Opinion ID: 1249235
Heading Depth: 4
Heading Rank: 2

Heading: Nelson's Position

Text: The position advocated by Nelson is equally untenable. Under Nelson's argument, she would begin with her net tort recovery of $24,666.67. She claims that she would then be entitled to recover from American Family the entire $12,333.33 paid in attorney fees because this amount represents income loss for which she remains uncompensated. Nelson argues that this amount is compensable under the No-Fault Act because the tort judgment represents her actual past income loss, while she was only compensated to the extent of her net tort recovery. Nelson's position is summarized as follows: No-Fault Benefits Paid Before Tort Action $ 0.00 Nelson's Tort Judgment For Past Income Loss $37,000.00 Nelson's Attorney Fees -$12,333.33 Nelson's Net Tort Recovery $24,666.67 Nelson's Uncompensated Loss Due from American Family ($37,000-$24,666.67) $12,333.33 Nelson's Combined Net Recovery $37,000.00 Nelson relies primarily on Ferguson v. Illinois Farmers Ins. Group Co. to support her claim. 348 N.W.2d 730 (Minn. 1984). She argues that Ferguson and three subsequent court of appeals cases [2] support the use of the net amount of recovery to determine whether an insurer's payment of no-fault benefits results in a double recovery. Nelson asserts that Ferguson is relevant to this case because it addressed the interplay of (1) the Act's policy against double recoveries, (2) a tort judgment, and (3) attorney feesa situation similar to that presented here. While we conclude that Ferguson is relevant to this issue, it does not provide the definitive guidance that Nelson asserts it does. The problems with Nelson's interpretation of Ferguson become apparent when the full consequences of her interpretation are explored. In Ferguson, a plaintiff was involved in an automobile accident and subsequently sued the tortfeasor for damages; the plaintiff then sued the no-fault insurer when benefits were denied and the cases were consolidated for trial. 348 N.W.2d at 731. The jury eventually awarded $10,000 as damages for future medical expenses. Id. Applying the principle that duplicate recoveries are to be prevented, we held that the plaintiff was not entitled to receive benefits from her no-fault insurer for future medical expenses until she first exhausted her net tort recovery for future medical expenses. Id. at 733. Having concluded in Ferguson that the plaintiff's net tort recovery must be exhausted before any no-fault benefits were payable, we then computed the net recovery by deducting the plaintiff's costs of collection, including attorney fees. Id. We explained that if additional medical expenses were incurred above the net tort recovery, the plaintiff would be entitled to payment for those medical expenses from the no-fault insurer up to the policy limits. Id. In effect, we allowed the net tort judgment to function as a bank that had to be exhausted before the no-fault insurer's future obligations took effect. Nelson contends that Ferguson established a general principle that when assessing whether no-fault benefits would constitute a double recovery, any attorney fees paid in the tort action must be deducted from the tort judgment. However, when this general principle is applied to other provisions of the No-Fault Act, a confusing and contrary result is reached. More particularly, when the principle Nelson advocates is applied to compute the extent of a double recovery for purposes of calculating the no-fault insurer's subrogation claim, her net recovery is more than that allowed under Minn.Stat. § 65B.53.