The Risk of No-Fault Full and Final Settlements

What risks are there in cashing out No-Fault Benefits before the liability trial? The plaintiff may create a very large setoff where one did not exist.

Defendants correctly argue that any no-fault benefits paid are deducted from the special damages awarded under Minn Stat. §65B.51, Subd. 1 (2000).

Interestingly, that statute also provides that “payable” benefits should be deducted, possibly implying that future medical and wage loss should also be deducted from the verdict. The Supreme Court closed this door in Haugen v. Town of Waltham, 292 N.W.2d 737 (Minn 1980). The court held that the “paid or payable” clause was unconstitutional regarding unpaid benefits.

However, once a full and final settlement, including a big ‘surplus’ for future benefits is accepted, doesn’t the defense argue that the "future payments" have gone from the ethereal (and unconstitutional) future to the concrete present.

I suspect that the courts will deduct all benefits paid in a full and final settlement, except amounts allocable as penalty/interest. If the payments can be specifically allocated to wage and/or medical, etc., it just makes the job easier for the judge.

A more interesting question is how a general payment for full and final release of benefits will be allocated by the court. I suspect that the courts would apportion the setoff equitably between the various damages. The courts may even may even do that if you tried to allocate the NF settlement yourself with some sort of recitation in the no-fault release.

Settling the no-fault case before the liability action is risky, and should be done with discretion. You don’t want to hand the third party defendant a big setoff to their damages.

10-Day Trap for Defense Attorneys. In 1986, the Collateral Source Statute, Minn Stat. §548.36, abrogated the common law Collateral Source Rule. Under the common law rule, plaintiffs were allowed a double recovery when an insurer or other entity had paid their special damages. The reasoning was that a tortfeasor should not receive a windfall simply because their victim had the foresight to purchase health or disability insurance. The 1986 statute was passed in a wave of Tort ‘Reform’ legislation, ostensibly because it was thought that plaintiffs were getting windfalls. The statute requires the defense to move to reduce the verdict by the amount of Collateral sources within 10 days of entry of the verdict.

A motion for No-Fault setoff must also be made within 10 days. The recent case of Lee v. Hunt (__ N.W.2d __ Min. Ct. App. File No. C9-01-1730 filed April 2, 2002) held that the Collateral Source Statute means exactly what it says: auto insurance benefits are included in the 10 day limit. A cursory memorandum opinion of the Supreme Court, Wertish v. Salvhus, 558 N.W.2d 258 (1997) to the contrary is discounted as dicta.

Social Host Liability Insurance Coverage. The 2000 Legislature passed Minn.Stat. §340A.90, Subd. 3 (2000) codifying liability for providing alcohol to minors. A subdivision barring general homeowners coverage expired December 31, 2001. Presumably, social hosts who allow minors to be served may now be covered under their general homeowners policy. Has anyone been successful in securing homeowner’s coverage since the limitation expired?

AAA Arbitrator Deadline Approaching!

If you’re a lawyer with five or more years in practice, and you are not a no-fault arbitrator, time may be running out.

The Minnesota Supreme Court will soon approve a rule increasing the requirement to seven years, thus delaying your chance to sit in judgment on some of these cases. It costs nothing to become an arbitrator, and while the $300 arbitrator fee won’t make you rich, the experience is priceless.

Are you sick of no-fault strike lists packed with defense lawyers and other folks hostile to no-fault benefit claims? If you’re not registered as an arbitrator with the American Arbitrations Association (AAA), you’re part of the problem.

Become part of the solution! Get an application from MAJ and start the application process now.

The 60-day Disability Jury Instruction (CIVJIG 65.40) as well as the pattern Sample Special Verdict Form contains a small, but important error. MAJ Past President Charlie Hvass, Jr.’s client astutely pointed out the error at a recent trial. Since the verdict form asks “Did (plaintiff) sustain a 60 day disability as a result of the accident?”, a jury might answer “no” if the plaintiff had a disability of 61 days or more. This overly-technical jury would find support in the instruction which states:

“Disability” means that an injured person is unable to engage in substantially all of his or her usual and customary daily activities, for 60 days. Sixty days does not mean 60 consecutive days. It is sufficient if the total number of days of disability was 60.

A better question for the verdict form would be “Did (plaintiff) sustain a disability totaling 60 days or more?”

MAJ - Minnesota’s 1400-Member Law Firm?

MAJ members can enjoy many of the benefits of the combined wisdom and legal abilities of its almost 1,400 members. Don’t reinvent the wheel! The MAJ Information Bank contains depositions, legal briefs, and other high-quality work product of some of the best lawyers in the country. Here are a few examples:

Deposition Bank. Most good lawyers study an adverse expert’s prior testimony before every trial or trial deposition. The MAJ has a huge library of adverse expert depositions. There is nothing quite a cross examination after catching an expert contradicting prior testimony.

There are other ways to use adverse depositions. Why not include one or two damning depositions from the adverse doctor in your no-fault arbitration book? Even the most knowledgeable arbitrator may be unaware of the dirty details of the adverse doctor’s past testimony.

Brief Bank. Are you preventing multiple adverse exams? The MAJ Brief Bank has numerous orders from District Court judges restricting and denying second adverse exams.

Are you rolling over on unnecessary employment authorizations? What about sensitive psychological and marriage counseling records? The Bank has motion papers and orders to help you oppose these and other excessive discovery requests.

For a small copying fee, you can avoid reinventing the wheel and benefit from the excellent work of fellow MAJ members. Remember, if you submit a deposition or brief of your own with a summary, your own order will be half price.

Injury Index. Review hundreds of settlements and verdicts submitted by members and arranged by type of injury. Insurance adjusters and defense attorneys may be impressed with some of the large settlements and verdicts listed for cases like yours.

Best of all, members can now peruse an on-line index of the Information Bank at www.mntla.com/mntlamembers2000/infobank. The index can be searched by names and key words. Most of the entries include a detailed description so you can narrow your search to the perfect document.

No-Fault Arbitrator Report Cards. Puzzled by your choices on a No-Fault arbitrator strike list? Call MAJ for help. The information Bank solicits “Arbitrator Report Cards” from members. These report cards include a letter grade of the member’s opinion on the arbitrator, plus comments. After calling AAA for their arbitrator information, call MAJ.

And don’t forget to send in a report card on your experience. Blank Arbitrator Report Cards can be found on the MAJ website or by calling Derek at 612-375-1707.

Auto Case Law Reports on the list serve. If you’re not signed up for one of the MAJ list serves, you’re missing out on one of the most valuable benefits of MAJ membership. MAJ members Matt Brenengen, Peter Riley, John Scott and your editor rotate the duties of reviewing and summarizing Minnesota Appellate Decisions touching on auto law.

Why wait until the cases are four to six days old to read about them in the legal newspapers? Most Tuesdays and Thursdays, the summary arrives in your inbox within an hour of the 1:00 p.m. release of the decisions.

If you can get e-mail, you can get join any of the MAJ list serves. Call Jodi at 612-375-1707 or just visit the website at www.mntla.com/mntlamembers2000/list_serv.

Deciding Tort Thresholds in limine

The No-Fault threshold statute allows a claim for noneconomic damages where:

What if the no-fault carrier has paid (or been forced to pay) bills exceeding $4,000? MAJ member Mike Tewksbury points out that the plain language of the statute states that the threshold is satisfied when the treatment is paid. Why do plaintiffs allow this issue to be religitated, and decided by the jury?

Mike suggests a motion in limine asking the court to decide this issue as a matter of law. The defense will argue that the insured should not be penalized by the actions of a lax no-fault carrier. They will complain that should not be bound by the findings of a no-fault arbitration to which they were not a party.

So what? The plain language of the threshold statute implies that this issue is a matter between the injured person and his or her insurer. The defendant has no say in that matter. Without the No-Fault Act and its benefits, the defendant would be facing a claim for the full tort damages. The defendant has no right or standing to be involved in the private dispute between the injured persons and their insurer regarding the no-fault benefits.

If there is a separate claim for the medical bill damages, the defendant will still be able to put in evidence and argue against those damages.

MAJ member Cameron Parkhurst liked Mike’s idea so much that he prepared a written motion in limine . You can get a copy of this by contacting Derek Lamparty at MAJ 612-375-1707.

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