This appeal was consolidated from two cases involving entirely different accidents and claimants (Angela Lennartson and Katie Foss). In both situations, the flow of events was essentially the same: first, the parties were in their respective car accidents and incurred medical expenses; second, they obtained no-fault benefits from State Farm to some extent less than the limits of their policies; third, when benefits were terminated by State Farm, they each sued the at-fault drivers in negligence actions in district court; and fourth, after recovering in the negligence actions, each driver turned around and sued State Farm for additional no-fault benefits and both were successful at arbitration. State Farm fought the awards in district court and was successful against one claimant but lost against the other. Appeals followed.
At the heart of the matter is the question about how the No-Fault Act should be interpreted. The Act mandates benefits to be paid for “basic economic loss” from injuries “arising out of the maintenance or use of a motor vehicle.” Minn. Stat. § 65B. 44, subd. 1(a). Furthermore, the purpose of the No-Fault Act is to allow for “prompt payment” of benefits for “basic economic loss” and “to provider offsets to avoid double recovery.” State Farm argued that the awards from the negligence actions negated the “loss” and that the policy of the No-Fault Act is to “avoid double recovery,” which clearly happened in these cases. The Supreme Court, however, determined that the “loss” was “incurred” at the moment the claimants were billed for medical services, regardless of whether they were subsequently compensated in the district court.
As for whether the plain language of the No-Fault Act prevents the kind of double recovery that took place in these cases, the Court determined that no “provision of the No-Fault Act reduces or eliminates the no-fault insurer’s obligation to pay benefits to an injured motorist for medical-expense or other economic loss based on a negligence award.” The Court also addressed the collateral estoppel issue by saying that the issues in the no-fault actions were not “identical” to the district court cases because “fault” is not at issue in the subsequent actions against State Farm directly.
Where does this leave us today? As Justice Anderson pointed out in the dissent, this opinion is consistent with the No-Fault Act’s plain language. Regardless, this rule sets up a situation where claimants, who can afford to forgo the No-Fault procedure, sometimes for years, can obtain a double recovery if they go through a district court action first.
We will continue to watch this issue closely. If you have any questions about auto accidents, the Minnesota No-Fault Act, or other personal injury issues, please feel free to call or e-mail any one of our many experienced attorneys – www.hansendordell.com / 651-482-8900.
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