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Why Minnesota Needs Good Faith Insurance Practices Legislation
Posted by: euser
March 30, 2007

Many people would agree that it would be good policy for insurance companies to be required to act in good faith in regards to their policyholders. In fact, 46 states have legislation mandating such a requirement. It is unfair that deserving plaintiffs are unable to receive the justice they deserve because of the bad faith acts of their insurers. Unfortunately, Minnesota is one of the four states that does not have such a requirement.

Some members of the Minnesota Legislature, however, are attempting to change that fact and we support their efforts. Under legislation introduced by Senator Tarryl Clark (DFL-St. Cloud) and Representative Joe Atkins (DFL-Inver Grove Heights), insurers would be required to act in good faith when dealing with claims made under an insurance policy. Section 3 of the bill would enact a new statute, which would read as follows:

Sec. 3. [604.18] GOOD FAITH INSURANCE PRACTICES.
Subdivision 1. Required conduct. (a) An insurer shall act in good faith in connection with any matter involving a claim under an insurance policy.
(b) An insurer does not act in good faith if the insurer delays or denies benefits offered or paid without an objectively reasonable basis for its offer, delay, or denial. An insurer also does not act in good faith if the insurer engages in any fraud, false pretense, false promise, misrepresentation, misleading statement, or deceptive practice that others rely on in connection with any matter involving a claim under an insurance policy.
(c) For purposes of this section:
(1) "insurance policy" means an insurance policy or contract issued, executed, renewed, maintained, or delivered in this state, other than a workers' compensation insurance policy or contract; and
(2) "insurer" means an individual, corporation, association, partnership, or other legal entity that issues, executes, renews, maintains, or delivers an insurance policy in this state.
Subd. 2. Penalties and remedies. A person violating subdivision 1 is acting against the public interest and is liable for costs, damages, and reasonable attorney fees.
Subd. 3. Report to commissioner. An insurer shall promptly report to the commissioner of commerce the date and disposition of every settlement and award against the insurer for a violation of subdivision 1.

Unfortunately, the Senate bill, S.F. 1152, failed to gain the approval of the Commerce and Consumer Protection Committee by a divided voice vote taken on March 20. However, the House bill, H.F. 1251, is still alive, as the Public Safety Finance Division laid over the bill on March 22 for possible inclusion in the Public Safety Finance Division omnibus bill. Let your state representatives know that we need this legislation!

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Minnesota Legislature Update
Posted by: euser
March 15, 2007

Two new bills have been introduced in the Minnesota Legislature in the last month regarding the Minnesota No-Fault Act. The first bill, S.F. 1309 and H.F. 1359, was introduced on February 26, 2007 by Senators Mary A. Olson (DFL - Bemidji), Dan Sparks (DFL - Austin), Dan Skogen (DFL - Hewitt), and Warren Limmer (R - Maple Grove) and Representatives Joe Atkins (DFL - Inver Grove Heights) and Joe Mullery (DFL - Minneapolis).

This bill makes several changes to the No-Fault Act. First, the bill would amend Minn. Stat. 65B.44 in several respects. Subdivision 2 would state that ?medical expense benefits shall reimburse all reasonable expenses for necessary medical, surgical, x-ray, optical, dental, chiropractic, and rehabilitative services, including prosthetic devices and items that provide relief from any injury.? Second, the bill would increase the weekly maximum allowed for disability and income loss benefits, and for unemployment benefits, from $250 to $500. Third, the maximum for funeral and burial benefits would be increased from $2,000 to $5,000. Finally, the weekly maximum for replacement services and loss would be increased from $200 to $600.

Furthermore, the bill would amend Minn. Stat. 65B.47, Subd. 7, providing that policies must be added together unless the policyholder specifically elects not to do so. Finally, under Minn. Stat. 65B.54, Subd. 1, benefits would be overdue 30 days after expenses incurred, rather than after the reparation obligor receives reasonable proof of the fact and the amount of loss is realized.

The second bill, S.F. 1732 and H.F. 1999, was introduced on March 12, 2007 by Senators Sparks, James P. Metzen (DFL - South St. Paul), and Dan Larson (DFL - Bloomington) and Representatives Linda Slocum (DFL - Richfield) and Paul Thissen (DFL - Minneapolis). This bill would amend Minn. Stat. 65B.44, Subd. 2 to provide that ?medical expense benefits shall reimburse all reasonable expenses for necessary?(6) first responder emergency care provided by a medical response unit, as defined in section 144E.275, subdivision 1, paragraph (a), that is registered with the Emergency Medical Services Regulatory Board under section 144E.275.? The section would take effect August 1, 2007 and apply to coverage issued or renewed on or after that date.

Both bills were referred to its respective House and Senate committees.

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Minnesota Legislature Update
Posted by: euser
February 08, 2007

Senator John Marty (DFL - Roseville) and Senator Linda Higgins (DFL - Minneapolis) have introduced legislation amending the No-Fault Act?s treatment of independent medical examinations. The bill would amend Minn. Stat. ? 65B.56, subdivision 1, to provide for integrity and fairness in medical examinations under no-fault automobile insurance and workers? compensation. The senators introduced this bill, SF 691, on February 8, 2007, and it was referred to the Committee on Health, Housing, and Family Security.

The proposed legislation, relevant in part, reads as follows:

A bill for an act relating to integrity and fairness in medical examinations; regulating certain medical examinations; amending Minnesota Statutes 2006, sections 65B.56, subdivision 1; 176.136, subdivision 1c; 176.155, subdivision 1, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATIVE OF THE STATE OF MINNESOTA

Section 1. Minnesota Statutes 2006, section 65B.56, subdivision 1, is amended to read:

Subdivision 1. Adverse medical examination; integrity; and discovery of condition of claimant. Any person with respect to whose injury benefits are claimed under a plan of reparation security shall, upon request of the reparation obligor from whom recovery is sought, submit to a physical an adverse medical examination by a physician or physicians selected by the obligor as may reasonably be required. The obligation to submit to an examination applies only to requests from a reparation obligor that has timely paid all medical bills for which it is responsible related to the injury for which the examination is sought.

The costs of any examinations requested by the obligor shall be borne entirely by the requesting obligor. Such examinations shall be conducted within the city, town, or statutory city of residence of the injured person. If there is no qualified physician to conduct the examination within the city, town, or statutory city of residence of the injured person, then such examination shall be conducted at another place of the closest proximity to the injured person?s residence. Obligors are authorized to include reasonable provisions in policies for mental and physical examination of those injured persons.

If requested by the person examined, a party causing an examination to be made shall deliver to the examinee a copy of every written report concerning the examination rendered by an examining physician to that person, at least one of which reports must set out in detail the findings and conclusions of such examining physician.

An injured person shall also do all things reasonably necessary to enable the obligor to obtain medical reports and other needed information to assist in determining the nature and extent of the injured person?s injuries and loss, and the medical treatment received. If the claimant refuses to cooperate in responding to requests for examination and information as authorized by this section, evidence of such noncooperation shall be admissible in any suit or arbitration filed for damages for such personal injuries or for the benefits provided by sections 65B.41 to 65B.71.

The provisions of this section apply before and after the commencement of suit.

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Minnesota Legislature Update
Posted by: euser
January 19, 2007

The Minnesota Legislature has introduced its first bill relating to no-fault insurance for the 2007 session. The legislation, introduced in the Senate on January 17 by Sen. David Tomassoni (DFL - Chisholm), and in the House on January 18 by Rep. Tom Rukavina (DFL - Virginia) and Rep. Joe Atkins (DFL - Inver Grove Heights), would require actions to terminate or deny basic economic loss benefits under no-fault automobile insurance to be based on awards obtained in arbitration proceedings. The Senate bill, SF 119, was referred to the Senate Commerce and Consumer Protection Committee. The House bill, HF 215, was referred to the House Commerce and Labor Committee.

Here is the text of the proposed legislation:

A bill for an act relating to insurance; no-fault auto; regulating benefit terminations or denials; proposing coding for new law in Minnesota Statutes, chapter 65B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

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What is Subrogation?
Posted by: euser
January 11, 2007

Generally, the term "subrogation" denotes a principle where an insurer that has paid benefits under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy. Under the No-Fault Act, the right of subrogation is typically not allowed to the insurance company. However, Minn. Stat. ? 65B.53, Subd. 2 and 3 allows subrogation when:

The main purpose behind the subrogation statutes is to prevent double recoveries. The statutes provide that the right of subrogation "exists only to the extent that basic economic loss benefits are paid or payable and only to the extent that recovery on the claim absent subrogation would produce a duplication of benefits or reimbursement of the same loss." This means that the insurance company would be reimbursed for economic loss benefits paid to the insured if the insured also obtains an award from a third-party defendant in a tort action.

Subrogation issues also arise between insurance companies regarding priority of payment. Minn. Stat. ? 65B.47, Subd. 6 states that "where a reparation obligor pays basic economic loss benefits which another reparation obligor is obligated to pay under the priority provided in this section, the reparation obligor that pays is subrogated to all rights of the person to whom benefits are paid."

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What if the Insurance Company Does Not Pay Benefits?
Posted by: euser
January 11, 2007

According to the provisions of Minn. Stat. ? 65B.54, Subd. 1, basic economic loss benefits are paid monthly as loss accrues, with loss denoting the incurrence of income loss, replacement services loss, and survivors? loss. Basic economic loss benefits are overdue "if not paid within 30 days after the reparation obligor receives reasonable proof of the fact and amount of loss realized, unless the reparation obligor elects to accumulate claims for periods not exceeding 31 days and pays them within 15 days after the period of accumulation."

An important consideration in determining whether benefits are overdue is what constitutes "reasonable proof of the fact and amount of loss realized." Typically, the reasonable proof requirement is satisfied when the claimant provides some form of evidence to the insurance company that the claimant?s loss was directly related to the motor vehicle accident, such as medical records or wage loss reports. The reasonable proof requirement is not satisfied if the claimant only notifies the insurer that there is a claim.

If basic economic loss benefits are overdue, Minn. Stat. ? 65B.54, Subd. 2 provides that "overdue payments shall bear simple interest at the rate of 15 percent per annum." This interest penalty is in addition to payment of the benefits that the insurance company did not pay. Subsequent case law has held that this 15% interest penalty is not part of the $20,000 in coverage for either medical expense benefits or disability and income loss benefits.

The No-Fault Act does allow an insurance company to terminate benefits if there is a lapse in treatment or disability for twelve consecutive months. However, termination is proper only if the insurer provides language in its insurance contract explaining its right to terminate because of a lapse of treatment.

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So Who Pays No-Fault Benefits?
Posted by: euser
December 26, 2006

The priority system under which an insurance company must pay no-fault benefits is described in Minn. Stat. ? 65B.47. The general rule is provided in Subdivision 4, which provides the following:

The statute also provides three general exceptions to the general rule:

Subsection 1 states that if a person is injured occupying a motor vehicle while that vehicle is being used "in the business of transporting persons or property," the injured person must seek no-fault benefits from the insurer of the occupied vehicle.

Subsection 2 also provides that an injured person must seek benefits from the insurer of the occupied vehicle if that vehicle was "furnished by the employer."

Finally, Subsection 3 provides that any person not occupying a motor vehicle, such as a pedestrian or a bike rider, who is injured by a vehicle "in the business of transporting persons or property" or a vehicle "furnished by the employer," the injured person must go to the insurer of the vehicle .

In all of these exceptions, if the occupied vehicle does not have coverage, the injured person may then make a no-fault claim to their own insurance company.

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The Damages Threshold for "Noneconomic Detriment"
Posted by: euser
December 26, 2006

Under Minn. Stat. ? 65B.51, Subdivision 3, a person seeking damages for "noneconomic detriment" must meet one of two threshold requirements. Under the first threshold, the sum of the following must exceed $4,000:

(1) reasonable medical expense benefits paid, payable or payable but for any applicable
deductible, plus

(2) the value of free medical or surgical care or ordinary and necessary nursing services
performed by a relative of the injured person or a member of the injured person's household, plus

(3) the amount by which the value of reimbursable medical services or products exceeds the
amount of benefit paid, payable, or payable but for an applicable deductible for those services or
products if the injured person was charged less than the average reasonable amount charged in
this state for similar services or products, minus

(4) the amount of medical expense benefits paid, payable, or payable but for an applicable
deductible for diagnostic X-rays and for a procedure or treatment for rehabilitation and not for
remedial purposes or a course of rehabilitative occupational training.

If this threshold cannot be meet, the injury must result in:

(1) permanent disfigurement;
(2) permanent injury;
(3) death; or
(4) disability for 60 days or more,

in order to receive damages for noneconomic detriment

For the purposes of this subdivision, disability means the inability to engage in substantially
all of the injured person's usual and customary daily activities.

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What About Uninsured or Underinsured Drivers?
Posted by: euser
December 26, 2006

First, what is an "uninsured" driver? The No-Fault Act describes an "uninsured motor vehicle" as "a motor vehicle or motorcycle for which a plan of reparation security meeting the requirements of [the No-Fault Act] is not in effect. (Minn. Stat. ?65B.43, Subd. 16) Therefore, the Act requires drivers to carry uninsured motorist coverage for the "protection of persons insured under that coverage who are legally entitled to recover damages for bodily injury from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles." (Minn. Stat. ? 65B.43, Subd. 18)

Likewise, an "underinsured motor vehicle" is "a motor vehicle or motorcycle to which a bodily injury liability policy applies at the time of the accident but its limit for bodily injury liability is less than the amount needed to compensate the insured for actual damages." (Minn. Stat. ? 65B.43, Subd. 17) The Act also requires that drivers carry underinsured motorist coverage. (Minn. Stat. ? 65B.43, Subd. 19)

So how much uninsured and underinsured coverage should drivers have? Minn. Stat. ? 65B.49, Subd. 3(a)(1) explains:

Further, Minn. Stat. ? 65B.49, Subd. 3(a)(2) requires that "every owner of a motor vehicle registered or principally garaged in this state shall maintain uninsured and underinsured motorist coverages as provided in this subdivision." Finally, "no recovery shall be permitted under the uninsured and underinsured motorist coverages of this section for basic economic loss benefits paid or payable, or which would be payable but for any applicable deductible." (Minn. Stat. ? 65B.49, Subd. 3(a)(4))

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What are "Basic Economic Loss Benefits"?
Posted by: euser
December 26, 2006

If an injury arises out of the "maintenance or use of a motor vehicle," the injured person is entitled to a variety of what the statute calls "basic economic loss benefits." Under Minn. Stat. ? 65B.44, basic economic benefits include up to $20,000 for medical expenses and a total of up to $20,000 for income loss, replacement services loss, funeral expense loss, and survivors? losses.

Subdivision 2 describes what is covered under the term "medical expenses." The statute provides that medical expense benefits shall reimburse all reasonable expenses for necessary:

(5) hospital, extended care, and nursing services.

Furthermore, Subdivision 3 provides an explanation of disability and income loss benefits, which under the statute "provides compensation for 85 percent of the injured person?s loss of present and future gross income from inability to work proximately caused by the nonfatal injury subject to a maximum of $250 per week." For self-employed workers, loss of income includes the costs incurred "to hire substitute employees 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."

Subdivision 3 also discusses what is required under the term "inability to work":

"For the purposes of this section "inability to work" means disability which prevents the injured person from engaging in any substantial gainful occupation or employment on a regular basis, for wage or profit, for which the injured person is or may by training become reasonably qualified. If the injured person returns to employment and is unable by reason of the injury to work continuously, compensation for lost income shall be reduced by the income received while the injured person is actually able to work. The weekly maximums may not be prorated to arrive at a daily maximum, even if the injured person does not incur loss of income for a full week. For the purposes of this section, an injured person who is "unable by reason of the injury to work continuously" includes, but is not limited to, a person who misses time from work, including
reasonable travel time, and loses income, vacation, or sick leave benefits, to obtain medical treatment for an injury arising out of the maintenance or use of a motor vehicle."

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What Happens to No-Fault Benefits When There is Also a Workers? Compensation Claim?
Posted by: euser
December 26, 2006

The basic statute describing the coordination of benefits is Minn. Stat. ? 65B.61. The statute provides that workers? compensation benefits are primary to no-fault insurance benefits, and that no-fault insurance benefits are primary to other forms of benefit payments, such as tort claims. The major purpose for this coordination is to prevent double recoveries by injured persons.

Subdivision 1 explains the general rule regarding the coordination of benefits:

Subdivision 2 provides that no-fault benefits may be offset depending upon the amount of disability benefits received under a workers? compensation claim:

Similarly, Subdivision 2a provides that survivors? economic loss benefits, as set out in section 65B.44, subdivision 6, are payable only if the no-fault benefits are greater than the workers? compensation benefits.

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What is an Independent Medical Examination?
Posted by: euser
December 26, 2006

An independent medical examination, or an IME, is a medical examination typically required by insurance companies in order to evaluate the extent of the injuries claimed by an insured after a motor vehicle accident. These examinations are allowed by Minn. Stat. ? 65B.56, Subd. 1:

The provisions of this section apply before and after the commencement of suit.

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Why Have a No-Fault Automobile Insurance System?
Posted by: euser
December 26, 2006

Despite what insurance companies and some state legislators may say about the costs incurred by using a no-fault insurance, this system remains the most effective and equitable means of resolving disputes arising out of automobile collision. A quick look at the scope of the Minnesota No-Fault Act gives us five reasons why we should keep this system.

The detrimental impact of automobile accidents on uncompensated injured persons, upon the
orderly and efficient administration of justice in this state, and in various other ways requires that
sections 65B.41 to 65.71 /bin/getpub.php?type=s&num=65B.41&year=2006/bin/getpub.php?type=s&num=65B.71&year=2006adopted to effect the following purposes:

(1) to relieve the severe economic distress of uncompensated victims of automobile accidents
within this state by requiring automobile insurers to offer and automobile owners to maintain
automobile insurance policies or other pledges of indemnity which will provide prompt payment
of specified basic economic loss benefits to victims of automobile accidents without regard
to whose fault caused the accident;

(2) to prevent the overcompensation of those automobile accident victims suffering minor
injuries by restricting the right to recover general damages to cases of serious injury;

(3) to encourage appropriate medical and rehabilitation treatment of the automobile accident
victim by assuring prompt payment for such treatment;

(4) to speed the administration of justice, to ease the burden of litigation on the courts of this
state, and to create a system of small claims arbitration to decrease the expense of and to simplify
litigation, and to create a system of mandatory intercompany arbitration to assure a prompt and
proper allocation of the costs of insurance benefits between motor vehicle insurers;

(5) to correct imbalances and abuses in the operation of the automobile accident tort liability
system, to provide offsets to avoid duplicate recovery, to require medical examination and
disclosure, and to govern the effect of advance payments prior to final settlement of liability.

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