What are No-Fault benefits?
"No-fault benefits" are also often referred to as "Personal Injury Protection benefits or "PIP Benefits" for short. No Fault refers to insurance coverage provided by your own automobile insurance policy regardless of who was at fault in the automobile accident.
When does a No-Fault claim arise?
Generally, a person suffering from injuries arising out of the “maintenance or use of a motor vehicle” has a right to benefits. A pedestrian struck by a motor vehicle or motorcycle is also entitled to no-fault benefits.
To determine whether or not an injury arises out of the maintenance or use of a motor vehicle:
1) There must be a causal relationship between the injury and the use of the vehicle for transportation purposes.
2) The vehicle must be more than just a place where the injury occurs.
3) The injury must be a natural and reasonable incident or consequence of the use of the vehicle.
North River Ins. Co. v. Dairyland Ins. Co., 346 N.W.2d 109, 114 (Minn. 1984).
The Minnesota Supreme Court created a 3 part test to determine if the injury arises out of “maintenance or use” of the motor vehicle:
1) The extent of causation between the automobile and the injury;
2) If enough causation exists, determine whether there is an act of independent significance that occurred to break the causal link; and
3) If cause exists and there is no intervening independent act, consider whether the motor vehicle was being used for transportation or was merely the site of the accident.
Continental Western Ins. Co. v. Klug, 415 N.W.2d 876 (Minn. 1987).
Are there No-Fault benefits when the injury arises from entering, exiting, or occupying the vehicle?
“Maintenance or use” of a motor vehicle does not include “conduct in the course of loading or unloading the vehicle” unless the conduct occurs “while occupying, entering into or alighting from” the vehicle. Minn. Stat. 65B.43, subdivision 3.
Changing the tire, standing in front of a vehicle, and preparing a car for towing have all been determined to constitute "occupying" for the purpose of coverage. Klein vs. U.S. Fidelity and Guar. Co., 451 N.W.2d 901 (Minn. Ct. App. 1990) (changing a tire); Horace Mann Ins. Co. vs. Mrs. Neuville, 465 N.W.2d 432 (Minn. Ct. App. 1991).
If the act of “alighting from” the vehicle is complete, no benefits will be awarded. A woman who got out of the vehicle and placed her hand on the car to steady herself slipped on the ice was denied no-fault benefits because she had finished “alighting from” the car. Christiansen v. General Accident Ins., 482 N.W.2d 510 (Minn. Ct. App. 1992).
When are No-Fault benefits not available?
There are three general situations when no-fault benefits will not be available: 1) When a person causes or attempts to cause injury to self or another person; 2) When the injuries arise from “an official racing contest” or “in practice or preparation” for such a race; and 3) When the injured person is a vehicle owner who is not insured as required by law.
A person who “converts a motor vehicle” can collect no-fault benefits only from an insurance contract under which the converter is an insured. The “converter” is barred from claiming no-fault benefits from the policy on the converted car or from any other source.
What is the statute of limitations for a No-Fault claim?
Once a claim is established, the general 6 year statute of limitations for contract claims will apply to no-fault claims.
Is No-Fault mandatory?
Yes. Required $20,000 medical expense, $20,000 for income loss, replacement service loss, and survivor’s replacement services loss. Minn. Stat. 65B.44, subdivision 1.
https://www.revisor.mn.gov/statutes/?id=65B.44
Who pays No-Fault benefits?
Most of the time, an injured person will receive no-fault benefits from the policy under which that individual is an insured (Subdivision 4). There are some exceptions to this general rule, found in 65B.47.
Subdivision 1: If injured while occupying a motor vehicle while the vehicle is being used in the business of transporting persons or property, then injured person must go to the insurance on that occupied vehicle. If no coverage, then to the injured person’s own insurance policy.
Exceptions to Subdivision 1: Commuter vans, vehicles transporting children to school or to a school sponsored activity, buses in Minnesota when injured is a an insured Minnesota resident, vehicles used in a family day care program, passengers in a taxi, and usually taxi drivers.
Subdivision 2: If employee or resident relative of employee is injured while occupying a vehicle furnished by the employer, then the injured person must go to the insurance on that occupied vehicle. If no coverage, then to the injured person’s own insurance policy.
Subdivision 3: Any person who is not occupying a motor vehicle and who is injured by a vehicle in Subdivision 1 or 2 must go to the insurance on that vehicle. If no coverage, then to the injured person’s own insurance policy.
Is there a No-Fault deductible?
No.
Are medical benefits payable at 100%?
Yes.
Are mileage expenses payable under No-Fault?
No Fault will pay for any "reasonable" mileage expenses incurred for transportation to and from a medical provider.
Beginning on January 1, 2010, the medical mileage rate is 16.5 cents per mile driven.
Are wage loss benefits payable at 100%?
No, wage loss benefits are payable at 85% of loss, up to a maximum of $250 per week. Minn. Stat. 65B.44, subdivision 3. https://www.revisor.mn.gov/statutes/?id=65B.44
Income loss benefits are not payable to an insured whose post-action gross income is greater than her pre-accident gross income. Erickson vs. Great American Ins. Co., 466 N.W.2d 430 (Minn. App. 1991).
Are self-employed people eligible for wage loss benefits?
Yes, the same principles apply to a self-employed person. The wage loss for a self-employed person is calculated by determining the cost incurred to hire a substitute employee(s) to perform tasks which are necessary to maintain the income of the injured person, which are normally performed by the injured person, and which cannot be performed because of the injury.
Does No-Fault allow for replacement services?
Yes, but there is an exclusion for any losses sustained on the date of the injury and the first 7 days thereafter. Minn. Stat. 65B.44, subdivision 5.
https://www.revisor.mn.gov/statutes/?id=65B.44
Are replacement services payable at 100%?
Yes, but they are limited to a maximum of $200 per week. Minn. Stat. 65B.44, subdivision 5.
https://www.revisor.mn.gov/statutes/?id=65B.44
Does No-Fault allow for survivor economic benefits?
Yes, in the event of death occurring within 1 year of the date of the accident, caused by and arising out of the injuries received in the accident. Minn. Stat. 65B.44, subdivision 6.
https://www.revisor.mn.gov/statutes/?id=65B.44
Are survivor economic benefits payable at 100%
Benefits are subject to a maximum of $200 per week and are limited to those contributions that the surviving dependent would have received from the decedent for their support.
Who is presumed to be a dependent of the insured?
A wife is dependent on a husband with whom she lives at the time of his death; a husband is dependent on a wife with whom he lives at the time of her death; any child under 18 years of age, or while over that age but physically or mentally incapacitated from earning, is dependent on the parent with whom the child is living or from whom the child is receiving regular support.
A nonhuman cannot be a "dependent" for purposes of a statute requiring that automobile policies include survivor's economic loss benefits. School Sisters of Notre Dame vs. State Farm, 476 N.W.2d 523 (Minn. App. 1991).
Are no-fault benefits subrogable?
Yes, in some circumstances, the injured person may be entitled to seek economic damages from a 3rd party.
Subrogation and Indemnity
Statutory Subrogation under Minn. Stat. 65B.53, subdivisions 2 and 3
Under these subdivisions, there are 2 situations in which subrogation rights may exist for a no-fault insurer. The no-fault insurer may have a right of subrogation (1) when the accident occurs outside the state of Minnesota or (2) when the claim is based on intentional tort, strict or statutory liability, or negligence other than negligence in the maintenance, use or operation of a motor vehicle.
If the insured settles his or her claims against the tortfeasor, the insurer has a right to reimbursement from the insured to the extent that the settlement duplicates no-fault benefits already paid. Fox v. City of Holdingford, 375 N.W.2d 44, 47-48 (Minn. Ct. App. 1985).
Statutory Subrogation under Minn. Stat. 65B.47, subdivision 6
A company mistakenly paying benefits “is subrogated to all rights of the person to whom benefits are paid.”
Where an insured received no-fault benefits from an insurer, but that insurer failed to notify the priority insurer of subrogation interests before the priority insurer's settlement with the insured, the settlement waived the insured's subrogation rights, if any, as well as those of the insurer; the subrogor insurer's remedy is to pursue its claim against its own insured in the event of double recovery. Farm Bureau Mut. vs. National Family Ins., 474 N.W.2d 424 (Minn. App. 1991).
Subrogation Claims Not Governed by No-Fault Statute
In a few cases, no-fault benefits may be paid under the terms of the contract, even though the No-Fault Act did not mandate such coverage.
In an out of state accident, the no-fault insurance carrier may be able to assert subrogation rights under the law of the state where the accident occurred.
Subrogation Claims and Dram Shop Claims
Under the present Civil Damage Act, subrogation claims are barred by statute. Minn. Stat. 340A.801, subdivision 4. Under present law, the defendant in a dram shop case would obtain an offset for no-fault benefits.
https://www.revisor.mn.gov/statutes/?id=340A.801
Subrogation Claims and Workers’ Compensation
Under the workers’ compensation laws, a no-fault insurer has no independent right to initiate litigation of a workers’ compensation claim. If an injured person does recover no-fault benefits and then recovers workers’ compensation for the same loss, the no-fault insurer is free to claim reimbursement from the injured person based upon the workers’ compensation recovery. Allied Property and Cas. v. Raymond, No. C3-97-1166, 1998 WL 51457 (Minn. Ct. App. Feb. 10, 1998).
Is there a right of indemnity under No-Fault?
Under certain circumstances, the insurance carrier paying no-fault benefits has a right of indemnity against the driver who negligently caused the injury. A right of indemnity exists if the negligent driver was operating “a commercial vehicle of more than 5,500 lbs curb weight.” Minn. Stat. 65B.53, subdivision 1.
https://www.revisor.mn.gov/statutes/?id=65B.53
Generally, a vehicle over 5,500 lbs. will be considered a commercial vehicle if it is a common carrier, or if it is used in the for-hire transportation of property, or if it is a vehicle designed and used for carrying more than 15 persons. Minn. Stat. 65B.43, subdivision 12.
https://www.revisor.mn.gov/statutes/?id=65B.43
Duties of the Parties in No-Fault
Does the Claimant have a duty to cooperate with the Insurer’s requests?
Independent Medical Examinations (IME)
Minn. Stat. 65B.56, subdivision 1 provides that an insurer may request a Claimant to submit to an examination by a physician selected by the insurer (IME). The reasonableness of an IME, or the conditions placed upon the examination, present factual issues which can be resolved by an arbitrator.
The statute generally requires the IME to be conducted within the Claimant’s city of residence, but an insurer may be entitled to schedule an IME in a city other than the Claimant’s city of residence if that city does not have a qualified physician to conduct the sort of IME required.
An insurer scheduling an independent medical examination outside of its insured's city of residence is not required to inform the insured that although state law required the examination be held in the insured's city of residence, a qualified physician was not in the insured's city of residence. Ortega vs. Farmers Ins. Group, 474 N.W.2d 7 (Minn. App. 1991).
Failure to attend an IME does not automatically terminate economic benefits, particularly where factual issues exist regarding the insurer's contract breach. Maryland Cas. Co. vs. Harvey, 474 N.W.2d 189 (Minn. App. 1991) distinguishing Johnson vs. American Family Mut. Ins. Co., 426 N.W.2d 419 (Minn. 1988) (in the area of automobile reparation arbitration arbitrators are limited to deciding issues of fact, leaving interpretation of law to the courts.) \
An insured's obligation to pay a missed appointment fee for an IME depends upon whether the insurer first breached the contract of no-fault insurance prior to the missed appointment by failing to pay medical expenses to its insured within the statutory 30 day period. Milwaukee Mut. Ins. Co. vs. Murphy, 474 N.W.2d 438 (Minn. App. 1991).
Does the Insurer have any duties to Claimant?
The Insurer has a duty to respond to claims. 65B.54, subdivision 1 provides that benefits are overdue if not paid within 30 days after the Insurer receives reasonable proof of loss.
Even after there is a cut off of No-Fault benefits, the Insurer is still entitled to receive the statutorily required “proof of the fact and amount of loss” before interest on the unpaid claim will begin to accrue. American Family Ins. Group v. Kiess, 697 N.W.2d 617 (Minn. 2005).
No-Fault Arbitration
Are there any time limitations for bringing a claim?
There must be notice of a no-fault claim within 6 months of the accident, but a late application must be considered by the insurance company unless the insurance company can show that it was actually prejudiced by the delay in applying. Minn. Stat. 65B.55
https://www.revisor.mn.gov/statutes/?id=65B.55
When can a Claimant file a petition for arbitration?
"If a respondent fails to respond in writing within 30 days after reasonable proof of the fact and the amount of loss is duly presented to the respondent, the claim shall be deemed denied for the purpose of activating these rules." Rule 5(d).
What must be included in the Petition for Arbitration?
"At the time of filing the arbitration form, or within 30 days after, the claimant shall file an itemization of benefits claimed and supporting documentation." Rule 5(e).
Does the Insurer have to respond to the Petition?
"Within 30 days after receipt of the itemization of benefits claimed and supporting documentation from claimant, respondent shall serve a response to the petition setting forth all grounds upon which the claim is denied and accompanied by all documents supporting denial of the benefits claimed." Rule 5(f).
Is Arbitration mandatory for all No-Fault Claims?
No, arbitration is mandatory for claims of $10,000.00 or less at the commencement of arbitration. Rule 5(a). However, a no-fault insurer does not need to submit to mandatory arbitration where the aggregate of the insured's claim for no-fault benefits exceeds the jurisdictional limit. Grinnell Mut. Reinsurance Co. vs. Arens, 478 N.W.2d 235 (Minn. App. 1991).
The interest on past due claims is not to be considered in calculating the $10,000 jurisdictional limit.
Can a Claimant split up the claims to qualify for arbitration?
No, a Claimant may not divide a single no-fault claim into separate parts in order to come within the jurisdictional limit.
What can a Claimant do when the claim exceeds $10,000?
A Claimant can voluntarily waive a portion of his or her claim for no-fault benefits in order to remain within the $10,000 jurisdictional limit. Brown vs. Allstate Ins. Co., 466 N.W.2d 54 (Minn. App. 1991). However, under Rule 6 of the Arbitration Rules, the insured must specify which claims are being presented and which claims are being waived.
http://www.adr.org/sp.asp?id=22203
Can the claim ever exceed $10,000 in a No-Fault Arbitration?
Yes, once jurisdiction has properly attached because no more than $10,000 was claimed at the commencement of the arbitration, the arbitrator has the jurisdiction to hear the entire no-fault claim, even if in excess of $10,000. Charboneau vs. American Family Ins. Co., 467 N.W.2d 830 (Minn. App. 1991).
What can the Arbitrator decide?
The arbitrator’s jurisdiction only covers factual disputes. Legal issues can only be resolved by district courts. Although the arbitrator does not have authority to make binding decisions on issues of law, the arbitrator does have to apply and may have to interpret the law in order to render an award.
When will the Arbitrator make a decision?
The award must be given within 30 days of the arbitration hearing. Minn. Stat. 65B.525. Minn. R. No-Fault Arb. 30.
The arbitrator’s award must contain the 15% interest penalty. Minn. Stat. 65B.54, and Arbitration Rule 32.
