Minn. Stat. § 65B.54

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American Family Insurance Group v. Kiess · 2005 18 citations

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.

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.

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.

+ 15 more citations in this opinion.

Nelson v. American Family Insurance Group · 2002 2 citations

+ 2 more citations in this opinion.

Stout v. AMCO Insurance Co. · 2002 3 citations

+ 3 more citations in this opinion.

Weaver v. State Farm Insurance Companies · 2000 4 citations

+ 4 more citations in this opinion.

Metropolitan Property & Casualty Insurance Co. v. Metropolitan Transit Commission · 1995 3 citations

Under Minnesota law, a no-fault insurer becomes obligated to pay its insured for economic losses arising from a motor vehicle accident when it receives “reasonable proof of the fact and amount of loss realized.” Minn. Stat. § 65B.54, subd. 1 (1994). As an insured party incurs economic losses as a result of the accident, the insured must provide proof of loss to the no-fault insurer. Id. Mere notice of an accident, however, is not “reasonable proof’ under the statute. La-Valley v. National Family Ins. Corp., 517 N.W.2d 602, 605 (Minn.App.1994), pet. for rev. denied (Minn., Aug. 24, 1994). The insured must present “reasonable notice of a possible claim of right” to the reparation obligor before he or she can receive no-fault benefits. Haagenson v. National Farmers Union Property and Casualty Co., 277 N.W.2d 648, 653 (Minn.1979).

Under Minnesota law, a no-fault insurer becomes obligated to pay its insured for economic losses arising from a motor vehicle accident when it receives “reasonable proof of the fact and amount of loss realized.” Minn. Stat. § 65B.54, subd. 1 (1994). As an insured party incurs economic losses as a result of the accident, the insured must provide proof of loss to the no-fault insurer. Id. Mere notice of an accident, however, is not “reasonable proof’ under the statute. La-Valley v. National Family Ins. Corp., 517 N.W.2d 602, 605 (Minn.App.1994), pet. for rev. denied (Minn., Aug. 24, 1994). The insured must present “reasonable notice of a possible claim of right” to the reparation obligor before he or she can receive no-fault benefits. Haagenson v. National Farmers Union Property and Casualty Co., 277 N.W.2d 648, 653 (Minn.1979).

Under Minnesota law, a no-fault insurer becomes obligated to pay its insured for economic losses arising from a motor vehicle accident when it receives “reasonable proof of the fact and amount of loss realized.” Minn. Stat. § 65B.54, subd. 1 (1994). As an insured party incurs economic losses as a result of the accident, the insured must provide proof of loss to the no-fault insurer. Id. Mere notice of an accident, however, is not “reasonable proof’ under the statute. La-Valley v. National Family Ins. Corp., 517 N.W.2d 602, 605 (Minn.App.1994), pet. for rev. denied (Minn., Aug. 24, 1994). The insured must present “reasonable notice of a possible claim of right” to the reparation obligor before he or she can receive no-fault benefits. Haagenson v. National Farmers Union Property and Casualty Co., 277 N.W.2d 648, 653 (Minn.1979).

Neal v. State Farm Mut. Ins. Co. · 1995 1 citation

+ 1 more citation in this opinion.

Patrin v. Progressive Rehab Options · 1993 2 citations

+ 2 more citations in this opinion.

Johnson v. United Services Automobile Ass'n · 1992 1 citation

+ 1 more citation in this opinion.

Burniece v. Illinois Farmers Insurance Co. · 1987 6 citations

+ 6 more citations in this opinion.

Freeman v. Armour Food Co. · 1986 2 citations

+ 2 more citations in this opinion.

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

. Mr. and Mrs. Reed filed affidavits with the trial court which, if true, tended to show that two of the Reed vehicles were in Minnesota at the time of the accident. Nevertheless, no factual determination on that point was made by the trial court. On remand, the parties should be permitted to make a record from which such a determination can be made by the court. Apparently, the affidavits were filed with the trial court the day of the hearing on the summary judgment. motion and Continental had no opportunity to respond probably because the trial court was of the opinion that the affidavits were immaterial. On remand, the trial court, if it finds coverage, should determine the amount of economic loss and interest on the “overdue payments” provided for by Minn. Stat. § 65B.54, subd. 2 (1984), both fact issues not heretofore determined.

+ 1 more citation in this opinion.

Streich v. American Family Mutual Insurance Co. · 1984 2 citations

+ 2 more citations in this opinion.

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

+ 1 more citation in this opinion.

National Indemnity Co. v. Farm Bureau Mutual Insurance Co. · 1984 2 citations

+ 2 more citations in this opinion.

Randall v. State Farm Mutual Automobile Insurance Co. · 1983 1 citation

+ 1 more citation in this opinion.

Hoben v. City of Minneapolis · 1982 1 citation

2. A more difficult question is raised by the adoption of an amendment to Minn. Stat. § 65B.61, subd. 2, effective April 12, 1980. The trial court held that the amendment did not apply to an injury which occurred in May 1979, and that respondent was therefore entitled to the additional benefits with which we dealt in Record v. Metropolitan Transit Commission, 284 N.W.2d 542 (Minn.1979). Because the rule we there adopted was nullified by 1980 Minn.Laws, c. 539, and because Minn. Stat. § 65B.54, subd. 1 (1980), applies to future payments for economic losses as they accrue, we hold that the amendment to § 65B.61 applies after April 12, 1980 to respondent’s combined benefits, and reverse.

Metropolitan Transit Commission v. Bachman's · 1981 1 citation

+ 1 more citation in this opinion.

Griebel v. Tri-State Insurance Co. of Minnesota · 1981 1 citation

+ 1 more citation in this opinion.

Nichols v. State Farm Mut. Auto. Ins. Co. · 2019 1 citation

+ 1 more citation in this opinion.

Rodriguez v. State Farm Mut. Auto. Ins. Co. · 2018 2 citations

+ 2 more citations in this opinion.

Western National Insurance Co. v. Nguyen · 2017 7 citations

+ 7 more citations in this opinion.

Stand Up Multipositional Advantage MRI, P.A. v. American Family Insurance Company, a Wisconsin corporation, Michael Schultz, Ilya Knyazev, Thomas Bennerotte, Jed Benjamin Iverson, Gabriel Johnson, Michael Fay, Brad Ratgen, Landon Barakow, Lebertha Porter · 2016 6 citations

+ 6 more citations in this opinion.

State Farm Insurance Companies v. Jolene Wuorenma · 2015 2 citations

+ 2 more citations in this opinion.

North Star Mutual Insurance Company, as Subrogee of Jacob Quernemoen v. State Farm Mutual Automobile Insurance Company · 2014 1 citation

+ 1 more citation in this opinion.

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

+ 1 more citation in this opinion.

In Re the Claims for No-Fault Benefits Against Progressive Insurance Co. · 2006 3 citations

+ 3 more citations in this opinion.

Tezak v. Bachke · 2005 2 citations

+ 2 more citations in this opinion.

American Family Insurance Group v. Kiess · 2004 9 citations

+ 9 more citations in this opinion.

State Farm v. Liberty Mutual Insurance Co. · 2004 3 citations

+ 3 more citations in this opinion.

Klinefelter v. Crum & Forster Insurance Co. · 2004 2 citations

+ 2 more citations in this opinion.

Stout v. AMCO Insurance Co. · 2001 1 citation

+ 1 more citation in this opinion.

American Family Insurance Group v. Udermann · 2001 2 citations

+ 2 more citations in this opinion.

Karels v. State Farm Insurance Co. · 2000 2 citations

+ 2 more citations in this opinion.

Liberty Mutual Insurance Co. v. Sankey · 2000 5 citations

+ 5 more citations in this opinion.

Hovland v. State Farm Insurance Companies · 1999 3 citations

+ 3 more citations in this opinion.

Great West Casualty Co. v. State Farm Mutual Automobile Insurance Co. · 1999 1 citation

+ 1 more citation in this opinion.

State Farm Mutual Automobile Insurance Co. v. Spartz · 1999 3 citations

+ 3 more citations in this opinion.

McGoff v. AMCO Insurance Co. · 1998 8 citations

+ 8 more citations in this opinion.

LeBeau v. John Deere Insurance Co. · 1998 2 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").

+ 1 more citation in this opinion.

Hippe v. American Family Insurance Co. · 1997 1 citation

+ 1 more citation in this opinion.

Arbitration Between Raymond v. Allied Property & Casualty Insurance · 1996 3 citations

+ 3 more citations in this opinion.

Great West Casualty Co. v. Northland Insurance · 1995 1 citation [Dissent]

+ 1 more citation in this opinion.

Metropolitan Property & Casualty Insurance Co. v. Metropolitan Transit Commission · 1995 1 citation

+ 1 more citation in this opinion.

LaValley v. National Family Insurance Corp. · 1994 1 citation

+ 1 more citation in this opinion.

Milwaukee Mutual Insurance Co. v. Murphy · 1991 2 citations

+ 2 more citations in this opinion.

Farm Bureau Mutual Insurance Co. v. National Family Insurance Co. · 1991 2 citations

+ 2 more citations in this opinion.

Maryland Casualty Co. v. Harvey · 1991 2 citations

+ 2 more citations in this opinion.

Wolf v. State Farm Insurance Co. · 1990 1 citation

We do not agree with State Farm’s position that the initial burden of proof was on Wolf to establish her entitlement to benefits by presenting evidence on the issues of causation and necessity. An insured has a right to basic economic loss benefit under the No-Fault Act. Minn. Stat. § 65B.46, subd. 1. Once an insurer receives reasonable proof of the fact and amount of loss realized, it has a duty to respond to an insured’s claims in a timely manner. Minn. Stat. § 65B.54. Assuming State Farm received reasonable proof of Wolf’s losses, the burden was on it to establish Wolf was not entitled to benefits. See Ruppert v. Milwaukee Mutual Insurance Co., 392 N.W.2d 550, 556, 557 (Minn.Ct.App.1986), pet. for rev. denied (Minn. Oct. 22, 1986) (suggesting benefits may be terminated only if insured has been cured and thus requires no further treatment or if insured is receiving treatment for pre-ex-isting condition). Generally, an insured may meet that burden with evidence obtained during an adverse medical examination. See Minn. Stat. § 65B.56, subd. 1. Assuming State Farm meets its burden on retrial with Smookler’s deposition testimony, the burden may then shift to Wolf to establish her entitlement to benefits.

McKenzie v. State Farm Mutual Automobile Insurance Co. · 1989 1 citation

+ 1 more citation in this opinion.

American Family Mutual Insurance Co. v. Universal Underwriters Insurance Co. · 1989 2 citations

2. Is an insurer who pays no-fault benefits under the assigned claims plan and commences a subrogation action against the insurer whose policy provides coverage entitled to 15 percent statutory interest under Minn.Stat § 65B.54?

Minn. Stat. § 65B.54, subd. 2 (1982) provides for payment of 15 percent interest on overdue payments. The purpose of the interest is to compensate the insured and “to punish insurance companies for their failure to pay proceeds on time and to motivate them to pay on time.” Burniece v. Illinois Farmers Insurance Co., 384 N.W.2d 615, 616 (Minn.Ct.App.1986), reversed on other grounds, 398 N.W.2d 542 (Minn.1987). On review, the supreme court reiterated that the purpose of interest was both to compensate and encourage prompt payment.

Amer. Fam. Ins. v. Metro. Transit Com'n · 1988 4 citations

ANALYSIS In reviewing a summary judgment, this court must determine whether any genuine issues of material fact exist and whether the trial court erred in its application of the law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). Because the operative facts of this litigation are not disputed, the standard of review is limited to a determination of whether the trial court erred in its application of the law. See A.J. Chromy Construction Company v. Commercial Mechanical Services, Inc., 260 N.W.2d 579, 581 (Minn. 1977). Because this issue is purely legal in nature, this court need not give deference to the decision of the trial court. Frost-Benco Electric Association v. Minnesota Public Utilities Commission, 358 N.W.2d 639, 642 (Minn.1984). The Minnesota Legislature specified that the 1986 amendment to Minnesota Statute § 65B.47, subd. 1 was to have an effective date of March 26, 1986. 1986 Minn. Laws ch. 455 § 95. The reason for this dispute, however, is that the legislature did not expressly state whether the amendment would apply prospectively to all future claims for basic economic loss benefits or simply to all future accidents. There is no dispute that at the date of the accident, MTC was the primary provider of no-fault benefits to Ms. Vincent. MTC argues that the background and purpose of the No-Fault Act generally, as well as the specific statutory provisions, reveal that the legislature intended this amendment to apply retroactively to accidents which occurred prior to this amendment. In Minnesota no statute shall be construed to be applied retroactively unless "clearly and manifestly so intended by the legislature." Minn. Stat. § 645.21 (1986). In following this legislative mandate, the supreme court has held that before a statute will be afforded retroactive application, there must exist clear evidence that the legislature intended retroactive application, "such as mention of the word `retroactive'." Duluth Firemen's Relief Association v. City of Duluth, 361 N.W.2d 381, 385 (Minn.1985). In attempting to ascertain whether the legislature intended that a statute be retroactively applied, the supreme court has stated, "it is immaterial in this state whether a law alters procedural or substantive rights; the legislature still must express its intention to make it [the statute in question] retroactive." In re Estate of Murphy v. State Department of Public Welfare, 293 Minn. 298, 308, 198 N.W.2d 570, 576 (1972). "Retroactive applications of statutes, however, are not favored and will be given effect only when such intent is clearly and manifestly shown on the face of the statute." Andros v. American Family Mutual Insurance Co., 359 N.W.2d 46, 47 (Minn.Ct.App. 1984), pet. for rev. denied (Minn. Apr. 12, 1985) (quoting Parish v. Quie, 294 N.W.2d 317, 318 (Minn.1980)) (emphasis added). No such intent is shown by this legislation. Further, we are of the opinion that MTC's interpretation of the retroactive application of the statute does not comport with basic contract law. An insurance policy, like any other contract, is customarily governed by the law in effect at the time the policy is issued or the contract is made. Amco Insurance Co. v. Lang, 420 N.W.2d 895, 898 (Minn.1988). Since a statute operates prospectively unless the legislative language clearly indicates that it should apply retrospectively, a statute enacted during the term of an insurance *828 policy does not usually apply to that policy until the policy is renewed. Id. See also Hauer v. Integrity Mutual Insurance Co., 352 N.W.2d 406, 408 (Minn.1984) (underinsured motorist coverage will not be read into policies renewed after date of repeal of mandatory offer). As a practical matter, the No-Fault Act when first adopted was to apply only to accidents occuring after its effective date. 1974 Minn. Laws ch. 408 § 35. With few exceptions, amendments to the No-Fault Act have been prospective in nature, fixing the date of loss and the rights and obligations of the parties as of the date of accident or injury. MTC further contends an insurer's obligation under the entire Minnesota No-Fault Act is premised on when loss accrues. Minn. Stat. § 65B.54, governing a "reparation obligor's duty to respond to claims" provides: Basic economic loss benefits are payable monthly as loss accrues. Loss accrues not when injury occurs, but as income loss, replacement services loss, survivor's economic loss, survivor's replacement service loss, or a medical or funeral expense is incurred. Minn. Stat. § 65B.54, subd. 1 (1986). Respondent maintains that the significant event for interpreting the no-fault benefit payment provisions of the Act is when the claim for basic economic loss benefits arises, not when the accident causing injury occurs. MTC's argument is without merit. There is no single purpose behind the Minnesota No-Fault Act. Minn. Stat. § 65B.42 (1986) recognizes and expressly states several specific purposes. See Galle v. Excalibur Insurance Co., 317 N.W.2d 368 (Minn.1982) (the supreme court used the purpose section to emphasize that the coverage was to be tied to automobile accidents). In addition, Minn. Stat. § 65B.54 is an enforcement provision and imposes a 15% interest penalty upon a reparation obligor who has failed to timely pay benefits. The date of loss as defined in Minn. Stat. § 65B.54 relates to the date of imposition of the penalty, not the date to determine priority of payment between conflicting reparation obligors. In Hoben v. City of Minneapolis, 324 N.W.2d 161 (Minn.1982), the supreme court dealt with reparation security statutes, Minn. Stat. §§ 65B.48, subd. 4 (1980) and 65B.61, subd. 2 (1980), as they apply to an employee injured in an automobile collision in the course of his employment. The supreme court held that: (1) Minn. Stat. § 65B.48 requires that municipalities provide reparation security for economic loss benefits arising out of the use of municipally owned motor vehicles; and (2) under statute pertaining to automobile insurance, Minn. Stat. § 56B.54, it was the intent of the legislature to deal prospectively with future payments of all basic economic loss benefits, regardless of when the incident giving rise to the claim occurred. Id. at 162 and 163. This case is quite different. In Hoben, the supreme court determined that the amendment in question was merely a clarification of the intent of the statute. "[T]here is little doubt but that the legislature's prompt reaction to our construction of the applicable statutes indicates not a change in legislative policy but a disagreement with our understanding of the legislative intent in initially adopting the statutes, it is not a question of retroactivity but more nearly akin to a clarification." Id. at 163 (emphasis added). In the present case the amendment is far from being a mere clarification. The amendment shifts the burden of responsibility for injuries sustained while on an MTC bus. There is nothing in the language of the amendment itself which indicates it is merely a clarification. MTC also claims that since the amendment is remedial in nature it should be liberally construed for the benefit of the MTC. MTC fails to demonstrate, however, that this idea of statutory construction evades the strong disfavor of retroactive legislation. Generally, adoption of an amendment creates a presumption that the *829 legislature intended to change pre-existing law. State by Spannaus v. Coin Wholesalers, Inc., 311 Minn. 346, 353-54, 250 N.W.2d 583, 587 (1976). When the language of an amendment is intended to clarify rather than enlarge the powers of the original statute, the presumption is rebutted. Id. at 354, 250 N.W.2d at 588. This is not the case here. American Family claims that retroactive application of the 1986 amendment to Minn. Stat. § 65B.47, subd. 1 would result in an unconstitutional impairment of contract rights in violation of article 1, section 10, clause 1 of the United States Constitution and of article 1, section 11 of the Minnesota Constitution. Because this court finds that the 1986 amendment applies prospectively, it need not address the constitutional analysis advanced by the appellant. An elementary principle of statutory construction is that the court will not determine the constitutionality of a statute unless it is absolutely necessary to determine the merits of the suit. See Midland Glass Company, Inc. v. City of Shakopee, 303 Minn. 134, 138, 226 N.W.2d 324, 326 (1975); Baugh v. Norman County, 140 Minn. 465, 467, 168 N.W. 348, 349 (1918).

ANALYSIS In reviewing a summary judgment, this court must determine whether any genuine issues of material fact exist and whether the trial court erred in its application of the law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). Because the operative facts of this litigation are not disputed, the standard of review is limited to a determination of whether the trial court erred in its application of the law. See A.J. Chromy Construction Company v. Commercial Mechanical Services, Inc., 260 N.W.2d 579, 581 (Minn. 1977). Because this issue is purely legal in nature, this court need not give deference to the decision of the trial court. Frost-Benco Electric Association v. Minnesota Public Utilities Commission, 358 N.W.2d 639, 642 (Minn.1984). The Minnesota Legislature specified that the 1986 amendment to Minnesota Statute § 65B.47, subd. 1 was to have an effective date of March 26, 1986. 1986 Minn. Laws ch. 455 § 95. The reason for this dispute, however, is that the legislature did not expressly state whether the amendment would apply prospectively to all future claims for basic economic loss benefits or simply to all future accidents. There is no dispute that at the date of the accident, MTC was the primary provider of no-fault benefits to Ms. Vincent. MTC argues that the background and purpose of the No-Fault Act generally, as well as the specific statutory provisions, reveal that the legislature intended this amendment to apply retroactively to accidents which occurred prior to this amendment. In Minnesota no statute shall be construed to be applied retroactively unless "clearly and manifestly so intended by the legislature." Minn. Stat. § 645.21 (1986). In following this legislative mandate, the supreme court has held that before a statute will be afforded retroactive application, there must exist clear evidence that the legislature intended retroactive application, "such as mention of the word `retroactive'." Duluth Firemen's Relief Association v. City of Duluth, 361 N.W.2d 381, 385 (Minn.1985). In attempting to ascertain whether the legislature intended that a statute be retroactively applied, the supreme court has stated, "it is immaterial in this state whether a law alters procedural or substantive rights; the legislature still must express its intention to make it [the statute in question] retroactive." In re Estate of Murphy v. State Department of Public Welfare, 293 Minn. 298, 308, 198 N.W.2d 570, 576 (1972). "Retroactive applications of statutes, however, are not favored and will be given effect only when such intent is clearly and manifestly shown on the face of the statute." Andros v. American Family Mutual Insurance Co., 359 N.W.2d 46, 47 (Minn.Ct.App. 1984), pet. for rev. denied (Minn. Apr. 12, 1985) (quoting Parish v. Quie, 294 N.W.2d 317, 318 (Minn.1980)) (emphasis added). No such intent is shown by this legislation. Further, we are of the opinion that MTC's interpretation of the retroactive application of the statute does not comport with basic contract law. An insurance policy, like any other contract, is customarily governed by the law in effect at the time the policy is issued or the contract is made. Amco Insurance Co. v. Lang, 420 N.W.2d 895, 898 (Minn.1988). Since a statute operates prospectively unless the legislative language clearly indicates that it should apply retrospectively, a statute enacted during the term of an insurance *828 policy does not usually apply to that policy until the policy is renewed. Id. See also Hauer v. Integrity Mutual Insurance Co., 352 N.W.2d 406, 408 (Minn.1984) (underinsured motorist coverage will not be read into policies renewed after date of repeal of mandatory offer). As a practical matter, the No-Fault Act when first adopted was to apply only to accidents occuring after its effective date. 1974 Minn. Laws ch. 408 § 35. With few exceptions, amendments to the No-Fault Act have been prospective in nature, fixing the date of loss and the rights and obligations of the parties as of the date of accident or injury. MTC further contends an insurer's obligation under the entire Minnesota No-Fault Act is premised on when loss accrues. Minn. Stat. § 65B.54, governing a "reparation obligor's duty to respond to claims" provides: Basic economic loss benefits are payable monthly as loss accrues. Loss accrues not when injury occurs, but as income loss, replacement services loss, survivor's economic loss, survivor's replacement service loss, or a medical or funeral expense is incurred. Minn. Stat. § 65B.54, subd. 1 (1986). Respondent maintains that the significant event for interpreting the no-fault benefit payment provisions of the Act is when the claim for basic economic loss benefits arises, not when the accident causing injury occurs. MTC's argument is without merit. There is no single purpose behind the Minnesota No-Fault Act. Minn. Stat. § 65B.42 (1986) recognizes and expressly states several specific purposes. See Galle v. Excalibur Insurance Co., 317 N.W.2d 368 (Minn.1982) (the supreme court used the purpose section to emphasize that the coverage was to be tied to automobile accidents). In addition, Minn. Stat. § 65B.54 is an enforcement provision and imposes a 15% interest penalty upon a reparation obligor who has failed to timely pay benefits. The date of loss as defined in Minn. Stat. § 65B.54 relates to the date of imposition of the penalty, not the date to determine priority of payment between conflicting reparation obligors. In Hoben v. City of Minneapolis, 324 N.W.2d 161 (Minn.1982), the supreme court dealt with reparation security statutes, Minn. Stat. §§ 65B.48, subd. 4 (1980) and 65B.61, subd. 2 (1980), as they apply to an employee injured in an automobile collision in the course of his employment. The supreme court held that: (1) Minn. Stat. § 65B.48 requires that municipalities provide reparation security for economic loss benefits arising out of the use of municipally owned motor vehicles; and (2) under statute pertaining to automobile insurance, Minn. Stat. § 56B.54, it was the intent of the legislature to deal prospectively with future payments of all basic economic loss benefits, regardless of when the incident giving rise to the claim occurred. Id. at 162 and 163. This case is quite different. In Hoben, the supreme court determined that the amendment in question was merely a clarification of the intent of the statute. "[T]here is little doubt but that the legislature's prompt reaction to our construction of the applicable statutes indicates not a change in legislative policy but a disagreement with our understanding of the legislative intent in initially adopting the statutes, it is not a question of retroactivity but more nearly akin to a clarification." Id. at 163 (emphasis added). In the present case the amendment is far from being a mere clarification. The amendment shifts the burden of responsibility for injuries sustained while on an MTC bus. There is nothing in the language of the amendment itself which indicates it is merely a clarification. MTC also claims that since the amendment is remedial in nature it should be liberally construed for the benefit of the MTC. MTC fails to demonstrate, however, that this idea of statutory construction evades the strong disfavor of retroactive legislation. Generally, adoption of an amendment creates a presumption that the *829 legislature intended to change pre-existing law. State by Spannaus v. Coin Wholesalers, Inc., 311 Minn. 346, 353-54, 250 N.W.2d 583, 587 (1976). When the language of an amendment is intended to clarify rather than enlarge the powers of the original statute, the presumption is rebutted. Id. at 354, 250 N.W.2d at 588. This is not the case here. American Family claims that retroactive application of the 1986 amendment to Minn. Stat. § 65B.47, subd. 1 would result in an unconstitutional impairment of contract rights in violation of article 1, section 10, clause 1 of the United States Constitution and of article 1, section 11 of the Minnesota Constitution. Because this court finds that the 1986 amendment applies prospectively, it need not address the constitutional analysis advanced by the appellant. An elementary principle of statutory construction is that the court will not determine the constitutionality of a statute unless it is absolutely necessary to determine the merits of the suit. See Midland Glass Company, Inc. v. City of Shakopee, 303 Minn. 134, 138, 226 N.W.2d 324, 326 (1975); Baugh v. Norman County, 140 Minn. 465, 467, 168 N.W. 348, 349 (1918).

ANALYSIS In reviewing a summary judgment, this court must determine whether any genuine issues of material fact exist and whether the trial court erred in its application of the law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). Because the operative facts of this litigation are not disputed, the standard of review is limited to a determination of whether the trial court erred in its application of the law. See A.J. Chromy Construction Company v. Commercial Mechanical Services, Inc., 260 N.W.2d 579, 581 (Minn. 1977). Because this issue is purely legal in nature, this court need not give deference to the decision of the trial court. Frost-Benco Electric Association v. Minnesota Public Utilities Commission, 358 N.W.2d 639, 642 (Minn.1984). The Minnesota Legislature specified that the 1986 amendment to Minnesota Statute § 65B.47, subd. 1 was to have an effective date of March 26, 1986. 1986 Minn. Laws ch. 455 § 95. The reason for this dispute, however, is that the legislature did not expressly state whether the amendment would apply prospectively to all future claims for basic economic loss benefits or simply to all future accidents. There is no dispute that at the date of the accident, MTC was the primary provider of no-fault benefits to Ms. Vincent. MTC argues that the background and purpose of the No-Fault Act generally, as well as the specific statutory provisions, reveal that the legislature intended this amendment to apply retroactively to accidents which occurred prior to this amendment. In Minnesota no statute shall be construed to be applied retroactively unless "clearly and manifestly so intended by the legislature." Minn. Stat. § 645.21 (1986). In following this legislative mandate, the supreme court has held that before a statute will be afforded retroactive application, there must exist clear evidence that the legislature intended retroactive application, "such as mention of the word `retroactive'." Duluth Firemen's Relief Association v. City of Duluth, 361 N.W.2d 381, 385 (Minn.1985). In attempting to ascertain whether the legislature intended that a statute be retroactively applied, the supreme court has stated, "it is immaterial in this state whether a law alters procedural or substantive rights; the legislature still must express its intention to make it [the statute in question] retroactive." In re Estate of Murphy v. State Department of Public Welfare, 293 Minn. 298, 308, 198 N.W.2d 570, 576 (1972). "Retroactive applications of statutes, however, are not favored and will be given effect only when such intent is clearly and manifestly shown on the face of the statute." Andros v. American Family Mutual Insurance Co., 359 N.W.2d 46, 47 (Minn.Ct.App. 1984), pet. for rev. denied (Minn. Apr. 12, 1985) (quoting Parish v. Quie, 294 N.W.2d 317, 318 (Minn.1980)) (emphasis added). No such intent is shown by this legislation. Further, we are of the opinion that MTC's interpretation of the retroactive application of the statute does not comport with basic contract law. An insurance policy, like any other contract, is customarily governed by the law in effect at the time the policy is issued or the contract is made. Amco Insurance Co. v. Lang, 420 N.W.2d 895, 898 (Minn.1988). Since a statute operates prospectively unless the legislative language clearly indicates that it should apply retrospectively, a statute enacted during the term of an insurance *828 policy does not usually apply to that policy until the policy is renewed. Id. See also Hauer v. Integrity Mutual Insurance Co., 352 N.W.2d 406, 408 (Minn.1984) (underinsured motorist coverage will not be read into policies renewed after date of repeal of mandatory offer). As a practical matter, the No-Fault Act when first adopted was to apply only to accidents occuring after its effective date. 1974 Minn. Laws ch. 408 § 35. With few exceptions, amendments to the No-Fault Act have been prospective in nature, fixing the date of loss and the rights and obligations of the parties as of the date of accident or injury. MTC further contends an insurer's obligation under the entire Minnesota No-Fault Act is premised on when loss accrues. Minn. Stat. § 65B.54, governing a "reparation obligor's duty to respond to claims" provides: Basic economic loss benefits are payable monthly as loss accrues. Loss accrues not when injury occurs, but as income loss, replacement services loss, survivor's economic loss, survivor's replacement service loss, or a medical or funeral expense is incurred. Minn. Stat. § 65B.54, subd. 1 (1986). Respondent maintains that the significant event for interpreting the no-fault benefit payment provisions of the Act is when the claim for basic economic loss benefits arises, not when the accident causing injury occurs. MTC's argument is without merit. There is no single purpose behind the Minnesota No-Fault Act. Minn. Stat. § 65B.42 (1986) recognizes and expressly states several specific purposes. See Galle v. Excalibur Insurance Co., 317 N.W.2d 368 (Minn.1982) (the supreme court used the purpose section to emphasize that the coverage was to be tied to automobile accidents). In addition, Minn. Stat. § 65B.54 is an enforcement provision and imposes a 15% interest penalty upon a reparation obligor who has failed to timely pay benefits. The date of loss as defined in Minn. Stat. § 65B.54 relates to the date of imposition of the penalty, not the date to determine priority of payment between conflicting reparation obligors. In Hoben v. City of Minneapolis, 324 N.W.2d 161 (Minn.1982), the supreme court dealt with reparation security statutes, Minn. Stat. §§ 65B.48, subd. 4 (1980) and 65B.61, subd. 2 (1980), as they apply to an employee injured in an automobile collision in the course of his employment. The supreme court held that: (1) Minn. Stat. § 65B.48 requires that municipalities provide reparation security for economic loss benefits arising out of the use of municipally owned motor vehicles; and (2) under statute pertaining to automobile insurance, Minn. Stat. § 56B.54, it was the intent of the legislature to deal prospectively with future payments of all basic economic loss benefits, regardless of when the incident giving rise to the claim occurred. Id. at 162 and 163. This case is quite different. In Hoben, the supreme court determined that the amendment in question was merely a clarification of the intent of the statute. "[T]here is little doubt but that the legislature's prompt reaction to our construction of the applicable statutes indicates not a change in legislative policy but a disagreement with our understanding of the legislative intent in initially adopting the statutes, it is not a question of retroactivity but more nearly akin to a clarification." Id. at 163 (emphasis added). In the present case the amendment is far from being a mere clarification. The amendment shifts the burden of responsibility for injuries sustained while on an MTC bus. There is nothing in the language of the amendment itself which indicates it is merely a clarification. MTC also claims that since the amendment is remedial in nature it should be liberally construed for the benefit of the MTC. MTC fails to demonstrate, however, that this idea of statutory construction evades the strong disfavor of retroactive legislation. Generally, adoption of an amendment creates a presumption that the *829 legislature intended to change pre-existing law. State by Spannaus v. Coin Wholesalers, Inc., 311 Minn. 346, 353-54, 250 N.W.2d 583, 587 (1976). When the language of an amendment is intended to clarify rather than enlarge the powers of the original statute, the presumption is rebutted. Id. at 354, 250 N.W.2d at 588. This is not the case here. American Family claims that retroactive application of the 1986 amendment to Minn. Stat. § 65B.47, subd. 1 would result in an unconstitutional impairment of contract rights in violation of article 1, section 10, clause 1 of the United States Constitution and of article 1, section 11 of the Minnesota Constitution. Because this court finds that the 1986 amendment applies prospectively, it need not address the constitutional analysis advanced by the appellant. An elementary principle of statutory construction is that the court will not determine the constitutionality of a statute unless it is absolutely necessary to determine the merits of the suit. See Midland Glass Company, Inc. v. City of Shakopee, 303 Minn. 134, 138, 226 N.W.2d 324, 326 (1975); Baugh v. Norman County, 140 Minn. 465, 467, 168 N.W. 348, 349 (1918).

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Minn. Stat. § 65B.54, subd. 2, provided as follows: “Overdue payments shall bear simple interest at the rate of ten percent per annum.” 1979 Laws, chapter 190, section 3, effective July 1, 1979, amended that section to provide for fifteen percent interest.

Minn. Stat. § 65B.54, subd. 2, provided as follows: “Overdue payments shall bear simple interest at the rate of ten percent per annum.” 1979 Laws, chapter 190, section 3, effective July 1, 1979, amended that section to provide for fifteen percent interest.