This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Viking Insurance Company,



Otis Clayburn, et al.,


Filed July 15, 1997

Affirmed in part, reversed in part, and remanded

Short, Judge

Hennepin County District Court

File No. 9613801

Jeffry C. Schmidt, Stempel & Schmidt, PLC, 41 Twelfth Avenue North, Hopkins, MN 55343 (for appellant)

Steven J. Terry, Daniels & Associates, 4725 Olson Memorial Highway, Golden Valley, MN 55422 (for respondents)

Considered and decided by Toussaint, Chief Judge, Short, Judge, and Schultz, Judge.[*]


SHORT, Judge

This dispute arises from a low-speed motor vehicle accident in which a vehicle rear-ended a car carrying respondents Otis Clayburn, William David Evans, and William James Evans (claimants). During the eight months following the accident, Viking Insurance Company (insurer) paid the claimants a total of approximately $8,500 in wage loss and medical bill reimbursements. The insurer then discontinued benefits on the basis of an accident reconstructionist's opinion that the low-speed impact could not have resulted in injuries.

After encouraging the claimants to file for arbitration, the insurer commenced this action, seeking: (1) a declaration that the claimants' alleged injuries could not have arisen from the motor vehicle accident; and (2) restitution of all medical and wage loss benefits paid by the insurer prior to its denial of coverage. The trial court dismissed both counts and ordered the parties to submit to mandatory arbitration. We affirm the trial court's dismissal of the insurer's declaratory judgment action, but reverse the dismissal of the restitution claim and remand if necessary for trial.


In reviewing a judgment on the pleadings, the only question before this court is whether the complaint sets forth a legally sufficient claim for relief. Elzie v. Commissioner of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980). Statutory construction presents a question of law, which we review de novo. Hibbing Educ. Ass'n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn. 1985).


The legislature enacted the Minnesota No-Fault Act to simplify and ease the burden of litigation in efforts to compensate injured persons. Minn. Stat. § 65B.42, subd. 4 (1996); Neal v. State Farm Mut. Ins. Co., 529 N.W.2d 330, 333 (Minn. 1995). In furtherance of this purpose, the act requires binding arbitration of all claims for no-fault benefits under $10,000. See Minn. Stat. § 65B.525, subd. 1 (1996) (requiring courts to provide for mandatory submission of such claims to binding arbitration); Minn. R. No-Fault Arb. 6 (providing that "mandatory arbitration applies to all claims for no-fault benefits * * * where the total amount of the claim * * * is in an amount of $10,000 or less").

In a claim for no-fault benefits, it is the arbitrator's role to decide issues of fact, leaving interpretation of law to the courts. Johnson v. American Family Mut. Ins. Co., 426 N.W.2d 419, 421 (Minn. 1988). However, when insurance coverage is preconditioned on the establishment of certain facts, the factual dispute must be resolved by a trial court before an insured is entitled to invoke his or her right to arbitration. Myers v. State Farm Mut. Auto. Ins. Co., 336 N.W.2d 288, 291 (Minn. 1983) (citing U.S. Fidelity & Guar. Co. v. Fruchtman, 263 N.W.2d 66, 71 (Minn. 1978)); see Costello v. Aetna Cas. & Sur. Co., 472 N.W.2d 324, 326 (Minn. 1991) (concluding coverage disputes are not arbitrable).

The insurer argues its claim that the motor vehicle accident could not have resulted in injuries is a coverage issue and the trial court erred in ordering the parties to submit the claim to mandatory arbitration. However, the record indicates: (1) an accident occurred; and (2) the accident arose out of the operation of a motor vehicle. Given these facts, there is no disputed precondition to coverage. See LaValley v. National Family Ins. Corp., 517 N.W.2d 602, 604 n.1 (Minn. App. 1994) (citing Continental W. Ins. Co. v. Klug, 415 N.W.2d 876, 877 (Minn. 1987), and noting coverage under No-Fault Act is conditioned on occurrence of accident that arose out of operation, use, or maintenance of motor vehicle), review denied (Minn. Aug. 24, 1994); cf. Costello, 472 N.W.2d at 327 (holding question whether vehicle was underinsured was unarbitrable coverage issue under underinsured motorist policy); Fruchtman, 263 N.W.2d at 72 (denying arbitration on question whether unidentified driver's vehicle made physical contact with insured's vehicle); AMCO Ins. Co. v. Ashwood-Ames, 534 N.W.2d 740, 741 (Minn. App. 1995) (holding that occurrence of accident is precondition to coverage which district court must determine before submission to arbitration), review denied (Minn. Sept. 28, 1995).

Contrary to the insurer's insistence that this case involves a coverage dispute, the real issue is whether and to what extent the claimants suffered injury from the motor vehicle accident. The resolution of that question is squarely within the competence of an arbitrator. Therefore, the trial court properly dismissed the first count of the insurer's action and ordered the parties to submit to arbitration.


The insurer also argues it is entitled to try in court its claim for restitution of all medical and wage loss benefits paid to the claimants prior to the insurer's denial of coverage. We agree. Under Minn. Stat. § 65B.54, subd. 4 (1996), an insurer may "bring an action to recover benefits" paid on the basis of an intentional misrepresentation by a claimant. The term "action" denotes a judicial proceeding. Minn. Stat. § 645.45(2) (1996) (defining "action" as in-court proceeding); see Har-Mar, Inc. v. Thorsen & Thorshov, Inc., 300 Minn. 149, 153, 218 N.W.2d 751, 754 (1974) (holding arbitration proceeding is not "action"). We recognize that compelling arbitration of the claimants' damages while permitting the insurer to bypass arbitration of the restitution claim may result in duplication of proof, which would not promote judicial economy. See Charboneau v. American Family Ins. Co., 467 N.W.2d 830, 831 (Minn. App. 1991) (recognizing public policy in favor of arbitration), aff'd, 481 N.W.2d 19 (Minn. 1992). However, the plain language of the statute compels such a result. See Minn. Stat. § 645.16 (1996) (forbidding courts from disregarding letter of law under pretext of pursuing its spirit). Under these circumstances, we conclude the trial court erred in dismissing the insurer's action for restitution of benefits paid. Therefore, we reverse and remand to the trial court for further proceedings consistent with this opinion.

Affirmed in part, reversed in part, 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.