Pususta v. State Farm Insurance Companies

*557GILBERT, Justice

(dissenting).

I respectfully dissent from the majority opinion and would affirm the court of appeals. The majority opinion is based on equitable apportionment, which is an approach that we have specifically rejected for subrogation claims to determine medical expense benefits provided for in the Minnesota No-Fault Automobile Insurance Act (No-Fault Act). Great West Cas. Co. v. Northland Ins. Co., 548 N.W.2d 279 (Minn.1996). The no-fault system was designed to eliminate this type of dispute on minor claims once a compensable loss occurs, and we have so held in other contexts. In fact, recently we stated “we disagree with the court’s apportioning of PIP benefits, and we consider them payable by the insurer when the insured incurs a loss.” Id. at 281 n. 4. The majority decision now reverses this directive and ignores the facts supporting the arbitrator’s and trial court’s ultimate decisions, awarding benefits in this case.

Here, the district court confirmed the medical expenses awarded in arbitration. It found that notwithstanding some comments made by the arbitrator relating to legal issues that “[a]ny allusion by the arbitrator to case law regarding apportionment was secondary to the facts which he had already decided. While defendant asserts that [the arbitrator] exceeded his powers, it has failed to make a clear showing that that was, in fact, the case.” The trial court reasoned “[t]he arbitrator clearly decided that Plaintiff had been injured in the auto accident of December 6, 1997, and that she received chiropractic care related to that accident.” Two experts were called upon in the arbitration hearing to give their opinion on the reásonable and necessary medical treatment required because of this automobile accident. Valerie Hoffman, D.C., offered an opinion on behalf of Pususta that the rehabilitation services being performed were for neck and upper back, not her lower back that was being treated before the automobile accident. David Olson, D.C., on behalf of State Farm, rendered an opinion authorizing paying the bills for medical rehabilitation through the beginning of April 1998, but none after that because that is when Pususta reached preaccident status. Accordingly, there was conflicting medical testimony, one opinion requiring additional treatment and the other terminating the treatment.

The court of appeals affirmed the arbitrator’s decision considering the guidance provided the supreme court in Great West and could not say that the arbitrator and the district court erred in refusing to apportion the respondent’s medical expenses. Pususta v. State Farm Ins. Cos., No. C8-99-1068, 1999 WL 1101388 (Minn.App.1999). Now, without calling the relief on remand apportionment, the majority reverses both of the lower courts with an order that the arbitrator must determine the extent to which the medical expenses relate to the use of a motor vehicle and “medical expenses for injuries caused by the horse riding accident shall be denied.” This directive obviously, calls for apportionment between accidents, which the arbitrator also determined was appropriate, but he felt constrained by our precedent in Great West. However, adopting the principle of apportionment severely interferes with the statutory framework that is “to govern the effect of advance payments pri- or to final settlement of liability” once a compensable loss occurs. Minn.Stat. § 65B.42, subd. 5 (2000).

The facts in this case highlight the prob^ lems that would be created by the majority’s opinion. Pususta was 18 years old at the time of the automobile accident, which occurred on December 6, 1997. Before *558authorizing any medical payments for that accident, State Farm ordered an independent medical examination. State Farm then decided to pay medical bills incurred through February 1998, but then stopped any further payments. Five months went by with no further payments and no denial of benefits. In the meantime, medical expenses had been incurred by an 18-year-old woman totaling more than $4,000. An independent medical examination was completed July 16, 1998, and an opinion rendered on July 23, 1998, 7 months after the automobile accident. Then, retroactively, Dr. Olson decided no further medical bills should be paid beyond the beginning of April of 1998. Now, the majority opinion will compel an independent medical examination whenever there is a preexisting no-nauto-related accident case with resulting expense, uncertainty and delays now being thrust into every decision on payment. In most cases, this will lead to retroactive approval or denial of medical expenses incurred to treat in a timely fashion injuries arising from an automobile accident. This result will occur even though it is undisputed that early and proper rehabilitation treatment usually tends to mitigate everybody’s damages. This is not to say that medical reimbursement would continue forever because there are statutory dollar limits applied to every policy and an arbitrator still would have the ability to terminate payments for medical expenses when pre-accident condition status has been reached. The No-Fault Act provides for such a determination now and that is why apportionment principles should be rejected for the same reason we rejected those principles for subrogation claims.

In Great West, we reasoned that a sub-rogation right must be found, if at all in the No-Fault Act, in that we do not recognize a separate common law right of subro-gation in the no-fault context. 548 N.W.2d at 281. This interpretation was reacknow-ledged in Scheibel v. Ill. Farmers Ins. Co., 615 N.W.2d 34, 37 (Minn.2000), and the reasoning should be followed in this case.

In Great West, we disallowed a subrogation claim against Northland brought by Great West who insured an individual injured in an automobile accident 3 years after the first automobile accident. 548 N.W.2d at 281. The majority attempts to distinguish this case from Great West depending on whether some of the medical expenses arose within or outside the no-fault system. Great West involved a multiple auto accident and the aggravation of a preexisting condition that resulted in a dispute between different insurance companies involved at the time of the two accidents, one in June 1988 and the second in June 1991. 548 N.W.2d at 279-80. We held that “[t]he clear implication is that only one accident can be deemed to be the cause of an injury for purposes of subrogation under section 65B.47.” Id. at 281. This “one accident” precedent from Great West is even more compelling in this case.

As stated by the legislature, the purpose of the No-Fault Act is to relieve the severe economic distress of uncompensated victims of automobile accidents without regard to whose fault caused the accident and to encourage appropriate medical and rehabilitation treatment by assuring prompt payment for the treatment. Minn. Stat. § 65B.42. It is undisputed that the respondent has suffered a compensable loss in an automobile accident, is an injured person, and is entitled to reasonable medical expense benefits and the assurance of prompt payment. Minnesota Statutes § 65B.44, subdivision 2, provides for the reimbursement of “all reasonable expenses for necessary * * * medical * * * and rehabilitative services * * It is also undisputed that the respondent has a preexisting chronic medical injury due to a horse-riding accident.

*559The majority opinion deviates from the stated purpose of the Act and holds that the statutory language defining loss incorporates the elements of causation into the determination of what medical expense benefits are reimbursable. The majority opinion relies on two of our cases on causation between the use of an automobile and an injury. In Continental Western, we found that there was the requisite degree of causation between injuries and the use of a car when a gun was fired out of a moving vehicle causing injury to another party. Cont’l W. Ins. Co. v. King, 415 N.W.2d 876, 878 (Minn.1987). North River involved an injury from a trailer attached to a motor vehicle. N. River Ins. Co. v. Dairyland Ins. Co., 346 N.W.2d 109, 114 (Minn.1984). However, these cases are not helpful because they do not involve PIP benefits and, in this case, it is undisputed that the second injury arose out of the use of an automobile.

Although our decision in Great West involved a subrogation claim between insurers for an injury caused by more than one auto accident, the legal principles, which support the denial of a subrogation claim, apply equally as well to the facts in this case.

The majority’s decision in this case has the same

* * ⅜ potential to trigger precisely what the legislature appears to have attempted to avoid in adopting the term “the accidenfi’-finger pointing among insurers claiming that another carrier was responsible for some portion of the insured’s disability. Further, as we noted above, it introduces the fault-based concept of subrogation into allocation of loss independent of fault, a step we are unwilling to take without explicit statutory authority notably absent here. That the entire responsibility for Neulieb’s disability caused by the accident occurring while Great West was on the policy should fall on Great West is neither unfair nor unjust. Great West accepted Neulieb as an insured with whatever physical condition he may have had at the time, and it is not for Great West to either refuse payments of benefits for that portion of his disability caused by a previous injury or is it to seek subro-gation from Northland therefore.

Great West, 548 N.W.2d at 281 (emphasis added).

The majority opinion also charts new legal ground in determining no-fault medical expense benefits by using common law tort principles to modify the No-Fault Act. It supports its rationale by citing Phelps v. Commonwealth Land. Title Ins. Co., 537 N.W.2d 271 (Minn.1995), which decided what general and special damages were in the context of an age and disability claim, Leubner v. Sterner, 493 N.W.2d 119 (Minn.1992), which was a medical malpractice claim, and Nelson v. Twin City Motor Bus Co., 239 Minn. 276, 58 N.W.2d 561 (1953). The majority then summarily distinguishes medical expenses from those caused by previous nonauto accidents from those caused by the more recent auto accident even though it is undisputed that the auto accident aggravated a chronic preexisting condition and the insured suffered a com-pensable loss. To shore up its reasoning, the majority opinion then gives an example of two separate injuries, one to one’s foot caused by a horse-riding accident and another to one’s shoulder caused by an auto accident. However, that example is not helpful because it obviously does not involve an aggravation of a preexisting injury, nor does it support a distinction between auto and nonauto-related accidents when the later injury was a compensable loss under the No-Fault Act.

In this case, the record indicates that we do not have two different injuries but rath*560er the aggravation of a preexisting injury-resulting from an auto accident.10 As in Great West, the entire responsibility for the insured’s disability caused by the accident occurred while State Farm was on the policy. State Farm accepted Pususta as an insured with whatever physical condition she may have had at the time and it is not for State Farm now to either refuse payments of benefits for that portion of disability caused by the previous injury or to seek subrogation. See Great West, 548 N.W.2d at 281. Importantly, once a com-pensable loss occurs, the No-Fault Act does not contain equitable apportionment of medical expense benefits nor have we previously recognized a common-law right to seek apportionment of medical expenses based on a preexisting condition in the no-fault context.

If we disallow subrogation of medical expense benefits between two insurance companies based on the one-accident principle, (that is, the last accident for purposes of the No-Fault Act), that is all the more reason to apply that same legal principle to prohibit insurers from attempting to offset, allocate or seek apportionment of medical expense benefits from their insureds. The No-Fault Act was not designed to pit an insurer against its insured for these basic medical benefits but rather to encourage swift, inexpensive rights to claim the benefits, without regard to fault or apportionment. Minn.Stat. § 658.42. The majority opinion will require more expert testimony of all the parties whenever a preexisting condition exists. This will only lead to more expenses, delays and disputes over these basic benefits. The No-Fault Act was designed to remove these subjective disputes to insure PIP coverage in exchange for removing the injured’s right or necessity to have to sue fer those types of benefits prior to no-fault coverage. See Minn.Stat. § 65B.51, subds. 1, 3 (2000).

In that the legislature did not provide for apportionment, it is not for this court to make up an additional distinction for entitlement to PIP benefits, based on injuries “within the no-fault system and some medical expenses arising outside that system.” The No-Fault Act has already provided a standard to determine medical expense benefits: “ * * * all reasonable expenses for necessary * * * medical, * * * and rehabilitative services * * *.” Minn.Stat. § 65B.44, subd. 2. We should continue to abide by this standard and our “one accident” precedent rather than create judicial modifications of the No-Fault Act. The legislature is the policy-making branch better suited to make these fine distinctions. I would therefore affirm.

. In his independent chiropractic evaluation of July 16, 1998, Dr. Olson described the most recent accident as "exacerbating chronic pre-existent symptoms * * * [and an] aggravation to pre-existent conditions.” Appellant's Appendix at 25-26.