupying, entering into or
     9  alighting from it. The term does not include the following:
    10         (1)  Conduct within the course of a business of
    11     repairing, servicing or otherwise maintaining motor vehicles
    12     unless the conduct occurs off the business premises.
    13         (2)  Conduct in the course of loading or unloading a
    14     motor vehicle unless the conduct occurs while occupying,
    15     entering into or alighting from it.
    16     "Medical and vocational rehabilitation services."  Services
    17  necessary to reduce disability and to restore the physical,
    18  psychological, social and vocational functioning of a victim.
    19  The term includes, but is not limited to, medical care,
    20  diagnostic and evaluation procedures, physical and occupational
    21  therapy, other necessary therapies, speech pathology and
    22  audiology, optometric services, nursing care under the
    23  supervision of a registered nurse, medical social services,
    24  vocational rehabilitation and training services, occupational
    25  licenses and tools and transportation where necessary to secure
    26  medical and vocational rehabilitation services.
    27     "Motor vehicle."  A vehicle of a kind required to be
    28  registered under this title.
    29     "Net loss."  Loss less benefits or advantages required to be
    30  subtracted from loss in calculating net loss under this chapter.
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     1     "Noneconomic detriment."  Pain, suffering, inconvenience,
     2  physical impairment and other nonpecuniary damage recoverable
     3  under the tort law applicable to injury arising out of the
     4  maintenance or use of a motor vehicle. The term does not include
     5  punitive or exemplary damages.
     6     "No-fault benefits."  Basic loss benefits, added loss
     7  benefits, or both.
     8     "No-fault insurance."  Basic loss insurance, added loss
     9  insurance, or both.
    10     "Obligor."  An insurer, self-insurer or obligated government
    11  providing no-fault benefits under this chapter.
    12     "Owner."  A person that owns or has title to a motor vehicle
    13  or is entitled to the use and possession of a motor vehicle
    14  subject to a security interest held by another. The term
    15  includes a lessee of a motor vehicle having the right to
    16  possession under a lease with option to purchase. The term does
    17  not include a lienholder or secured party that owns or has title
    18  to a motor vehicle or is entitled to possession of a motor
    19  vehicle.
    20     "Replacement services loss."  Expenses reasonably incurred in
    21  obtaining ordinary and necessary services in lieu of those the
    22  victim would have performed not for income but for the benefit
    23  of the victim or the victim's family if the victim had not been
    24  injured.
    25     "Secretary."  The Secretary of Transportation of the
    26  Commonwealth.
    27     "Secured vehicle."  A motor vehicle for which security is
    28  provided under section 1703 (relating to required motor vehicle
    29  insurance).
    30     "Security."  The security which is provided in under section
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     1  1703.
     2     "Self-insurer."  An owner or any person providing security
     3  under section 1703(b) or (c).
     4     "State."  A state of the United States, the District of
     5  Columbia, Guam or the Virgin Islands.
     6     "State vocational rehabilitation agency."  The agency in the
     7  Commonwealth which administers the Commonwealth plan for
     8  vocational rehabilitation services under section 5 of the
     9  Vocational Rehabilitation Act (41 Stat. 735, 29 U.S.C. § 35).
    10     "Survivor."  A spouse, child, parent, brother, sister or
    11  relative dependent upon the deceased for support.
    12     "Survivor's loss."  The loss of income of a deceased victim
    13  which would probably have been contributed to survivors if the
    14  victim had not sustained the fatal injury and replacement
    15  services loss reduced by expenses which the survivors would
    16  probably have incurred but avoided by reason of the victim's
    17  death resulting from injury.
    18     "Victim."  An individual who suffers injury arising out of
    19  the maintenance or use of a motor vehicle.
    20     "Without regard to fault."  Irrespective of fault as a cause
    21  of injury.
    22     "Work loss."  The loss of gross income of a victim, as
    23  calculated under section 1725 (relating to work loss), and
    24  reasonable expenses of a victim for hiring a substitute to
    25  perform self-employment services, thereby mitigating loss of
    26  income, or for hiring special help, thereby enabling a victim to
    27  work and mitigate loss of income.
    28  § 1703.  Required motor vehicle insurance.
    29     (a)  Security.--An owner of a motor vehicle which is
    30  registered or which is operated in this Commonwealth by the
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     1  owner or with the owner's permission shall continuously provide
     2  security covering the motor vehicle while the vehicle is either
     3  present or registered in this Commonwealth. A person may provide
     4  security by a contract of insurance with an insurer or by
     5  qualifying as a self-insurer or as an obligated government.
     6  Security shall be provided for the payment of all of the
     7  following:
     8         (1)  Basic loss benefits up to a maximum of $1,000,000
     9     per individual.
    10         (2)  Sums, up to a maximum of $30,000 in total and
    11     $15,000 per individual, which the owner or a person operating
    12     the vehicle with the express or implied permission of the
    13     owner may become liable to pay as damages because of bodily
    14     injury or death arising out of a single accident.
    15         (3)  Damages, up to a maximum of $5,000, for injury to or
    16     destruction of property in a single accident.
    17     (b)  Self-insurance.--Self-insurance, subject to approval of
    18  the commissioner and the department, is effected by filing all
    19  of the following with the department in satisfactory form:
    20         (1)  A continuing undertaking by the owner or other
    21     appropriate person to pay basic restoration benefits and to
    22     discharge tort liability in amounts not less than those
    23     required by subsection (a), to perform obligations imposed by
    24     this chapter and to elect to pay added restoration benefits
    25     as specified in the undertaking.
    26         (2)  Evidence that appropriate provision exists for
    27     prompt and efficient administration of claims, benefits and
    28     obligations under this chapter.
    29         (3)  Evidence that reliable financial arrangements,
    30     deposits, resources or commitments exist providing assurance
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     1     substantially equivalent to that afforded by a contract of
     2     insurance complying with this chapter for payment of no-fault
     3     benefits, discharge of tort liability and performance of
     4     other obligations imposed by this chapter.
     5     (c)  Obligated government.--A government may provide security
     6  with respect to a motor vehicle owned or operated by it by
     7  lawfully obligating itself to pay basic restoration benefits
     8  under this chapter and added restoration benefits as specified
     9  in the undertaking.
    10     (d)  Obligations upon termination of security.--An owner of a
    11  motor vehicle who ceases to maintain the security required by
    12  this section shall immediately surrender the registration
    13  certificate and license plates for the vehicle to the department
    14  and may not operate or permit operation of the vehicle in this
    15  Commonwealth until security has again been furnished as required
    16  by this section. A person other than the owner who ceases to
    17  maintain security shall immediately notify the owner and the
    18  department, and the owner may not operate or permit operation of
    19  the vehicle until security has again been furnished. An insurer
    20  who has issued a contract of insurance and knows or has reason
    21  to believe the contract is for the purpose of providing security
    22  shall immediately give notice to the department of the
    23  termination of the insurance. If a self-insurer knows that the
    24  conditions for self-insurance have ceased to exist, the self-
    25  insurer shall immediately give notice thereof to the department.
    26  The requirements of this subsection may be modified or waived by
    27  the department.
    28  § 1704.  Availability of insurance.
    29     (a)  General rule.--
    30         (1)  The commissioner shall implement a plan assuring
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     1     that required no-fault benefits and tort liability coverages
     2     for motor vehicles will be conveniently and expeditiously
     3     available, subject only to payment or provisions for payment
     4     of the premium, to individuals who cannot conveniently obtain
     5     insurance through ordinary methods at rates not in excess of
     6     those applicable to similarly situated individuals under the
     7     plan. The plan may provide reasonable means for the transfer
     8     of individuals insured under the plan into the ordinary
     9     market, at the same or lower rates, under regulations
    10     established by the commissioner. The plan may be implemented
    11     by assignment of applicants among insurers, pooling, joint
    12     insuring or reinsuring arrangement or another method if the
    13     implementation results in applicants being conveniently
    14     afforded the insurance coverages on reasonable and not
    15     unfairly discriminatory terms.
    16         (2)  The plan shall make available added loss benefits
    17     and tort liability coverage together with other contract
    18     provisions which the commissioner determines are reasonably
    19     needed by applicants and are commonly afforded in voluntary
    20     markets. The plan shall also assure that there is available
    21     to applicants adequate premium financing or provision for the
    22     installment payment of premiums subject to customary terms
    23     and conditions.
    24         (3)  Insurers writing no-fault benefits and tort
    25     liability coverages in this Commonwealth shall participate in
    26     the plan. The plan shall provide for equitable apportionment,
    27     among all participating insurers writing insurance coverage
    28     required under the plan, of the financial burdens of
    29     insurance provided to applicants under the plan and of the
    30     costs of operation of the plan.
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     1         (4)  Subject to the supervision and approval of the
     2     commissioner, insurers may consult and agree with each other
     3     and with other appropriate persons as to the organization,
     4     administration and operation of the plan and as to rates and
     5     rate modifications for insurance coverages provided under the
     6     plan. Rates and rate modifications adopted or charged for
     7     insurance coverages provided under the plan shall be approved
     8     by the commissioner and shall be reasonable and not unfairly
     9     discriminatory among similarly situated applicants for
    10     insurance under regulations promulgated by the commissioner.
    11         (5)  To carry out the objectives of this subsection, the
    12     commissioner may promulgate regulations, make orders, enter
    13     into agreements with other governmental and private entities
    14     and individuals and form and operate or authorize the
    15     formation and operation of bureaus and other entities.
    16     (b)  Cancellation, refusal to renew or other termination of
    17  insurance.--Cancellation, refusal to renew and other termination
    18  of insurance shall be provided for under the act of June 5, 1968
    19  (P.L.140, No.78), entitled "An act regulating the writing,
    20  cancellation of or refusal to renew policies of automobile
    21  insurance; and imposing powers and duties on the Insurance
    22  Commissioner therefor."
    23  § 1705.  Payment of claims for no-fault benefits.
    24     (a)  General rule.--
    25         (1)  No-fault benefits are payable monthly as loss
    26     accrues. Loss accrues not when injury occurs but as allowable
    27     expense, work loss, replacement services loss or survivor's
    28     loss is sustained.
    29         (2)  No-fault benefits are overdue if not paid within 30
    30     days after the receipt by the obligor of submission of
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     1     reasonable proof of the fact and amount of loss sustained
     2     unless the obligor designates, upon receipt of an initial
     3     claim for no-fault benefits, periods not to exceed 31 days
     4     each for accumulating claims received within the period. In
     5     this case benefits are overdue if not paid within 15 days
     6     after the close of each period. If reasonable proof is
     7     supplied as to only part of a claim, but the part amounts to
     8     $100 or more, benefits for that part are overdue if not paid
     9     within the time mandated by this paragraph. An obligation for
    10     basic loss benefits for an item of allowable expense may be
    11     discharged by the obligor by reimbursing the victim or by
    12     making direct payment to the supplier or provider of
    13     products, services or accommodations within the time mandated
    14     by this paragraph. Overdue payments bear interest at the rate
    15     of 18% annually.
    16         (3)  A claim for no-fault benefits shall be paid without
    17     deduction for the benefits or advantages which are to be
    18     subtracted from loss in calculating net loss if the benefits
    19     or advantages have not been paid or provided to the claimant
    20     prior to the date the no-fault benefits are overdue or the
    21     no-fault benefits claim is paid. The obligor is entitled to
    22     recover reimbursement from the person obligated to pay or
    23     provide benefits or advantages or from the claimant who
    24     actually receives them.
    25         (4)  An obligor may bring an action to recover
    26     reimbursement for no-fault benefits which are paid upon the
    27     basis of an intentional misrepresentation of a material fact
    28     by a claimant or a supplier or provider of an item of
    29     allowable expense if the obligor reasonably relied upon
    30     misrepresentation. The action may be brought only against the
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     1     supplier or provider unless the claimant has intentionally
     2     misrepresented the facts or unless the claimant knew of the
     3     misrepresentation. An obligor may offset amounts the obligor
     4     is entitled to recover from the claimant under this paragraph
     5     against no-fault benefits otherwise due.
     6         (5)  An obligor who rejects a claim for basic loss
     7     benefits shall give to the claimant written notice of the
     8     rejection promptly, but in no event more than 30 days after
     9     the receipt of reasonable proof of the loss. Notice shall
    10     specify the reason for rejection and inform the claimant of
    11     the terms and conditions of the right to obtain an attorney.
    12     If a claim is rejected for a reason other than that the
    13     person is not entitled to basic loss benefits claimed, the
    14     written notice shall inform the claimant that the claim may
    15     be held with the assigned claims bureau and shall give the
    16     name and address of the bureau.
    17     (b)  Release or settlement of claim.--
    18         (1)  Except as otherwise provided in this subsection, no-
    19     fault benefits may not be denied or terminated because the
    20     victim executed a release or other settlement agreement. If
    21     the reasonably anticipated net loss does not exceed $2,500, a
    22     claim for no-fault benefits may be discharged by a settlement
    23     agreement for an agreed amount payable in installments or in
    24     a lump sum. If the reasonably anticipated net loss exceeds
    25     $2,500, a claim may be discharged by a settlement to the
    26     extent authorized by law upon a finding by a court of
    27     competent jurisdiction that the settlement is in the best
    28     interest of the claimant and beneficiaries of the claimant
    29     and that the claimant understands and consents to the
    30     settlement and upon payment by the obligor of the costs of
    19870H1446B1706                 - 16 -

     1     the proceeding, including a reasonable attorney fee based
     2     upon actual time expended. Costs may not be charged to or
     3     deducted from the proceeds of the settlement. Upon approval
     4     of the settlement, the court may make appropriate orders
     5     concerning the safeguarding and disposing of the proceeds of
     6     the settlement and may direct, as a condition of the
     7     settlement agreement, that the obligor pay the reasonable
     8     cost of appropriate future medical and vocational
     9     rehabilitation services.
    10         (2)  A settlement agreement for an amount payable in
    11     installments shall be modified as to amounts to be paid in
    12     the future if it is shown that a material and substantial
    13     change of circumstances has occurred or that there is newly-
    14     discovered evidence concerning the claimant's physical
    15     condition, loss or rehabilitation which could not have been
    16     known previously or discovered in the exercise of reasonable
    17     diligence.
    18         (3)  A settlement agreement may be set aside if it is
    19     procured by fraud or if its terms are unconscionable.
    20     (c)  Time limitations on actions to recover benefits.--
    21         (1)  If no-fault benefits have not been paid for loss
    22     arising otherwise than from death, an action for the benefits
    23     may be commenced not later than two years after the victim
    24     suffers the loss and knows, or, in the exercise of reasonable
    25     diligence, should have known, that the loss was caused by the
    26     accident, or not later than four years after the accident,
    27     whichever is earlier. If no-fault benefits have been paid for
    28     loss arising otherwise than from death, an action for further
    29     benefits other than survivor's benefits may be commenced not
    30     later than two years after the last payment of benefits.
    19870H1446B1706                 - 17 -

     1         (2)  If no-fault benefits have not been paid to the
     2     deceased victim or the victim's survivor, an action for
     3     survivor's benefits may be commenced not later than one year
     4     after the death or four years after the accident from which
     5     death results, whichever is earlier. If survivor's benefits
     6     have been paid to a survivor, an action for further
     7     survivor's benefits may be commenced not later than two years
     8     after the last payment of benefits. If no-fault benefits have
     9     been paid for loss suffered by a deceased victim before
    10     death, an action for survivor's benefits may be commenced not
    11     later than one year after the death or six years after the
    12     last payment of benefits, whichever is earlier.
    13         (3)  If timely action for basic restoration benefits is
    14     commenced against an obligor and benefits are denied because
    15     of a determination that the obligor's coverage is not
    16     applicable to the claimant under the provisions of section
    17     1724 (relating to source of basic restoration benefits), an
    18     action against the applicable obligor or the obligor to whom
    19     a claim is assigned under an assigned claims plan may be
    20     commenced not later than 60 days after the determination
    21     becomes final or the last date on which the action could
    22     otherwise have been commenced, whichever is later.
    23         (4)  Except as paragraph (1), (2) or (3) prescribes a
    24     longer period, an action by a claimant on an assigned claim
    25     which has been timely presented under section 1707 (relating
    26     to assigned claims plan) may not be commenced more than 60
    27     days after the claimant receives written notice of rejection
    28     of the claim by the obligor to which it was assigned.
    29         (5)  If a person entitled to no-fault benefits is under a
    30     legal disability when the right to bring an action for the
    19870H1446B1706                 - 18 -

     1     benefits accrues, the period of the disability shall not be a
     2     part of the time limited for commencement of the action.
     3     (d)  Assignment of benefits.--An assignment of or an
     4  agreement to assign a right under this chapter for loss accruing
     5  in the future is unenforceable except as to benefits for one of
     6  the following:
     7         (1)  Work loss to secure payment of alimony, maintenance
     8     or child support.
     9         (2)  Allowable expense to the extent the benefits are for
    10     the cost of products, services or accommodations provided or
    11     to be provided by the assignee.
    12     (e)  Deduction and setoff.--Except as otherwise provided in
    13  this chapter, basic loss benefits shall be paid without
    14  deduction or setoff.
    15     (f)  Exemption of benefits.--
    16         (1)  No-fault benefits for allowable expense are exempt
    17     from garnishment, attachment, execution and other process or
    18     claim, except upon the claim of a creditor who has provided
    19     products, services or accommodations to the extent benefits
    20     are for allowable expense for those products, services or
    21     accommodations.
    22         (2)  Basic loss benefits other than those for allowable
    23     expense are exempt from garnishment, attachment, execution
    24     and other process or claim to the extent the benefits are
    25     attributable to loss sustained within the first 60 days
    26     following the accident resulting in injury. Other basic loss
    27     benefits except for items of allowable expense are exempt to
    28     the extent that wages or earnings are exempt under applicable
    29     law exempting wages or earnings from process or claims.
    30  § 1706.  Attorney fees and costs.
    19870H1446B1706                 - 19 -

     1     (a)  Claimant.--If overdue no-fault benefits are paid by the
     2  obligor after receipt by the obligor of notice of representation
     3  of a claimant in connection with a claim or action for the
     4  payment of no-fault benefits, a reasonable attorney fee based on
     5  actual time expended shall be paid by the obligor to the
     6  attorney. No part of the attorney fee for representing the
     7  claimant in connection with the claim or action for no-fault
     8  benefits may be charged or deducted from benefits otherwise due
     9  to the claimant, and no part of the benefits may be applied to
    10  the fee. If, in an action by a claimant to recover no-fault
    11  benefits from an obligor, the court determines that the obligor
    12  has denied the claim or a significant part of the claim without
    13  reasonable foundation, the court may award the claimant's
    14  attorney a reasonable fee based upon actual time expended.
    15     (b)  Obligor.--If, in an action by a claimant to recover no-
    16  fault benefits from an obligor, the court determines that the
    17  claim or a significant part of the claim is fraudulent or so
    18  excessive as to have no reasonable foundation, the court may
    19  award the obligor's attorney a reasonable fee based upon actual
    20  time expended. The court may direct that the fee shall be paid
    21  by the claimant or that the fee may be treated in whole or in
    22  part as an offset against benefits due the claimant.
    23  § 1707.  Assigned claims plan.
    24     (a)  Benefits.--
    25         (1)  For an accident resulting in injury that occurs on
    26     or after the effective date of this chapter, a victim or the
    27     survivor of a deceased victim may obtain basic benefits
    28     through the assigned claims plan established under subsection
    29     (b), if one of the following applies:
    30             (i)  Basic loss incurred is not applicable to the
    19870H1446B1706                 - 20 -

     1         injury for a reason other than those specified in section
     2         1728 (relating to ineligible claimants).
     3             (ii)  Basic loss incurred is not applicable to the
     4         injury because the victim converted a motor vehicle while
     5         the victim was under 15 years of age.
     6             (iii)  Basic loss incurred applicable to the injury
     7         cannot be identified.
     8             (iv)  Basic loss incurred applicable to the injury is
     9         inadequate to provide the contracted-for benefits because
    10         of financial inability of an obligor to fulfill its
    11         obligations.
    12             (v)  Basic loss incurred benefits are refused by an
    13         obligor for a reason other than that the individual is
    14         not entitled in accordance with this chapter to receive
    15         the basic loss benefits claimed.
    16         (2)  If a claim qualifies for assignment under paragraph
    17     (1)(iii), (iv) or (v), the assigned claims bureau or an
    18     insurer to whom the claim is assigned is subrogated to the
    19     rights of the claimant against the obligor obligated to
    20     provide basic benefits to the claimant for the benefits
    21     provided by the assignee.
    22         (3)  If an individual receives basic loss benefits
    23     through the assigned claims plan for a reason other than
    24     because of the financial inability of an obligor to fulfill
    25     its obligation, the benefits or advantages that the
    26     individual receives or is entitled to receive as a result of
    27     the injury, other than life insurance benefits or benefits by
    28     way of succession at death or in discharge of familial
    29     obligations of support, shall be subtracted from loss in
    30     calculating net loss.
    19870H1446B1706                 - 21 -

     1         (4)  An assigned claim of an individual who does not
     2     comply with the requirement of providing security for the
     3     payment of basic restoration benefits or of an individual as
     4     to whom the security is invalidated because of the
     5     individual's fraud or willful misconduct is subject to all of
     6     the following:
     7             (i)  The maximum optional deductibles and exclusions
     8         required to be offered.
     9             (ii)  A deduction in the amount of $500 for each year
    10         or part thereof of the period of the individual's
    11         continuous failure to provide security, applicable to
    12         benefits otherwise payable except basic benefits for
    13         allowable expense.
    14     (b)  Establishment.--
    15         (1)  Obligors other than self insurers and governments
    16     providing basic loss insurance in this Commonwealth shall
    17     organize and maintain, subject to approval and regulation by
    18     the commissioner, an assigned claims bureau and an assigned
    19     claims plan and adopt rules for their operation and for
    20     assessment of costs on a fair and equitable basis consistent
    21     with this chapter. If a bureau and plan are not organized and
    22     maintained in a manner considered by the commissioner to be
    23     consistent with this chapter, the commissioner shall organize
    24     and maintain an assigned claims bureau and an assigned claims
    25     plan. Each obligor insurer providing basic loss insurance in
    26     this Commonwealth shall participate in the assigned claims
    27     bureau and the assigned claims plan. Costs incurred shall be
    28     allocated fairly and equitably among the obligors.
    29         (2)  The assigned claims bureau shall promptly do all of
    30     the following:
    19870H1446B1706                 - 22 -

     1             (i)  Assign claims for no-fault benefits to an
     2         assignee who shall be a participating insurer.
     3             (ii)  Notify the claimant of the identity and address
     4         of the assignee.
     5         (3)  Claims shall be assigned so as to minimize
     6     inconvenience to claimants. The assignee has rights and
     7     obligations as if the assignee had issued a policy of basic
     8     loss insurance complying with this chapter applicable to the
     9     injury or, in a case involving the financial inability of an
    10     obligor to perform its obligations, as if the assignee had
    11     written the applicable basic restoration insurance,
    12     undertaken the self-insurance or lawfully obligated itself to
    13     pay basic loss benefits.
    14     (c)  Time for presenting claims.--
    15         (1)  Except as provided in paragraph (2), an individual
    16     authorized to obtain basic loss benefits through the assigned
    17     claims plan shall notify the assigned claims bureau of a
    18     claim within the time that would have been allowed under
    19     section 1705(c) (relating to payment of claims for no-fault
    20     benefits) for commencing an action for basic loss benefits
    21     against an obligor in a case in which identifiable no-fault
    22     insurance coverage was in effect and applicable to the claim.
    23         (2)  If timely action for basic loss benefits is
    24     commenced against an obligor who is unable to fulfill
    25     obligations because of financial inability, an individual
    26     authorized to obtain basic loss benefits through the assigned
    27     claims plan shall notify the bureau of the claim within six
    28     months after discovery of financial inability.
    29  § 1708.  Rates.
    30     (a)  General rule.--The commissioner shall regulate obligors
    19870H1446B1706                 - 23 -

     1  providing security. The rates charged for security shall be
     2  established, determined and modified only in accordance with the
     3  provisions of the applicable rating law of this Commonwealth.
     4     (b)  Public information.--The commissioner shall provide the
     5  means to inform purchasers of insurance, in a manner adequate to
     6  permit them to compare prices, about rates being charged by
     7  insurers for no-fault benefits and tort liability coverage.
     8     (c)  Accountability program.--
     9         (1)  The commissioner, through the State vocational
    10     rehabilitation agency, shall establish and maintain a program
    11     for the regular and periodic evaluation of medical and
    12     vocational rehabilitation services for which reimbursement or
    13     payment is sought from an obligor as an item of allowable
    14     expense to assure all of the following:
    15             (i)  Services are medical and vocational
    16         rehabilitation services.
    17             (ii)  The recipient of the services is making
    18         progress toward a greater level of independent
    19         functioning, and the services are necessary to such
    20         progress and continued progress.
    21             (iii)  The charges for the services for which
    22         reimbursement or payment is sought are fair and
    23         reasonable.
    24         (2)  Progress reports shall be made periodically in
    25     writing on each case for which reimbursement or payment is
    26     sought under security for the payment of basic loss benefits.
    27     Reports shall be prepared by the supervising physician or
    28     rehabilitation counselor and submitted to the State
    29     vocational rehabilitation agency. The State vocational
    30     rehabilitation agency shall file reports with the applicable
    19870H1446B1706                 - 24 -

     1     obligor. Pursuant to this program, there shall be provision
     2     for determinations to be made in writing of the
     3     rehabilitation goals and needs of the victim and for the
     4     periodic assessment of progress at reasonable time intervals
     5     by the supervising physician or rehabilitation counselor.
     6         (3)  The commissioner may establish and maintain a
     7     program for the regular and periodic evaluation of this
     8     Commonwealth's no-fault plan for motor vehicle insurance.
     9     (d)  Availability of services.--The commissioner may
    10  coordinate with appropriate government agencies in the creation
    11  and maintenance of an emergency health services system and take
    12  steps necessary to assure that emergency health services are
    13  available for each victim suffering injury in this Commonwealth.
    14  The commissioner may take steps necessary to assure that medical
    15  and vocational rehabilitation services are available for each
    16  victim who is a resident of this Commonwealth. Steps may
    17  include, but are not limited to, guarantees of loans or other
    18  obligations of suppliers or providers of services and support
    19  for training programs for personnel in programs and facilities
    20  offering services.
    21  § 1709.  Motor vehicles in interstate travel.
    22     (a)  General rule.--An owner who has complied with the
    23  requirements of security shall be deemed to have complied with
    24  the requirements for security in states in which the vehicle is
    25  operating.
    26     (b)  Conforming coverage.--
    27         (1)  An obligor providing security for the payment of
    28     basic loss benefits is obligated to provide, and each
    29     contract of insurance for the payment of basic loss benefits
    30     shall be construed to contain, coverage sufficient to satisfy
    19870H1446B1706                 - 25 -

     1     the requirements for security covering a motor vehicle in a
     2     state where a victim or a survivor of a deceased victim is
     3     domiciled or where a victim is injured.
     4         (2)  An obligor providing security for the payment of
     5     basic loss benefits shall include, in each contract of
     6     insurance for the payment of basic loss benefits, coverage to
     7     protect the owner of a motor vehicle from tort liability to
     8     which the owner is exposed through application of the law of
     9     a state in which the motor vehicle may be operated and which
    10     arises out of the ownership, maintenance or use of a motor
    11     vehicle.
    12     (c)  Applicable law.--
    13         (1)  The basic loss benefits available to a victim or
    14     survivor of a deceased victim shall be determined pursuant to
    15     the provisions of the state no-fault plan for motor vehicle
    16     insurance in effect in the state of domicile of the victim on
    17     the date when the motor vehicle accident resulting in injury
    18     occurs. If there is no state no-fault plan in effect or if
    19     the victim is not domiciled in a state, then basic loss
    20     benefits available to the victim shall be determined pursuant
    21     to the provisions of the state no-fault plan for motor
    22     vehicle insurance in effect in the state in which the
    23     accident resulting in injury occurs.
    24         (2)  The right of a victim or of a survivor of a deceased
    25     victim to sue in tort shall be determined by the law of the
    26     state of domicile of the victim. If a victim is not domiciled
    27     in a state, the right to sue shall be determined by the law
    28     of the state in which the accident resulting in injury or
    29     damage to property occurs.
    30  § 1710.  Rights and duties of obligors.
    19870H1446B1706                 - 26 -

     1     (a)  Reimbursement and subrogation.--
     2         (1)  Except as provided in paragraphs (2) and (3), all of
     3     the following apply:
     4             (i)  An obligor does not have, and may not contract
     5         for, a right of reimbursement from or subrogation to the
     6         proceeds of a victim's claim for relief or a right of
     7         subrogation to a victim's cause of action for noneconomic
     8         detriment.
     9             (ii)  An obligor may not contract for any right of
    10         reimbursement based upon a determination of fault from
    11         another obligor not acting as a reinsurer for no-fault
    12         benefits which it has paid or is obligated to pay as a
    13         result of injury to a victim.
    14         (2)  If an individual who receives or is entitled to
    15     receive no-fault benefits for an injury has a claim or cause
    16     of action against another person who caused the injury, based
    17     upon a determination of fault, and if the obligor has paid or
    18     become obligated to pay accrued or future no-fault benefits
    19     in excess of the minimum basic loss benefits required under
    20     this chapter, the obligor shall be subrogated to the rights
    21     of the claimant only for elements of damage compensated for
    22     by security for the payment of no-fault benefits in excess of
    23     the minimum basic loss benefits required under this chapter.
    24         (3)  Nothing in this subsection precludes a person
    25     supplying or providing products, services or accommodations
    26     from contracting or otherwise providing for a right of
    27     reimbursement to basic restoration benefits for allowable
    28     expense.
    29         (4)  An entity providing benefits other than no-fault
    30     benefits to an individual as described in section 1723
    19870H1446B1706                 - 27 -

     1     (relating to collateral benefits) does not have a right of
     2     subrogation with respect to the benefits.
     3     (b)  Duty to pay basic loss benefits.--An obligor providing
     4  security for the payment of basic loss benefits shall pay or
     5  provide benefits without regard to fault to each individual
     6  entitled to the benefits under this chapter.
     7     (c)  Indemnity.--An obligor has a right of indemnity against
     8  an individual who has converted a motor vehicle involved in an
     9  accident, or against an individual who has intentionally injured
    10  himself or another individual, for no-fault benefits paid for
    11  all of the following:
    12         (1)  The loss caused by the conduct of that individual.
    13         (2)  The cost of processing the claims for the benefits.
    14         (3)  The cost of enforcing this right of indemnity,
    15     including reasonable attorney fees.
    16     (d)  Referral for rehabilitation services.--The obligor shall
    17  promptly refer a victim to whom basic benefits are expected to
    18  be payable for more than two months to the State vocational
    19  rehabilitation agency.
    20                            SUBCHAPTER B
    21                         RIGHT TO BENEFITS
    22  Sec.
    23  1721.  Right to basic loss benefits.
    24  1722.  Basic loss benefits.
    25  1723.  Collateral benefits.
    26  1724.  Source of basic restoration benefits.
    27  1725.  Work loss.
    28  1726.  Net loss.
    29  1727.  Added loss benefits.
    30  1728.  Ineligible claimants.
    19870H1446B1706                 - 28 -

     1  1729.  Other provisions.
     2  § 1721.  Right to basic loss benefits.
     3     (a)  Accident within this Commonwealth.--If the accident
     4  resulting in injury occurs in this Commonwealth, a victim or a
     5  survivor of a deceased victim is entitled to receive basic loss
     6  benefits under this chapter.
     7     (b)  Accident outside this Commonwealth.--If the accident
     8  resulting in injury occurs outside this Commonwealth, a victim
     9  or a survivor of a deceased victim is entitled to receive basic
    10  loss benefits if the victim was one of the following:
    11         (1)  An insured.
    12         (2)  The driver or other occupant of a secured vehicle.
    13  § 1722.  Basic loss benefits.
    14     (a)  Allowable expense limits.--Allowable expense shall be
    15  provided, or the equivalent of allowable expenses shall be
    16  provided, in the form of a contract to provide required
    17  services.
    18     (b)  Work loss limits.--Work loss shall be provided for
    19  amounts, selected by the insured, not to exceed after-tax
    20  earnings as reported to the Internal Revenue Service for Federal
    21  income tax purposes.
    22     (c)  Deductibles and waiting period.--Allowable expense and
    23  work loss may include provisions to provide a deductible not to
    24  exceed $1,000 for each individual or, with respect to work loss
    25  services only, to provide a waiting period not to exceed 30
    26  days. The deductible or waiting period shall be elected, in
    27  writing, upon a form approved by the commissioner. If elected,
    28  the deductible or waiting period shall be effective only against
    29  the named insured and the named insured's family.
    30     (d)  Exclusion.--A basic loss obligor is not obligated to
    19870H1446B1706                 - 29 -

     1  provide basic loss benefits for allowable expense for medical
     2  and vocational rehabilitation services unless the facility in
     3  which or through which the services are provided has been
     4  accredited by the Department of Health, or the equivalent
     5  governmental agency responsible for health programs in the state
     6  in which the services are provided, as being in accordance with
     7  applicable requirements and regulations.
     8  § 1723.  Collateral benefits.
     9     (a)  General rule.--If benefits, other than no-fault
    10  benefits, for a victim or the survivor of a deceased victim are
    11  provided to an individual through a program, group, contract or
    12  other arrangement for which some other person pays, in whole or
    13  in part, then a reduction or savings, resulting from the
    14  existence of no-fault benefits, in the direct or indirect cost
    15  of the provided benefits shall be returned to the individual.
    16     (b)  Security.--The owner may elect to provide for security
    17  for the payment of basic loss benefits through a program, group,
    18  contract or other arrangement that would pay, to or on behalf of
    19  the victim, members of the victim's family residing in the same
    20  household or the survivor of a deceased victim, allowable
    21  expense, loss of income, work loss, replacement services loss
    22  and survivor's loss. A contract of insurance issued by an
    23  insurer shall be construed to contain a provision that basic
    24  loss benefits provided in the contract shall be in excess of
    25  valid and collectible benefits otherwise provided through a
    26  program, group, contract or other arrangement, as designated at
    27  the election of the owner to be primary.
    28     (c)  Cost reduction.--An insurer providing basic loss
    29  benefits and tort liability coverage under subsection (b) shall
    30  reduce the cost of the contract of insurance to reflect the
    19870H1446B1706                 - 30 -

     1  anticipated reduction in basic loss benefits payable by the
     2  insurer by reason of the election of the owner to provide
     3  substitute security.
     4  § 1724.  Source of basic restoration benefits.
     5     (a)  Applicable security.--
     6         (1)  The security for the payment of basic loss benefits
     7     applicable to an employee or to the spouse or other relative
     8     of the employee residing in the same household as the
     9     employee, if the accident resulting in injury occurs while
    10     the victim or deceased victim is driving or occupying a motor
    11     vehicle furnished by the employer, is the security for the
    12     payment of basic loss benefits covering the motor vehicle or,
    13     if there is none, other security applicable to the victim.
    14         (2)  The security for the payment of basic loss benefits
    15     applicable to an individual who is not an insured or the
    16     driver or other occupant of a motor vehicle involved in an
    17     accident resulting in injury is the security covering the
    18     motor vehicle involved in the accident. For purposes of this
    19     paragraph, a parked and unoccupied motor vehicle is not a
    20     motor vehicle involved in an accident unless it was parked so
    21     as to cause unreasonable risk of injury.
    22         (3)  The security for the payment of basic loss benefits
    23     applicable to the driver or other occupant of a motor vehicle
    24     who is involved in an accident resulting in injury but who is
    25     not an insured is the security covering the vehicle.
    26         (4)  The security for the payment of basic loss benefits
    27     applicable to an insured is the security under which the
    28     victim or deceased victim is insured.
    29         (5)  The applicable assigned claims plan is the security
    30     for the payment of basic loss benefits applicable to
    19870H1446B1706                 - 31 -

     1     individuals not covered by paragraphs (1) through (4).
     2     (b)  Multiple sources of equal property.--If two or more
     3  obligations to pay basic loss benefits apply equally to an
     4  injury under the priorities set forth in subsection (a), the
     5  obligor against whom a claim is asserted first shall process and
     6  pay the claim as if wholly responsible. That obligor shall be
     7  entitled to recover contribution pro rata from another obligor
     8  for the basic loss benefits paid and for the costs of processing
     9  the claim. If contribution is sought among obligors responsible
    10  under subsection (a)(2), proration shall be based on the number
    11  of involved motor vehicles.
    12  § 1725.  Work loss.
    13     (a)  Regularly employed.--The work loss of a victim whose
    14  income prior to the injury was realized in regular increments is
    15  calculated as follows:
    16         (1)  Divide probable annual income by 52.
    17         (2)  Multiply the quotient in paragraph (1) by the number
    18     of work weeks the victim sustains loss of income during the
    19     accrual period.
    20     (b)  Seasonally employed.--The work loss of a victim whose
    21  income is realized in irregular increments is calculated as
    22  follows:
    23         (1)  Divide probable annual income by the number of weeks
    24     the victim normally works.
    25         (2)  Multiply the quotient in paragraph (1) by the number
    26     of work weeks the victim was unable to perform and would have
    27     performed work but for the injury during the accrual period.
    28     (c)  Not employed.--The work loss of a victim who is not
    29  employed when the accident resulting in injury occurs is
    30  calculated as follows:
    19870H1446B1706                 - 32 -

     1         (1)  Divide probable annual income by 52.
     2         (2)  Multiply the quotient in paragraph (1) by the number
     3     of work weeks, if any, the victim would reasonably have been
     4     expected to realize income during the accrual period.
     5     (d)  Definitions.--As used in this section, the following
     6  words and phrases shall have the meanings given to them in this
     7  subsection:
     8     "Probable annual income."  Absent a showing that it is or
     9  would be some other amount, the following:
    10         (1)  For a victim regularly employed at the time of the
    11     accident, the greater of the following:
    12             (i)  Twelve times the monthly gross income earned by
    13         the victim from work in the month preceding the month in
    14         which the accident resulting in injury occurs.
    15             (ii)  The average annual income earned by the victim
    16         from work during the years, not to exceed three,
    17         preceding the year in which the accident resulting in
    18         injury occurs.
    19         (2)  For a victim seasonally employed or unemployed at
    20     the time of the accident, the average annual gross income
    21     earned by the victim from work during the years in which the
    22     victim was employed, not to exceed three, preceding the year
    23     in which the accident resulting in injury occurs.
    24         (3)  For a victim who has not previously earned income
    25     from work, the average annual gross income of a production or
    26     nonsupervisory worker in the private nonfarm economy in the
    27     state in which the victim is domiciled for the year in which
    28     the accident resulting in injury occurs.
    29     "Weekly income."  Income earned during a work week.
    30     "Work week."  The number of days an individual normally works
    19870H1446B1706                 - 33 -

     1  in a seven-day period.
     2  § 1726.  Net loss.
     3     (a)  General rule.--Except as provided in section 1707(a)(3)
     4  (relating to assigned claims plan), all of the following shall
     5  be subtracted from loss in calculating net loss:
     6         (1)  Benefits or advantages, less reasonably incurred
     7     collection costs, that an individual receives or is entitled
     8     to receive from all of the following:
     9             (i)  Social Security. This subparagraph does not
    10         apply to benefits provided under Title XIX of the Social
    11         Security Act (Public Law 74-271, 42 U.S.C. § 1396 et
    12         seq.) or Medicare benefits to which an individual's
    13         entitlement depends upon use of "life-time reserve" of
    14         benefit days.
    15             (ii)  Worker's compensation.
    16             (iii)  State-required temporary, nonoccupational
    17         disability insurance.
    18         (2)  Benefits from a government received by or available
    19     to an individual because of an injury. This paragraph does
    20     not apply to proceeds of life insurance.
    21     (b)  Tax deduction.--If a benefit or advantage received to
    22  compensate for loss of income because of injury, whether from
    23  no-fault benefits or from a source of benefits or advantages
    24  subtracted under subsection (a), is not taxable income, the
    25  income tax saving that is attributable to that loss of income
    26  because of injury shall be subtracted in calculating net loss
    27  for work loss. Subtraction may not exceed 20% of the loss of
    28  income and shall be in a lesser amount as the insurer reasonably
    29  determines is appropriate based on a lower value of the income
    30  tax advantage.
    19870H1446B1706                 - 34 -

     1  § 1727.  Added loss benefits.
     2     (a)  Mandatory offering.--Obligors providing security for the
     3  payment of basic loss benefits shall offer or obligate
     4  themselves to provide added loss benefits for injury or damage
     5  arising out of the ownership, maintenance or use of a motor
     6  vehicle, including:
     7         (1)  Loss excluded from basic loss benefits by limits on
     8     allowable expense, work loss, replacement services loss and
     9     survivor's loss.
    10         (2)  Benefits for damage to property.
    11         (3)  Benefits for loss of use of a motor vehicle.
    12         (4)  Benefits for expense for remedial religious
    13     treatment and care.
    14         (5)  For physical damage to a motor vehicle, a coverage
    15     for collision and upset damage, subject to an optional
    16     deductible.
    17         (6)  For economic detriment, a coverage for work loss
    18     sustained by a victim in excess of limitations on basic loss
    19     benefits for work loss.
    20     (b)  Additional loss coverage.--Subject to the approval of
    21  terms and forms by the commissioner, obligors may offer or
    22  obligate themselves to provide other added loss coverages. The
    23  commissioner may adopt regulations requiring that insurers
    24  providing basic loss insurance offer, under this chapter, other
    25  specified added loss coverages.
    26  § 1728.  Ineligible claimants.
    27     (a)  Converter.--
    28         (1)  Except as provided for assigned claims, a converter
    29     of a motor vehicle is ineligible to receive no-fault
    30     benefits, including benefits otherwise due as a survivor,
    19870H1446B1706                 - 35 -

     1     from a source other than a contract of insurance under which
     2     the converter is an insured for an injury arising out of the
     3     maintenance or use of the converted vehicle. If a converter
     4     dies from injuries, the survivor is not entitled to no-fault
     5     benefits for survivor's loss from a source other than a
     6     contract of insurance under which the converter is an
     7     insured.
     8         (2)  For purposes of this subsection and section 1710
     9     (relating to rights and duties of obligors), an individual is
    10     not a converter of a motor vehicle if the individual used it
    11     in the good faith belief that the individual was legally
    12     entitled to do so.
    13     (b)  Intentional injuries.--
    14         (1)  An individual who intentionally injures himself or
    15     another individual is ineligible to receive no-fault benefits
    16     for injury arising out of the act, including benefits
    17     otherwise due as a survivor. If an individual dies as a
    18     result of intentionally injuring himself, the survivor is not
    19     entitled to no-fault benefits for survivor's loss. An
    20     individual intentionally injures himself or another
    21     individual if he acts or fails to act for the purpose of
    22     causing injury or with knowledge that the injury is
    23     substantially certain to follow. An individual does not
    24     intentionally injure himself or another individual merely
    25     because the act or failure to act is intentional or done with
    26     the realization that it creates a grave risk of causing
    27     injury or if the act or omission causing the injury is for
    28     the purpose of averting bodily harm to himself or another
    29     individual.
    30         (2)  For the purposes of sections 1710(c) and 1726
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     1     (relating to net loss), an individual does not intentionally
     2     injure himself or another individual merely because the act
     3     or failure to act is intentional or done with the realization
     4     that it creates a grave risk of harm.
     5  § 1729.  Other provisions.
     6     (a)  Included coverage.--A contract of insurance covering
     7  liability arising out of the ownership, maintenance or use of a
     8  motor vehicle registered in this Commonwealth shall include
     9  basic loss benefits and other benefit coverages required by the
    10  plan under section 1704 (relating to availability of insurance)
    11  unless the contract provides tort liability coverages only in
    12  excess of those required by the no-fault plan.
    13     (b)  Approval of terms and forms.--Terms and conditions,
    14  including forms used by insurers, of a contract, certificate or
    15  other evidence of insurance sold or issued pursuant to the plan
    16  under section 1704 providing no-fault benefits or required tort
    17  liability are subject to approval and regulation by the
    18  commissioner. The commissioner shall approve only terms and
    19  conditions which are consistent with the purposes of this
    20  chapter and which are and fair and equitable to persons whose
    21  interests may be affected. The commissioner may reasonably limit
    22  by regulation the variety of coverage available in order to give
    23  purchasers of insurance a reasonable opportunity to compare the
    24  cost of insuring with various insurers.
    25                            SUBCHAPTER C
    26                           TORT LIABILITY
    27  Sec.
    28  1731.  Tort liability.
    29  § 1731.  Tort liability.
    30     (a)  Partial abolition.--Tort liability is abolished with
    19870H1446B1706                 - 37 -

     1  respect to an injury that takes place in this Commonwealth if
     2  the injury arises out of the maintenance or use of a motor
     3  vehicle. Tort liability is not abolished in the following
     4  circumstances:
     5         (1)  An owner of a motor vehicle involved in an accident
     6     remains liable if, at the time of the accident, the vehicle
     7     was not a secured vehicle.
     8         (2)  A person in the business of designing,
     9     manufacturing, repairing, servicing or otherwise maintaining
    10     motor vehicles remains liable for injury arising out of a
    11     defect in a motor vehicle which is caused or not corrected by
    12     an act or omission in the course of the business. This
    13     paragraph does not apply to a defect in a motor vehicle which
    14     is operated by such business.
    15         (3)  An individual remains liable for intentionally
    16     injuring himself or another individual.
    17         (4)  A person remains liable for loss which is not
    18     compensated because of a limitation under section 1722
    19     (relating to basic loss benefits).
    20         (5)  A person remains liable for damages for noneconomic
    21     detriment if the accident results in one of the following:
    22             (i)  Death or serious and permanent injury.
    23             (ii)  The reasonable value of reasonable and
    24         necessary medical and dental services, including
    25         prosthetic devices and necessary ambulance, hospital and
    26         professional nursing expenses incurred in the diagnosis,
    27         care and recovery of the victim, exclusive of diagnostic
    28         X-ray costs and rehabilitation costs in excess of $100,
    29         in excess of $3,000. For the purposes of this paragraph,
    30         the reasonable value of hospital room and board shall be
    19870H1446B1706                 - 38 -

     1         the amount determined by the Department of Health to be
     2         the average daily rate charged for a semiprivate hospital
     3         room and board, computed from charges by all hospitals in
     4         this Commonwealth.
     5             (iii)  Medically determinable physical or mental
     6         impairment which prevents the victim from performing all
     7         or substantially all of the material acts and duties
     8         which constitute the victim's usual and customary daily
     9         activities and which continues for more than 60
    10         consecutive days.
    11             (iv)  Injury which consists of cosmetic disfigurement
    12         which is permanent, irreparable and severe.
    13         (6)  A person remains liable for injury arising out of a
    14     motorcycle accident to the extent that the injury is not
    15     covered by basic loss benefits payable under this chapter.
    16     (b)  Nonreimbursable tort fine.--Nothing in this section
    17  shall be construed to immunize an individual from liability to
    18  pay a fine on the basis of fault in a proceeding based upon an
    19  act or omission arising out of the maintenance or use of a motor
    20  vehicle. A fine under this subsection may not be paid or
    21  reimbursed by an insurer or other obligor.
    22                            SUBCHAPTER D
    23            EXAMINATION, TREATMENT AND REHABILITATION OF
    24                          INJURED PERSONS
    25  Sec.
    26  1741.  Examination.
    27  1742.  Report of examination.
    28  1743.  Refusal to comply.
    29  1744.  Court order for obligor responsibility.
    30  1745.  Court order for rehabilitative training.
    19870H1446B1706                 - 39 -

     1  1746.  Compliance with court order.
     2  1747.  Customary charges for treatment.
     3  1748.  Earnings statement.
     4  § 1741.  Examination.
     5     If the mental or physical condition of a victim is material
     6  to a claim that has been or may be made for past or future basic
     7  loss benefits, a court of competent jurisdiction may order the
     8  victim to submit to mental or physical examination by a
     9  physician. The order may be made only upon motion for good cause
    10  shown and upon notice to the victim to be examined and to other
    11  persons having an interest. The order shall specify the time,
    12  place, manner, conditions and scope of the examination and the
    13  individual by whom it is to be made.
    14  § 1742.  Report of examination.
    15     If requested by the victim, a party causing an examination to
    16  be made shall deliver to the victim a copy of every written
    17  report concerning the examination rendered by an examining
    18  physician. At least one of these reports must set out the
    19  findings and conclusions in detail. After request and delivery,
    20  the party causing the examination to be made may, upon request,
    21  receive from the victim every written report available to the
    22  victim or a representative concerning an examination of the same
    23  mental or physical condition. By requesting and obtaining a
    24  report of the examination so ordered or by taking the deposition
    25  of the examiner, the victim waives the privilege, in relation to
    26  the claim for basic loss benefits, regarding the testimony of
    27  examiner of the victim in respect to the same mental or physical
    28  condition.
    29  § 1743.  Refusal to comply.
    30     If a person refuses to comply with an order entered under
    19870H1446B1706                 - 40 -

     1  section 1741 (relating to examination) or 1742 (relating to
     2  report of examination), the court may make orders in regard to
     3  the refusal as are just. No order shall be entered directing the
     4  arrest of a person for disobeying an order to submit to a
     5  physical or mental examination. The orders that may be made in
     6  regard to a refusal include, but are not limited to, the
     7  following:
     8         (1)  An order that the mental or physical condition of
     9     the victim shall be taken to be established for the purposes
    10     of the claim in accordance with the contention of the party
    11     obtaining the order.
    12         (2)  An order refusing to allow the disobedient person to
    13     support or oppose designated claims or defenses or
    14     prohibiting the disobedient person from introducing evidence
    15     of mental or physical condition.
    16         (3)  An order rendering judgment by default against the
    17     disobedient person as to the person's entire claim or a
    18     designated part of it.
    19         (4)  An order requiring the disobedient person to
    20     reimburse the obligor for reasonable attorney fees and
    21     expenses incurred in defense against the claim.
    22         (5)  An order requiring delivery of a report under
    23     section 1742 on just terms. If a physician fails or refuses
    24     to make a report, a court may exclude the physician's
    25     testimony.
    26  § 1744.  Court order for obligor responsibility.
    27     (a)  General rule.--Upon application by an interested person,
    28  upon reasonable notice to other interested persons and upon
    29  findings supported by evidence, a court of competent
    30  jurisdiction may, after a hearing, enter an order determining
    19870H1446B1706                 - 41 -

     1  that an obligor is responsible, subject to the limits and other
     2  terms and conditions of the coverage, for the cost of a
     3  specified procedure or treatment for rehabilitation to which the
     4  victim submits.
     5     (b)  Findings.--All of the following findings are required to
     6  support an order under subsection (a):
     7         (1)  The specified course of procedure or treatment,
     8     whether or not involving surgery, is recognized and
     9     acceptable medically or is acceptable nonmedical remedial
    10     Christian Science treatment and care.
    11         (2)  The specified course of procedure or treatment has
    12     contributed or will contribute substantially to
    13     rehabilitation.
    14         (3)  The cost of the procedure or treatment is reasonable
    15     in relation to its probable rehabilitative effects.
    16  § 1745.  Court order for rehabilitative training.
    17     (a)  General rule.--Upon application by an interested person,
    18  upon reasonable notice to other interested persons and upon
    19  findings supported by evidence, a court of competent
    20  jurisdiction may, after a hearing, enter an order determining
    21  that an obligor is responsible, subject to the limits and other
    22  terms and conditions of the coverage, for the cost of a
    23  specified course of rehabilitative occupational training that
    24  the injured victim takes.
    25     (b)  Findings.--All of the following findings are required to
    26  support an order under subsection (a):
    27         (1)  The specified course of occupational training is a
    28     recognized form of training and is reasonable and appropriate
    29     for the particular case.
    30         (2)  The training has contributed or will contribute
    19870H1446B1706                 - 42 -

     1     substantially to rehabilitation.
     2         (3)  The cost of the training is reasonable in relation
     3     to its probable rehabilitative effects.
     4  § 1746.  Compliance with court order.
     5     (a)  Order of compliance.--Upon application by an interested
     6  person, upon reasonable notice to other interested persons and
     7  upon findings supported by evidence, a court of competent
     8  jurisdiction may, after a hearing, enter an order invoking
     9  reasonable sanctions against the victim and survivors. All of
    10  the following findings are required to support an order under
    11  this subsection:
    12         (1)  The victim has refused or has caused the obligor
    13     reasonably to believe that the victim may refuse to submit to
    14     procedure, treatment or training.
    15         (2)  The victim does not have reasonable grounds to
    16     continue refusal.
    17     (b)  Refusal to comply.--In determining whether a victim has
    18  reasonable grounds for continuing refusal to submit to the
    19  specified procedure, treatment or training, the court shall take
    20  into account the extent of the probable benefit; the attendant
    21  risks; the extent to which the procedure, treatment or training
    22  is or is not recognized as standard and customary; and whether
    23  the imposition of sanctions because of the victim's refusal
    24  would abridge the victim's constitutional rights.
    25     (c)  Sanctions.--The sanctions that may be invoked under
    26  subsection (a) include, but are not limited to, the following:
    27         (1)  An order that benefits be reduced or terminated as
    28     necessary to limit recovery of benefits to an amount equal to
    29     the benefits that, in reasonable probability, would have been
    30     due had the victim submitted to rehabilitative procedure,
    19870H1446B1706                 - 43 -

     1     treatment or training.
     2         (2)  An order that the physical or mental condition of
     3     the victim shall be taken to be established for the purposes
     4     of the claim in accordance with the contention of the
     5     obligor.
     6         (3)  An order that, if the obligor elects to pay a
     7     specified lump sum, found to be fair and reasonable
     8     compensation, in lieu of benefits that, in reasonable
     9     probability, would be due if the victim submitted to the
    10     specified procedure, treatment or training, it shall be
    11     discharged from liability arising from the injury.
    12  § 1747.  Customary charges for treatment.
    13     A physician, hospital, clinic or other person or institution
    14  lawfully rendering treatment to an injured individual for an
    15  injury covered by basic loss benefits and a person or
    16  institution providing rehabilitative occupational training
    17  following such an injury may charge a reasonable amount for the
    18  products, services and accommodations rendered. A charge may not
    19  be in excess of the amount the person or institution customarily
    20  charges for like products, services and accommodations in cases
    21  involving no insurance.
    22  § 1748.  Earnings statement.
    23     (a)  Statement from employer.--An employer of a victim shall,
    24  if a request is made by an obligor against whom a claim has been
    25  made, furnish, in a form approved by the commissioner, a sworn
    26  statement of earnings, since injury and for a reasonable period
    27  before injury, of the victim.
    28     (b)  Medical records.--A physician, hospital, clinic or other
    29  person or institution providing products, services or
    30  accommodations shall, if requested to do so by the obligor,
    19870H1446B1706                 - 44 -

     1  subject to conditions approved by the commissioner, do the
     2  following:
     3         (1)  Furnish a written report of the history, condition,
     4     treatment and dates and costs of treatment of the victim that
     5     are in connection with the injury for which claim is being
     6     made.
     7         (2)  Produce and permit the inspection and copying of
     8     records regarding the history, condition, treatment and dates
     9     and costs of treatment that are in connection with the injury
    10     for which claim is being made.
    11     (c)  Cost of reports.--An employer, physician, hospital,
    12  clinic or other person or institution providing information in
    13  response to a request under the terms of this section may charge
    14  a reasonable amount in reimbursement for the time and cost of
    15  providing the information.
    16     (d)  Discovery.--In the event of a dispute regarding an
    17  insurer's right to discovery of facts about a victim's earnings
    18  or about a victim's history, condition, treatment and dates and
    19  costs of treatment, a court of competent jurisdiction may enter
    20  an order for discovery. The order may be made only upon motion,
    21  for good cause shown, and upon notice to persons having an
    22  interest. The order shall specify the time, place, manner,
    23  conditions and scope of discovery. A court, as justice requires,
    24  may, in order to protect against annoyance, embarrassment or
    25  oppression, enter an order refusing discovery or specifying
    26  conditions of discovery and may order payments of costs and
    27  expenses of the proceeding, including reasonable fees for the
    28  appearance of attorneys at the proceedings.
    29                            SUBCHAPTER E
    30                             INSURANCE
    19870H1446B1706                 - 45 -

     1  Sec.
     2  1751.  Uninsured motorists.
     3  1752.  Antidiscrimination.
     4  1753.  Policy requirements and premium charges.
     5  1754.  Add-on benefits.
     6  § 1751.  Uninsured motorists.
     7     If the owner of a motor vehicle is insured under this
     8  chapter, the obligor obligated to pay basic loss benefits for
     9  accidental bodily injury to an individual occupying the motor
    10  vehicle or to the spouse or relative resident in the household
    11  of the owner shall be entitled to recover the benefits paid and
    12  appropriate loss adjustments costs incurred from the owner or
    13  from the owner's estate. The failure of the individual to make
    14  payment within 30 days shall be grounds for suspension or
    15  revocation of the motor vehicle registration and operator's
    16  license.
    17  § 1752.  Antidiscrimination.
    18     There may be no unfair discrimination by insurers in
    19  eligibility rules and underwriting practices by reason of race,
    20  religion, nationality or ethnic group, age, sex, family size,
    21  occupation, place of residence or marital status. The terms
    22  "eligibility rules and underwriting practices" do not include
    23  the making or promulgation of rates in accordance with law.
    24  § 1753.  Policy requirements and premium charges.
    25     (a)  Requirements for writing insurance.--Insurers licensed
    26  in this Commonwealth and desiring to qualify to write insurance
    27  applicable to motor vehicle accidents subsequent to the
    28  effective date of this chapter must, as a condition of
    29  qualification, prepare and file policy forms and insurance rates
    30  for coverages affected by this chapter. Policy forms and rates
    19870H1446B1706                 - 46 -

     1  must be filed with the office of the commissioner of this
     2  Commonwealth within three months from the effective date of this
     3  chapter.
     4     (b)  Initial premium charges.--The premiums charged by an
     5  insurer during the first 12-month period following the effective
     6  date of this chapter for basic loss insurance benefits, together
     7  with security required for the payment of tort judgments, may
     8  not exceed 85% of the combined premiums for:
     9         (1)  Bodily injury liability insurance for the same
    10     limits required in this chapter.
    11         (2)  Medical payments insurance in the amount of $1,000,
    12     approved by the commissioner for an insurer and in effect on
    13     the date this chapter becomes effective.
    14     (c)  Limitation on premium increases.--No insurer may
    15  increase the premium rate of an owner of a policy solely because
    16  a named insured under the policy made a claim under the policy
    17  and was paid the claim unless it is determined that the named
    18  insured was at fault in contributing to the accident giving rise
    19  to the claim. The commissioner shall promulgate regulations for
    20  determining fault of an insured for the purposes of this
    21  subsection.
    22  § 1754.  Add-on benefits.
    23     No obligor may, in effecting the renewal of an automobile
    24  insurance policy or in amending an automobile insurance policy
    25  to conform to the provisions of this chapter, add on no-fault
    26  benefits in excess of the minimum benefits required or increase
    27  the limits of tort liability insurance required under this
    28  chapter without the prior written consent of the insured.
    29                            SUBCHAPTER F
    30                             PENALTIES
    19870H1446B1706                 - 47 -

     1  Sec.
     2  1761.  Operation of a vehicle without security.
     3  1762.  Violations by obligor.
     4  § 1761.  Operation of a vehicle without security.
     5     An owner of a passenger vehicle for which the existence of
     6  security for basic loss benefits and tort liability insurance is
     7  a requirement for its legal operation upon the highways of this
     8  Commonwealth who operates the motor vehicle or permits it to be
     9  operated upon a highway in this Commonwealth without security
    10  under section 1703 (relating to required motor vehicle
    11  insurance) commits a misdemeanor of the third degree. An
    12  individual who operates a motor vehicle upon a public highway in
    13  this Commonwealth with the knowledge that the owner does not
    14  have security under section 1703 commits a misdemeanor of the
    15  third degree. Upon conviction of a misdemeanor under this
    16  section, a person shall be sentenced to pay a fine of not less
    17  than $100 and not more than $500 or to imprisonment for not more
    18  than six months, or both.
    19  § 1762.  Violations by obligor.
    20     An obligor who advertises, offers or contracts for or
    21  provides for no-fault benefits or tort liability insurance
    22  coverages required by this chapter and who, by a pattern of
    23  business transactions, violates this chapter commits a summary
    24  offense and shall, upon conviction, be sentenced to pay a fine
    25  of not more than $1,000.
    26                            SUBCHAPTER G
    27                      MISCELLANEOUS PROVISIONS
    28  Sec.
    29  1771.  Insurance premium rates.
    30  1772.  Severability.
    19870H1446B1706                 - 48 -

     1  § 1771.  Insurance premium rates.
     2     (a)  Reasonable difference in losses and expenses.--No rate
     3  made under the  act of June 11, 1947 (P.L.538, No.246), known as
     4  The Casualty and Surety Rate Regulatory Act, shall be held to be
     5  unfairly discriminatory unless, allowing for practical
     6  limitations, it clearly fails to reflect with reasonable
     7  accuracy the differences in expected losses and expenses. A rate
     8  is not unfairly discriminatory because different premiums result
     9  for policyholders with like loss exposures but different expense
    10  factors so long as the rate reflects the differences with
    11  reasonable accuracy. A rate is not unfairly discriminatory if it
    12  is averaged broadly among persons insured under a group,
    13  franchise or blanket policy.
    14     (b)  Factors supported by actuarial principles.--This section
    15  shall not be construed to prohibit rates for automobile
    16  insurance which are based on factors whose use is supported by
    17  sound actuarial principles or is related to actual or reasonably
    18  anticipated experience. Factors under this section include sex
    19  but exclude race, religion or national origin.
    20  § 1772.  Severability.
    21     The provisions of this chapter are severable. The provisions
    22  of section 1731 (relating to tort liability) are expressly made
    23  nonseverable.
    24     Section 3.  This act shall take effect in 60 days.




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