Court Clarifies $10,000 Jurisdictional Limit For No-Fault Claims
You receive a No-Fault Petition on your desk Friday, at 3:30 p.m. It’s too early to try your best Houdini routine out the back door and run to the lake cabin so you must address the Petition. Here is the situation:
The Petition lists an outstanding claim of $17,000, $10,000 in medical bills and $7,000 in interest. The insured was injured in a February, 1999 accident. Your company paid medical expense benefits for six months, including an ER visit, chiropractic care, massage therapy, and one round of physical therapy. After six months, your insured attends an IME and benefits are subsequently denied. According to the Petition, the insured underwent a cervical fusion in June, 2000. You discover the surgery bill was paid by the insured’s private health insurer. You also learn the liability claim against the tortfeasor is resolved and the health insurer waived its subrogation interest.
Your case is nearly identical to that faced by the insurer in the recent case of American Family Ins. Group v. Kiess, 2004 WL 1192120 (Minn. Ct. App. June 1, 2004). There were three main issues addressed in the Kiess case. The first issue that should jump off the paper is the $17,000 claim listed on the petition because the Rules only allow for arbitration of claims $10,000 or less at the “commencement” of the arbitration. American Arbitration Association Rule 5(a). Your jurisdictional objection will be denied. The Kiess Court allowed the $17,000 claim, by concluding the $7,000 interest is “separate from and in addition to the amount of the underlying claim” when calculating the $10,000 jurisdictional limit. The interest penalty is just that, a penalty and is akin to icing on a birthday cake.
The next issue is calculation of the interest penalty. The insured wants to start the calculation at the time of your denial, August, 1999. On the other hand, it is not fair to hold you to the denial date because there was no notice of the surgery bill until the recent filing of the Arbitration Petition. The Kiess Court sides with the insurer here. Prior to Kiess, the argument against the insurer was the denial of benefits constitutes a constructive denial of all subsequent claims. The clear reading of Minn. Stat. §65B.54, however, provides that the penalty interest is incurred 30 days after the insurer receives 30 days after the insurer receives “reasonable proof of the fact and amount of the loss realized by the insurer.” The decision stresses the importance of an accurate file log or time-line in the file to adequately respond to these disputes at arbitration.
The final issue is one of collateral sources. If the surgery bill was paid by a private carrier and they have waived any subrogation interest, what is the loss to the insured? There is no outstanding bill with the hospital and no infringement on the liability settlement. The Kiess Court confirmed our prior concerns with the unfortunate outcome in Stout v. AMCO, Ins. In Stout, the Supreme Court stated that a no-fault insurer’s duty is to compensate the insured for the actual expense incurred and not the amount paid in satisfaction of those bills as a result of collateral transactions involving a private health insurer. The situation here is no different. Since no-fault is primary, any potential windfall or double recovery must go to the insured.
About the Author: Jon is an associate attorney with the firm, focusing his practice solely on litigation. He is licensed in both Minnesota and Wisconsin. Jon primarily concentrates on all types of automobile litigation, including: no-fault, UM/UIM, and bodily injury claims. He has represented national automobile insurers in well over 100 binding arbitrations with excellent results. In fact, Jon recently received a complete defense verdict in just his third jury trial. He also aggressively litigates slip/fall cases, dog-bites, professional liability, construction disputes, and wrongful death cases. Jon is a frequent lecturer to our clients, including presentations on: defending self-employed wage-loss claims, general MN PIP, and low-impact bodily injury claims. Jon is a third-generation lawyer, recently attending a ceremony honoring his grandfather's 50th year of practicing law in Wisconsin. He enjoys hunting, fishing, golfing, and cheering for the Green Bay Packers.
By: Lee A. Miller
In March of 2003 we wrote of a strategy employed by plaintiff attorneys to minimize or eliminate the use of low impact property damage photos in the defense of automobile claims in Minnesota. The theory is that vehicle damage, unaccompanied by testimony from a biomechanical engineer, is irrelevant to the claimant’s injuries.
The legal authority cited by the plaintiff’s bar is a Delaware case, Davis v. Maute, 770 A.2d 36 (Del. 2001). Several district court judges were swayed by this analysis and low impact photographs were often excluded. In the March, 2003 article we indicated that case law in Minnesota held that low impact photographs should be admitted to show evidence of physical impact. Recently, the Minnesota Court of Appeals upheld this position.
In Newman v. Gallipo, 2004 WL 1192357 (Minn. Ct. App. June 2004), the court pointed to the same cases cited in our article and held “Where liability has been admitted in a personal injury action arising out of an automobile accident and the only issue for trial is the amount of damages, evidence as to the force of impact may relevant to establish the extent of plaintiff’s injuries as a measure of damages.” They held that in these cases the photographs should be admitted. With this new decision, we expect less arguments from the plaintiff’s bar on this issue.
About the Authors: Lee is a shareholder who enjoys a diverse area of practice representing and trying cases on behalf of insurance carriers and their insureds in several areas of law including motor vehicle law, liquor liability, premises liability, and commercial litigation. A large portion of his practice is associated with "niche" areas such as rental vehicle and trucking law. He has been named a Rising Star by Minnesota Law & Politics magazine in 2001, 2002 and 2003. Lee is available to educate and guide clients through the complex maze that is Minnesota law. He currently serves as co-chair of the firm's Motor Vehicle Practice Group and is a member of the Rental and Trucking Groups.