Opinion
No. 77-558
Decided June 8, 1978. Rehearing denied June 29, 1978. Certiorari granted September 11, 1978.
Having paid personal injury protection benefits to its insureds, insurance company sought to intervene in action by those insureds against alleged tortfeasor. Finding that recovery of its payments could be effected only through the arbitration procedure set out in the No Fault Act, trial court refused to allow the intervention, and the insurance company appealed.
Order reversed
1. INSURANCE — No Fault Act — Personal Injury Protection Benefits — Paid — Arbitration — Tortfeasor's Insurer — Not Exclusive Remedy — Paying Insurer — — May Seek Recovery — Conventional Litigation. Where an insurer pays Personal Injury Protection benefits to an insured under the Colorado Auto Accident Reparations Act, arbitration for reimbursement of the payments from the tortfeasor's insurer as provided by the Act is not an exclusive remedy, and the paying insurer may seek reimbursement from the tortfeasor through conventional litigation.
Appeal from the District Court of the City and County of Denver, Honorable Henry E. Santo, Judge.
Anstine Hill, Ronald C. Hill, for defendant-appellee.
Jenkins, O'Rourke Sandstrom, Michael S. Kupecz, for intervenor-appellant.
Appellant, Kentucky Farm Bureau Mutual Insurance Company, appeals from a denial of its motion to intervene in an action brought by its insureds, George and Hattie Caldwell. We reverse and remand with directions that the trial court permit intervention.
On December 5, 1974, the plaintiffs below, George and Hattie Caldwell, were injured in an accident involving a car driven by defendant, Werner Baumgart. Shortly thereafter, plaintiffs' insurer, Kentucky Farm, commenced the payment of Personal Injury Protection (P.I.P.) benefits to the Caldwells. See § 10-4-706(1)(b) to (e), C.R.S. 1973. Such payments eventually totaled approximately $7,300. Kentucky Farm never sought reimbursement of these amounts from defendant's insurer through the intercompany arbitration mechanics provided by the Colorado Auto Accident Reparations ("No Fault") Act. See § 10-4-717, C.R.S. 1973.
When the Caldwells brought suit against Baumgart in August of 1975, Kentucky Farm sought to intervene, seeking reimbursement from Baumgart of the amounts it had paid the Caldwells under its P.I.P. coverage. The trial court denied the motion on the grounds that such intervention was barred by the provisions of the "No Fault" Act, see § 10-4-701, et seq., C.R.S. 1973.
On appeal, Kentucky Farm asserts that § 10-4-713, C.R.S. 1973, specifically authorizes its participation in this suit; that the arbitration provisions of § 10-4-717, C.R.S. 1973, are not its exclusive remedy under the facts of this case; and that Kentucky Farm's interests, absent intervention, would not be adequately protected in the trial court.
Baumgart, on the other hand, argues that Kentucky Farm, by its decision not to seek arbitration within one year of the first P.I.P. payment, has waived all rights to reimbursement of the P.I.P. amounts paid the Caldwells.
The central issue presented here concerning the interrelation of § 10-4-713, C.R.S. 1973, and § 10-4-717, C.R.S. 1973, is one of first impression in Colorado. Section 10-4-713(1), C.R.S. 1973, provides, in pertinent part, that no insurer providing P.I.P. benefits shall have any right to recover such benefits against the owner, user, or operator of a motor vehicle, except that an insurer paying P.I.P. benefits:
"in excess of five hundred dollars shall have a direct cause of action against an alleged tort-feasor to the extent of benefits paid in excess of five hundred dollars and limited to the liability insurance coverage of the alleged tort-feasor."
Section 10-4-717, C.R.S. 1973, provides, in pertinent part, that "every insurer licensed to write motor vehicle insurance in this state shall be deemed to have agreed" that where its insured would be liable for damages for bodily injury sustained by any person to P.I.P. benefits have been paid by another insurer:
"It will reimburse such other insurer to the extent of such benefits, subject to the limitations contained in section 10-4-713 . . . and (b) That the issue of liability for such reimbursement and the amount thereof shall be decided by mandatory, binding intercompany arbitration procedures approved by the commissioner. . . .
. . . .
(3) Notwithstanding any statute of limitations to the contrary, any demand for initial arbitration proceedings shall be brought within one year of the first payment of any of the benefits described in section 10-4-706(1)(b) to (1)(e) [P.I.P. benefits] by the insurer claiming for reimbursement."
[1] We agree with the Kentucky Farm's interpretation of the two statutes. On looking to other "No Fault" jurisdictions, we note that some states provide for both litigation and arbitration, but the prerequisites for each option are explicitly set forth and are mutually exclusive. See, e.g, Mass. Gen. Laws Ann. ch. 90, § 34M (West) (1977-78 Supp). Others provide that the insurer's right of subrogation is restricted to seeking arbitration only against the insurer of the tort-feasor. See, e.g., N.J. Stat. Ann. § 39:6A-9 (West). But we are aware of no "No Fault" state which has adopted provisions such as those before us, nor is there any discussion in the case law or in the "Uniform Motor Vehicle Auto Reparations Act," see 13 Uniform Laws Annotated 349 (1975), which aids us in our interpretation of the two provisions.
In attempting to give meaning and effect to each provision we are drawn inescapably to the conclusion that, when read together, they offer to the insurer who has made P.I.P. payments and is seeking reimbursement, a choice of alternate means of recovery. If such insurer wishes to avoid the time and expense of a trial by resolving the issue of reimbursement between itself and the other insurer, § 10-4-717, C.R.S. 1973, has provided the mechanics of arbitration. Under this section, once the insurer seeking reimbursement has demanded arbitration, the other party's consent thereto is automatic and the binding arbitration can go forward. As long as the demand is made within one year, this insurer-to-insurer alternative is available.
Section 10-4-713, C.R.S. 1973, on the other hand, provides the insurer seeking reimbursement with the opportunity to resolve the issue of liability (and, thus, of reimbursement) by conventional litigation procedures. To hold otherwise, by requiring binding arbitration, would render meaningless the statutorily conferred right to a direct action.
As the insurer here sought to avail itself of its right under § 10-4-713, C.R.S. 1973, and no other objections to intervention have been raised or ruled upon, we hold that it was error to deny the motion to intervene.
Order reversed and cause remanded to the trial court with directions to grant Kentucky Farm's motion to intervene.
JUDGE PIERCE and JUDGE KELLY concur.