No-Fault Update: Replacement Services Now Compensable Even If They’re Not Replaced.

The Minnesota Court of Appeals recently ruled that under the Minnesota No-Fault Act, an injured insured who has primary responsibility for the management of a household is entitled to the reasonable value of the insured’s household care and maintenance, regardless of whether the services were replaced so long as the insured could not perform them.  In Schroeder v. Western National Mut. Ins. Co., A13-2289, 2014 WL 3024662 (Minn. Ct. App. July 7, 2014), the insurer challenged a no-fault arbitration award, claiming the insured could not recover household care and maintenance services that were not actually replaced.

Carmen Schroeder suffered a spinal fracture in a motor vehicle accident.  She underwent spinal surgery.  Plaintiff was completely disabled for several months and partially disabled for several more.  During her period of disability, no one provided household care or maintenance services on a paid or volunteer basis.

Plaintiff submitted a claim to Defendant Western National for, in part, the reasonable value of the care and maintenance services she did not perform because of her injury.  Defendant denied this aspect of her claim.  Plaintiff filed a petition for no-fault arbitration claiming $3,400 in replacement benefits under Minn. Stat. § 65B.44, subd. 5.  The arbitrator awarded her $3,400 plus interest.

Defendant moved to vacate the award on the ground the arbitrator misapplied the law awarding benefits for services that were not replaced.  The parties agreed plaintiff had primary responsibility for household management and care, she was disabled from performing these services, and no replacement services were performed.  The district court denied defendant’s motion and affirmed the award.

The Court of Appeals affirmed.  The court held the clause “the benefit to be provided under this subdivision shall be the reasonable value of [home] care and maintenance” does not require the services to be performed.  The court held that clause is independent from the proceeding clause, which states the expenses must be “incurred.”  The court ultimately held “an insured who normally, as a full-time responsibility, provides care and maintenance of a home is entitled to the reasonable value of the insured’s care and maintenance services, without regard to whether the services were replaced when the insured could not perform them.”

This case is signification for its interpretation of replacement services under the No-Fault Act.  The holding expands potential no-fault claims to hypothetical replacement services losses.  We will monitor this case on appeal and other decisions concerning the No-Fault Act.  If you have any questions about this, or any other matter, please contact us.