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Court Rules: Recover No-Fault Benefits for Damages Recovered in a Prior Negligence Action

| Dec 16, 2016 | Firm News, Insurance Defense |

Laura Moehrle

Jim McAlpine

Earlier today, the Minnesota Supreme Court issued a decision holding that an insured may recover no-fault benefits for medial expenses and wage loss even if those expenses were previously recovered in a tort action. State Farm v. Lennartson and Foss, No. A14-0132; A14-0224.

In reaching this holding the Supreme Court determined that neither the No-Fault Act nor collateral estoppel (doctrine precluding re-litigation of issues determined in an earlier action) bars a plaintiff from collecting no-fault benefits for amounts awarded against and paid by a tortfeasor.

As a result of the Court’s decision, we may expect to see plaintiffs/insureds waiting to bring a no-fault claim until after trial on the tort action. The potential impact of delaying the no-fault action until after the tort action includes:

– Decreasing the total amount of collateral source offsets available to a defendant (resulting in a higher net damages award)

– Increasing the amount of money a plaintiff can collect from a tortfeasor

– Allowing the Plaintiff to recover from the tortfeasor and the no-fault carrier for the same medical expenses or wage loss, resulting in a double recovery.

A concurring opinion was filed by two Justices, which emphasizes that the language of the law as written by the Legislature is in conflict with the statute’s purpose of providing a prompt recovery of economic loss damages and saving litigation as a last resort. The minority seems to call for Legislative action to change the law to avoid this outcome.

If you have any questions about this decision or how it may impact pending claims, please feel free to give us a call

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