State Farm Mutual Automobile Insurance Company, (A14-132), (A14-224) v. Angela Mary Lennartson, (A14-132), Katie Foss, (A14-224).

STATE OF MINNESOTA
IN COURT OF APPEALS
A14-0132
A14-0224

State Farm Mutual Automobile Insurance Company,
Respondent (A14-0132),
Appellant (A14-0224),

vs.

Angela Mary Lennartson,
Appellant (A14-0132),

Katie Foss,
Respondent (A14-0224)

Filed December 1, 2014
Reversed (A14-0132)
Affirmed (A14-0224)
Chutich, Judge

Washington County District Court
File No. 82-CV-13-4106

Ramsey County District Court
File No. 62-CV-13-3925

Suzanne Wolbeck Kvas, Lutter, Gilbert & Kvas, LLC, Eagan, Minnesota (for
respondent/appellant State Farm)

D. Patrick McCullough, Courtney Pedersen-Louis, McCullough & Associates, P.A., St.
Paul, Minnesota (for appellant Angela Lennartson)

D. Patrick McCullough, Courtney Pedersen-Louis, McCullough & Associates, P.A., St.
Paul, Minnesota (for respondent Katie Foss)
 Considered and decided by Chutich, Presiding Judge; Ross, Judge; and

Stoneburner, Judge.

SYLLABUS

The plain language of the Minnesota No-Fault Insurance Act and the doctrine of

collateral estoppel do not prevent an insured from seeking economic-loss benefits in a no-

fault arbitration proceeding after the insured has litigated economic-loss damages in a

negligence action.

OPINION

CHUTICH, Judge

In these consolidated appeals, appellant Angela Lennartson and respondent Katie

Foss (insureds) were involved in separate car accidents, recovered awards in negligence

actions, and then received awards in arbitration proceedings under the Minnesota No-

Fault Insurance Act (no-fault act) from State Farm Mutual Automobile Insurance

Company, their insurer. State Farm, respondent in the Lennartson appeal and appellant in

the Foss appeal, challenges the arbitration awards. It contends that the no-fault act’s

purpose and collateral estoppel prevent the insureds from seeking economic-loss awards

in no-fault arbitration when the same damages were litigated in a prior negligence action.

Because neither the plain language of the no-fault act nor collateral estoppel prevent an

insured from seeking economic-loss benefits in no-fault arbitration after litigating the


Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.

2
same damages in a negligence action, we reverse the vacation of Lennartson’s arbitration

award and affirm Foss’s arbitration award.

FACTS

In November 2009, Katie Foss was injured in a car accident. Foss sought medical

treatment for her injuries and submitted a claim for no-fault benefits to her insurer, State

Farm. Foss’s insurance policy had a no-fault medical coverage limit of $50,000 and a

wage loss limit of $20,000. State Farm discontinued Foss’s no-fault benefits in June

2012, after an independent medical examination. At the time her no-fault benefits were

terminated, State Farm had reimbursed $39,667.92 of Foss’s past medical expenses.

Foss next sued the driver of the other car in a negligence action, claiming

$46,641.29 in past medical expenses and $7,574.42 in past wage loss. In January 2013, a

jury awarded Foss $19,760.40 for past medical expenses and $1,662.00 in past mileage

expenses. Foss received nothing for past wage loss. Minnesota Statutes section 65B.51,

subdivision 1 (2012) required the district court to deduct the $39,667.92 in no-fault

medical benefits that State Farm had already paid Foss from her total jury award.

Because State Farm had paid Foss more no-fault benefits than the jury awarded, she

recovered no additional reimbursement for past medical expenses. Shortly after her trial,

Foss petitioned for no-fault arbitration, seeking wage loss and medical expense benefits

for losses that were not reimbursed in her negligence action.

In June 2013, the arbitrator awarded Foss $8,284.41 for medical expenses and

$3,783.44 for wage loss. The arbitrator found Foss’s testimony to be very credible, and

3
he specifically criticized the independent medical examiner’s opinion that led State Farm

to terminate her no-fault benefits.

State Farm moved to vacate the arbitration award, claiming that collateral estoppel

barred the arbitration and that the arbitrator exceeded his powers when he granted the

arbitration award with full knowledge that Foss had previously recovered past medical

expenses in her negligence case. The district court denied State Farm’s motion. It found

that the arbitrator did not exceed his powers because the arbitrator explicitly reserved the

issue of collateral estoppel for the district court, and the district court held that collateral

estoppel does not apply.

In the second appeal, Angela Lennartson was injured in a car accident in August

2008. Lennartson sought medical treatment for her injuries and submitted a claim for no-

fault benefits to her insurer, State Farm. At the time of the accident, Lennartson was

covered by her parent’s State Farm insurance policy; the policy had stackable no-fault

benefits for two vehicles, with a no-fault medical coverage limit of $40,000. In January

2010, State Farm discontinued Lennartson’s no-fault benefits based on the results of an

independent medical examination. When State Farm terminated Lennartson’s no-fault

benefits, it had reimbursed her $11,671.16 for medical expenses.

Lennartson sued the driver of the other vehicle in a negligence action. In

November 2012, a jury awarded Lennartson, among other relief, $23,910.11 for past

medical expenses. As required by Minnesota Statutes section 65B.51, subdivision 1, the

district court deducted the no-fault benefits that State Farm had already paid Lennartson.

4
Lennartson then petitioned for no-fault arbitration, seeking reimbursement for the same

past medical expenses that the jury had awarded in her previous negligence action.

In October 2013, the arbitrator awarded Lennartson $11,790.31 in past medical

expenses and interest. State Farm moved to vacate the arbitration award, claiming that

the award gave Lennartson a double recovery that contradicts the public policy behind

the no-fault act and that collateral estoppel bars Lennartson from arbitrating to obtain the

same medical expenses that she had already litigated and recovered in her negligence

action.

The district court agreed and vacated the arbitration award. It found that the

arbitrator exceeded his authority because the public policy behind the no-fault act

prevents Lennartson from seeking recovery in arbitration for the same medical expenses

that she had been awarded in her negligence action. In support of this conclusion, the

district court relied on one of the purposes of the no-fault act—the prevention of double

recovery—as the policy that conclusively barred Lennartson’s arbitration award. The

district court also found that Lennartson had no “economic loss” within the meaning of

Minnesota Statutes section 65B.43, subdivision 7 (2012), permitting her to recover under

the no-fault act. And finally, the district court concluded that collateral estoppel bars

Lennartson from arbitrating the same past medical expenses that she had already litigated

in her negligence action.

These consolidated appeals followed.

5
 ISSUE

Does the Minnesota No-Fault Insurance Act or collateral estoppel prevent an

insured from seeking economic-loss benefits in a no-fault arbitration proceeding if the

insured has already litigated economic-loss damages in a negligence action?

ANALYSIS

This court reviews statutory interpretation questions of the no-fault act de novo.

Pepper v. State Farm Mut. Auto. Ins. Co., 813 N.W.2d 921, 925 (Minn. 2012). “The goal

of all statutory interpretation is to ascertain and effectuate the intent of the Legislature.”

Hous. & Redevelopment Auth. of Duluth v. Lee, 852 N.W.2d 683, 687 (Minn. 2014).

State Farm argues that the insureds cannot arbitrate their no-fault claims because

they fully litigated their claims for economic-loss benefits in separate negligence actions

and the arbitration awards would be a double recovery contrary to the no-fault act’s

purposes. The insureds contend that the arbitration awards compensate them for a “loss”

consistent with the no-fault act’s stated purposes and that nothing in the no-fault act

prohibits them from recovering an arbitration award after a jury trial. Because we

conclude that the plain language of the no-fault act does not prohibit an insured from

seeking economic-loss benefits in no-fault arbitration after litigating the same damages in

a negligence action, we reverse the district court’s vacation of Lennartson’s arbitration

award and affirm Foss’s arbitration award.

The No-Fault Act

The no-fault act requires every “owner of a motor vehicle of a type which is

required to be registered or licensed or is principally garaged in [Minnesota]” to carry no-

6
fault insurance. Minn. Stat. § 65B.48, subd. 1 (2012). An insured person who suffers an

injury arising out of the maintenance or use of a motor vehicle is entitled to basic

economic-loss benefits, also known as no-fault benefits. Minn. Stat. § 65B.44, subd. 1(a)

(2012). Economic-loss benefits reimburse an insured for medical expenses and income

loss, among other things. Id. “Medical expense benefits reimburse a wide range of

reasonable and necessary medical expenses, including medical, chiropractic, and

rehabilitative services.” Do v. Am. Family Mut. Ins. Co., 779 N.W.2d 853, 857 (Minn.

2010) (citing Minn. Stat. § 65B.44, subd. 2 (2008)).

An insured recovers basic economic-loss benefits without regard to fault. Minn.

Stat. § 65B.42(1) (2012); see also Milbrandt v. Am. Legion Post of Mora, 372 N.W.2d

702, 705 (Minn. 1985) (“[The insurer] has a duty to pay basic economic loss benefits to

its insured without regard to fault.”). The no-fault act requires an insured to carry a

minimum of $20,000 for medical expense coverage and $20,000 for coverage of other

economic losses that includes income loss. Minn. Stat. § 65B.44, subd. 1(a). But policy

holders can contract for coverage above the statutory minimum, and here, Lennartson and

Foss did so.

The no-fault act was passed with several purposes. See Minn. Stat. § 65B.42. One

of the purposes is “to relieve the severe economic distress of uncompensated victims of

automobile accidents.” Id. (1). The act accomplishes this purpose by making basic

economic-loss benefits “primary with respect to benefits.” Minn. Stat. § 65B.61, subd. 1

(2012). Another purpose of the no-fault act is “to provide offsets to avoid duplicate

7
recovery.” Minn. Stat. § 65B.42(5). We take note of these purposes when we construe

the act. Nelson v. Am. Family Ins. Grp., 651 N.W.2d 499, 503 (Minn. 2002).

Plain Language

“The object of all interpretation and construction of laws is to ascertain and

effectuate the intention of the legislature.” Minn. Stat. § 645.16 (2012). And when a

statute is unambiguous, we apply its plain meaning. White v. City of Elk River, 840

N.W.2d 43, 53 (Minn. 2013). “We construe statutes to effect their essential purpose but

will not disregard a statute’s clear language to pursue the spirit of the law.” Lee v.

Fresenius Med. Care, Inc., 741 N.W.2d 117, 123 (Minn. 2007).

State Farm argues that the statutory offset provision of the no-fault act1 bars the

insureds from seeking post-trial arbitration and any interpretation otherwise would nullify

the provision. The statutory offset provision instructs the district court to deduct from a

tort verdict (1) any no-fault benefits that the insurer previously paid and (2) any no-fault

arbitration awards recovered before trial. See Minn. Stat. § 65B.51, subd. 1. In other

words, a district court deducts no-fault payments and arbitration awards only when the

1
The statutory offset provision states in full:
With respect to a cause of action in negligence accruing as a
result of injury arising out of the operation, ownership,
maintenance or use of a motor vehicle with respect to which
security has been provided as required by sections 65B.41 to
65B.71, the court shall deduct from any recovery the value of
basic or optional economic loss benefits paid or payable, or
which would be payable but for any applicable deductible. In
any case where the claimant is found to be at fault under
section 604.01, the deduction for basic economic loss benefits
must be made before the claimant’s damages are reduced
under section 604.01, subdivision 1.
Minn. Stat. § 65B.51, subd. 1.

8
insured receives no-fault benefits before the insured recovers in the negligence action.

See id.

Contrary to State Farm’s assertion, nothing in the plain language of the statutory

offset provision requires the district court to reduce an arbitration award by amounts the

insured previously recovered in a tort action. The statutory offset provision of section

65B.51, subdivision 1, unambiguously applies only to no-fault arbitration awards

received before trial in the negligence action. And when the statute is unambiguous, as it

is here, we apply its plain meaning. White, 840 N.W.2d at 53. To interpret the plain

language of this provision otherwise is to disregard the letter of the law, and we decline

to do so here.

State Farm nevertheless asks this court to look beyond the plain language of the

no-fault act to find an implicit legislative intent to bar the insureds alleged duplicate

recoveries based on the no-fault act’s stated purpose “to provide offsets to avoid

duplicate recovery.” Minn. Stat. § 65B.42(5). While this court has “the power to inquire

beyond a statute’s plain language,” the power is exercised sparingly and only when “the

statute’s plain language violates a clearly expressed goal of the legislature.” Erickson v.

State, 599 N.W.2d 589, 591 (Minn. App. 1999) (quotation omitted), review denied

(Minn. Dec. 14, 1999).

The legislature has clearly expressed a goal “to provide offsets to avoid duplicate

recovery,” see Minnesota Statutes section 65B.42(5) (emphasis added), and the statutory

offset provision of the no-fault act fulfills this goal, see Minnesota Statutes

section 65B.51, subd. 1. If the legislature intends to apply this provision to an arbitration

9
award issued after an insured’s recovery in a negligence action, then the legislature must

amend the no-fault act accordingly.

Furthermore, the policy of avoiding duplicate recoveries does not apply to Foss.

In her negligence action, Foss did not recover all of her claimed past medical expenses,

and she recovered nothing for past wage loss. And when Foss arbitrated her no-fault

claim, she only sought reimbursement for the economic-loss benefits that she did not

recover in her negligence action. She did not seek a double recovery. Thus, Foss’s

arbitration award does not violate the no-fault act’s purposes; rather, her recovery fulfills

the act’s purpose of relieving the “severe economic distress of uncompensated victims.”

Minn. Stat. § 65B.42(1).

Lennartson’s situation is different because she sought to recover the same

economic-loss benefits in no-fault arbitration that she received in her tort action. But

allowing Lennartson to seek economic-loss benefits in arbitration does not violate a clear

legislative purpose under the no-fault act because the act does not generally prohibit all

duplicate recoveries. See Stout v. AMCO Ins. Co., 645 N.W.2d 108, 113 (Minn. 2002)

(finding that an insured’s “loss” under the no-fault act accrues when medical expenses

are incurred and discounts later negotiated with medical providers do not change the

amount incurred); Wallace v. Tri-State Ins. Co., 302 N.W.2d 337, 339-40 (Minn. 1980)

(finding that a no-fault insurer must pay basic economic-loss benefits even if those

benefits duplicate payments from the insured’s health insurer). Simply because a

duplicate recovery may occur does not mean that Lennartson’s recovery contradicts the

spirit of the no-fault act.

10
 In Do, the supreme court recently analyzed a similar “double recovery” situation

under the no-fault statutory offset provision of section 65B.51, subdivision 1, and the

collateral source statute.2 779 N.W.2d at 860. The insured, Do, was injured in a car

accident and incurred $40,853.13 in medical expenses. Id. at 855. Do’s policy provided

for $30,000 in no-fault medical expense benefits, but the insurer, American Family, only

paid $865.50 in no-fault benefits claiming that Do’s medical expenses were “not

reasonable, necessary, or related to the accident.” Id. Do first sued the driver of the other

car and reached a settlement with the driver’s insurer for $28,000; the settlement payment

was not allocated to any damages in particular. Id.

Do then sued American Family seeking no-fault benefits and recovered

$49,416.13, $39,416.13 of which were allocated to his past medical expenses. Id. The

district court found that the settlement payment Do recovered in the negligence action

was a collateral source under Minnesota Statutes section 548.251 and deducted that

amount3 from Do’s verdict, leaving Do with a total recovery of $20,550.63. Id.

The supreme court granted review to decide “whether [Minnesota’s collateral

source statute] requires the deduction of a settlement payment made by the tortfeasor’s

automobile insurer from the plaintiff’s subsequent judgment against his own automobile

2
The collateral source offset statute is separate from the no-fault act, but operates in a
manner similar to the statutory offset provision of the no-fault act in that its purpose is to
prevent duplicate recoveries. See Minn. Stat. § 548.251 (2012). The collateral source
offset statute sets out a procedure in which a party in a civil action can request the court
to determine and deduct collateral sources from the liability verdict. Id., subd. 2.
3
The district court also deducted the $865.50 in no-fault benefits that American Family
had paid Do before terminating his benefits. Id.

11
insurer for no-fault benefits.” Id. at 856. To answer this question, the supreme court

carefully examined the no-fault act and the collateral source statute. Id. at 856-58.

In its discussion of the no-fault act, the supreme court stated that “[a] claim for no-

fault benefits is separate and distinct from a tort claim against the tortfeasor and the

tortfeasor’s insurer.” Id. at 857 (citing Minn. Stat. § 65B.49, subds. 2, 3 (2008)). The

supreme court also found that no-fault insurers have “‘a duty to provide basic economic

loss benefits to reimburse an injured person’s loss even when the injured person is

entitled to compensation for the same loss from a different source.’” Id. at 857 (emphasis

added) (quoting Stout, 645 N.W.2d at 114). The Do court specifically considered the no-

fault offset provision of section 65B.51, subdivision 1, and concluded that it did not apply

because Do had settled the tort claim with the tortfeasor’s insurer. Id. Notably, the

supreme court did not consider applying the spirit of the no-fault offset provision to

reduce Do’s later no-fault judgment. See id. at 857, 860.

Do also interpreted the collateral source statute. Id. at 858. The collateral source

statute, like the no-fault statute, is concerned with preventing double recoveries. Id. And

in Do, the supreme court recognized the same “double recovery” argument that State

Farm makes here: “We recognize that based upon our interpretation of the [collateral

source] statute, it is possible that a plaintiff who chooses to pursue his claim serially first

against the tortfeasor and then against his own no-fault insurer may receive a windfall.”

Id. at 860. Despite the collateral source statute’s policy against double recoveries, the

supreme court declined to expand the definition of “collateral source” in the absence of

clear statutory language. Id. at 859. It reasoned that “[u]ltimately, the question of a

12
potential windfall to the plaintiff in this circumstance is one for the legislature and not

this court.” Id. at 860.

Do guides our analysis here because the supreme court in Do acknowledged the

statute’s policy of avoiding double recoveries and still declined to expand the definition

of “collateral source” in the absence of clear statutory language. Id. at 859. Do’s

reasoning applies with even greater force here because no statutory language bars the

insureds from seeking economic-loss benefits in a no-fault arbitration proceeding after

litigating and recovering the same economic-loss damages in a negligence action. Thus,

consistent with Do, we conclude that the insureds can arbitrate their no-fault claims after

litigating the same claims, even if insureds like Lennartson receive a windfall. See, e.g.,

Stout, 645 N.W.2d at 114 (“Under our case law, if there is to be a windfall either to an

insurer or to an insured, the windfall should go to the insured.”).

State Farm also contends that Lennartson cannot arbitrate post-trial because the

no-fault act only allows an insured who suffers an economic detriment to recover, and

here, Lennartson’s liability action award left her with no outstanding economic detriment.

The no-fault act provides basic economic-loss benefits for “all loss suffered

through injury arising out of the maintenance or use of a motor vehicle.” Minn.

Stat. § 65B.44, subd. 1(a). “‘Loss’ means economic detriment resulting from the accident

causing the injury . . . .” Minn. Stat. § 65B.43, subd. 7. In Stout, the supreme court

interpreted “loss” under the no-fault act. 645 N.W.2d at 112-13. The injured plaintiff in

Stout was initially billed $25,638.73 for his medical treatments, but the bill was

discounted to $12,471.44 based on the plaintiff’s Medicaid and MinnesotaCare fee

13
schedules. Id. at 109. The no-fault insurer wanted to reimburse the plaintiff for the

discounted amount instead of the actual amount that the healthcare providers first billed.

Id. at 112.

The supreme court held that “loss” refers to the medical expenses that the plaintiff

incurred in his initial medical bill and not the later discounted amount. Id. at 113. The

supreme court reasoned that the plaintiff’s discounts did not decrease his “loss” because

“no language in the Act provid[es] that loss, once accrued, can be reduced through the

involvement of the injured person’s health insurer.” Id. Additionally, the court reasoned

that reducing the plaintiff’s loss on the basis of discounts “would be inconsistent with the

Act’s designation of basic economic loss benefits as primary and would violate the Act’s

prohibition of the coordination of benefits.” Id.

While we recognize that Lennartson’s tort recovery fully compensated her

outstanding economic losses, under Stout, Lennartson incurred a “loss” at the moment

she incurred medical expenses. See id. And similar to the supreme court’s reasoning in

Stout, nothing in the plain language of the no-fault act prohibits Lennartson’s recovery.

Moreover, preventing Lennartson from arbitrating her no-fault claim would be

inconsistent with the act’s designation of no-fault benefits as “primary.” See id. (citing

Minn. Stat. § 65B.61, subd. 1 (2000)) (“[R]educing Stout's loss on the basis of discounts

obtained by his health insurer would be inconsistent with the Act's designation of basic

economic loss benefits as primary . . . .”).

In sum, the plain language of the no-fault act does not preclude insureds from

seeking recovery of benefits in an arbitration proceeding following a negligence action

14
and allowing them to do so does not violate a “clearly expressed goal of the legislature.”

Erickson, 599 N.W.2d at 591 (emphasis omitted). If the legislature intends to prohibit

insureds such as Foss and Lennartson from recovering under these circumstances, then

the legislature must amend the no-fault act accordingly.

Collateral Estoppel

State Farm also contends that general collateral estoppel principles bar the

insureds who brought a tort action from later seeking economic-loss benefits in a no-fault

proceeding because the insureds are re-litigating the same issues. Foss claims that the

issues presented at trial and in arbitration are distinct because she sought different

damages in each proceeding; at trial she sought the full amount of medical expenses and

gross wage loss whereas in arbitration she sought only her unpaid medical expenses and

wage loss benefits. Lennartson acknowledges that she sought a double recovery in

arbitration, but argues that collateral estoppel requires the legal issue to be identical and

not merely the recovery sought.

“Collateral estoppel precludes the relitigation of issues which are both identical to

those issues already litigated by the parties in a prior action and necessary and essential to

the resulting judgment.” Ellis v. Minneapolis Comm’n on Civil Rights, 319 N.W.2d 702,

704 (Minn. 1982). Collateral estoppel applies when,

(1) the issue was identical to one in a prior adjudication; (2)
there was a final judgment on the merits; (3) the estopped
party was a party or in privity with a party to the prior
adjudication; and (4) the estopped party was given a full and
fair opportunity to be heard on the adjudicated issue.

15
Id. But collateral estoppel is also an equitable remedy that we need not rigidly apply;

instead, we must consider whether its application “would work an injustice on the party

against whom the [doctrine is] urged.” Hauschildt v. Beckingham, 686 N.W.2d 829, 837

(Minn. 2004). Here, the only element that the parties dispute is whether the issues

litigated at trial were identical to the issues in arbitration.

The Lennartson district court applied collateral estoppel to vacate the arbitration

award reasoning that “[t]he issue of past medical expenses litigated in the civil case is the

identical issue submitted in the no-fault arbitration.” The Foss district court concluded

that collateral estoppel did not apply because the arbitration claim was “statutory and

contractual” while the trial claim was “negligence in tort.” This court concludes that the

issue in a no-fault arbitration is not identical to the issue in a negligence action because

no-fault arbitration is a completely different system of recovery from a liability trial.

No Minnesota case has definitively answered whether collateral estoppel prevents

an insured from arbitrating their no-fault claims after seeking to recover for the same

losses in a tort action, but several cases warrant discussion here.

In Nelson, the insured, Nelson, was injured in a car accident in South Dakota. 651

N.W.2d at 502. Nelson’s insurer, American Family, refused to pay her no-fault benefits.

Id. Nelson sued the tortfeasor in South Dakota and recovered damages, specifically

$37,000 for past income loss. Id. Because Nelson’s past income-loss award was subject

to a one-third contingency fee arrangement with her attorney, she only recovered a net

amount of $24,666.67 in past-income loss damages. Id. Nelson then sued American

Family in Minnesota to recover the portion of her trial award that was allocated to her

16
attorney’s fees. Id. The supreme court, using the no-fault subrogation provision

applicable to out-of-state accidents, ultimately awarded Nelson a proportionate share of

the attorney fees charged in the South Dakota tort action. Id. at 505-07.

American Family asserted a defense of collateral estoppel, arguing that “the issues

resolved in the South Dakota action [were] identical to the issues raised in [Nelson’s

appeal] because the issue of income loss was identical.” Id. at 511. The supreme court

disagreed. Id. It found that collateral estoppel did not bar Nelson’s claim because the

actual legal issues presented in the two cases were not identical—the trial in South

Dakota concerned negligence, and trial in Minnesota concerned the insurer’s obligation

to pay no-fault subrogation benefits. Id.

Nelson illustrates an important principle: the issues in a trial against a tortfeasor

for negligence are not the same issues as those in a claim for no-fault benefits. See id.

Because a prior liability action against the tortfeasor in Nelson did not collaterally estop

the insured’s breach of contract claim for no-fault benefits, it follows that an insured’s

prior negligence action does not collaterally estop a subsequent no-fault arbitration.

State Farm argues that Nelson is distinguishable because Nelson concerns the no-

fault subrogation statute. See id. at 504, 507. But State Farm’s attempt to distinguish

Nelson is impermissibly limiting; the Nelson court used broad language to prohibit the

application of collateral estoppel to the later no-fault action. Id. at 511. Furthermore,

National Indemnity v. Farm Bureau Mutual Insurance Company, 348 N.W.2d 748, 750

(Minn. 1984), superseded by statute on other grounds, sets forth this same line of

reasoning in the arbitration context.

17
 In National Indemnity, an insurer, Farm Bureau, paid no-fault benefits to its

insured after a car accident. Id. at 749. The insured then sued the tortfeasor and received

a directed verdict as to negligence, but the jury awarded no damages. Id. After the

verdict, Farm Bureau initiated an arbitration proceeding against the tortfeasor’s insurer,

National, for indemnification under the no-fault act. Id. at 749-50. The arbitrator ordered

National to reimburse Farm Bureau for the no-fault benefits that Farm Bureau had paid

its insured. Id. at 750.

National sought to vacate the arbitrator’s award claiming that the arbitrator had no

authority to force National to indemnify Farm Bureau because Farm Bureau’s insured did

not recover damages at trial. Id. National argued that the jury verdict “absolutely

precluded the arbitrators from compelling National to indemnify Farm Bureau.” Id. But

the supreme court disagreed and said that the “major flaw[] in National’s argument [is] in

equating arbitration with court actions.” Id. The supreme court upheld Farm Bureau’s

indemnity award, finding that “no-fault arbitration was intended as a recourse totally

separate from resort to the courts” and that “arbitrators may give whatever weight to the

prior trial proceedings that they deem justified.” Id. at 750-51. As National Indemnity

illustrates, no-fault arbitration is a separate and distinct recovery system from the courts.

State Farm argues that National Indemnity does not apply to these consolidated

appeals because it examined the indemnity provisions of the no-fault act. But the

rationale of National Indemnity is broader than State Farm contends, and it reinforces the

principle from Nelson that no-fault arbitration claims are separate and distinct from

previous liability actions against a tortfeasor. This principle was also reiterated in Do

18
when the supreme court held that an insured’s prior settlement with a tortfeasor’s insurer

is a “separate and distinct” claim from the insured’s claim for no-fault benefits. 779

N.W.2d at 857. Because caselaw interpreting the no-fault act has consistently refused to

apply collateral estoppel between liability actions and claims for no-fault benefits, we

follow these precedents here. See Nelson, 651 N.W.2d at 511; National Indemnity, 348

N.W.2d at 750; see also Milwaukee Mut. Ins. Co. v. Currier, 310 Minn. 81, 88, 245

N.W.2d 248, 251 (1976) (“[A] res judicata defense does not preclude arbitration

proceedings solely because the underlying claim would be barred by res judicata if

asserted in an action in court.”).

In addition to caselaw, the structure and procedural rules of the no-fault arbitration

system further support our conclusion that collateral estoppel does not apply here. One

of the greatest practical differences between a no-fault arbitration and a trial is the type of

evidence that a factfinder may consider; no-fault arbitrators can consider a wide range of

evidence not normally admissible at trial. Minn. R. No-Fault Arb. 24.4

4
Rule 24 of the Minnesota Rules of No-Fault Arbitration says:
The parties may offer such evidence as they desire and shall
produce such additional evidence as the arbitrator may deem
necessary to an understanding and determination of the
issues. The arbitrator shall be the judge of the relevancy and
materiality of any evidence offered, and conformity to legal
rules of evidence shall not be necessary. The parties shall be
encouraged to offer, and the arbitrator shall be encouraged to
receive and consider, evidence by affidavit or other
document, including medical reports, statements of witnesses,
officers, accident reports, medical texts and other similar
written documents that would not ordinarily be admissible as
evidence in the courts of this state. In receiving this evidence,

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 Moreover, a jury in a negligence action and an arbitrator in a no-fault arbitration

focus on different issues. In a negligence action, a jury must determine who is at fault,

apportion liability, and calculate the appropriate amount of damages sustained. In a no-

fault arbitration, the arbitrator focuses exclusively on whether the insured incurred

economic-loss that is causally related to the accident. See Minn. Stat. § 65B.44 (2012)

(stating that medical expense benefits reimburse expenses reasonable and necessary for

treatment related to a motor vehicle accident). These structural and procedural

differences reinforce National Indemnity’s determination that “no-fault arbitration was

intended as a recourse totally separate from resort to the courts.” 348 N.W.2d at 750.

State Farm cites a number of cases in which courts have applied collateral estoppel

principles in the context of tort actions and actions for underinsured or uninsured motorist

benefits. Costello v. Aetna Cas. & Sur. Co., 472 N.W.2d 324 (Minn. 1991) (holding that

collateral estoppel may bind a party on an issue determined in prior litigation if the court

makes a determination in a dispute over coverage); Aufderhar v. Data Dispatch, Inc., 452

N.W.2d 648 (Minn. 1990) (holding that an insured was collaterally estopped from re-

litigating damages in a civil action against a tortfeasor because the insured had already

arbitrated his uninsured motorist benefits claim against his insurer); Butzer v. Allstate Ins.

Co., 567 N.W.2d 534 (Minn. App. 1997) (holding that insureds were collaterally

estopped from litigating damages in a jury trial after first arbitrating their underinsured

motorist claim).

the arbitrator shall consider any objections to its admission in
determining the weight to which he or she deems it is entitled.

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 On the surface, the underinsured and uninsured motorist cases that State Farm

cites appear to support its argument that collateral estoppel bars the insureds’ arbitration

proceedings here. These cases, however, are all legally and factually distinguishable. 5

For example, in Aufderhar, the claimant’s right to arbitrate arose from a contract created

between the claimant and his uninsured motorist insurer.6 452 N.W.2d at 653. In

Aufderhar, the supreme court distinguished National Indemnity by explaining that

collateral estoppel only bars a subsequent arbitration when no statutory right to arbitrate

exists. Id. But here, the insureds have a statutory right to arbitrate. See Minn. Stat.

§ 65B.525, subd. 1 (mandating binding arbitration for all no-fault disputes under

$10,000). Thus, the underinsured and uninsured cases that State Farm cites are not

persuasive because the no-fault act creates a statutory right for insureds to arbitrate

economic-loss claims with their no-fault insurer.

Moreover, the uninsured and underinsured motorist cases that State Farm cites

involve legal issues that are raised in tort liability cases: negligence, causation, and

damages, including medical expenses and pain and suffering. No-fault economic

5
Before the Costello court even reached the issue of collateral estoppel, it determined
that it “must make a finding of coverage” before Costello could invoke his right to
arbitration. 472 N.W.2d at 326. Here, no finding of coverage is required; the insureds
have a statutory right to arbitrate. See Minn. Stat. § 65B.525, subd. 1 (2012). Also, in
Butzer, the appellant and the tortfeasor’s insurer voluntarily entered into binding
arbitration and the arbitration clause in the agreement expressly waived the appellant’s
right to a jury trial regarding damages. 567 N.W.2d at 536, 538.
6
The supreme court limited its holding in Aufderhar to the “factual posture presented by
this case.” Id. at 649. The factual posture included Aufderhar initiating binding
arbitration, securing a district court order to compel the binding arbitration, and receiving
an arbitration proceeding with a three-lawyer panel that used “legal rules of procedure
and evidence.” Id. at 651-52.

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benefits, by contrast, are limited. See Minn. Stat. § 65B.51, subd. 3 (limiting recovery of

damages for noneconomic detriment).

State Farm finally contends that allowing insureds to arbitrate their no-fault claims

after litigating their economic-loss benefits encourages insureds to delay arbitration until

resolution of the tort claim in hope of receiving a double recovery. But as the Do court

recognized, “the plaintiff also takes a risk in pursuing his claims piecemeal that he will

receive less than full compensation.” Do, 779 N.W.2d at 860.

Moreover, because no-fault arbitration is an efficient and inexpensive tool to

resolve an insured’s economic-loss claim, the insured may be unlikely to delay no-fault

arbitration for the mere possibility of a double recovery. Further, nothing prevents an

arbitrator from considering the jury’s findings. See Milwaukee, 310 Minn. at 88, 245

N.W.2d at 252 (“[The arbitrator] may give whatever weight to the prior trial proceedings

as he determines justified under all the circumstances.”). And most importantly here, as

in Do, “the no-fault insurer paid exactly what it was required to pay: basic economic loss

benefits ‘without regard to fault.’” Do, 779 N.W.2d at 860 (quoting Milbrandt, 372

N.W.2d at 705).

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 DECISION

Because we hold that the plain language of the no-fault act and collateral estoppel

do not prevent an insured from seeking economic-loss benefits in an arbitration

proceeding after the insured has litigated economic-loss damages in a negligence action,

we reverse the district court’s vacation of Lennartson’s arbitration award and affirm the

district court’s decision to uphold Foss’s arbitration award.

Reversed (A14-0132); Affirmed (A14-0224).

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