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PA Bulletin, Doc. No. 01-66



[231 PA. CODE CH. 200]

Proposed Amendment to Rule 238 Governing Damages for Delay; Proposed Recommendation No. 166

[31 Pa.B. 414]

   The Civil Procedural Rules Committee proposes that Rule of Civil Procedure 238 governing damages for delay be amended as set forth herein. The proposed recommendation is being submitted to the bench and bar for comments and suggestions prior to its submission to the Supreme Court.

   All communications in reference to the proposed recommendation should be sent not later than March 2, 2001 to:

Harold K. Don, Jr., Esquire
Civil Procedural Rules Committee
5035 Ritter Road, Suite 700
Mechanicsburg, Pennsylvania 17055

or E-Mail to

   The Explanatory Comment which appears in connection with the proposed recommendation has been inserted by the Committee for the convenience of the bench and bar. It will not constitute part of the rules of civil procedure nor will it be officially adopted or promulgated by the Court.

Annex A




Rule 238.  Damages for Delay in Actions for Bodily Injury, Death or Property Damage.

   (b) The period of time for which damages for delay shall be calculated under subdivision (a)(2) shall exclude the period of time, if any,

   (1)  after which the defendant has made a written offer of

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   (ii)  a structured settlement including an annuity underwritten by a financially responsible entity, which offer includes the actual cost of the annuity and the identity of the underwriter, plus any cash payment to the plaintiff,

and [continued that offer in effect] which offer shall contain an express clause continuing the offer in effect for at least ninety days or until commencement of trial, which ever first occurs, which offer was not accepted and the plaintiff did not recover by award, verdict or decision, exclusive of damages for delay, more than 125 percent of either the specified sum or the actual cost of the [structured settlement] annuity plus any cash payment to the plaintiff; or

   Official Note: The actual terms of a structured settlement may vary and have to be recalculated at the time of acceptance due to market fluctuation over the ninety day period during which the offer must remain open. For this reason, to permit the plaintiff to make an informed decision regarding settlement, the actual cost of the structured settlement must be included in the offer. However, the offer is sufficient as long as the offer of the cost of the annuity remains open for ninety days.

   (2)  during which the plaintiff caused delay of the trial.

*      *      *      *      *

Explanatory Comment

   The proposed amendment to Rule 238(b)(1) governing damages for delay incorporates into the rule certain requirements imposed by case law to bring an offer of settlement within the exclusion of that rule from the calculation of delay damages. Sonlin v. Abington Memorial Hospital, 748 A.2d 213 (2000), imposes three requirements, one of which applies to offers of both cash settlements and structured settlements and two of which apply to offers of structured settlements only.

   A written offer of settlement, whether cash or structured, must, in the words of the Sonlin case, contain ''a clause expressly validating the offer for 90 days . . . .'' This requirement carries out the intention of the rule which presently requires that an offer be in writing and that it be continued ''in effect for at least ninety days or until commencement of trial, whichever first occurs . . . .'' The recommendation proposes to amend subdivision (b) to include the requirement of ''an express clause'' so providing.

   If the offer is one of a structured settlement including an annuity, it must also state the actual cost of the annuity and the identity of the underwriter. The offer must be sufficient to enable, again in the words of Sonlin, a ''knowledgeable appraisal of the offer's legitimacy'' and these two elements are essential to that inquiry. The recommendation proposes to amend subdivision (b)(1)(ii) to include these two elements of the offer.

   A note added to subdivision (b)(1) recognizes that most entities underwriting structured settlement annuity cannot commit to the exact payout terms of a structured settlement for the entire ninety-day period required under the rule because the payout is often dependent on the financial market which may fluctuate over the period of the offer. Slight variations due to market forces should not invalidate the offer for purposes of this rule and thus repeated modifications of the offer are not required. It is imperative, therefore, that the plaintiff be aware of the actual cost to be paid for the structured settlement annuity.

By the Civil Procedural Rules Committee


[Pa.B. Doc. No. 01-66. Filed for public inspection January 19, 2001, 9:00 a.m.]

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