American Family Insurance Group v. Kiess

MEYER, Justice

(concurring).

I agree with the' májority that Minn. Stat. § 65B.54, subd. 1, plainly states that an insured must provide an insurer with actual noticé of losses incurred in order for interest on the claim to begin to accrue. However, I respectfully take issue with the conclusion that — absent legislative intervention — an insurer’s conduct can never be interpreted as a waiver of its right to statutory notice. Such a position ignores the realities of the practice of no-fault insurance law in this state and places a heavy burden on insureds — who, the majority now holds, are not eligible for penalty interest under the statute even if they follow plainly-stated directions given to them by their insurance companies to submit their medical bills elsewhere.

The question we face in this decision is whether appellant Kiess is entitled to collect interest under section 65B.54, subd. 1, from the time he incurred his medical bills or only from the time he filed for arbitration of his discontinued benefits. Here, Kiess received a letter from American Family specifically stating that “[a]ll no-fault benefits from your auto policy for this accident will be discontinued at this time. You may wish to forward any future medical billings to your health insurance carrier for consideration of payment.” Accordingly, Kiess submitted the bills he subsequently incurred to his medical insurance carrier, Blue Cross. Blue Cross paid Kiess’s surgery bills in full, then waived its subrogation interest in the matter. Kiess subsequently brought a petition for arbitration against American Family for $10,-000 — the statutory limit — and $7,125 in penalty interest.

The majority concludes that Kiess is entitled to penalty interest only from the time he filed his petition for arbitration because the statute plainly states that an insurer must pay interest from the time it receives “reasonable proof of the fact and amount of loss realized.” Minn.Stat. § 65B.54, subd. i. I agree with the majority that the statute requires actual notice. However, rather than ending the analysis there, I would go on to apply common law equitable principles of waiver and estoppel and consider whether American Family is barred from asserting its right to statutory notice.

We have- previously concluded that, in certain cases, waiver and estoppel defenses are not abrogated by statutes. In Neuberger v. Hennepin County Workhouse, 340 N.W.2d 330, 331-32 (Minn.1983), we held that an employer was estopped from pleading a statutory time bar where, based on the employer’s statement that he was “just as well off on disability,” an employee did not timely file a workers’ compensation claim. See also Kahn v. State, 289 N.W.2d 737, 745 (Minn.1980) (holding where agent of employer misled the employee’s husband into believing her injury was not *623compensable, and employee failed to timely file a claim as a result, employer was estopped from asserting the time bar); Brekke v. THM Biomedical, Inc., 683 N.W.2d 771, 775 (Minn.2004) (stating that waiver and estoppel defenses were not superseded or abrogated by statute in question). Similarly, in L & H Transport, Inc. v. Drew Agency, Inc., we stated that “[a] defendant’s conduct can be such as to es-top that defendant from asserting a time limitation contained in an insurance policy” where it would be “unjust, inequitable, or unconscionable” to allow the defendant to do so. 403 N.W.2d 223, 227 (Minn.1987). In Neuberger we stated that our conclusion that the statute did not supersede the worker’s right to assert equitable estoppel comported with the “general policy of compensation law, that benefits should be provided for all injuries that are reasonably compensable under the statute.” 340 N.W.2d at 332.

The No-Fault Act does not specifically preclude an insured from asserting equitable defenses where the purposes of the Act would be served, and our court has never interpreted the statute to abrogate such defenses. As the majority has noted, the Act expressly seeks to relieve the “severe economic distress” of automobile accident victims and to assure that accident victims receive “prompt payment” for necessary treatment. MinmStat. § 65B.42(1), (3). In eases like the one at hand, where an insurance company discontinues an insured’s coverage and tells the insured that he “may wish to forward any future medical billings to your health insurance carrier for consideration of payment,” the insured should have the right to argue that the insurer is equitably estopped from asserting its right to notice under section 65B.54, subd. 1.

A party seeking to invoke the doctrine of equitable estoppel has the burden of proving (1) that promises or inducements were made; (2) that the party reasonably relied upon the promises; and (3) that the party will be harmed if estoppel is not applied. Hydra-Mac, Inc. v. Onan Corp., 450 N.W.2d 913, 919 (Minn.1990). In the case at hand, Kiess could not succeed in arguing equitable estoppel because, although American Family induced Kiess to send his bills to his health insurance carrier, and Kiess reasonably relied on those instructions, Kiess could not establish that he was harmed by not receiving statutory interest on a $10,000 windfall. Kiess received necessary treatment that was promptly paid for and thus cannot argue that the purposes of the Act would be furthered by awarding him interest in this case.

However, it is not hard to imagine an injured person in other circumstances who would, in fact, be harmed by relying on the language of a termination of benefits letter like the one American Family sent in this case. Many people do not have health insurance to which they can “forward” additional bills — or they have health insurance with limited coverage or high deductibles. In such cases, a person whose no-fault benefits have been discontinued will likely pay his or her additional medical expenses out of pocket, pay medical expenses on credit, or not seek out necessary additional medical care. In such cases, the Act’s purposes — to relieve the “severe economic distress” of automobile accident victims and to assure that accident victims receive “prompt payment” for necessary treatment — are served by equitably estop-ping an insurer from asserting its right to notice under the statute.

It is at odds with the purposes of the Act to insist that an injured person continue to submit medical bills to a no-fault insurer that has discontinued benefits and directed the injured person to submit his *624or her bills elsewhere. In the practice of no-fault law in this state; an insured simply should not bear the burden of having to analyze and interpret discontinuation letters in relation to the larger statutory scheme in order to determine whether to follow the instructions given by an insurance company. Rather, because insurance companies are sophisticated entities well-versed in the nuances and intricacies of the Act, they should bear the risk of being equitably estopped from asserting their right to notice in those cases where the insured has been harmed by reasonably relying on statements in a discontinuation letter.

Thus, I would hold that, in cases in which an insured receives a letter like the one at issue here, then reasonably relies on the insurance company’s instructions in such a way that subverts the purposes of the No-Fault Act, the insurer is equitably estopped from asserting its right to notice under section 65B.54, subd. 1.