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Minnesota Legislature Update
Posted by: euser
January 19, 2007

The Minnesota Legislature has introduced its first bill relating to no-fault insurance for the 2007 session. The legislation, introduced in the Senate on January 17 by Sen. David Tomassoni (DFL - Chisholm), and in the House on January 18 by Rep. Tom Rukavina (DFL - Virginia) and Rep. Joe Atkins (DFL - Inver Grove Heights), would require actions to terminate or deny basic economic loss benefits under no-fault automobile insurance to be based on awards obtained in arbitration proceedings. The Senate bill, SF 119, was referred to the Senate Commerce and Consumer Protection Committee. The House bill, HF 215, was referred to the House Commerce and Labor Committee.

Here is the text of the proposed legislation:

A bill for an act relating to insurance; no-fault auto; regulating benefit terminations or denials; proposing coding for new law in Minnesota Statutes, chapter 65B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

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What is Subrogation?
Posted by: euser
January 11, 2007

Generally, the term "subrogation" denotes a principle where an insurer that has paid benefits under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy. Under the No-Fault Act, the right of subrogation is typically not allowed to the insurance company. However, Minn. Stat. ? 65B.53, Subd. 2 and 3 allows subrogation when:

The main purpose behind the subrogation statutes is to prevent double recoveries. The statutes provide that the right of subrogation "exists only to the extent that basic economic loss benefits are paid or payable and only to the extent that recovery on the claim absent subrogation would produce a duplication of benefits or reimbursement of the same loss." This means that the insurance company would be reimbursed for economic loss benefits paid to the insured if the insured also obtains an award from a third-party defendant in a tort action.

Subrogation issues also arise between insurance companies regarding priority of payment. Minn. Stat. ? 65B.47, Subd. 6 states that "where a reparation obligor pays basic economic loss benefits which another reparation obligor is obligated to pay under the priority provided in this section, the reparation obligor that pays is subrogated to all rights of the person to whom benefits are paid."

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What if the Insurance Company Does Not Pay Benefits?
Posted by: euser
January 11, 2007

According to the provisions of Minn. Stat. ? 65B.54, Subd. 1, basic economic loss benefits are paid monthly as loss accrues, with loss denoting the incurrence of income loss, replacement services loss, and survivors? loss. Basic economic loss benefits are overdue "if not paid within 30 days after the reparation obligor receives reasonable proof of the fact and amount of loss realized, unless the reparation obligor elects to accumulate claims for periods not exceeding 31 days and pays them within 15 days after the period of accumulation."

An important consideration in determining whether benefits are overdue is what constitutes "reasonable proof of the fact and amount of loss realized." Typically, the reasonable proof requirement is satisfied when the claimant provides some form of evidence to the insurance company that the claimant?s loss was directly related to the motor vehicle accident, such as medical records or wage loss reports. The reasonable proof requirement is not satisfied if the claimant only notifies the insurer that there is a claim.

If basic economic loss benefits are overdue, Minn. Stat. ? 65B.54, Subd. 2 provides that "overdue payments shall bear simple interest at the rate of 15 percent per annum." This interest penalty is in addition to payment of the benefits that the insurance company did not pay. Subsequent case law has held that this 15% interest penalty is not part of the $20,000 in coverage for either medical expense benefits or disability and income loss benefits.

The No-Fault Act does allow an insurance company to terminate benefits if there is a lapse in treatment or disability for twelve consecutive months. However, termination is proper only if the insurer provides language in its insurance contract explaining its right to terminate because of a lapse of treatment.

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What is a No-Fault Arbitration?
Posted by: euser
January 05, 2007

Minnesota has established a system of no-fault arbitrations in order to settle disputes over benefits arising out of motor vehicle injuries. Minn. Stat. ? 65B.525 provides for "the mandatory submission to binding arbitration of all cases at issue where the claim at the commencement of arbitration is in an amount of $10,000 or less against any insured?s reparation obligor for no-fault benefits or comprehensive or collision damage coverage." Arbitrations are administered by the American Arbitration Association and its procedures are governed by the Minnesota No-Fault Arbitration Rules.

There has been much discussion in the courts regarding the $10,000 jurisdictional limit. Courts have held that a claimant cannot "split" his or her no-fault claims into separate claims in order to meet the jurisdictional limit. However, a claimant does have the option of waiving part of the no-fault claim in order to meet that limit. Rule 6 of the Minnesota No-Fault Arbitration Rules states that "if the claimant waives a portion of the claim in order to come within the $10,000 jurisdictional limit, the claimant must specify within thirty days of filing the claims in excess of the $10,000 being waived." The rule also states that in cases where the amount of the claim continues to accrue after the petition is filed, the arbitrator shall have jurisdiction to determine all amounts claimed, including those in excess of $10,000.

Rule 30 requires an arbitrator to issue an award no later than 30 days from the date of closing the hearing. If the award is not issued within this period, the arbitrator loses jurisdiction over the dispute. In no-fault arbitrations, an arbitrator has no authority to make binding decisions of law. However, arbitrations awards are binding on the parties.

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