Founders Insurance Company v. Yates
Minnesota Court of Appeals
2-29-16

In this Minnesota Court of Appeals case interpreting Minnesota’s No-Fault Act, the Court found that an out-of-state insurer that is not licensed to write motor-vehicle-accident insurance in Minnesota has no obligation under the Act to provide basic economic loss benefits to it insured injured in an accident in Minnesota.

Founders Insurance Company (“Founders”) insured Yates pursuant to an Illinois policy of insurance, issued to Yates while he was an Illinois resident.  Founders is licensed to write dram-shop insurance in Minnesota, but is not to write or issue motor-vehicle insurance in Minnesota.  Yates moved to Minnesota, and did not notify Founders of his move.  Shortly after moving to Minnesota, Yates lost control on a snowy highway and collided with another vehicle.  Yates sought no-fault benefits of $17,000 for chiropractic expenses arising out of the collision.  The Illinois policy, consistent with Illinois law, capped medical payments at $1,000.  Illinois law has no basic-economic-loss benefits and the policy did not provide for such.  Founders denied Yates’ no-fault claim.

Yates submitted the case to no-fault arbitration, to which Founders objected.  Founders filed a declaratory judgment action in Minnesota district court seeking a finding that it has no obligation to provide basic economic-loss benefits pursuant to Minnesota’s no-fault act.  The no-fault arbitrator then held a hearing (at which Founders objected again) and the arbitrator awarded Yates more than $19,000.  Yates moved to confirm and Founders moved to vacate the award.  The district court, after a hearing, found that Founders was licensed to write and issue motor-vehicle insurance in Minnesota and was, therefore, required to provide economic loss benefits to Yates.   Founders appealed.

The Minnesota Court of Appeals analyzed the plain language of the policy, which both parties agreed did not provide for the benefits requested.  The court then addressed Minnesota Statutes section 65B.50, Subdivision 1, and first found that Founders is not licensed to write automobile policies in Minnesota solely because it is licensed to write dram shop.  Minn. Stat. § 60A.06, subd. 1 (2014).  Therefore, the court concluded that section 65B.50 does not compel Founders to provide no-fault benefits per the Minnesota Act.  The court further concluded that the plain language of subdivision 2 also does not require Founders to provide economic loss benefits because it only applies to insurers licensed to write automobile policies in Minnesota – not simply any insurer authorized to do business in Minnesota.  The court concluded that the arbitrator exceeded his authority in awarding basic economic loss benefits and reversed the Order confirming the Award.