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Man hurt in two accidents recovers under two policies

Where a policyholder’s injuries were caused by two car accidents two months apart, the policyholder is entitled to assert two separate no-fault claims if his damages exceed the maximum policy limit of the policy in effect at the time of the second accident, the Supreme Court has ruled.

“When a person insured under a no-fault automobile insurance policy is injured in two automobile accidents that cumulatively cause injuries, the insurer, at the time of the second accident, is obligated to pay up to the maximum policy limit for the injuries regardless of the extent to which each accident contributed to the injuries,” the decision’s syllabus provides. “To the extent that the insured still has a viable claim under the no-fault policy for injuries suffered in the first accident, the insured is entitled to payment for losses related to the first accident that remain unreimbursed after the policy limit for the second accident has been paid.”

However, the court went on to find that a no-fault policyholder whose cumulative injuries are caused by two accidents is limited to a maximum of $250 per week in income loss benefits.

The 11-page decision, Scheibel v. Illinois Farmers Insurance Co. (Minnesota Lawyer No. SC-160-00), was written by Justice Paul H. Anderson.

No-fault policy

Daniel Scheibel was issued an auto insurance policy by Illinois Farmers. On March 16, 1996, Scheibel injured his neck and shoulder when his vehicle was read-ended. Two months later his vehicle was rear-ended a second time. Although he received some treatment after the first accident, his condition deteriorated after the second accident, ultimately requiring surgery. Scheibel did not lose any work until after the second accident.

A no-fault arbitrator found that Scheibel’s “medical and disability income” losses were causally related to both accidents, with 35 percent attributable to the first accident and 65 percent attributable to the second.

Scheibel commenced a District Court action seeking confirmation of the arbitrator’s determination and a judgment against Illinois Farmers for additional benefits. The parties brought cross motions for summary judgment.

A District Court judge and the Court of Appeals held that Scheibel was only entitled to personal injury protection (PIP) benefits payable due to the second accident, and $250 per week income loss.

“[T]he implication of the court’s finding is that, following the second accident, the $20,000 limit for that accident would apply and Scheibel could not apportion his loss between the two accidents to take advantage of a $20,000 policy limit for each accident,” Justice Anderson noted.

On appeal, Scheibel argued that he was entitled to recover no-fault benefits for both his first and second accidents, specifically seeking reimbursement for medical expenses up to his policy limits for each accident. He also argued that because two accidents caused his injuries, he was entitled to twice the $250 maximum weekly income loss benefits provided for by both his policy and the No-Fault Act.

Precedent distinguished

Justice Anderson considered the application of the Supreme Court’s 1996 decision in Great West Casualty Co. v. Northland Insurance Co.

In a footnote in the Great West case, the court stated: “We disagree with the court’s apportioning of PIP benefits, and we consider them payable by the insurer when the insured incurs a compensable loss.”

Anderson said that Great West is distinguishable from the case at bar.

“First, our holding in Great West only addressed whether an insurer has a right of subrogation under the No-Fault Act,” the justice wrote. “Second, the insured in Great West was fully compensated for his cumulative injuries caused by the accidents.”

The Great West court clearly stated its primary concern was that the insured achieve full reparation for his loss, Anderson noted.

“When considering the issue of how much an insured is entitled to recover as opposed to who pays, it is critical that that we keep this over-arching policy of full compensation in mind,” the justice wrote.

“We emphasized in Great West that the no-fault act is intended to promote the efficient administration of justice and provide an insured prompt payments. Here, as in Great West, we must follow these mandates of the no-fault act, but we must do so in the context of deciding how much the insured is entitled to recover. Under the no-fault act, Scheibel is entitled to ‘reimbursement’ for all loss suffered through injury arising out of the maintenance or use of a motor vehicle.”

Avoiding ‘absurd’ result

Anderson noted that Illinois Farmers did not dispute that if Scheibel had suffered distinct and separable injuries in the two accidents, medical expenses from each injury would have been separately compensable up to the limits.

“We see no reason why the same principles should not apply when the second accident exacerbates an injury sustained in an earlier accident,” the justice observed. “It would be an absurd result to cut off recovery for an injury from the first accident merely because an intervening accident aggravates the same injury.”

Therefore, held the court, “consistent with our language in Great West, Illinois Farmers, as the insurer on the second accident, is obligated to pay the maximum policy limit of $20,000 for Scheibel’s injuries regardless of the extent to which each accident contributed to the injuries. Further, to the extent that, absent the second accident, Scheibel would still have a viable claim under his Illinois Farmers policy for injuries suffered in the first accident, he is entitled to payment for medical expenses attributable to the first accident that remain unreimbursed after the $20,000 policy limit for the second accident has been paid. However, Scheibel is entitled to recover only that unreimbursed portion of his total medical expenses attributable to the first accident, up to the $20,000 policy limit applicable to the first accident. Conversely, he cannot recover for any loss attributable to the second accident from coverage for the first accident.”

Considering the wage-loss claim, Anderson observed that although the No-Fault Act generally seeks to protect accident victims, it also evinces a clear intent to limit the weekly income loss benefits.

“In arguing that he is entitled to income loss benefits of twice the [statutory] maximum of $250 a week, Scheibel fails to recognize the impossibility of being totally out of work twice,” Anderson said.

— Barbara L. Jones

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