Economic contribution relevant under No-Fault Act

A decedent’s economic contribution and consumption are relevant factors when determining the extent of a survivor’s dependency under Minn. Stat. sec. 65B.44, subd. 6 (1998), ruled the Court of Appeals.

An arbitrator granted a surviving spouse economic-loss benefits under Minnesota’s no-fault statute, even though testimony demonstrated that the decedent’s economic contributions equaled her economic consumption.

A District Court judge denied the insurance company’s motion to vacate the arbitration award, but the Court of Appeals reversed, remanding the case for factual findings on dependency.

“The arbitrator clearly exceeded his authority by finding economic consumption of the decedent irrelevant when determining the extent of [the claimant’s] dependency under the no-fault statute,” wrote Court of Appeals Judge James C. Harten.

The six-page decision is In the Matter of the Arbitration between Racine and AMCO Insurance Company, Minnesota Lawyer No. CA-199-00.

Minneapolis attorney James Ballentine, who represented the claimant, said he doesn’t think the statute is as clear as the Court of Appeals stated that it was. The statute sets forth three categories of “presumed dependents” — and it was not disputed that as the decedent’s spouse, the claimant was a presumed dependent within the meaning of the statute, observed Ballentine.

If, as the Court of Appeals’ decision suggests, presumed dependents must prove the existence and extent of their dependency, what is the purpose of defining and providing for presumed dependents?, asked Ballentine.

“The Court of Appeals said that the amount of the decedent’s income that she would have consumed needs to be considered in determining how much her husband will receive,” said Ballentine. “Under the statute, [the surviving spouse] is entitled to $20,000 in survivor’s benefits. As this case plays out, it appears we’ll just have to keep submitting claims and re-arbitrating this matter until the $20,000 in survivor’s benefits are paid to the claimant.”

Minneapolis attorney George Hottinger, who represented the insurance company, declined to comment on the decision.

Arbitration award

Rita Racine died in an automobile accident and her husband, Richard Racine, submitted a claim to his insurer, AMCO Insurance Company (AMCO), for no-fault benefits pursuant to Minn. Stat. sec. 65B.44, subd. 6 (1998). After AMCO denied the claim, Racine filed a petition to arbitrate.

At arbitration, AMCO’s expert testified that, at the time of her death, Rita Racine’s economic contributions equaled her economic consumption. Therefore, argued AMCO, Richard Racine’s claim for economic-loss benefits should be offset by his wife’s personal consumption.

However, the arbitrator concluded that the extent of dependency and any offset for personal consumption is not relevant to a surviving spouse’s claim under the statute and awarded Racine $7,519.09 in survivor’s economic-loss benefits.

AMCO moved to vacate the arbitration award, but the District Court judge denied the motion. In so ruling, the trial court judge relied on the arbitrator’s interpretation of the Minnesota Supreme Court’s 1984 decision in Peevy v. Mutual Servs. Cas. Ins. Co..

“[E]ven though a person may be entitled to an economic loss as a spouse or child of decedent, the issue of existence and the extent of dependency is rebuttable by the respondent,” the District Court judge reasoned. “In this case [the insurance company is] claiming that the deceased would have consumed more than they earned and therefore extent of dependency is relevant and respondent should be able to …use [it] to rebut and offset the amount to be granted the claimant.”

Order challenged

The District Court judge affirmed the $7,519 award and also awarded Racine 15 percent interest and $200 in costs. AMCO challenged the District Court’s order.

The Court of Appeals began by noting that an arbitration award will not be vacated unless the appellant can “prove that the arbitrator clearly exceeded his authority.”

The insurance company argued that the arbitrator clearly exceeded his authority by finding the consumption of the decedent irrelevant when determining dependency under the No-Fault Act. Although the parties agreed that the claimant was dependent on the decedent under the statutory presumption, AMCO argued that the presumption of dependency is a rebuttable evidentiary presumption.

The Court of Appeals agreed. “The statute provides that the extent of dependency shall be a question of fact. This indicates that the legislature intended factual inquiry into the economic contributions and consumption of the decedents,” wrote Harten.

Rebuttable presumption

The court went on to note that AMCO correctly argued that if the claimant’s dependency is a rebuttable presumption, evidence concerning the decedent’s economic consumption is relevant and the arbitrator clearly exceeded his authority by finding that any offset for personal consumption is not appropriate.

The claimant argued that under Peevy, consideration of regularly received support is not relevant to the dependency of those persons entitled to a presumption. But Harten observed that “the language in Peevy on which [the claimant] relies is obiter dictum and is not precedent.” Minn. Stat. sec. 65B.44 provides that the existence and the extent of dependency shall be questions of fact and invites inquiry into a decedent’s economic contributions and economic consumption when determining a survivor’s dependency, continued Harten.

The Court of Appeals reversed the District Court’s ruling against the insurance company, vacated the arbitration award, and remanded for factual findings on the extent of the claimant’s dependency. The court also vacated the statutory costs and interest assessed against the insurance company.