Arbitration Forums Authority For MN Commercial …

1 Subrogation1 of Minnesota No-Fault benefits against a Commercial vehicle insurer or a self-insured Commercial vehicle owneris permitted but must be pursued in Arbitration of Minnesota No-Fault benefits against the owner of an at faultcommercial vehicle is permitted by Statute provides that an insurance carrier which paid Minnesota No-Fault PIP benefits may pursue recovery of the paid benefits against the reparation obligor of acommercial vehicle. Generally, subrogation, or indemnity, of PIP benefits is not allowed underMinnesota Statutes 65B.

2 One exception is under Minnesota Statute against acommercial vehicle reparation obligor. Some trucking companies or Commercial vehicleowners choose to be their own reparation obligor by choosing a high deductible. MinnesotaStatutes specifically defines reparation obligor as an insurer or self-insured. Thus acommercial vehicle owner s choice of a high deductible does not eliminate the jurisdiction andthe statutory intent which the legislature had in allowing PIP indemnity claim is often confused with subrogation pursuant to other subdivisions ofthis statute.

3 This, however, is a direct indemnity action, from insurance company to insurancecompany. In Minnesota, the general rule is that an insurance company is not permitted to be sueddirectly for the acts of its insured. The insured itself is sued and the insurance company isrequired to indemnify and defend, but is normally not a named party. Minnesota Statute 1 and 4 make an exception to this general rule, allowing direct Arbitration against the"reparation obligor providing residual liability coverage on a Commercial vehicle of more than5,500 pounds.

4 " Minn. Stat. , Subd. 1; National Indem. Co. v. Mutual Service Casualty,311 856, 1981 Minn. LEXIS 1485 (Minn. 1981). Forums is the proper jurisdiction for Commercial vehicle Forums conducts intercompany arbitrations for its members. It is also the arbitrator for indemnity claims pursuant to Minnesota Statute of membership. Some respondents claim that Arbitration Forums is not the proper or agreed uponjurisdiction for PIP indemnity claims. It is, however, the only jurisdiction allowed. The statutedoes not provide for this matter to be commenced in District Subrogation and indemnity are often confused and frequently overlap.

5 Minn. Stat. describes what more likely is subrogation as Stat. , Subd. 4 states:The right of indemnity provided in subdivision 1 shall be enforceable onlythrough mandatory good faith and binding Arbitration procedures established byrule of the Commissioner of Commerce. These procedures shall utilizedeterminations of comparative negligence. No evidence nor the decision in suchan Arbitration proceeding shall be admissible in any action by any Minnesota Motor Vehicle Insurance Manual, 3rd Edition, authored by Ted Smetak states:Unlike subrogation, the indemnity right under Subd.

6 1 must be brought against theinsurer. It is brought in inter-company Arbitration , and governed by the inter-company Arbitration rules. The Arbitration rules are found at of the Minnesota Rule states:Under these rules, the committee on insurance Arbitration is authorized to selectplaces where Arbitration facilities are to be available, and to make appropriaterules to a portion equitably among reparation obligors. The operating expenses ofthe Arbitration program set out under these to Arbitration Forums is not required for claims arising underMinnesota Statutes , subd.

7 Arising under Minnesota Statute subd 1 are enforceable only through mandatory good faith and binding Arbitration procedures established by rule of the commissionerof commerce. Whether an insurance company is a signatory member of Arbitration ForumsInc. is irrelevant for purposes of compulsory Arbitration under Minnesota Statute subd 4and the rules promulgated thereunder. (Bulletin 2007-1, issued January 19, 2007, State of Minnesota Commerce Department).