OPINION BLATZ, Chief Justice. Appellant Mark Kiess appeals from a decision by the court of appeals holding that under Minn. Stat. § 65B.54, subd. 1 (2004), respondent American Family Insurance Group (American Family) was obligated to pay interest on a no-fault claim 30 days after American Family received actual notice of the claim, which occurred in this case when Kiess filed a petition for arbitration. Because American Family had notified him that it was discontinuing payment of future claims, Kiess argues that case law and public policy dictate that interest began to accrue 30 days after he received the medical care underlying the claim, approximately 52 months before he filed his arbitration petition. We affirm. Kiess was injured in a two-vehicle automobile accident in February 1996. At the time of the accident, Kiess had no-fault automobile insurance coverage through American Family, which paid Kiess’s no-fault claims for several months following the accident. In August 1996, American Family notified Kiess it was discontinuing his no-fault benefits because, pursuant to an independent medical examination, American Family had determined that Kiess no longer required medical care for injuries related to the accident. In its letter discontinuing no-fault benefits, American Family stated: Given the results of the Independent Medical Examination, we must respectfully deny any further claims or pay*ment for diagnostic testing, chiropractic and/or medical care. All no-fault benefits from your auto policy for this accident will be discontinued at this time. You may wish to forward any future medical billings to your health insurance carrier for consideration of payment. In the same letter, American Family advised Kiess that he had the statutory “right to' demand arbitration of this claim if the amount claimed is $10,000.00 or less.” Kiess continued to experience neck and back pain, and in June 1997 he underwent surgery to address these problems at a cost of $12,597.76. Kiess did not submit this additional no-fault claim to American Family or notify the insurer of his surgery at that time. Instead, Kiess submitted his medical bills to his health insurer, Blue Cross & Blue Shield of Minnesota (Blue Cross), which paid the bills in full. In March 1999, Blue Cross notified Kiess that, under the subrogation-recovery provision of his health insurance policy, Blue Cross was entitled to recover the claims it had paid if Kiess collected benefits from a third party. Kiess, in fact, did file a claim against the other driver in the accident and received a settlement offer of $25,000.1 Kiess’s attorney notified Blue Cross of this settlement offer by telephone and Blue Cross then sent a letter to Kiess’s attorney dated September 2001. The letter stated that Blue Cross was waiving its subrogation interest in the matter as a result of the telephone conversation with Kiess’s attorney, which caused Blue Cross to conclude that Kiess’s accident had “significant causation and liability issues.” In November 2001 — two months after Blue Cross waived its subrogation rights— *619Kiess filed an arbitration petition against American Family, asserting that the insurer was liable for no-fault benefits covering the cost of the surgery paid for by Blue Cross. To bring the $12,597.76 claim within the $10,000 statutory limit for arbitration, Kiess waived $2,597.76 of his claim. See Minn. Stat. § 65B.525, subd. 1 (2004). In May 2002, Kiess amended his arbitration petition, claiming that American Family was liable for an additional $7,125 of interest. This amount represented interest for non-payment of the no-fault claim, calculated pursuant to Minn. Stat. § 65B.54, subds. 1 and 2 (2004). When calculating the interest due, Kiess included the 52 months that passed from 30 days after his surgery in June 1997 to the time he filed his petition for arbitration in November 2001. He then added the five months that had passed while arbitration was pending. In all, the interest Kiess demanded covered a total of 57 months. The arbitrator awarded Kiess $17,125, the full amount of his claim. After the arbitrator denied American Family’s mo: tion to reduce the award, American Family moved to vacate the award in district court. The court denied the motion and issued an order confirming the award. American Family then appealed to the court of appeals. American Family raised four issues at the court of appeals, including whether Kiess was entitled to interest under Minn. Stat. § 65B.54, subd. 1, from the time he incurred his losses or only from the time he provided American Family with actual notice of the losses.2 In resolving this issue, the court of appeals reversed the district court and held that American Family’s interest liability did not begin when Kiess received the care underlying his no-fault claim. Am. Family Ins. Group v. Kiess, 680 N.W.2d 552, 558 (Minn.App.2004). Rather, the court of appeals concluded that American Family’s interest liability began 30 days after Kiess provided the insurer with actual notice of his losses, which in this case occurred when Kiess filed his arbitration petition. Id. Both Kiess and American Family sought review by this court. We granted Kiess’s petition, limiting our review to the court of appeals’ interpretation of Minn. Stat. § 65B.54, subd. 1. The Minnesota No-Fault Automobile Insurance Act (Act) is set forth in Minn. Stat. §§ 65B.41-.71 (2004). The section at issue here states in relevant part: Basic economic loss benefits are payable monthly as loss accrues. Loss accrues not when injury occurs, but as * * * expense is incurred. Benefits are overdue if not paid within 30 days after the reparation obligor receives reasonable proof of the fact and amount of loss realized * * *. Minn. Stat. § 65B.54, subd. 1. Once overdue, payments bear simple interest at the rate of 15% per year. Id., subd. 2. The issue presented is whether, under section 65B.54, subd. 1, an insured is obligated to provide a no-fault carrier with actual notice of a loss incurred in order to be eligible for mandatory interest when the insurer had previously discontinued the insured’s no-fault benefits pursuant to an independent medical examination. We review questions of statutory construction de novo. Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273, 277 *620(Minn.2000). “The object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature.” Minn. Stat. § 645.16 (2004). “When the language of a statute is plain and unambiguous, that plain language must be followed.” Vlahos v. R & I Constr. of Bloomington, Inc., 676 N.W.2d 672, 679 (Minn.2004). We construe words and phrases “according to rules of grammar and according to their most natural and obvious usage unless it would be inconsistent with the manifest intent of the legislature.” Id. Kiess asserts that by discontinuing his no-fault benefits, American Family constructively denied all of Kiess’s future claims and thereby waived its right to receive notice under section 65B.54, subd. 1. According to Kiess, it would have been “futile” for him to continue to submit bills to American Family after his benefits had been discontinued. Thus, even though American Family had paid all submitted claims prior to the discontinuation of Kiess’s no-fault benefits and had received no notice that Kiess had incurred subsequent losses related to injuries sustained in the car accident, Kiess contends he is entitled to interest from 30 days after his back surgery in June 1997. Notwithstanding the plain language of the statute requiring reasonable proof of the fact and amount of loss realized, Kiess appeals to “principles of fundaméntal fairness” and argues that “imposing constructive notice on [American Family] is not inequitable.” American Family responds that the discontinuation letter sent to Kiess did not constitute a waiver of its statutory right to receive notice of ongoing medical claims, and that the plain language of the statute dictates that Kiess’s benefits should not be considered “overdue” until 30 days after American Family received actual notice of Kiess’s additional losses. We have previously interpreted Minn. Stat. § 65B.54, subd. 1, in other contexts. See, e.g., Pederson v. All Nation Ins. Co., 294 N.W.2d 693, 696 (Minn.1980); Haagenson v. Nat’l Farmers Union Prop. & Cas. Co., 277 N.W.2d 648, 653 (Minn.1979). The precise facts of this case present a question of first impression for this court, however. The statute in question expressly provides that benefits are overdue 30 days after an insurer has received “reasonable proof of the fact and amount of loss realized.” Minn. Stat. § 65B.54, subd. 1. We conclude that when these words are interpreted according to their most natural and obvious usage, the statute requires insureds to provide insurers with actual notice of additional losses. Concluding otherwise would require us to read the words “proof’ and “fact” out of the statute entirely. The parties do not dispute the fact that Kiess did not provide American Family with any notice of the losses he incurred after the discontinuation of his benefits until he filed his arbitration petition. Therefore, Kiess’s no-fault benefits were not “overdue” until 30 days after he filed the arbitration petition. . In arguing that we should interpret section 65B.54, subd. 1, to provide for constructive notice, Kiess relies heavily on Perry v. State Farm Mutual Automobile Insurance Co., 506 F.Supp. 130 (D.Minn.1980). In that case, the federal district court held that an insured’s widow was entitled to- interest under section 65B.54, subd. 1, from the time her claim was constructively denied. 506 F.Supp. at 134. However, unlike the case at hand, Perry involved a contract dispute and focused on the resolution of liability issues. Moreover, the court in Perry neither cited nor discussed the requirement in section 65B.54 that interest be calculated from the time an insurer receives “reasonable proof of the fact and amount of loss realized.” Because Perry did not acknowledge the *621statute’s notice requirement or discuss how that requirement could be reconciled with a theory of constructive notice, the case provides no guidance in resolving the question at hand. We are also not persuaded by Kiess’s argument that interpreting the statute to allow for constructive notice serves the purposes of the No-Fault Act. See Minn. Stat. § 65B.42(l)-(5) (2004). The Act expressly seeks to relieve the “severe economic distress” of automobile accident victims and to assure that accident victims receive “prompt payment” for necessary treatment. Minn. Stat. § 65B.42(1), (3). Interpreting the interest statute to require actual notice promotes prompt payment in two ways. First, because no-fault insurers can only pay claims they know about, the interest statute’s notice requirement gives insureds an incentive to submit their claims promptly. Second, insurers are motivated to promptly pay upon notice in order to avoid a 15% interest surcharge. The notice requirement also promotes the relief of the economic distress of accident victims by assuring that once insureds provide insurers with actual notice of any loss, the victims will be compensated for the use of their money if the insurer fails to pay within 30 days. See Burniece v. Ill. Farmers Ins. Co., 398 N.W.2d 542, 544 (Minn.1987) (stating that the interest statute is intended to compensate insureds for the use of their funds and encourage prompt payment of benefits). Here, Kiess delayed notifying American Family of his losses for over four years.3 We do not believe that such a delay is encouraged or supported by the Act’s express policy objectives. See Minn. Stat. § 65B.42(1)-(5). While Kiess urges the court to recognize his theory of constructive notice and hold that such notice furthers the policies undergirding the Act, we leave it to the legislature to weigh the implications of amending the statute to allow for constructive notice. In doing so, we acknowledge that the responsibility of evaluating the direct or collateral benefits and consequences of such proposed statutory changes are best addressed by the legislature. On a final note, we disagree with the concurrence’s focus on the possible collateral consequences of interpreting the statute in accordance with its plain language and our need to prevent those consequences by applying principles of equitable estoppel.4 Specifically, the concurrence addresses the hardships imposed on insureds who have no health insurance when no-fault benefits are discontinued. Although we acknowledge the hardship faced by all such situated individuals, the fact that some insureds do not have health insurance does not dictate a different conclusion in this case. The issue is “What does an insured have to do to obtain additional no-fault coverage when the insured disagrees with the insurer’s decision that no further testing or care is needed?” Whether an individual has health insur-*622anee does not change the requirement that the insured must bring an arbitration petition in order to determine if additional no-fault coverage is warranted. In recognition of this, the statute is written to encourage prompt resolution of such disputes by requiring both notice to the insurer of an insured’s additional claims and payment of interest by the insurer if meritorious claims are not paid within 30 days. Accordingly, we affirm the court of appeals’ decision and hold that Kiess is entitled to collect interest beginning 30 days after he filed his arbitration petition in November 2001. We remand to the district court for proceedings in accordance with this opinion. Affirmed. MEYER, J., files concurring opinion joined by PAGE, J.

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Pususta v. State Farm Insurance Companies · 2001 7 citations

632 N.W.2d 549 (2001) Mariah PUSUSTA, Respondent, v. STATE FARM INSURANCE COMPANIES, Petitioner, Appellant. No. C8-99-1068. Supreme Court of Minnesota. July 19, 2001. *550 Robert W. Roe, Thomas J. Lyons & Associates, P.A., St. Paul, for respondent. William M. Hart, Katherine A. McBride, Jenneane L. Jansen, Meagher & Geer, P.L.L.P., Minneapolis, for appellant. Heard, considered, and decided by the court en banc. OPINION ANDERSON, RUSSELL A., Justice. In mandatory arbitration, respondent Mariah Pususta sought no-fault medical expense benefits from her insurance carrier, appellant State Farm Insurance Companies (State Farm), for injuries she sustained in an automobile accident on December 6, 1997. We are asked to review the no-fault arbitrator's legal conclusion, upheld by the district court and affirmed by the court of appeals, that the arbitrator is precluded from considering whether some of the claimed medical expenses were for injuries that resulted from a prior nonautomobile accident, and if so, whether reimbursement for such expenses should be denied. We reverse and remand. Pususta was in an automobile accident on December 6, 1997. At that time, she was receiving chiropractic care for back and neck injuries she sustained five years earlier in a horse-riding accident. In 1994, *551 her chiropractor requested that her health insurance carrier allow 24 chiropractic visits per year to treat the injuries sustained in the horse-riding accident. In 1997, Pususta visited the chiropractor once a month until the automobile accident in December. Following the accident, Pususta's pain worsened and her chiropractor concluded that the auto accident had exacerbated her prior injuries. After the accident, Pususta received more frequent chiropractic care: seven times in December 1997, nine times in January, eight times in February, nine times in March, seven times in April, twice in May, once in June, twice in July, and twice in August. Pususta had a no-fault automobile insurance policy with State Farm. Following the accident, State Farm reimbursed Pususta for the medical care she received for her injuries through February 1998, but State Farm refused to provide further coverage until Pususta submitted to an independent medical exam (IME). Pususta attended an IME on July 16, 1998. The independent medical examiner concluded that some of Pususta's injuries were caused by the earlier horse-riding accident and that chiropractic care for injuries arising out of the auto accident was warranted only through the first week in April 1998. State Farm informed Pususta that on this basis it would provide coverage only for expenses incurred through the first week of April. Pususta sought arbitration of the dispute and coverage for all chiropractic care through September 16, 1998, the date of the arbitration. State Farm argued it should not be required to pay for medical expenses incurred after the first week in April because the remaining medical expenses were due to the horse-riding injury and further treatment for any injuries related to the automobile accident was not reasonable or necessary. State Farm also argued that if it were required to pay for any medical care received after the first week in April, the expenses should be apportioned based on the degree to which the automobile accident caused the injuries. Specifically, State Farm asked that it not be required to pay for the 24 chiropractic visits per year that the chiropractor requested for the injuries that existed before the auto accident. The arbitrator awarded Pususta all of her medical expenses through August 1998. In his written conclusions, the arbitrator stated that the facts of the case "would call for apportionment, based upon the prior accident," but that our decision in Great West Casualty Co. v. Northland Ins. Co., 548 N.W.2d 279 (Minn.1996), precluded him from doing so. State Farm appealed. The district court upheld the award, and the court of appeals affirmed, concluding that under Great West, it was not clear that that the arbitrator erred by refusing to apportion medical expenses. See Pususta v. State Farm Ins. Cos., No. C8-99-1068, 1999 WL 1101388 (Minn.App.1999). We granted review to consider the no-fault arbitrator's conclusion that he was precluded by our decision in Great West from considering whether a portion of the claimed medical expenses resulted from injuries caused by the horse-riding accident and whether reimbursement for such expenses should be denied. No-fault arbitrators are limited to deciding questions of fact and their legal determinations are subject to de novo review by the courts. Weaver v. State Farm Ins. Cos., 609 N.W.2d 878, 882 (Minn.2000). The issue before us is a legal determination, which we review de novo. Nathe Bros., Inc. v. Am. Nat'l Fire Ins. Co., 615 N.W.2d 341, 344 (Minn.2000). We begin our analysis of the issue by examining the provisions of the Minnesota No-Fault Automobile Insurance *552 Act[1] (No-Fault Act) relating to reimbursement of medical expenses. Our primary objective in interpreting statutory language is to give effect to the legislature's intent as expressed in the language of the statute. Minn. Stat. § 645.16 (2000). The No-Fault Act provides that an injured person, such as Pususta, is entitled to medical expense reimbursement "for all loss suffered through injury arising out of the maintenance or use of a motor vehicle * * *." Minn. Stat. § 65B.44, subd. 1 (2000) (emphasis added). The term "loss" is defined as economic detriment, which includes medical expenses "resulting from the accident causing the injury." Minn. Stat. § 65B.43, subd. 7 (2000) (emphasis added). The statutory language thus incorporates the element of causation into the determination of what losses are reimbursable. The question that the trier of fact, in this case the arbitrator, must determine under the No-Fault Act is whether the medical expenses Pususta claims result from injuries arising out of, or caused by, the use or maintenance of a motor vehicle; that is, whether the medical expenses claimed are for injuries caused by the automobile accident. We have set forth three general considerations for determining whether an injury arose out of the use of a motor vehicle. See Cont'l W. Ins. Co. v. Klug, 415 N.W.2d 876, 878 (Minn.1987). In the case of this car accident, we are concerned only with the first consideration, which is the extent of causation between the automobile and the injury. Id.[2] The causal connection is established if "the injury is a natural and reasonable incident or consequence of the use of the vehicle." N. River Ins. Co. v. Dairyland Ins. Co., 346 N.W.2d 109, 114 (Minn.1984) (quoting Tlougan v. Auto-Owners Ins. Co., 310 N.W.2d 116, 117 (Minn.1981)). As applied to this case, the arbitrator appeared to question whether all of the medical expenses Pususta claimed resulted from injuries caused by the car accident, but he declined to answer the question, referring to such a determination as an "apportionment" of expenses caused by the horse-riding accident and expenses caused by the auto accident. The arbitrator determined that the facts of this case called for such an apportionment, but he interpreted our decision in Great West to prohibit the apportionment of damages where two separate accidents contributed to an injury. See 548 N.W.2d at 281.[3] In Great West, the insured injured his shoulder in 1988 in an accident that arose out of the use of a motor vehicle while he was working. Id. at 279. At the time he was insured by and received no-fault benefits from Northland Insurance Company. Id. In June 1991, the insured re-injured his shoulder, again arising out of use of a *553 motor vehicle. Id. At that time, Great West was his insurance carrier and it promptly provided coverage for his economic losses related to the injury. Id. at 279-80. By May 1992, Great West had paid more than $15,000 in no-fault benefits for the shoulder injury. Id. at 280. Great West brought a subrogation and contribution action against Northland under Minn. Stat. § 65B.47 (2000), which establishes the priority for coverages available when the loss results from use of a vehicle for employment. For example, the statute provides that if a person is insured in a vehicle provided by his employer, basic economic loss benefits are to be provided by the insurance carrier covering the vehicle, or, if none, the carrier covering the injured person. Minn. Stat. § 65B.47, subd. 1 (2000). The statute provides that where two or more obligations to pay benefits are applicable, the reparation obligor against whom a claim is asserted must pay the claim as if wholly responsible, but that obligor may bring an action for contribution against other obligors. Id., subd. 5. The statute also allows for an action in subrogation. Id., subd. 6. Great West claimed that the injury for which it paid benefits was partially caused by the June 1988 accident when the claimant was insured by Northland and sought reimbursement under Minn. Stat. § 65B.47 from Northland for a portion of the benefits Great West paid its insured. Great West, 548 N.W.2d at 280. We were asked whether under section 65B.47, a no-fault carrier may by subrogation or contribution obtain reimbursement from another no-fault carrier for paid benefits that it contends were for injuries resulting from an earlier car accident, when the claimant was insured by the other carrier. We noted that subrogation in the no-fault context is purely a creature of statute and that the definition of "loss" under Minn. Stat. § 65B.43, subd. 7, implies that, for purposes of subrogation and contribution under section 65B.47, only one accident can be deemed the cause of an injury. Great West, 548 N.W.2d at 280-81. We concluded that the authorization for actions for subrogation and contribution in Minn. Stat. § 65B.47 does not apply to a multiple accident situation. Great West, 548 N.W.2d at 281. Great West is distinguishable from the case at bar because Great West involved subrogation and contribution claims under section 65B.47, which establishes priorities between insurers for a single accident. See Scheibel v. Ill. Farmers Ins. Co., 615 N.W.2d 34, 37 (Minn.2000) ("[O]ur holding in Great West only addressed whether an insurer has a right of subrogation under the no-fault act."). Here we deal with a more elementary and basic concern: whether the trier of fact, in this instance the arbitrator, may consider whether the medical expenses for which reimbursement is sought are for injuries caused by an earlier nonautomobile accident, in this instance a fall from a horse. Pususta nonetheless relies on language in Great West indicating that attribution of medical expenses to prior accidents or injuries is improper in the no-fault context. In explaining the imposition of the entire expense on Great West, we stated: Great West accepted [the claimant] as an insured with whatever physical condition he may have had at that time, and it is not for Great West to either refuse payment of benefits for that portion of his disability caused by a previous injury or is it to seek subrogation from Northland therefore. 548 N.W.2d at 281 (emphasis added).[4] The implication of this ruling in Great *554 West arose in Scheibel, where the claimant was injured in a March 1996 collision for which the insurer paid $3,558 in medical expenses. Less than two months later the claimant again injured his back in an auto accident requiring medical care. The insurer, the same for both accidents, attributed all medical expenses to coverage for the second accident, exhausting the $20,000 limit and leaving the claimant with approximately $6,500 in unpaid medical expenses. Scheibel, 615 N.W.2d at 36 n. 1. In Scheibel we noted that our statement in Great West regarding attributing benefits to a previous injury was "not a part of our holding." Scheibel, 615 N.W.2d at 38. We nonetheless relied on this language to require the insurer in Scheibel to pay the maximum policy limit for injuries "regardless of the extent to which each accident contributed to the injuries." 615 N.W.2d at 39. Thus, the question presented is whether our decisions in Great West and Scheibel, to the extent they reject attributing medical expenses to previous accidents, apply where the previous accident is not an automobile accident.[5] We stated in Scheibel: [The insurer] does not dispute that if Scheibel had been in two accidents and suffered distinct and separable injuries, medical expenses from each injury would have been separately compensable up to the policy maximum of $20,000 for each accident. We see no reason why the same principles should not apply when the second accident exacerbates an injury sustained in an earlier accident. It would be an absurd result to cut off recovery for an injury from the first accident merely because an intervening accident aggravates the same injury. 615 N.W.2d at 38-39.[6] Applying the same rationale used in Scheibel to these facts, *555 there can be no dispute that if Pususta had injured her foot in the horse-riding accident and injured her shoulder in the auto accident, medical expenses for the foot injury would not be attributable to the no-fault auto carrier. To hold the insurer liable for medical expenses resulting from a nonautomobile accident conflicts with the statutory language limiting the definition of loss to injuries "arising out of the maintenance or use of a motor vehicle * * *." Minn. Stat. § 65B.44, subd. 1.[7] Both Scheibel and Great West must be read in the context in which they arosea dispute over which no-fault policy the losses should be attributed to, where some of the losses arguably resulted from a prior auto accident. Great West stands for the proposition that where the legislature has not provided for contribution or subrogation between insurers in this context, we will not read such a right into the statute. 548 N.W.2d at 281. Scheibel stands for the proposition that an insurer cannot minimize its exposure by attributing all losses to one policy, and that within the no-fault context, the overriding principle is that an injured party be fully compensated to the limits of mandated insurance. 615 N.W.2d at 38-39. Neither Great West nor Scheibel prohibits an arbitrator from determining whether the medical expenses for which the insured is seeking reimbursement from the no-fault carrier result from injuries that arise out of the car accident, that is, the use or maintenance of a motor vehicle. In contrast to Great West and Scheibel, here we apparently have some medical expenses arising within the no-fault system and some arising outside that system. Within the no-fault system, i.e., where there are multiple auto accidents involved, imposing liability solely on the insurer at the time of the most recent accident to the extent such coverage fully compensates the claimant serves the legislative goals of ensuring prompt payment of expenses and minimizing litigation. Minn. Stat. § 65B.42 (2000); Scheibel, 615 N.W.2d at 37. Where, as here, one cause of injury arises within the no-fault system and one outside that system, our focus is on whether the loss arose out of the use of an automobile and whether reimbursement is for only those medical expenses resulting from injuries caused by the use or maintenance of an automobile. *556 Pususta relies on the above-quoted language in Great West in arguing that State Farm must pay for all of her medical expenses because the insurer must take the insured with whatever condition she had at the time of the accident. See Great West, 548 N.W.2d at 281. However, there is no indication in the No-Fault Act that the legislature intended to modify the well-settled concept from tort law that damages are those attributable to a particular injury and the aggravation of a pre-existing physical condition. See Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271, 275 n. 2 (Minn.1995) (stating compensatory damages are the "natural, necessary and usual result of the * * * occurrence in question."); Leubner v. Sterner, 493 N.W.2d 119, 122 (Minn.1992) (stating aggravation damages ensure that defendant pays only for the harm he causes, not the harm plaintiff already had); Nelson v. Twin City Motor Bus Co., 239 Minn. 276, 280, 58 N.W.2d 561, 563 (1953). Requiring compensation for any aggravation of a pre-existing condition is what is meant by accepting the insured with any conditions she had at the time.[8] Accepting the insured with the conditions she had does not mean that the insurer is liable for the expenses that the pre-existing condition, "running its normal course, would itself have caused if there had been no aggravation * * *." Nelson, 239 Minn. at 280, 58 N.W.2d at 563. The insurer is liable for the expenses related to injuries caused or aggravated by the automobile accident. Limiting damages in this way insures that the insurer will pay only for the damages caused by the accident and not for the pre-existing physical condition. Leubner, 493 N.W.2d at 122. Applied to a no-fault case, the limitation ensures that a no-fault insurer pays only medical expenses for injuries arising out of the use of an automobile and not medical expenses for injuries caused by a nonautomobile accident.[9] Thus, we reverse and remand and instruct the arbitrator to award those reasonable medical expenses for treatment of injuries caused by, or aggravated by, the automobile accident. The arbitrator must determine the extent to which the medical expense relates to an injury that was a natural and reasonable incident or consequence of the use of the vehicle. North River, 346 N.W.2d at 114. Medical expenses for injuries caused solely by the horse-riding accident shall be denied. Reversed and remanded. *557 GILBERT, Justice (dissenting). I respectfully dissent from the majority opinion and would affirm the court of appeals. The majority opinion is based on equitable apportionment, which is an approach that we have specifically rejected for subrogation claims to determine medical expense benefits provided for in the Minnesota No-Fault Automobile Insurance Act (No-Fault Act). Great West Cas. Co. v. Northland Ins. Co., 548 N.W.2d 279 (Minn.1996). The no-fault system was designed to eliminate this type of dispute on minor claims once a compensable loss occurs, and we have so held in other contexts. In fact, recently we stated "we disagree with the court's apportioning of PIP benefits, and we consider them payable by the insurer when the insured incurs a loss." Id. at 281 n. 4. The majority decision now reverses this directive and ignores the facts supporting the arbitrator's and trial court's ultimate decisions, awarding benefits in this case. Here, the district court confirmed the medical expenses awarded in arbitration. It found that notwithstanding some comments made by the arbitrator relating to legal issues that "[a]ny allusion by the arbitrator to case law regarding apportionment was secondary to the facts which he had already decided. While defendant asserts that [the arbitrator] exceeded his powers, it has failed to make a clear showing that that was, in fact, the case." The trial court reasoned "[t]he arbitrator clearly decided that Plaintiff had been injured in the auto accident of December 6, 1997, and that she received chiropractic care related to that accident." Two experts were called upon in the arbitration hearing to give their opinion on the reasonable and necessary medical treatment required because of this automobile accident. Valerie Hoffman, D.C., offered an opinion on behalf of Pususta that the rehabilitation services being performed were for neck and upper back, not her lower back that was being treated before the automobile accident. David Olson, D.C., on behalf of State Farm, rendered an opinion authorizing paying the bills for medical rehabilitation through the beginning of April 1998, but none after that because that is when Pususta reached preaccident status. Accordingly, there was conflicting medical testimony, one opinion requiring additional treatment and the other terminating the treatment. The court of appeals affirmed the arbitrator's decision considering the guidance provided the supreme court in Great West and could not say that the arbitrator and the district court erred in refusing to apportion the respondent's medical expenses. Pususta v. State Farm Ins. Cos., No. C8-99-1068, 1999 WL 1101388 (Minn.App.1999). Now, without calling the relief on remand apportionment, the majority reverses both of the lower courts with an order that the arbitrator must determine the extent to which the medical expenses relate to the use of a motor vehicle and "medical expenses for injuries caused by the horse riding accident shall be denied." This directive obviously calls for apportionment between accidents, which the arbitrator also determined was appropriate, but he felt constrained by our precedent in Great West. However, adopting the principle of apportionment severely interferes with the statutory framework that is "to govern the effect of advance payments prior to final settlement of liability" once a compensable loss occurs. Minn. Stat. § 65B.42, subd. 5 (2000). The facts in this case highlight the problems that would be created by the majority's opinion. Pususta was 18 years old at the time of the automobile accident, which occurred on December 6, 1997. Before *558 authorizing any medical payments for that accident, State Farm ordered an independent medical examination. State Farm then decided to pay medical bills incurred through February 1998, but then stopped any further payments. Five months went by with no further payments and no denial of benefits. In the meantime, medical expenses had been incurred by an 18-year-old woman totaling more than $4,000. An independent medical examination was completed July 16, 1998, and an opinion rendered on July 23, 1998, 7 months after the automobile accident. Then, retroactively, Dr. Olson decided no further medical bills should be paid beyond the beginning of April of 1998. Now, the majority opinion will compel an independent medical examination whenever there is a preexisting no-auto-related accident case with resulting expense, uncertainty and delays now being thrust into every decision on payment. In most cases, this will lead to retroactive approval or denial of medical expenses incurred to treat in a timely fashion injuries arising from an automobile accident. This result will occur even though it is undisputed that early and proper rehabilitation treatment usually tends to mitigate everybody's damages. This is not to say that medical reimbursement would continue forever because there are statutory dollar limits applied to every policy and an arbitrator still would have the ability to terminate payments for medical expenses when pre-accident condition status has been reached. The No-Fault Act provides for such a determination now and that is why apportionment principles should be rejected for the same reason we rejected those principles for subrogation claims. In Great West, we reasoned that a subrogation right must be found, if at all in the No-Fault Act, in that we do not recognize a separate common law right of subrogation in the no-fault context. 548 N.W.2d at 281. This interpretation was reacknowledged in Scheibel v. Ill. Farmers Ins. Co., 615 N.W.2d 34, 37 (Minn.2000), and the reasoning should be followed in this case. In Great West, we disallowed a subrogation claim against Northland brought by Great West who insured an individual injured in an automobile accident 3 years after the first automobile accident. 548 N.W.2d at 281. The majority attempts to distinguish this case from Great West depending on whether some of the medical expenses arose within or outside the no-fault system. Great West involved a multiple auto accident and the aggravation of a preexisting condition that resulted in a dispute between different insurance companies involved at the time of the two accidents, one in June 1988 and the second in June 1991. 548 N.W.2d at 279-80. We held that "[t]he clear implication is that only one accident can be deemed to be the cause of an injury for purposes of subrogation under section 65B.47." Id. at 281. This "one accident" precedent from Great West is even more compelling in this case. As stated by the legislature, the purpose of the No-Fault Act is to relieve the severe economic distress of uncompensated victims of automobile accidents without regard to whose fault caused the accident and to encourage appropriate medical and rehabilitation treatment by assuring prompt payment for the treatment. Minn. Stat. § 65B.42. It is undisputed that the respondent has suffered a compensable loss in an automobile accident, is an injured person, and is entitled to reasonable medical expense benefits and the assurance of prompt payment. Minnesota Statutes § 65B.44, subdivision 2, provides for the reimbursement of "all reasonable expenses for necessary * * * medical * * * and rehabilitative services * * *." It is also undisputed that the respondent has a preexisting chronic medical injury due to a horse-riding accident. *559 The majority opinion deviates from the stated purpose of the Act and holds that the statutory language defining loss incorporates the elements of causation into the determination of what medical expense benefits are reimbursable. The majority opinion relies on two of our cases on causation between the use of an automobile and an injury. In Continental Western, we found that there was the requisite degree of causation between injuries and the use of a car when a gun was fired out of a moving vehicle causing injury to another party. Cont'l W. Ins. Co. v. Klug, 415 N.W.2d 876, 878 (Minn.1987). North River involved an injury from a trailer attached to a motor vehicle. N. River Ins. Co. v. Dairyland Ins. Co., 346 N.W.2d 109, 114 (Minn.1984). However, these cases are not helpful because they do not involve PIP benefits and, in this case, it is undisputed that the second injury arose out of the use of an automobile. Although our decision in Great West involved a subrogation claim between insurers for an injury caused by more than one auto accident, the legal principles, which support the denial of a subrogation claim, apply equally as well to the facts in this case. The majority's decision in this case has the same * * * potential to trigger precisely what the legislature appears to have attempted to avoid in adopting the term "the accident"-finger pointing among insurers claiming that another carrier was responsible for some portion of the insured's disability. Further, as we noted above, it introduces the fault-based concept of subrogation into allocation of loss independent of fault, a step we are unwilling to take without explicit statutory authority notably absent here. That the entire responsibility for Neulieb's disability caused by the accident occurring while Great West was on the policy should fall on Great West is neither unfair nor unjust. Great West accepted Neulieb as an insured with whatever physical condition he may have had at the time, and it is not for Great West to either refuse payments of benefits for that portion of his disability caused by a previous injury or is it to seek subrogation from Northland therefore.

+ 4 more citations in this opinion.

Sheung Kwong v. Depositors Insurance Co. · 2001 1 citation

+ 1 more citation in this opinion.

Schons v. State Farm Mutual Automobile Insurance Co. · 2001 2 citations

+ 2 more citations in this opinion.

Scheibel v. Illinois Farmers Insurance Co. · 2000 2 citations

+ 2 more citations in this opinion.

Weaver v. State Farm Insurance Companies · 2000 1 citation

+ 1 more citation in this opinion.

Nodak Mutual Insurance Co. v. American Family Mutual Insurance Co. · 2000 1 citation

+ 1 more citation in this opinion.

American National Property & Casualty Co. v. Loren · 1999 1 citation

. See generally Minn. Stat. § 65B.42(1) (1998) (setting out purposes of the Act).

Ka Ying Vue v. State Farm Insurance Companies · 1998 1 citation

+ 1 more citation in this opinion.

Lobeck v. State Farm Mutual Automobile Insurance Co. · 1998 1 citation

+ 1 more citation in this opinion.

Hertz Corp. v. State Farm Mutual Insurance Co. · 1998 4 citations

OPINION GARDEBRING, Justice. This case involves the application of the Minnesota No-Fault Act in the context of rental cars. Specifically, we are asked to determine whether a self-insured rental car agency may meet its obligations under the Minnesota No-Fault Automobile Insurance Act, Minn. Stat. §§ 65B.41-.71(1996) ("No-Fault Act"), by providing liability coverage only in the event that the renter or operator of the rented vehicle does not have other liability coverage arising from his or her own automobile policy. Jeffrey Powers rented an automobile from Hertz in August 1994. While driving the rental car, he was involved in an accident, which gave rise to negligence claims against him for property damage and personal injury. At the time of rental, Powers declined to purchase the Liability Insurance Supplement (LIS), which, for an additional fee, provided full liability coverage for automobile renters. The rental agreement provided that: If you do not purchase liability insurance supplement (LIS) * * * at the commencement of the rental and an accident results from the use of the car, your insurance and the insurance of the operator of the car will be primary. This means that Hertz will not grant any defense or indemnity protection under this paragraph if either you or the operator of the car are covered by any valid and collectible automobile liability insurance, whether primary, excess or contingent, with limits at least equal to the minimum required by the applicable state financial responsibility law. If neither you nor the operator of the car have such insurance, Hertz will grant you and any authorized operator of the car limited protection under the terms and conditions stated in subparagraphs 10(a) above and 10(c) below. The intended import of this provision was apparently to make the Hertz self-insurance coverage effective only if the renter or operator of the rented vehicle had no automobile liability insurance. *688 Powers had personal automobile liability insurance through State Farm for coverage on his 1985 Ford Bronco II. Powers renewed his State Farm policy on March 22, 1994, for a six-month term and the policy was in effect at the time of the accident. The State Farm policy, which has liability coverage with limits at $50,000 per person and $100,000 per occurrence, provided: "The liability coverage extends to the use, by an insured, of a * * * non-owned car." The policy further stated that "[i]f a * * * non-owned car has other vehicle liability coverage on it, then this coverage is excess." Hertz brought a declaratory judgment action against State Farm, asserting that State Farm has the primary duty to defend and indemnify Powers against the claims arising from the accident involving the rented vehicle. In granting Hertz's motion for summary judgment, the trial court held that the Hertz rental agreement was a valid and enforceable contract that did not provide Powers with liability coverage at the time of the accident. It also held that the Hertz rental agreement did not violate the No-Fault Act because it guaranteed liability coverage if the renter or operator was not insured. It concluded that Minn. Stat. § 65B.49, subd. 3(3)(d), the statute dictating priority of coverage, did not apply because Hertz did not provide liability coverage at all on these facts. The trial court further concluded that Minn. Stat. § 65B.49, subd. 3(3)(d) did not apply because it took effect on August 1, 1994, after the March 1994 renewal date of the Powers' State Farm policy. Finally, the trial court held that State Farm, and not Hertz, was responsible for defending and indemnifying Powers for the claims arising out of the accident. The court of appeals affirmed the trial court, holding that the Hertz rental agreement satisfied the purpose of the No-Fault Act because Hertz provided liability coverage in the event that the renter or operator did not have other automobile liability insurance. Because the court of appeals held the Hertz rental agreement was valid and enforceable, it did not reach the issue of priority of coverage under the No-Fault Act. State Farm now appeals, arguing that the Hertz rental agreement violates the No-Fault Act, because Hertz, a self-insurer, was required to maintain liability coverage on the vehicles that it owns. We reverse. In our review of the summary judgment, we must determine "whether there are any genuine issues of material fact and whether the trial court erred in its application of the law." Interstate Fire & Cas. Co. v. Auto-Owners Ins. Co., 433 N.W.2d 82, 84 (Minn.1988). Because the facts are undisputed, this case raises only issues of statutory and contract interpretation, which are questions of law subject to de novo review. Garrick v. Northland Ins. Co., 469 N.W.2d 709, 711 (Minn.1991). The No-Fault Act requires that every Minnesota automobile owner maintain a "plan of reparation security," with specific, statutorily set minimum benefits, including liability coverage. Minn. Stat. § 65B.48, subd. 1; see also Minn. Stat. § 65B.49, subd. 3(1) (stating the minimum benefits required). That obligation may, of course, be met either by the purchase of a commercial automobile liability insurance policy under Minn. Stat. § 65B.48, subd. 2, or by qualification as a self-insured entity, under Minn. Stat. § 65B.48, subd. 3. In this case, Hertz met its obligation by seeking and receiving the authorization of the commissioner of commerce to operate as a self-insured entity. In seeking that approval, Hertz agreed to "discharge fully and promptly all payments and obligations which are now due or shall become due under the provisions of the Minnesota No-Fault Automobile Insurance Act and amendments thereto." State Farm asserts that Hertz's rental agreement violates the No-Fault Act because it allows Hertz to provide "contingent" liability coverage on vehicles it owns, although Hertz is statutorily required, as a self-insured owner of the vehicles, to maintain liability coverage, regardless of whether the renter or operator of a rented vehicle is otherwise insured. In response, Hertz argues that there is no violation of the No-Fault Act because there are no circumstances under which a Hertz vehicle would be uninsured. We disagree. A self-insured car rental agency does not meet its obligations *689 as an automobile owner under the No-Fault Act by thrusting upon the renter its responsibility to provide liability coverage that is, by providing liability coverage only in the event that the renter is without liability coverage. The statutory provisions at issue Minn. Stat. §§ 65B.48, subd. 1 and 65B.49, subd. 3(2) do not on their face require that an automobile owner maintain coverage that is not contingent upon the presence of other coverage. Nevertheless, it is inconsistent with the general purpose of the No-Fault Act to read the statute in the manner advocated by Hertz. Hertz's interpretation of the Act would create a practical exemption to the broad statutory mandate that all automobile owners carry liability insurance, an exemption nowhere evident in the language of the statute. Further, the distinction relied upon by Hertz and the court of appeals, that the statutory requirements on Hertz are different because it is self-insured, is contrary to our reading of the NoFault Act in other cases. We have said that "[s]elf-insurance is the functional equivalent of a commercial insurance policy. * * * The purpose of either form of insurance is to compensate victims appropriately. The certificate filed with the commissioner [of commerce] is the functional equivalent of an insurance policy." McClain v. Begley, 465 N.W.2d 680, 682 (Minn.1991). Further, in his concurring opinion in McClain, Justice Simonett concluded that, in considering the application of the No-Fault Act to self-insureds, we should "treat the self-insurer as if it had purchased a policy of auto liability insurance for each of its vehicles with itself as the named insured. Such a policy, if purchased, would contain an omnibus clause extending coverage to permissive drivers as additional unnamed insureds." Id. at 684. Applying this conceptual approach here, one could identify Powers as a permissive driver of the rented vehicle, whose liability would be fully covered by virtue of the omnibus clause.[1] Further, we find no merit in Hertz's argument that this construction of the No-Fault Act violates its freedom of contract. Legislation may impact contractual obligations, if certain conditions are met. Generally speaking, "[t]he federal constitutional prohibition against contract impairment, U.S. Const., art. I, § 10, cl. 1, has been construed to mean that the state reserves some power to modify contract terms when the public interest requires." Christensen v. Minneapolis Mun. Employees Retirement Bd., 331 N.W.2d 740, 750 (Minn. 1983). The legislature, therefore, can alter contract terms by enacting statutes as long as the legislation is "necessary to meet a broad and pressing social or economic need, if the legislation is reasonably adopted for the solution of the problem involved, and if it is not over broad or over harsh." Id. (quoting White Motor Corp. v. Malone, 599 F.2d 283, 287 (8th Cir.1979)). The purposes of the No-Fault Act are spelled out in Minn Stat. § 65B.42: to "relieve the severe economic distress of uncompensated victims"; to prevent overcompensation; to assure prompt payment; to "ease the burden of litigation"; and to correct imbalances and abuses in the automobile accident liability system. That these are legitimate public purposes is unquestionable, and a statutory scheme the linchpin of which is a requirement that each automobile owner carry liability coverage is not either harsh or overly broad. This court has stated, in the context of a No-Fault Act case, that "contract provisions which conflict with statutory law will not be enforced." Roering v. Grinnell Mut. Reinsurance Co., 444 N.W.2d 829, 833 (Minn. 1989). We have also stated that "an insurer's liability is governed by the contract between the parties only as long as coverage *690 required by law is not omitted and policy provisions do not contravene applicable statutes." Streich v. American Family Mut. Ins. Co., 358 N.W.2d 396, 399 (Minn.1984) (emphasis added). We conclude that the provision of the rental agreement purporting to limit Hertz' liability obligation to situations in which there is no other coverage, contravenes the No-Fault Act and is, therefore, unenforceable.[2] Because we hold that Hertz's attempted limitation of coverage is unenforceable, we must determine which insurance coverage is primary in this case. We begin with the consideration of Minn. Stat. § 65B.49, subd. 3(3)(d), a statutory amendment to the No-Fault Act which became effective on August 1, 1994. See Minn. Stat. § 645.02 (1996). Minn. Stat. § 65B.49, subd. 3(3)(d) (1996) states that: (3) Every plan of reparation security shall be subject to the following provisions which need not be contained therein: * * * * (d) Except as provided in subdivision 5a,[3] a residual liability insurance policy shall be excess of a nonowned vehicle policy whether the nonowned vehicle is borrowed or rented, or used for business or pleasure. A nonowned vehicle is one not used or provided on a regular basis. Hertz argues that Minn. Stat. § 65B.49, subd. 3(3)(d) does not apply to the instant case because (1) Powers' State Farm policy, which was effective at the time of the accident, was renewed prior to the effective date of this statutory amendment and (2) the statutory amendment only applies to insurance "policies" and not to self-insurers. Hertz further argues that State Farm's "other insurance" provision is not applicable here, because, as a self-insurer, its reparation security is simply not "other insurance." For the second proposition, Hertz asserts that "a certificate of self-insurance is a contract with the state to protect the public, whereas an automobile liability insurance policy is a contract with the insured to provide indemnity." State Farm argues that the statutory amendment does apply because, according to Hertz's application for self-insurance, Hertz obligated itself to "discharge fully and promptly all payments and obligations which are now due or shall become due under the provisions of the Minnesota No-Fault Automobile Insurance Act and amendments thereto." State Farm further argues that self-insurance is the equivalent of an insurance policy, and the statutory amendment cannot be found inapplicable simply because it uses the word "policy," rather than the broader term "plan of reparation security." We have stated that "the general rule is that upon each renewal an entirely new and independent contract of insurance is created and is governed by the laws in effect on the date of renewal." Hauer v. Integrity Mut. Ins. Co., 352 N.W.2d 406, 408 (Minn. 1984). However, "[o]n each reinstatement or renewal of policies, any statutes or amendments pertaining to such policies and enacted after their issuance are incorporated into the new policies." Id. (quoting Taylor v. American Nat'l Ins. Co., 264 Minn. 21, 25, 117 N.W.2d 408, 411 (1962)). Therefore, Hertz is incorrect in its assertion that Minn. Stat. § 65B.49, subd. 3(3)(d) does not apply because it became effective after Powers renewed his State Farm policy. State Farm is correct in its contention that Hertz's application for self-insurance required that Hertz comply with the No-Fault Act in its entirety and with any amendments enacted in the future. Also, as previously stated, neither this court nor the legislature has provided that self-insured entities should be treated any differently from other insurers, and for that reason Hertz's assertion that the statutory amendment only applies to third-party insurers is mistaken. Therefore, we conclude that Minn. Stat. § 65B.49, subd. 3(3)(d) is applicable to determine *691 which coverage should be deemed primary. In applying Minn. Stat. § 65B.49, subd. 3(3)(d) to the instant case, we conclude that the Hertz self-insurance is primary. The State Farm policy is secondary under the statute, in excess of the Hertz coverage. Even if this court did not apply Minn. Stat. § 65B.49, subd. 3(3)(d) to this case, the Hertz coverage would still be deemed primary under the common-law "closest to the risk" doctrine. Under our previous cases, to determine which coverage is primary we applied the "closest to the risk" test, in which we ask: (1) Which policy specifically described the accident-causing instrumentality? (2) Which premium is reflective of the greater contemplated exposure? (3) Does one policy contemplate the risk and use of the accident-causing instrumentality with greater specificity than the other policy that is, is the coverage of the risk primary in one policy and incidental to the other? Interstate Fire & Cas. Co., 433 N.W.2d at 86. Applying these factors to this case, the Hertz self-insurance policy specifically describes the rental vehicle involved in the accident because Hertz is the owner and its self-insurance is specifically available to cover the vehicle at issue, while Powers' State Farm policy only describes Powers' personal automobile. As to the second factor, because Hertz chose to self-insure, it avoided the payment of premiums to cover its liability. However, it is clear that Powers' State Farm policy did not contemplate primary coverage for more than damage to a rental vehicle, and its premiums are reflective of that fact. In addressing the third and final factor, the State Farm policy specifically states that its non-owned vehicle coverage is excess and incidental to any other policy covering the vehicle. While Hertz attempts to shift primacy to the State Farm policy through its rental agreement, Hertz's self insurance must provide liability coverage for damages caused by the use of vehicles it owns and offers for rent. Therefore, Hertz's self-insurance coverage is primary even under common law principles. In summary, Hertz cannot contract away its primary obligations under the No-Fault Act by limiting its liability coverage to situations where no other coverage exists. Therefore, Hertz must provide primary liability coverage for the damages resulting from Powers' accident while driving the rental car owned by Hertz. Reversed. BLATZ, Justice (concurring specially). I concur in the result of the majority decision. The legislature clearly set forth in Minn. Stat. § 65B.49, subd. 3(3)(d) that "a residual liability insurance policy shall be excess of a nonowned vehicle policy." This statutory amendment to the No-Fault Act was effective on August 1, 1994. The statute requires that Hertz's nonowned vehicle policy be deemed primary in providing Powers with liability coverage. This statutory amendment was effective the day before Powers rented the Hertz vehicle, and, therefore, Hertz is bound by its mandates. While I do not agree with all of the other legal analysis and conclusions reached by the majority, Minn. Stat. § 65B.49, subd. 3(3)(d) is dispositive of this matter. Therefore, I concur in the result. KEITH, Chief Justice (concurring specially). I join in the special concurrence of Justice Blatz. PAGE, Justice (dissenting). I respectfully dissent. The court's decision, which allows the renter of a rental car, who has his or her own liability insurance coverage and who declines to purchase the rental car company's liability insurance supplement to escape responsibility for the renter's involvement in an accident with the rental car, is wrong, fundamentally unfair, and poor public policy. What purpose is served by allowing the renter and the renter's insurance company to avoid responsibility for the renter's action? I would suggest none. To the extent that it is asserted that this result *692 is necessary in order to fulfill the purposes of Minnesota's No-Fault Automobile Insurance Act, that simply is not the case. The purpose of the No-Fault Act is "[t]o relieve the severe economic distress of uncompensated victims of automobile accidents." Minn. Stat. § 65B.42(1) (1996). On the facts before us, that purpose is met and will always be met. The terms of the rental agreement at issue make clear that under any circumstances "[i]f neither [the customer] nor the operator of the car have [liability] insurance," Hertz will provide coverage. Thus, no "victim," injured as a result of an accident with one of Hertz's rental cars, will remain "uncompensated." Finally, the result reached today is poor public policy. If Hertz cannot rely on its customers to either provide their own liability insurance protection or, at the time of rental, purchase Hertz's liability insurance supplement, the cost of that protection is likely to be passed on by Hertz to all of its rental car customers. There is no sound reason why individual renters should not be required to bear the cost of their own liability insurance protection. Therefore, I dissent. NOTES [1] In McClain, the rental car agency attempted to shift all financial liability to the renter through a provision in the rental agreement that provided that the renter was responsible for insuring the rental car. 465 N.W.2d at 681. Here, Hertz has attempted a similar shift of responsibility, but has agreed to provide coverage if the renter does not have liability coverage through a policy on another automobile. The Hertz approach is different in scope than that of the rental car agency in McClain, but its fundamental aim is the same to avoid the statutory obligations of the No Fault Act. [2] If our interpretation of the No-Fault Act is deemed incorrect by the legislature, and rental car agencies are to be treated differently than all other automobile owners, the legislature is, of course, free to clarify the statute at any time. [3] Subdivision 5a provides that every plan of reparation security insuring a natural person must cover damage to rented automobiles.

OPINION GARDEBRING, Justice. This case involves the application of the Minnesota No-Fault Act in the context of rental cars. Specifically, we are asked to determine whether a self-insured rental car agency may meet its obligations under the Minnesota No-Fault Automobile Insurance Act, Minn. Stat. §§ 65B.41-.71(1996) ("No-Fault Act"), by providing liability coverage only in the event that the renter or operator of the rented vehicle does not have other liability coverage arising from his or her own automobile policy. Jeffrey Powers rented an automobile from Hertz in August 1994. While driving the rental car, he was involved in an accident, which gave rise to negligence claims against him for property damage and personal injury. At the time of rental, Powers declined to purchase the Liability Insurance Supplement (LIS), which, for an additional fee, provided full liability coverage for automobile renters. The rental agreement provided that: If you do not purchase liability insurance supplement (LIS) * * * at the commencement of the rental and an accident results from the use of the car, your insurance and the insurance of the operator of the car will be primary. This means that Hertz will not grant any defense or indemnity protection under this paragraph if either you or the operator of the car are covered by any valid and collectible automobile liability insurance, whether primary, excess or contingent, with limits at least equal to the minimum required by the applicable state financial responsibility law. If neither you nor the operator of the car have such insurance, Hertz will grant you and any authorized operator of the car limited protection under the terms and conditions stated in subparagraphs 10(a) above and 10(c) below. The intended import of this provision was apparently to make the Hertz self-insurance coverage effective only if the renter or operator of the rented vehicle had no automobile liability insurance. *688 Powers had personal automobile liability insurance through State Farm for coverage on his 1985 Ford Bronco II. Powers renewed his State Farm policy on March 22, 1994, for a six-month term and the policy was in effect at the time of the accident. The State Farm policy, which has liability coverage with limits at $50,000 per person and $100,000 per occurrence, provided: "The liability coverage extends to the use, by an insured, of a * * * non-owned car." The policy further stated that "[i]f a * * * non-owned car has other vehicle liability coverage on it, then this coverage is excess." Hertz brought a declaratory judgment action against State Farm, asserting that State Farm has the primary duty to defend and indemnify Powers against the claims arising from the accident involving the rented vehicle. In granting Hertz's motion for summary judgment, the trial court held that the Hertz rental agreement was a valid and enforceable contract that did not provide Powers with liability coverage at the time of the accident. It also held that the Hertz rental agreement did not violate the No-Fault Act because it guaranteed liability coverage if the renter or operator was not insured. It concluded that Minn. Stat. § 65B.49, subd. 3(3)(d), the statute dictating priority of coverage, did not apply because Hertz did not provide liability coverage at all on these facts. The trial court further concluded that Minn. Stat. § 65B.49, subd. 3(3)(d) did not apply because it took effect on August 1, 1994, after the March 1994 renewal date of the Powers' State Farm policy. Finally, the trial court held that State Farm, and not Hertz, was responsible for defending and indemnifying Powers for the claims arising out of the accident. The court of appeals affirmed the trial court, holding that the Hertz rental agreement satisfied the purpose of the No-Fault Act because Hertz provided liability coverage in the event that the renter or operator did not have other automobile liability insurance. Because the court of appeals held the Hertz rental agreement was valid and enforceable, it did not reach the issue of priority of coverage under the No-Fault Act. State Farm now appeals, arguing that the Hertz rental agreement violates the No-Fault Act, because Hertz, a self-insurer, was required to maintain liability coverage on the vehicles that it owns. We reverse. In our review of the summary judgment, we must determine "whether there are any genuine issues of material fact and whether the trial court erred in its application of the law." Interstate Fire & Cas. Co. v. Auto-Owners Ins. Co., 433 N.W.2d 82, 84 (Minn.1988). Because the facts are undisputed, this case raises only issues of statutory and contract interpretation, which are questions of law subject to de novo review. Garrick v. Northland Ins. Co., 469 N.W.2d 709, 711 (Minn.1991). The No-Fault Act requires that every Minnesota automobile owner maintain a "plan of reparation security," with specific, statutorily set minimum benefits, including liability coverage. Minn. Stat. § 65B.48, subd. 1; see also Minn. Stat. § 65B.49, subd. 3(1) (stating the minimum benefits required). That obligation may, of course, be met either by the purchase of a commercial automobile liability insurance policy under Minn. Stat. § 65B.48, subd. 2, or by qualification as a self-insured entity, under Minn. Stat. § 65B.48, subd. 3. In this case, Hertz met its obligation by seeking and receiving the authorization of the commissioner of commerce to operate as a self-insured entity. In seeking that approval, Hertz agreed to "discharge fully and promptly all payments and obligations which are now due or shall become due under the provisions of the Minnesota No-Fault Automobile Insurance Act and amendments thereto." State Farm asserts that Hertz's rental agreement violates the No-Fault Act because it allows Hertz to provide "contingent" liability coverage on vehicles it owns, although Hertz is statutorily required, as a self-insured owner of the vehicles, to maintain liability coverage, regardless of whether the renter or operator of a rented vehicle is otherwise insured. In response, Hertz argues that there is no violation of the No-Fault Act because there are no circumstances under which a Hertz vehicle would be uninsured. We disagree. A self-insured car rental agency does not meet its obligations *689 as an automobile owner under the No-Fault Act by thrusting upon the renter its responsibility to provide liability coverage that is, by providing liability coverage only in the event that the renter is without liability coverage. The statutory provisions at issue Minn. Stat. §§ 65B.48, subd. 1 and 65B.49, subd. 3(2) do not on their face require that an automobile owner maintain coverage that is not contingent upon the presence of other coverage. Nevertheless, it is inconsistent with the general purpose of the No-Fault Act to read the statute in the manner advocated by Hertz. Hertz's interpretation of the Act would create a practical exemption to the broad statutory mandate that all automobile owners carry liability insurance, an exemption nowhere evident in the language of the statute. Further, the distinction relied upon by Hertz and the court of appeals, that the statutory requirements on Hertz are different because it is self-insured, is contrary to our reading of the NoFault Act in other cases. We have said that "[s]elf-insurance is the functional equivalent of a commercial insurance policy. * * * The purpose of either form of insurance is to compensate victims appropriately. The certificate filed with the commissioner [of commerce] is the functional equivalent of an insurance policy." McClain v. Begley, 465 N.W.2d 680, 682 (Minn.1991). Further, in his concurring opinion in McClain, Justice Simonett concluded that, in considering the application of the No-Fault Act to self-insureds, we should "treat the self-insurer as if it had purchased a policy of auto liability insurance for each of its vehicles with itself as the named insured. Such a policy, if purchased, would contain an omnibus clause extending coverage to permissive drivers as additional unnamed insureds." Id. at 684. Applying this conceptual approach here, one could identify Powers as a permissive driver of the rented vehicle, whose liability would be fully covered by virtue of the omnibus clause.[1] Further, we find no merit in Hertz's argument that this construction of the No-Fault Act violates its freedom of contract. Legislation may impact contractual obligations, if certain conditions are met. Generally speaking, "[t]he federal constitutional prohibition against contract impairment, U.S. Const., art. I, § 10, cl. 1, has been construed to mean that the state reserves some power to modify contract terms when the public interest requires." Christensen v. Minneapolis Mun. Employees Retirement Bd., 331 N.W.2d 740, 750 (Minn. 1983). The legislature, therefore, can alter contract terms by enacting statutes as long as the legislation is "necessary to meet a broad and pressing social or economic need, if the legislation is reasonably adopted for the solution of the problem involved, and if it is not over broad or over harsh." Id. (quoting White Motor Corp. v. Malone, 599 F.2d 283, 287 (8th Cir.1979)). The purposes of the No-Fault Act are spelled out in Minn Stat. § 65B.42: to "relieve the severe economic distress of uncompensated victims"; to prevent overcompensation; to assure prompt payment; to "ease the burden of litigation"; and to correct imbalances and abuses in the automobile accident liability system. That these are legitimate public purposes is unquestionable, and a statutory scheme the linchpin of which is a requirement that each automobile owner carry liability coverage is not either harsh or overly broad. This court has stated, in the context of a No-Fault Act case, that "contract provisions which conflict with statutory law will not be enforced." Roering v. Grinnell Mut. Reinsurance Co., 444 N.W.2d 829, 833 (Minn. 1989). We have also stated that "an insurer's liability is governed by the contract between the parties only as long as coverage *690 required by law is not omitted and policy provisions do not contravene applicable statutes." Streich v. American Family Mut. Ins. Co., 358 N.W.2d 396, 399 (Minn.1984) (emphasis added). We conclude that the provision of the rental agreement purporting to limit Hertz' liability obligation to situations in which there is no other coverage, contravenes the No-Fault Act and is, therefore, unenforceable.[2] Because we hold that Hertz's attempted limitation of coverage is unenforceable, we must determine which insurance coverage is primary in this case. We begin with the consideration of Minn. Stat. § 65B.49, subd. 3(3)(d), a statutory amendment to the No-Fault Act which became effective on August 1, 1994. See Minn. Stat. § 645.02 (1996). Minn. Stat. § 65B.49, subd. 3(3)(d) (1996) states that: (3) Every plan of reparation security shall be subject to the following provisions which need not be contained therein: * * * * (d) Except as provided in subdivision 5a,[3] a residual liability insurance policy shall be excess of a nonowned vehicle policy whether the nonowned vehicle is borrowed or rented, or used for business or pleasure. A nonowned vehicle is one not used or provided on a regular basis. Hertz argues that Minn. Stat. § 65B.49, subd. 3(3)(d) does not apply to the instant case because (1) Powers' State Farm policy, which was effective at the time of the accident, was renewed prior to the effective date of this statutory amendment and (2) the statutory amendment only applies to insurance "policies" and not to self-insurers. Hertz further argues that State Farm's "other insurance" provision is not applicable here, because, as a self-insurer, its reparation security is simply not "other insurance." For the second proposition, Hertz asserts that "a certificate of self-insurance is a contract with the state to protect the public, whereas an automobile liability insurance policy is a contract with the insured to provide indemnity." State Farm argues that the statutory amendment does apply because, according to Hertz's application for self-insurance, Hertz obligated itself to "discharge fully and promptly all payments and obligations which are now due or shall become due under the provisions of the Minnesota No-Fault Automobile Insurance Act and amendments thereto." State Farm further argues that self-insurance is the equivalent of an insurance policy, and the statutory amendment cannot be found inapplicable simply because it uses the word "policy," rather than the broader term "plan of reparation security." We have stated that "the general rule is that upon each renewal an entirely new and independent contract of insurance is created and is governed by the laws in effect on the date of renewal." Hauer v. Integrity Mut. Ins. Co., 352 N.W.2d 406, 408 (Minn. 1984). However, "[o]n each reinstatement or renewal of policies, any statutes or amendments pertaining to such policies and enacted after their issuance are incorporated into the new policies." Id. (quoting Taylor v. American Nat'l Ins. Co., 264 Minn. 21, 25, 117 N.W.2d 408, 411 (1962)). Therefore, Hertz is incorrect in its assertion that Minn. Stat. § 65B.49, subd. 3(3)(d) does not apply because it became effective after Powers renewed his State Farm policy. State Farm is correct in its contention that Hertz's application for self-insurance required that Hertz comply with the No-Fault Act in its entirety and with any amendments enacted in the future. Also, as previously stated, neither this court nor the legislature has provided that self-insured entities should be treated any differently from other insurers, and for that reason Hertz's assertion that the statutory amendment only applies to third-party insurers is mistaken. Therefore, we conclude that Minn. Stat. § 65B.49, subd. 3(3)(d) is applicable to determine *691 which coverage should be deemed primary. In applying Minn. Stat. § 65B.49, subd. 3(3)(d) to the instant case, we conclude that the Hertz self-insurance is primary. The State Farm policy is secondary under the statute, in excess of the Hertz coverage. Even if this court did not apply Minn. Stat. § 65B.49, subd. 3(3)(d) to this case, the Hertz coverage would still be deemed primary under the common-law "closest to the risk" doctrine. Under our previous cases, to determine which coverage is primary we applied the "closest to the risk" test, in which we ask: (1) Which policy specifically described the accident-causing instrumentality? (2) Which premium is reflective of the greater contemplated exposure? (3) Does one policy contemplate the risk and use of the accident-causing instrumentality with greater specificity than the other policy that is, is the coverage of the risk primary in one policy and incidental to the other? Interstate Fire & Cas. Co., 433 N.W.2d at 86. Applying these factors to this case, the Hertz self-insurance policy specifically describes the rental vehicle involved in the accident because Hertz is the owner and its self-insurance is specifically available to cover the vehicle at issue, while Powers' State Farm policy only describes Powers' personal automobile. As to the second factor, because Hertz chose to self-insure, it avoided the payment of premiums to cover its liability. However, it is clear that Powers' State Farm policy did not contemplate primary coverage for more than damage to a rental vehicle, and its premiums are reflective of that fact. In addressing the third and final factor, the State Farm policy specifically states that its non-owned vehicle coverage is excess and incidental to any other policy covering the vehicle. While Hertz attempts to shift primacy to the State Farm policy through its rental agreement, Hertz's self insurance must provide liability coverage for damages caused by the use of vehicles it owns and offers for rent. Therefore, Hertz's self-insurance coverage is primary even under common law principles. In summary, Hertz cannot contract away its primary obligations under the No-Fault Act by limiting its liability coverage to situations where no other coverage exists. Therefore, Hertz must provide primary liability coverage for the damages resulting from Powers' accident while driving the rental car owned by Hertz. Reversed. BLATZ, Justice (concurring specially). I concur in the result of the majority decision. The legislature clearly set forth in Minn. Stat. § 65B.49, subd. 3(3)(d) that "a residual liability insurance policy shall be excess of a nonowned vehicle policy." This statutory amendment to the No-Fault Act was effective on August 1, 1994. The statute requires that Hertz's nonowned vehicle policy be deemed primary in providing Powers with liability coverage. This statutory amendment was effective the day before Powers rented the Hertz vehicle, and, therefore, Hertz is bound by its mandates. While I do not agree with all of the other legal analysis and conclusions reached by the majority, Minn. Stat. § 65B.49, subd. 3(3)(d) is dispositive of this matter. Therefore, I concur in the result. KEITH, Chief Justice (concurring specially). I join in the special concurrence of Justice Blatz. PAGE, Justice (dissenting). I respectfully dissent. The court's decision, which allows the renter of a rental car, who has his or her own liability insurance coverage and who declines to purchase the rental car company's liability insurance supplement to escape responsibility for the renter's involvement in an accident with the rental car, is wrong, fundamentally unfair, and poor public policy. What purpose is served by allowing the renter and the renter's insurance company to avoid responsibility for the renter's action? I would suggest none. To the extent that it is asserted that this result *692 is necessary in order to fulfill the purposes of Minnesota's No-Fault Automobile Insurance Act, that simply is not the case. The purpose of the No-Fault Act is "[t]o relieve the severe economic distress of uncompensated victims of automobile accidents." Minn. Stat. § 65B.42(1) (1996). On the facts before us, that purpose is met and will always be met. The terms of the rental agreement at issue make clear that under any circumstances "[i]f neither [the customer] nor the operator of the car have [liability] insurance," Hertz will provide coverage. Thus, no "victim," injured as a result of an accident with one of Hertz's rental cars, will remain "uncompensated." Finally, the result reached today is poor public policy. If Hertz cannot rely on its customers to either provide their own liability insurance protection or, at the time of rental, purchase Hertz's liability insurance supplement, the cost of that protection is likely to be passed on by Hertz to all of its rental car customers. There is no sound reason why individual renters should not be required to bear the cost of their own liability insurance protection. Therefore, I dissent. NOTES [1] In McClain, the rental car agency attempted to shift all financial liability to the renter through a provision in the rental agreement that provided that the renter was responsible for insuring the rental car. 465 N.W.2d at 681. Here, Hertz has attempted a similar shift of responsibility, but has agreed to provide coverage if the renter does not have liability coverage through a policy on another automobile. The Hertz approach is different in scope than that of the rental car agency in McClain, but its fundamental aim is the same to avoid the statutory obligations of the No Fault Act. [2] If our interpretation of the No-Fault Act is deemed incorrect by the legislature, and rental car agencies are to be treated differently than all other automobile owners, the legislature is, of course, free to clarify the statute at any time. [3] Subdivision 5a provides that every plan of reparation security insuring a natural person must cover damage to rented automobiles.

+ 2 more citations in this opinion.

Gusk v. Farm Bureau Mutual Insurance Co. · 1997 1 citation

+ 1 more citation in this opinion.

Malmin v. Minnesota Mutual Fire & Casualty Co. · 1996 2 citations

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Dairyland Insurance Co. v. Starkey · 1995 2 citations

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Neal v. State Farm Mut. Ins. Co. · 1995 2 citations

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McIntosh v. State Farm Mutual Automobile Insurance Co. · 1992 2 citations

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Arbitration Between Charboneau v. American Family Insurance Co. · 1992 2 citations

+ 2 more citations in this opinion.

McClain v. Begley · 1991 2 citations

465 N.W.2d 680 (1991) Claudia McCLAIN, as Trustee for the heirs and next of kin of Michelle Elizabeth McClain, decedent, petitioner, Appellant, v. Bridget J. BEGLEY, petitioner, Appellant, Christine S. Meyers, Defendant, Altra Auto Rental, Inc., a division of Agency Rent-A-Car, Inc., Respondent. and ALTRA AUTO RENTAL, INC., A DIVISION OF AGENCY RENT-A-CAR, INC., Respondent, v. FIREMEN'S FUND INSURANCE COMPANY, Defendant, Allstate Insurance Company, petitioner, Appellant. No. C1-89-2206. Supreme Court of Minnesota. February 15, 1991. Eric Magnuson, Andrew M. Walsh, Rider, Bennett, Egan & Arundel, William M. Hart, R. Gregory Stephens, Meagher & Geer, Minneapolis, for appellants. Scott W. Johnson, James A. O'Neal, Paul W. Heirling, Faegre & Benson, Bonita J. Girard, Bassford, Hecht, Lochhart & Mullia, Minneapolis, for respondents. Heard, considered and decided by the court en banc. *681 YETKA, Justice. This case is here on appeal from the court of appeals, which reversed summary judgment awarded by the trial court on motion of plaintiff McClain. We reverse the court of appeals and reinstate the judgment of the trial court. Petitioner McClain brought an action against Altra Auto Rental, Inc., Bridget Begley, and Christine Meyers for the wrongful death of her daughter, Michelle McClain. The death resulted from a car accident involving a car rented by Michelle McClain, Begley and Meyers from Altra. Altra insured the rental car through a plan of self-insurance under the no-fault act. Allstate insured Begley, the driver of the rental car at the time of the accident, through her parents' liability policy. After McClain commenced suit, Altra brought a declaratory judgment action against Allstate to determine priority of coverage. In January 1988, McClain moved for partial summary judgment, claiming that Altra's self-insurance plan provided primary coverage to the extent of the $500,000 liability limits stated on the certificate of insurance. The motion was granted on April 7, 1988. Altra's petition for discretionary review was denied by the court of appeals. Thereafter, the parties stipulated to damages and the entry of judgment with the express understanding that Altra would appeal the summary judgment decision.[1] The court of appeals reversed the trial court, holding that, in the absence of express liability coverage limits in a self-insurance plan, a self-insurer is liable only for the statutory minimum amount of coverage. McClain v. Begley, 457 N.W.2d 230 (Minn.App.1990). Respondents McClain and Begley appealed. This court granted respondents' petition for review. This case arises from an automobile accident on March 30, 1986, in Missouri. Michelle McClain, Bridget Begley, Christine Meyers, and Shannon Murphy, all college students, planned a spring-break trip to Padre Island, Texas. Prior to the trip, Murphy contacted Altra about renting a car. An agent of Altra told Murphy that, to qualify for the least expensive rate, she must rent the car as a replacement for an insured, but out-of-service car. Murphy told the agent that McClain had an out-of-service car insured through Firemen's Fund Insurance. On March 21, 1986, the Altra agent delivered the car to Murphy and Meyers. Meyers signed the rental contract which stated that Altra did not provide liability coverage on the car and that the car was to be insured by the lessee. A few days after the rental contract was signed, the agent filled in the rental form with a fictitious policy number, agent, and agency phone number. On March 30, 1986, as the women were returning from the trip, Begley fell asleep at the wheel and collided with a car parked on the shoulder of an interstate in Missouri. McClain was killed in the collision. Altra insures its cars through a plan of self-insurance. As a self-insured entity, Altra completed and filed the forms developed by the Department of Commerce. One of the forms included a question and an answer which we repeat as follows: 12. List all excess insurance applicable to motor vehicle accidents, with name(s) of insurer(s), policy number(s) and limits of liability. Lexington Insurance Company Policy No. 552 8742 Effective: 12-31-86/87 Amount of Insurance: $2,500,000 in excess of $500,000 S.I.R. [Self-insured Retention] The above question and answer was part of a form entitled "REQUEST FOR EXEMPTION FROM INSURING LIABILITIES UNDER THE MINNESOTA NO-FAULT AUTOMOBILE INSURANCE ACT." The parties to the lawsuit entered into a stipulation which, in substance, provided the following: Altra owned the car in *682 which McClain was killed. The negligence of Begley, the driver, was the sole cause of McClain's death. The total damages for the death are $155,000. If the trial court orders are upheld on final appeal, Altra will pay $155,000 to plaintiff. If Altra's obligation is limited to the statutory minimum, Altra will pay $30,000 and Allstate will pay $100,000. As a result of all this pre-appeal maneuvering, the parties agree and have submitted to the court the following: 1. The question of the applicability of Minnesota's car owner's responsibility act is not raised and is thus not before this court. 2. Altra sought protection of its fleet under the Minnesota no-fault act. 3. Altra, through its rental agreements, had attempted to shift responsibility for all liability coverage to the lessees of its cars and absolve itself of any liability. This has been held illegal by the Minnesota Department of Commerce. 4. Thus, the sole issue for this court to decide involves the interpretation of the no-fault insurance act, Minn. Stat. §§ 65B.41-65B.71 (1990), and its applicability to self-insurers. Interpretation of statutes is a question of law. Hibbing Educ. Ass'n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn.1985). The parties have stipulated to the facts and to the amount of damages. This court thus must determine whether the court of appeals erred in its application of the law to the facts of this case. This court is not bound by the decision of the court of appeals. A.J. Chromy Constr. Co. v. Commercial Mechanical Serv., Inc., 260 N.W.2d 579 (Minn.1977). The Minnesota no-fault act imposes a duty on the owner of a motor vehicle to maintain "a plan of reparation security * * * insuring against loss resulting from liability imposed by law for injury and property damage by any person arising out of the ownership * * * of the vehicle." Minn. Stat. § 65B.48, subd. 1. The owner has the choice of self-insuring or buying an insurance policy. The act states five purposes: to relieve the "severe economic distress of uncompensated victims," to prevent overcompensation, to provide prompt payment, to reduce litigation, and to correct abuses of the tort liability system. Minn. Stat. § 65B.42. The obligations imposed on self-insurers should reflect those goals. Self-insurance is the functional equivalent of a commercial insurance policy. The law of workers' compensation treats self-insurers no differently than those who insure by commercial policy. The purpose of either form of insurance is to compensate victims appropriately. The certificate filed with the commissioner is the functional equivalent of an insurance policy. While under the Minnesota no-fault statutes, Minn. Stat. § 65B.49, subd. 3(1), any insurer is required to have liability coverage of $30,000 as a minimum, Altra made a deliberate representation to the Department of Commerce to provide coverage in excess of that amount, namely, $500,000. Based on that representation and other data supplied to the Department of Commerce, Altra was accepted as a self-insured. It should thus be held to the representations that it made. The cases and precedent cited in the briefs are simply not applicable to the unique facts of this case, for the decision in this case is based more on equitable estoppel principles than on any other. The court of appeals is thus reversed and judgment of the trial court reinstated. COYNE and GARDEBRING, JJ., took no part in the consideration or decision of this matter. SIMONETT, Justice (concurring). I join in the majority opinion but my reasoning, only sketched out here, is different. A Minnesota car owner can satisfy the requirements of our No-Fault Act by purchasing a liability policy with limits of $30,000 for bodily injury to any one person, $60,000 for any one accident, and $10,000 *683 property damage. Minn. Stat. § 65B.49, subd. 3(1). These limits, of course, do not limit the car owner's tort liability; a car owner remains liable for any tort exposure over the policy limits. By purchasing minimum coverage, a car owner in this state keeps his car registered, keeps his driver's license, and avoids criminal penalties. Minn. Stat. § 65B.67. Policy limits measure the amount of protection afforded the insured. Also, policy limits, whether the statutory minimum or higher, are significant in determining when other auto liability policies covering the driver (if such is the case) will come into play. A self-insurer must approach these risk management problems a little differently than a regular policyholder. The self-insurer's exposure is its tort liability exposure, which the self-insurer may limit by purchasing an excess policy for claims against it over and above a certain amount. In relation to this excess policy, the self-insurer's underlying personal exposure is its self-insured retention. This self-insurance, by statutory definition, is a plan of reparation. Minn. Stat. § 65B.43, subd. 15. Consequently, there is no need for a self-insurer to file any detailed plan. See Anderson v. Northwestern Bell Tel. Co., 443 N.W.2d 546, 549 (Minn.App.1989) ("[S]elf-insureds are not required to have the carefully worded, highly specific policy provisions, declarations and coverage limits required of insurance companies."). Ordinarily, a self-insured retention operates much the same as stated limits in a regular insurance policy. But not necessarily. Arguably, a self-insurer may, with respect to certain persons, place limits on its self-insured retention which are lower than the self-insured retention. The self-insurer will try to do this so that if there are other auto insurance policies also covering the driver of the car, such other insurance will no longer be excess but will then apply. In this case, for example, the driver of the rented car, Bridget Begley, had her parents' auto policy affording her coverage, and the question arises as to when this other insurance takes over.[1] In this case Altra, Inc. (the Rental Agency) purchased an excess policy with coverage of "$2,500,000 in excess of $500,000 S.I.R." (the initials refer to Self-Insured Retention). This excess policy, however, contained a "Renter's Exclusion" endorsement which appears to exclude claims such as McClain's arising from accidents while the automobile is being operated by a lessee under a rental agreement.[2] I understand the Rental Agency's position to be that it is self-insured for claims arising when its own employees are driving its cars up to $500,000, after which the excess policy takes over for the next $2.5 million; but that as to claims arising where a lessee is operating the rented vehicle, while the personal exposure, if any, of the Rental Agency as owner of the rented car is limitless, the Rental Agency's self-insurance exposure for the lessee-operator is the minimum statutory limits under the Minnesota No-Fault Act. The issue then becomes: To what extent, if any, does the grant of self-insurance authority to the Rental Agency provide protection to persons operating the Rental Agency's automobiles as lessee-operators? *684 It seems to me there are two possible ways in which the Rental Agency, as a self-insurer, might possibly provide coverage to its lessee-operators. One possibility is that the self-insurer contracts with the lessee to protect the lessee the same as if the lessee had purchased a standard auto liability insurance policy for the rented car. Presumably the Rental Agency could place limits on this contractual coverage by so stating in the rental contract. The problem with this arrangement, however, is that the Rental Agency is a self-insurer, not an insurer. I doubt if a self-insurer is authorized to issue contracts of insurance.[3] The second possibility is to treat the self-insurer as if it had purchased a policy of auto liability insurance for each of its vehicles with itself as the named insured. Such a policy, if purchased, would contain an omnibus clause extending coverage to permissive drivers as additional unnamed insureds.[4] This seems to me the better approach and more in keeping with the concept of self-insurance. This brings up, however, another question: Can omnibus coverage limits ever be less than the coverage limits for the named insured? Courts in other states appear to differ on this. For example, in Balboa Ins. Co. v. State Farm Mut. Auto. Ins. Co., 17 Ariz. App. 157, 496 P.2d 147 (1972), a rental car agency had purchased a liability policy with $100,000/300,000 coverage but with an endorsement limiting coverage for lessee-operators to $10,000/20,000, the statutory minimum. The court held these differing limits were permissible, relying on Rocky Mountain Fire & Cas. Co. v. Allstate Ins. Co., 107 Ariz. 227, 485 P.2d 552 (1971). Compare Southern Home Ins. Co. v. Burdette's Leasing Service, Inc., 268 S.C. 472, 234 S.E.2d 870 (1977), where the South Carolina Supreme Court held that an auto rental agency's self-insurance covered permissive users including lessee-customers, and that the self-insurance "substitutes for an insurance policy to the extent of the statutory policy requirements." Id., 234 S.E.2d at 872 (emphasis added). Wisconsin has a so-called "omnibus statute" which provides that coverage applicable to the named insured is to be extended to any person using the motor vehicle. Wis.Stat. § 632.32(3), successor to Wis. Stat. § 204.30(3) (1967). In Smith v. National Indemnity Co., 57 Wis.2d 706, 205 N.W.2d 365 (1973), the car rental agency had liability insurance with coverage for itself, as the named owner insured, of $100,000/300,000; an endorsement to the policy, however, limited coverage for renters to $10,000/20,000. The Wisconsin Supreme Court held, applying its omnibus coverage statute, that the car rental agency could not have less coverage for its lessee-customers than for itself. In National Indemnity Co. v. Manley, 53 Cal.App.3d 126, 125 Cal.Rptr. 513 (1975), the rental agency's liability policy contained *685 an endorsement that it was excess over other insurance. The intermediate appellate court held that under the California Insurance Code an insurer could provide in its policy for only minimum statutory coverage for permissive users, but that in this instance the policy clause attempted to exclude permissive users from any coverage whatsoever and, hence, was void. 53 Cal. App.3d at 133, 125 Cal.Rptr. at 513. The court, therefore, ruled that permissive users would be entitled to coverage in the same amount as that specified by the policy for the named insured. See also Globe Indemnity Co. v. Universal Underwriters Ins. Co., 201 Cal.App.2d 9, 17-18, 20 Cal. Rptr. 73, 78-79 (1962). I think arguments can be made both for and against restricting omnibus coverage to minimum statutory limits in cases where a self-insurer is engaged in the business of short-term car rentals.[5] One would need, however, a better record than the one we have here to resolve this question. The record does indicate that the Minnesota Department of Commerce expects a self-insured rental agency to provide liability protection for its lessee-operators, and there is some indication that this coverage can be limited to the statutory minimum.[6] On this record and for this case, I take the following position. The Rental Agency affords protection to its lessee-operators as if it had omnibus coverage. Car rental companies are a special case of self-insurance. The Rental Agency may limit its omnibus coverage at least for lessee-operators to the statutory minimum and it may do this in the rental contract. In this case, however, the Rental Agency went further and attempted to deny all omnibus coverage. This attempt was void.[7] Therefore, left in place for omnibus coverage are the same "limits" for residual liability coverage as for the named insured, see Manley, supra, which in this case is either unlimited or $500,000, depending on how the renter's exclusion is construed. In any event, for the purposes of this case, the Rental Agency is responsible under the stipulation of the parties to pay $155,000. I think the $500,000 self-insured retention refers to residual tort liability, not to first party no-fault benefits, and, therefore, no-fault economic loss benefits are the statutory minimum. KEITH, Chief Justice (concurring). I join in the concurrence of Justice Simonett. *686 TOMLJANOVICH, Justice (concurring). I join in the concurrence of Justice Simonett. NOTES [1] The parties stipulated to damages of $155,000, noting that if the summary judgment decision is reversed, then Altra will pay the statutorily mandated amount, $30,000, and Allstate will pay the limit of its secondary liability, $100,000. Thus, were the summary judgment decision reversed, McClain's estate would be uncompensated for $25,000. [1] The trial court ruled that Altra's self-insurance was primary vis-a-vis Allstate's policy issued to Bridget Begley's parents and affording coverage to Bridget Begley as driver of the rented car. This ruling was not appealed. Altra appeals only the issue of how much of its self-insured retention must be paid on the wrongful death claim before Allstate's policy must pay.

+ 1 more citation in this opinion.

Rehnelt v. Stuebe · 1986 4 citations

+ 4 more citations in this opinion.

Murphy v. Milbank Mutual Insurance Co. · 1986 1 citation

+ 1 more citation in this opinion.

Reed v. Continental Western Insurance Co. · 1985 2 citations

KELLEY, Justice. The primary issue in this case is whether a Minnesota licensed insurer of automobiles owned by nonresidents is liable under the Minnesota No-Fault Reparations Act (Minn. Stat. § 65B.47) for no-fault benefits when one of its insureds sustained personal injuries while in a Minnesota accident at a time she was operating a non-owned vehicle, and at a time one or more of the insured vehicles was not in the State of Minnesota. On motion for summary judgment, the trial judge held that it was. The Court of Appeals affirmed.1 We reverse in part, affirm in part, and remand. On November 25, 1981, at 2:15 p.m., Carmen Reed, a college student who resided with her parents in Chester, Iowa, sustained extensive personal injuries resulting in quadriplegia in a Minnesota accident while driving a vehicle owned by Bernie Leeder, a Wisconsin resident. The Leeder vehicle was insured by Allstate Insurance Company (Allstate). Carmen Reed’s parents, who lived only one mile from the Minnesota-Iowa border, owned three vehicles insured by Continental Western Insurance Company (Continental). Carmen was an “insured” under the definition of the policy. Iowa does not have a no-fault reparation system, and there were no no-fault riders on the policy *438covering the three Reed vehicles. Carmen’s father was a rural mail carrier whose route brought him almost daily into Minnesota. The other members of the family using the insured vehicles traveled frequently in Minnesota. In an affidavit filed with the trial court, Carmen’s father claims that at the time of the accident, he was most likely in Minnesota on his mail route. In a similar affidavit, Carmen’s mother claims that at the same time she was in LeRoy, Minnesota, doing Thanksgiving shopping. The trial court, however, made no finding whether, at the time of Carmen’s accident, one or more of the Reed insured vehicles was in Minnesota. Continental, an Iowa corporation, actively conducts automobile insurance business in Minnesota and has filed its no-fault certification form with the commissioner of commerce. Shortly after the accident Carmen Reed collected $20,000 in medical benefits from Allstate, the insurer of the Leeder vehicle. She then ultimately commenced this action against Continental claiming no-fault benefits under the policy covering her parents’ three vehicles.2 The trial court granted Carmen Reed summary judgment in reliance on Western National Mutual Ins. Co. v. State Farm Ins. Co., 353 N.W.2d 169 (Minn.App.1984) holding that Carmen was an insured at priority level 4(a) of Minn. Stat. § 65B.47 (1984) without making any fact findings with respect to whether any of the Reed vehicles were in the State of Minnesota at the time of Carmen’s accident. It further found that she was entitled to no-fault benefits from Continental in addition to the benefits she had previously received from Allstate. The Court of Appeals affirmed on both issues.3 1. We have held today in Western National Mutual Ins. Co. v. State Farm Ins. Co., 374 N.W.2d 441 (Minn.1985), whether a foreign insurer, which insured vehicles owned and garaged in a state without a no-fault reparations system, licensed to write auto insurance in Minnesota, is liable for no-fault reparation benefits at priority level 4(a) of Minn. Stat. § 65B.47 depends upon whether, at the time of the accident giving rise to the claim, one or more of the nonresident vehicles was in the State of Minnesota. Both the trial court and the majority of the court of appeals panel held that physical presence of an insured automobile in the state was not relevant to Continental’s obligation to furnish no-fault benefits. Accordingly, we reverse those holdings. ' Whether Continental is liable to pay no-fault benefits depends upon whether at the time of Carmen’s accident one or more of the Reed vehicles was in this state. As indicated, the trial judge did not address this issue because he deemed it to be immaterial. However, it is now clear that if one of the Reed vehicles was in the state at the time of the accident, it would trigger Continental’s liability for no-fault benefits under priority level 4(a) of section 65B.47 (1984). Since the trial court made no factual determination on this issue, we remand for findings on this issue.4 2. Even should it ultimately be determined on remand that Continental is *439liable under priority level 4(a), Minn. Stat. § 65B.47 (1984) to pay Carmen no-fault benefits, Continental claims she is not entitled to those benefits because Carmen has accepted no-fault benefits from Allstate. It claims Reed cannot stack benefits because the applicable policies are at different priority levels — i.e., recovery under Minn. Stat. § 65B.47, subd. 4(b) against Allstate, the insurer of the involved vehicle, and level 4(a) against Continental which issued the policy under which Carmen claims coverage under the Minnesota No-Fault Act. Relying on Wasche v. Milbank Mutual Ins. Co., 268 N.W.2d 913, 919 (Minn.1978), Continental claims Reed may not stack across priority levels. We find Wasche, however, to be inapposite. While we did state in Wasche that stacking at the same level was not prohibited, it should be noted that Wasche did not involve the issue presented here. In that case the stacking was at the same priority level. In this case, Reed contends she has not made an election to receive medical pay at level 4(b) from Allstate, but rather that she was compelled to do so because Continental refused to pay no-fault economic loss benefits at level 4(a), and that she was desperately in need of money to pay medical bills. She claims Continental’s liability has existed since the time of the accident, and that Continental denied the claim for those benefits made about one week after the accident.5 She notes that were this court to apply the “voluntary payment doctrine,” the application would run contrary to the purpose of the No-Fault Act because it would discourage primary obligors from providing benefits in the hope that some other carrier, mistakenly or otherwise under statutory compulsion, might pay. Likewise, she argues that Continental’s position runs counter to the purpose of providing prompt payment of benefits, see Minn. Stat. 65B.42(1) (1984), because it discourages lower priority insurers from providing benefits when a claim could be made to a “higher priority insurer.” Finally, double recovery is prevented by granting subrogation rights. See Minn. Stat. § 65B.47, subd. 6 (1984). The issue here is not whether Reed can stack across priorities, but rather whether Reed can recover damages in excess of Continental policy limits from Allstate. Since Reed was rendered quadriplegic, the damages would undoubtedly exceed Continental’s $90,000 exposure; but if Allstate has a subrogation action, any circuity of action is directly attributable to Continental’s refusal to pay. We conclude under the circumstances of this case that if Continental’s policy applies that Carmen Reed is entitled to recover economic loss benefits under its policy insuring the three Reed vehicles. Accordingly, on this issue we affirm the Court of Appeals. COYNE, J., took no part in the consideration or decision of this case.

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Sobania v. Integrity Mutual Insurance Co. · 1985 1 citation

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Arbitration of Fryer v. National Union Fire Insurance Co. · 1985 1 citation

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Hilden v. Iowa National Mutual Insurance Co. · 1985 1 citation

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Dahle v. Aetna Casualty & Surety Insurance Co. · 1984 1 citation

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Schmidt v. Clothier · 1983 6 citations

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Mickelson v. American Family Mutual Insurance Co. · 1983 2 citations

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Langenberger v. Dahl · 1983 4 citations

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Bartel v. New Haven Township · 1982 6 citations

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Waldbillig v. State Farm Mutual Automobile Insurance Co. · 1982 2 citations

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Tuenge v. Konetski · 1982 1 citation

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Galle v. Excalibur Insurance Co. · 1982 2 citations

(emphasis added). Recently we considered the loading and unloading clause when a plaintiff was struck by a dumpster which fell from the rear of a garbage truck. Krupenny v. West Bend Mutual Ins. Co., 310 N.W.2d 133 (Minn.1981). Although the mechanical unloading of the dumpster made Minn. Stat. § 65B.43, subd. 3 applicable, recovery under the Act was denied because the plaintiff was not occupying, entering into or alighting from the garbage truck when the dumpster fell. In the present case, all three plaintiffs were engaged in loading or unloading activities and were occupying or entering their vehicles at the time they suffered their injuries. Thus both requirements of § 65B.43, subd. 3(2) (1980) have been met. *370 We do not believe, however, that all loading and unloading injuries incurred while occupying, entering into or alighting from a vehicle are necessarily compensable under the No-Fault Act. The injury must also arise out of the "maintenance or use of a motor vehicle as a vehicle." Minn. Stat. § 65B.43, subd. 3 (1980). To hold otherwise would lead to extreme and absurd coverage results which we are certain the Legislature never intended. Would no-fault coverage exist in a situation where a Brinks security guard standing in the rear of his truck unloading money is shot by a robber? Would coverage be extended to an instance where the freight being unloaded were fireworks and the injury resulted from an accidental explosion? We do not believe these are injuries for which the Act is intended to provide compensation, for there is no causal relationship between the injury and the use of the vehicle for transportation purposes. Haagenson v. Nat'l Farmers Union Property & Casualty Co., 277 N.W.2d 648, 652 (Minn.1979). The Commissioners' Comments to Section 1(a)(6) of the 1972 Uniform Motor Vehicle Accident Reparations Act, in discussing the definition of "maintenance or use of a motor vehicle" state: While "use" has a broader meaning than operating or driving a vehicle, the requirement that use of the motor vehicle be "as a motor vehicle" qualifies the term so that both the tort exemption and the availability of basic reparation benefits are more nearly limited to activities whose costs should be allocated to motoring as part of an automobile insurance package. 14 Uniform Laws Annotated 55-56 (1980). The maintenance or use issue has been discussed in several cases, but "each case presenting such a question must to a great degree, turn on the particular facts presented." Associated Independent Dealers, Inc. v. Mutual Service Ins. Cos., 304 Minn. 179, 182, 229 N.W.2d 516, 518 (1975) (footnote omitted). A person injured when he is entering a car intending to become a passenger would be allowed recovery. See Haagenson v. Nat'l Farmers Union Property & Casualty Co., 277 N.W.2d 648, 652 (Minn. 1979). In contrast, an intoxicated, unconscious person who dies due to exposure when left sitting in a car overnight has not suffered an injury arising from the use of the automobile as a vehicle. See Engeldinger v. State Auto & Casualty Underwriters, 306 Minn. 202, 236 N.W.2d 596 (1975). Where it is established that the injury or loss "was a natural and reasonable incident or consequence of the use of the [insured] vehicle," Associated Independent Dealers, Inc. v. Mutual Service Ins. Cos., 304 Minn. 179, 182, 229 N.W.2d 516 (1975) (footnote omitted), a sufficient relationship between the injury and the use of the vehicle for transportation purposes exists to allow recovery. We have no hesitation in finding Standfield's injury encompassed within the Act. He was injured by a part of the vehicle itself which malfunctioned when he was attempting to unload a piece of equipment from the rear of the truck. However, we do not believe that the activities in which Galle and Schroedl were engaged arose from the "maintenance or use of a motor vehicle" within the meaning of the No-Fault Act. While it is true that lifting injuries are not unlikely when the vehicle in question is a delivery truck, it is apparent that the injuries occur not because of the use of the vehicle but because of the nature of plaintiffs' employment. This is not one of those activities "whose costs should be allocated to motoring as part of an automobile insurance package." Commissioner's Comments supra. The injuries sustained by Galle and Schroedl when lifting cargo were work-related rather than the result of an accident involving the use of a vehicle for transportation purposes. Denying no-fault benefits and allowing workers' compensation benefits is consistent with the purpose of the workers' compensation statute to provide compensation for injuries arising out of and in the course of employment. See, e.g., Lewis v. Connolly Contracting Co., 196 Minn. 108, 264 N.W. 581 (1936). Furthermore, *371 such a result is consistent with the general purposes of the No-Fault Act, stated in Minn. Stat. § 65B.42 (1980): The detrimental impact of automobile accidents on uncompensated injured persons, * * * requires that sections 65B.41 to 65B.71 be adopted to effect the following purposes: (1) To relieve the severe economic distress of uncompensated victims of automobile accidents * * *; (3) To encourage appropriate medical and rehabilitation treatment of the automobile accident victim * * *; (5) To correct imbalances and abuses in the operation of the automobile accident tort liability system * * *; (emphasis added). Affirmed. KELLEY, J., took no part in the consideration or decision of this matter. WAHL, Justice (dissenting in part). I agree with the majority opinion that Standfield's injury is encompassed within the No-Fault Act but must respectfully dissent from the holding that the injuries of Galle and Schroedl are not so encompassed. Minn. Stat. § 65B.43, subd. 3 (1980), clearly sets out that "[m]aintenance or use of a motor vehicle does not include * * * conduct in the course of loading and unloading the vehicle unless the conduct occurs while occupying, entering into or alighting from it." (Emphasis added.) Recovery was denied in Krupenny because the plaintiff was not occupying, alighting from or entering the garbage truck when the dumpster fell. Krupenny v. West Bend Mutual Insurance Co., 310 N.W.2d 133 (Minn.1981). Here, Galle and Schroedl were both "occupying" their trucks when their injuries occurred. To hold that those injuries did not arise out of the use of the plaintiffs' trailers as vehicles would ignore the clear language of the statute. When construing statutes, "[t]he general rule is that where language is unambiguous, the clearly expressed intent must be given effect and there is no room for construction. * * * * In interpreting a statute, a court must construe the language so as to effectuate the legislative intent." Mankato Citizens Telephone Co. v. Commissioner of Taxation, 275 Minn. 107, 112, 145 N.W.2d 313, 317 (1966) (citations omitted). The legislature clearly intended some loading and unloading injuries to be compensable under the Act. In limiting the injuries by specifying that only those occurring while a person is occupying, entering into or alighting from a motor vehicle arise out of the "maintenance and use of a motor vehicle," the legislature has eliminated many injuries covered by workers' compensation benefits or other reparation schemes. While the injuries of Galle and Schroedl were not the standard automobile accident injury, neither were they irrational, bizarre happenings in view of the use of the truck. As a matter of law these injuries arose out of the use of a motor vehicle and are compensable under the Minnesota No-Fault Act. TODD, Justice (dissenting in part). I join in the dissent of Justice Wahl. SCOTT, Justice (dissenting in part). I join in the dissent of Justice Wahl. NOTES [1] The trailer of a truck is statutorily defined as a vehicle under Minn. Stat. § 65B.43, subd. 2(c) (1980).

+ 1 more citation in this opinion.

Peterson v. Iowa Mutual Insurance Co. · 1982 1 citation

+ 1 more citation in this opinion.

National Indemnity Co. v. Mutual Service Casualty Co. · 1981 1 citation

Minn. Stat. § 65B.42 (1980) specifies the several objectives of the Minnesota No-Fault Automobile Insurance Act including “to create a system of mandatory inter-company arbitration to assure a prompt and proper allocation of the costs of insurance benefits between motor vehicle insurers.” Section 65B.53 (1978) is, on its face, directly responsive to that goal, providing for indemnity from insurers of commercial vehicles. National Indemnity argues that the classification of vehicles as commercial or noncommercial bears no rational relationship to fair cost allocation between insurers.

Krupenny v. West Bend Mutual Insurance Co. · 1981 1 citation

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Griebel v. Tri-State Insurance Co. of Minnesota · 1981 2 citations

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Pfeffer v. State Automobile & Casualty Underwriters Insurance Co. · 1980 3 citations

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Haugen v. Town of Waltham · 1980 2 citations

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Minnesota Court of Appeals

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Sandra Castillo as Personal Representative of the Estate of Jose Luis Estrada-Martinez v. American Standard Insurance Company of Wisconsin · 2017 1 citation

The stated purposes of the No-Fault Act are to relieve severe economic distress for uncompensated victims of automobile accidents and to correct abuses and imbalances in the operation of the automobile tort liability system. Galle v. Excalibur Ins. Co., 317 N.W.2d 368, 371 (Minn. 1982); see Minn. Stat. § 65B.42. This court has held that the exclusion for conduct within the course of business of repairing vehicles did not preclude coveragé when an off-duty employee was conducting repair work on his own personal vehicle, even though the work occurred on his employer’s premises. Midwest Family Mut. Ins. Co. v. Karpe, 430 N.W.2d 856, 860 (Minn. App. 1988), review denied (Minn. Dec. 21, 1988); see also Commissioners’ Comments, Unif. Motor Vehicle Accident Reparations Act § 1, 14 U.L.A. 48 (2005) (stating that injuries from the activities of business operation are excluded from no-fault coverage if they occur on the business premises; thus, an employee who suffers injury in an accident while test-driving a vehicle would be entitled to basic reparation benefits).

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Paek Saengkeo v. Minnesota Automobile Assigned Claims · 2016 2 citations

will cover basic economic loss. Minn. Stat. § 65B.42, subd. 1 (2014). Providing benefits

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Jon P. Hanbury, individually and as father and natural guardian of Andrew and Nick Hanbury v. American Family Mutual Insurance Company · 2015 2 citations

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State Farm Mutual Automobile Insurance Company, (A14-132), (A14-224) v. Angela Mary Lennartson, (A14-132), Katie Foss, (A14-224). · 2014 4 citations

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· 2014 2 citations

double recovery. 1974 Minn. Laws ch. 408 at 762 (fact of enactment); Minn. Stat. § 65B.42 (stating purposes of the no-fault act); Scheibel v. Ill. Farmers Ins. Co., 615

receiving double recovery. Minn. Stat. § 65B.42. In MSI, the supreme court concluded

State Farm Mutual Automobile Insurance Co. v. Metropolitan Council · 2014 2 citations

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Kastning v. State Farm Insurance Companies · 2012 1 citation

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State Farm Mutual Automobile Insurance v. Frelix · 2009 1 citation

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Do v. American Family Mutual Insurance Co. · 2008 1 citation

The no-fault act is intended to (1) relieve uncompensated victims from the economic stress caused by automobile accidents by providing for prompt payment for economic losses to victims of automobile accidents without regard for who was at fault; (2) prevent overcompensation of automobile-accident victims; (3) ensure, by the guarantee of prompt payment, that victims seek and receive appropriate medical treatment; (4) speed the administration of justice, ease the burden of litigation on state courts, and create an efficient arbitration system; and (5) prevent automobile-accident victims from receiving duplicate recovery. Minn. Stat. § 65B.42 (2006); Scheibel v. Ill. Farmers Ins. Co., 615 N.W.2d 34, 37 (Minn.2000). Under the act, Minnesota insurance policies must, at a minimum, provide coverage of $20,000 for medical-expense loss and $20,000 for income loss and other expenses. See Minn. Stat. § 65B.44, subd. 1(a)(1), (2) (2006). 2

Marchio v. Western National Mutual Insurance Co. · 2008 1 citation

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Schossow Ex Rel. Schossow v. First National Insurance Co. of America · 2007 1 citation

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Stewart v. Illinois Farmers Insurance Co. · 2007 1 citation

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In Re the Claims for No-Fault Benefits Against Progressive Insurance Co. · 2006 1 citation

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Illinois Farmers Insurance Co. v. Marvin · 2006 1 citation

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Dougherty v. State Farm Mutual Insurance Co. · 2004 6 citations

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State Farm v. Liberty Mutual Insurance Co. · 2004 1 citation

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Klinefelter v. Crum & Forster Insurance Co. · 2004 1 citation

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Arbitration of Olson v. Auto-Owners Insurance Co. · 2003 1 citation

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State Farm Mutual Automobile Insurance Co. v. Cincinnati Insurance Co. · 2002 4 citations

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Msi v. Lmcit · 2002 1 citation

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Lee v. Hunt · 2002 1 citation

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Mickman Bros., Inc. v. Farm Bureau Mutual Insurance Co. · 2002 1 citation

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Stout v. AMCO Insurance Co. · 2001 1 citation

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American Family Insurance Group v. Udermann · 2001 1 citation

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Loven v. City of Minneapolis · 2001 2 citations

Interpretations of statutes raise questions of law that are reviewed de novo. McClain v. Begley, 465 N.W.2d 680, 682 (Minn.1991). The Minnesota No-Fault Automobile Insurance Act, Minn. Stat. §§ 65B.41-.71 (1998), has many purposes, including “[t]o relieve the severe economic distress of uncompensated victims of automobile accidents,” to prevent overcompensation, to encourage medical treatment, to ease the burden of litigation, and to provide offsets to avoid duplicate recovery. Minn. Stat. § 65B.42 (1998). Under this act, every owner of a motor vehicle in Minnesota, including a political subdivision, must maintain a “plan of reparation security” to provide basic economic loss benefits and residual liability coverage. Minn. Stat. § 65B.48, subds. 1, 4 (1998).

There are major differences between tort law and no-fault law. Tort law has its origins in the common law. Anker v. Little, 541 N.W.2d 333, 337 (Minn.App.1995), review denied (Minn. Feb. 9, 1996). It is based on the concept of fault. See Tester v. American Standard, Inc., 590 N.W.2d 679, 680-81 (Minn.App.1999) (discussing effect of allocation of fault between parties), review denied (Minn. June 16, 1999). In contrast, the no-fault act is solely a creature of statute. Minn. Stat. §§ 65B.41-.71 (1998). It is based on the concept of compensation, regardless of fault. See Minn. Stat. §§ 65B.42 (1998). Given these differences, it would be expected that if the legislature had intended the municipal tort liability cap to apply to basic economic loss benefits, it would have done so expressly.

Braginsky v. State Farm Mutual Automobile Insurance Co. · 2001 1 citation

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Simpson v. American Family Insurance Co. · 2000 2 citations

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Northrup v. State Farm Mutual Automobile Insurance Co. · 1999 2 citations

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Tillery v. League General Insurance Co. · 1998 1 citation

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Johnson v. State Farm Mutual Automobile Insurance Co. · 1998 1 citation

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LeBeau v. John Deere Insurance Co. · 1998 4 citations

ANALYSIS An occupant of a motor vehicle that is insured pursuant to the no-fault act is entitled to collect basic economic loss benefits from an insurer, even if the accident occurs in another state. Minn. Stat. § 65B.46, subd. 2 (1990). Basic economic loss benefits include payments for medical expenses. Minn. Stat. § 65B.44, subds. 1, 2 (1990). Basic economic loss benefits are payable when an expense is incurred. Minn. Stat. § 65B.54 subd. 1 (1990). Because LeBeau's accident occurred in Wisconsin, John Deere ordinarily would be entitled to assert subrogation[1] rights against LeBeau after paying a claim for medical expenses, if that payment were to result in double recovery by LeBeau. Minn. Stat. § 65B.53, subd. 2 (1990). But LeBeau settled the tort action before he incurred additional medical expenses for his daughter's surgery. LeBeau claims that he is entitled to recover from John Deere any medical expenses incurred after the settlement, and that a no-fault insurer has no subrogation rights under Minn. Stat. § 65B.53 in the situation where basic economic loss accrues after a tort settlement. The parties cite Ferguson v. Illinois Farmers Ins. Group Co., 348 N.W.2d 730 (Minn.1984). There, the supreme court held that when an insured recovers a judgment against a tortfeasor, the insured's expected medical expenses may not be deducted from the judgment and assigned to the no-fault carrier. Rather, the insured should receive the entire judgment from the tortfeasor, less the costs of collection, including reasonable attorney fees. Then, after the insured has exhausted the damages allocated for medical expenses, the insured may recover any additional medical expenses from the no-fault insurer. Id. at 730. LeBeau argues that critical to Ferguson was the fact that the insured received a judgment that included a specific identifiable recovery allocated to future medical expenses. But here, although LeBeau did not receive a judgment against Larson, he did agree to a settlement which, like the judgment in Ferguson, allocated a specific amount for expected medical expenses.[2] Therefore, applying Ferguson, to avoid double recovery, LeBeau must first exhaust the amount of the settlement allocated for expected medical expenses, less costs of collection and reasonable attorney fees, before he is entitled to recover any medical expenses from John Deere. The total amount of LeBeau's settlement was $25,000, including $9,000 for expected medical expenses. From the $25,000, the district court deducted $2,755, or 11.02%, for costs of collection and reasonable attorney *86 fees. When the amount of $9,000 is similarly reduced by the 11.02% costs of collection and attorney fees, the resultant $8,008.20 represents the net amount of future medical expenses that LeBeau must exhaust pursuant to Ferguson before he may recover no-fault benefits from John Deere. The actual cost of the surgery was $8,508.25. Because this amount exceeds $8,008.20, LeBeau has in fact exhausted the amount of future medical expenses attributable to the settlement and has stated a proper claim against John Deere for the balance of $500.05. LeBeau did not include the above calculations in his briefs to this court, and he apparently made a tactical decision not to do so. However, undisputed evidence in the record supports our calculations, and in response to questioning by this court at oral argument, the parties fully addressed the issue to our satisfaction. Therefore, in the interest of judicial economy,[3] we hold that when either a judgment against or a settlement with a tortfeasor includes a designated amount for expected medical expenses, that amount must be reduced proportionally by the total costs of collection, including reasonable attorney fees, and that net amount must be exhausted before the insured seeks to recover any additional medical expenses from the no-fault carrier. We note that if the district court had required John Deere to pay LeBeau's claim for the surgery, such payment would result in a double recovery to the extent of $8,008.20, triggering John Deere's subrogation rights and bringing the case again before the court. The district court's decision to instead resolve the parties' entire dispute is supported by an overriding purpose of the no-fault act, which is to avoid "[t]he detrimental impact of automobile accidents * * * upon the orderly and efficient administration of justice in this state[.]" Minn. Stat. § 65B.42; accord Minn. Stat. § 65B.42(4) (reiterating this purpose by stating that the no-fault act is intended "[t]o speed the administration of justice, [and] to ease the burden of litigation on the courts of this state").