Meister v. Western National Mutual Insurance
479 N.W.2d 372, 1992 Minn. LEXIS 9, 1992 WL 5362 (1992)
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Rule of Law:
Optional economic loss benefits purchased by an insured in addition to the statutory minimum are not 'basic economic loss benefits' and are therefore not subject to the statutory priority scheme that dictates which insurer is primarily responsible for payment.
Facts:
- David J. Meister held a personal automobile insurance policy with Western National Mutual Insurance Company (Western National) covering two vehicles.
- David Meister elected and paid an additional premium to increase his basic economic loss coverage, resulting in stacked limits of $40,000 for medical and $40,000 for non-medical coverage for each insured person.
- His son, Michael Meister, was an employee of Gunflint Lodge, Inc.
- On August 9, 1988, while not in the course and scope of his employment, Michael Meister was a passenger in the back of a pickup truck owned by Gunflint Lodge.
- The truck was insured by Mutual Service Casualty Insurance Company (MSI) under a business policy providing the statutory minimum basic economic loss benefits of $20,000 for medical and $20,000 for non-medical expenses.
- While the truck was en route, an inflatable raft blew out of the truck bed, throwing Michael Meister to the pavement.
- Meister suffered severe head injuries, incurring medical bills exceeding $60,000.
Procedural Posture:
- Michael Meister sued Western National, MSI, and Gunflint Lodge, Inc., in the District Court of Carlton County (trial court).
- The trial court granted summary judgment for Western National, ruling that MSI, the insurer of the employer's vehicle, was the sole source of coverage under the statutory priority rules.
- Meister appealed the trial court's decision to the Minnesota Court of Appeals.
- The court of appeals reversed, holding that MSI was liable for basic benefits, but Meister could also recover the additional benefits he purchased from Western National.
- Western National, as appellant, appealed the court of appeals' decision to the Supreme Court of Minnesota.
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Issue:
Does Minnesota's statutory priority scheme for 'basic economic loss benefits' prevent an injured person from recovering 'additional' or 'optional' economic loss benefits purchased under a personal insurance policy after the primary insurer, as determined by the priority rules, has paid its basic benefits?
Opinions:
Majority - Yetka, J.
No. The statutory priority scheme does not prevent recovery of additional, optional benefits because the scheme applies only to 'basic economic loss benefits.' The court reasoned that 'basic economic loss benefits' are statutorily defined with a maximum limit of $20,000 for medical and $20,000 for other losses. Any coverage purchased above this amount constitutes 'additional' or 'optional' benefits, not 'basic' benefits. Therefore, the priority rules in Minn. Stat. § 65B.47, which assign liability for basic benefits to the insurer of the vehicle involved in the accident, do not apply to this extra coverage. This situation does not constitute the prohibited 'cross-priority stacking' from pre-1985 cases because it involves accessing different types of benefits (basic vs. additional), not stacking two basic policies. The court also invalidated Western National's business use exclusion as applied to these additional benefits, holding that optional coverage protects persons, not vehicles, and the exclusion would render the separately purchased coverage illusory.
Dissenting - Simonett, J.
Yes. The statutory priority scheme should prevent this recovery because all no-fault benefits, whether stacked or not, are 'basic economic loss benefits' subject to the priority rules. The dissent argued that the 1985 anti-stacking amendment merely allowed policyholders to elect to 'add together' their basic coverages; it did not create a new category of 'optional' benefits that are exempt from the No-Fault Act's priority system. By allowing Meister to access the Western National policy, the majority improperly permits cross-priority stacking, which has been consistently prohibited by precedent like Wasche and Koons. The majority's decision is 'creative judicial legislation' that invents a distinction not present in the statute, effectively rewriting the law to achieve a desired outcome.
Analysis:
This decision established a significant distinction between 'basic' and 'additional' no-fault benefits in Minnesota, fundamentally altering the application of the statutory priority system. By classifying benefits purchased above the statutory minimum as 'additional' and exempt from priority rules, the court made such coverage portable and person-oriented, rather than vehicle-oriented. This holding expands recovery for insureds who pay for higher limits, allowing them to access their own policy as a secondary source even when priority rules would otherwise designate a commercial policy as the sole source of benefits. Consequently, the case shifts some financial risk for high-cost injuries back to personal auto insurers who have collected premiums for that enhanced coverage.
