This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).







Brenda Picasso, et al.,


Progressive Northern Insurance,



Filed September 10, 2002

Toussaint, Chief Judge


Ramsey County District Court

File No. C80256



Roger L. Kramer, Katz, Manka, Teplinsky, Due & Sobol, Ltd., 225 South Sixth Street, Suite 4150, Minneapolis, MN 55402 (for respondents)


Michael W. Lowden, Stempel & Associates, P.L.C., 41 12th Avenue North, Hopkins, MN 55343 (for appellant)


            Considered and decided by Willis, Presiding Judge, Toussaint, Chief Judge, and Stoneburner, Judge.

U N P U B L I S H E D   O P I N I O N

TOUSSAINT, Chief Judge

            This is an appeal from an order confirming an arbitrator’s no-fault awards for respondents that included medical expenses for chiropractic treatment.  Appellant insurer contends that (1) the court erred in holding that respondents’ chiropractic bills had not been satisfied without considering the settlement between appellant and the chiropractor; and (2) because appellant has paid all of the chiropractor’s outstanding medical bills, respondents have not sustained a loss.  We affirm.


            On December 18, 2000, respondents Brenda Picasso and Marco Ramirez suffered injuries in a car accident.  Respondents received treatment at Rivera Chiropractic Center and claimed no-fault benefits from their insurer, appellant Progressive Northern Insurance.  In January 2001, respondents assigned their no-fault benefits to Rivera.  In February, appellant denied respondents’ claims, and in March, respondents petitioned for no-fault arbitration, which ultimately awarded Picasso $4,140 and Ramirez $3,305 for their treatment at Rivera.  Appellant did not pay the awards because, meanwhile, it had settled the chiropractic bills with Rivera for less than the arbitration awards. 

            In January 2002, respondents moved the district court to compel payment of the remainder of the awards, which the court subsequently confirmed and entered judgment against appellant.  The court stated that appellant had not satisfied the arbitration awards because no-fault insurers may not coordinate benefits or enjoy the benefits of reduced medical expenses.  This appeal followed.


            Minnesota’s No-Fault Automobile Insurance Act (the act) provides that a no-fault insurer has the primary obligation of paying basic economic loss benefits for an injury arising out of the use of an automobile.  Minn. Stat. § 65B.61, subd. 1 (2000).  A no-fault insurer must “provide basic economic loss benefits to reimburse an injured person’s loss even when the injured person is entitled to compensation for the same loss from a different source.”  Stout v. AMCO Ins. Co, 645 N.W.2d 108, 112 (Minn. 2002).  The parties dispute whether the act requires appellant to pay the full amount of the arbitration awards when appellant ultimately settled respondents’ chiropractic bills for a lesser amount.  Statutory construction is a question of law subject to de novo review.  Id.  A reviewing court is not bound by a lower court’s conclusions in applying a statute to undisputed essential facts.  Id. 



            Appellant argues that the district court erroneously applied Minn. Stat. § 65B.61 to the settlement because appellant was not coordinating benefits by settling with Rivera.  We disagree.  In reaching our decision, we are guided by a recent supreme court opinion, which stated:

            In general terms, the Act is a comprehensive and highly-detailed statutory scheme that governs the compensation of persons injured in automobile accidents.  The Act is silent as to whether the amount of loss suffered by an injured person excludes the discounts that health insurers are able to obtain from medical service providers.  It appears to us that such discounts have become common, and the legislature may decide that this area of the law would benefit from its attention.  In the meantime, we must decide the issue based on the provisions of the Act that set forth the nature of basic economic loss benefits and describe the concept of loss.


Stout, 645 N.W.2d at 112. 

            In Stout, the injured party received medical-assistance benefits from the Department of Human Services and applied for no-fault benefits with the driver’s insurer.  Id. at 109.  Stout’s medical bills totaled $25,638.73, but Medicaid and MinnesotaCare fee schedules later discounted this amount to $12,471.44.  Id. at 110.  The insurer initially denied coverage, later paid $4,831.27 of the medical bills, but appealed its obligation to pay the amount that was discounted.  Id. at 110-11. 

            The court held that the insurer had to pay the amount originally billed, subject to the policy’s $20,000 coverage limit.  Id. at 114.  Thus, the insurer had to pay $15,168.73—the $20,000 limit minus the $4,831.27 that it had already paid.  Id.  The court stated:

To preserve no-fault insurers’ status as the primary source of benefits for those injured in automobile accidents, the Act generally prohibits no-fault insurers from coordinating basic economic loss benefits with benefits provided by any other legal entity.  * * * In other words, a no-fault insurer has a duty to provide basic economic loss benefits to reimburse an injured person’s loss even when the injured person is entitled to compensation for the same loss from a different source.


Id. at 112.  The court reasoned that a “loss,” under the act, is the amount originally billed by the medical service providers and not the amount actually paid in satisfaction of the medical bills.  Id. at 113.  The court also rejected the difference between another insurer paying the benefits and the medical provider discounting the original amount.

In either case, the no-fault insurer attempts to reduce its obligation to provide basic economic loss benefits on the ground that another source of benefits has stepped in and decreased the amount of the injured person’s medical bills—whether by paying them, obtaining discounts, or some other means.


Id. at 114.  The court asserted that its holding furthered the act’s purposes of ensuring prompt payment of benefits for persons injured in car accidents, as well as mandating prompt payment to medical service providers:

[W]e remove the incentive for no-fault insurers to delay the payment of meritorious claims in the hope that the injured person’s health insurer will step in and pay his or her medical bills at a discounted rate. 



            Stout differs from this case only because it involved claims paid by another entity.  In contrast, this case deals with medical benefits that the no-fault insurer itself paid.  Thus, appellant was still the primary source of benefits—it just managed to pay less than ordered by the arbitration.              Nevertheless, Stout explains that a loss under the act occurs when the injured person incurs a medical expense and that a subsequent settlement, which reduces the original medical bill, does not affect the no-fault insurer’s obligation to pay the original amount. 

            Appellant further contends that it was merely disputing certain claims that Rivera had sent to appellant and cites various provisions of the act, claiming that they support the type of settlement that occurred in this case.[1]  These sections of the act, however, do not authorize appellant to reduce its medical-expense obligation based on a settlement with a medical provider.  Moreover, the rule in Stout furthers the act’s purpose by requiring no-fault insurers to pay the injured person’s medical bills promptly, rather than permitting them to wait and hope that negotiation will reduce their obligations.


            Appellant argues that, because respondents owe no money to the medical provider, they have not suffered a compensable loss.  Appellant contends that the act entitles each injured party to only $20,000 to pay for medically necessary treatment arising out of a car accident, and, if the insured does not need that amount to pay for treatment, the insured should not get the money anyway.  Appellant also points to Rivera’s settlement releasing respondents from any future obligation arising out of their treatment.  Appellant argues that the amount not actually incurred in medical expenses was not a “windfall” to anyone because it remains available to cover additional medical expenses. 

            Again, we are guided by Stout, which pointed out that, as between the insurer and the insured, the insured should receive any windfall.  Id., 645 N.W.2d at 114.  Although in Stout the insured received a windfall because another entity paid his medical bills, the court’s analysis applies equally to this case, where respondents will receive a windfall because their no-fault insurer settled their medical bills for a lesser amount than awarded by arbitration.  The court in Stout pointed out that a “loss” occurs when the insured receives a medical bill, and

[a] reduction in the amount billed, whether obtained pursuant to a settlement agreement or a health insurer’s fee schedule, does not modify the amount of medical expense incurred. 


Id. at 113.  Thus, respondents suffered a “loss” the moment they incurred medical expenses from Rivera.  Moreover, respondents remained liable to Rivera until appellant settled the bills.

            Respondents’ windfall is troubling to this court.  But it appears clear from Stout that, as between the insurer and the insured, the insured should prevail with respect to receiving medical expense sums over and above the discount given by the chiropractor.  See id. at 114-15 (stating that “it seems more just that the insured who has paid a premium should get all he paid for rather than that the insurer should escape liability for that for which it collected a premium.”) (citation omitted).  We echo the supreme court’s suggestion in Stout that this is an area of the law that might benefit from legislative attention. 


* The Honorable Daniel F. Foley, one of the founding members of this court, who continued to serve by appointment order from the supreme court after his retirement, fully participated in the consideration of this appeal.  Due to Judge Foley’s untimely death before the filing of the opinion, Chief Judge Toussaint has been assigned as a substitute, and now joins the panel in issuing this decision.


[1] See Minn. Stat. § 65B.42, subd. 5 (2000) (stating that the no-fault act was meant “[t]o 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.”); Minn. Stat. § 65B.54, subd. 1 (2000) (stating that “medical or funeral expense benefits may be paid by the reparation obligor directly to persons supplying products, services, or accommodations to the claimant.”); Id., subd. 4 (2000) (stating that the insurer “may offset amounts the reparation obligor is entitled to recover from the claimant under this subdivision against any basic economic loss benefits otherwise due the claimant.”); Minn. Stat. § 65B.57 (2000) (stating that economic loss benefits shall not be subject to garnishment except by any person who has provided the claimant with treatment or services).