This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Sandra Vee Andersen,
United Fire and Casualty Company,
Filed May 16, 2006
Hennepin County District Court
File No. PI 03-006069
William O. Bongard, Sieben, Grose, Von Holtum & Carey, Ltd., 900
Scott A. Wilson,
Frederick L. Grunke, Rajkowski Hansmeier Ltd., 11 Seventh Avenue North, P.O. Box 1433, St. Cloud, MN 56302 (for appellant)
Considered and decided by Worke, Presiding Judge; Dietzen, Judge; and Collins, Judge.[*]
U N P U B L I S H E D O P I N I O N
On appeal from a district court decision that respondent was entitled to underinsured motorist (UIM) benefits, appellant argues that the district court erred in (a) disregarding the parties’ agreement to engage in binding arbitration and in failing to accept the arbitrator’s findings; (b) ruling that appellant was not entitled to a collateral-source deduction; (c) ruling that appellant was not entitled to an offset under Minn. Stat. § 65B.51 (2004) for no-fault benefits paid up to the date of the award; and (d) ruling that respondent was entitled to UIM benefits. We reverse and remand.
D E C I S I O N
Appellant United Fire and Casualty
Company argues that the district court erred in disregarding a decision from
binding arbitration. Respondent Sandra
Vee Anderson argues that the district court did not err because the decision was
merely advisory. Arbitrators derive
their authority to resolve disputes from the parties’ agreement to do so. Johnson v. Piper Jaffray, Inc., 530
N.W.2d 790, 795-96 (
Here, respondent was involved in a two-car collision while insured under an automobile policy issued by appellant. After settling her claim against the at-fault driver for $90,000, respondent filed a complaint alleging that appellant refused to pay her UIM benefits. The parties agreed to submit the claim to a three-member arbitration panel seeking a gross-damages award. The parties did not submit the issue of collateral-source deductions, believing that they would reach an agreement; but the parties agreed to subsequently submit that issue for a determination in the event they could not agree. The panel determined that respondent’s gross damages were $156,000—$96,000 in past medical expenses, $50,000 in past pain and suffering, and $10,000 in future pain and suffering. Appellant informed the arbitration panel chairman that the parties had been unable to agree on the collateral-source issue and agreed to submit the matter to him for a decision. Respondent confirmed the parties’ intent to seek assistance in making a decision related to the collateral-source issue and the parties’ agreement that applicable collateral-source offset determinations could be made post verdict. Respondent’s submission stated that the parties had “rather different views of the collateral source statute, and the effect of a no-fault settlement early on in the case, and [sought] assistance in making a decision[.]” Thus, the parties agreed to submit the issue for a binding decision.
We must next decide whether the district court erred by
disregarding the arbitrator’s decision.
Here, after finding that respondent had not met the $100,000 threshold for recovery of UIM benefits,the arbitrator determined that respondent was not entitled to UIM benefits. The arbitrator found that approximately $16,000 ($1,137.09 in medical benefits paid and a $15,000 settlement payment) respondent received in no-fault benefits should be offset. The arbitrator also found that respondent’s medical insurer had paid the balance of respondent’s medical expenses and that respondent could not be liable to anyone for the $96,000 in past medical expenses awarded by the arbitration panel. The arbitrator concluded that respondent was only entitled to $80,361.10 ($29,290.11 recovery of medical expenses, plus $60,000 recovery of non-economic expenses, less 10%—respondent’s agreed-on comparative fault, equals $80,361.10). Appellant moved the district court to confirm this decision, and respondent moved the district court to confirm the gross-damages award. The district court confirmed the award as follows: “[respondent’s] $96,000 medical expense recovery is to be reduced according to the offset provisions of the No-Fault Act by no more than $1,137.09, yielding $94,862.91, prior to application of the agreed 10% comparative fault reduction. This amount, added to the unreduced $60,000 non-economic component, totals $154,862.91.” The district court then reduced the award by the 10% comparative fault and deducted the $90,000 respondent recovered from the at-fault driver and concluded that respondent was entitled to $49,376.61 in UIM benefits ($154,862.91 less 10% equals $139,376.61, less $90,000 equals $49,376.61). We need not defer to the district court’s decisions on questions of law; we must accept the arbitrator’s findings and apply them to the applicable statutes to determine whether respondent is entitled to UIM benefits.
Collateral sources are “payments
related to the injury or disability in question made to the plaintiff, or on
the plaintiff’s behalf up to the date of the verdict[.]” Minn. Stat. § 548.36, subd. 1 (2004). The deduction of collateral-source payments
includes “amounts of collateral sources that have been paid for the benefit of
the plaintiff or are otherwise available to the plaintiff as a result of losses
except those for which a subrogation right has been asserted.”
In 2001 respondent had entered into an agreement with her medical insurer
whereby the insurer accepted $20,500 from respondent “as full and final
satisfaction of [its] subrogation interest for this loss [of $29,290.11].” The arbitrator determined that the
only subrogation right that had been asserted was for $29,290.11. The district court rejected this
determination and relied on Smith v. Am. States Ins. Co., 586 N.W.2d 784
(Minn. App. 1998), review denied (Minn. Feb. 18, 1999). The district court ruled that respondent was
not barred from recovering special damages even though the damages had been
paid by another. But the facts in Smith
are unlike the circumstances here.
The court in Smith held that based on its particular fact
situation, the collateral-source statute did not apply “[b]ecause the statute
expressly does not apply to payments not yet received, whether due to an
insurer’s denial of coverage or discontinuation of payment based on an
insured’s failure to show continued entitlement to those benefits[.]”
Respondent argues that the statute states “except those for which
a subrogation right has been asserted” and this means all payments regardless
of when paid.
Stat. § 65B.51, subd. 1 (2004), provides for the deduction
“from any recovery the value of basic or optional economic loss benefits paid
or payable[.]” The offset provision
operates to preclude duplicate recovery or “over-compensation.” Pfeffer v. State Auto. & Cas.
Underwriters Ins. Co., 292 N.W.2d 743, 747-48 (
In July 2001, respondent accepted $15,000 from appellant as settlement of all no-fault-benefit claims of whatever nature resulting from the accident. Respondent agreed that by receiving the $15,000 it was her “specific intent to release [appellant] . . . from any and all claims that [she] may have for past, present or future claims for no-fault benefits.” The arbitrator determined that respondent had received more than $16,000 in no-fault benefits consisting of $1,137.09 in medical benefits and the $15,000 settlement. The district court reduced respondent’s recovery by $1,137.09, and did not provide any reason for not deducting the $15,000.
Respondent argues that the district court did not deduct the
$15,000 because it cannot be traced to medical expenses. Respondent argues that Fahy v. Templin,
361 N.W.2d 158 (Minn. App. 1985), review denied
Underinsured Motorist Benefits
Minn. Stat. § 65B.43, subd. 17 (2004), provides that an individual is entitled to UIM benefits only if the at-fault driver’s policy limit for bodily injury liability is less than the amount needed to compensate the insured for actual damages. Here, the at-fault driver’s policy limit was $100,000. As the arbitrator concluded, respondent is entitled to $80,361.10 which falls short of the $100,000 threshold of the at-fault driver’s policy limit; therefore, respondent is not entitled to UIM benefits. The arbitrator’s analysis was correct, and the district court erred in not adopting the arbitrator’s findings and decision that respondent was not entitled to UIM benefits. We reverse and remand to the district court to adopt the arbitrator’s findings and decision.
Reversed and remanded.
[*] Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.