Insurance (No Fault): CITY OF LOUISVILLE V. STATE FARM MUTUAL AUTO. INS. CO. (SC 6/15/2006)

CITY OF LOUISVILLE V. STATE FARM MUTUAL AUTO. INS. CO.
INSURANCE:  NO FAULT ACT (Reparation benefits; subrogation against city as self-insurer)
2004-SC-000048-DG.pdf
PUBLISHED
AFFIRMING; COOPER
DATE:  6/15/2006

In this car accident case, the defendant city of Louisville did not have a standard insurance policy and had not opted to provide PIP benefits.  The question was who was State Farm going to sue for its subrogation benefits paid as PIP under the no fault act.

The City’s vehicle was not insured by a standard automobile insurance policy. Instead, the City annually appropriated funds for the payment of tort liabilities and expenses. The City  admits that, pursuant to KRS 304.39-080(3), it had opted not to provide for BRB payments as defined in KRS 304.39-010(1).

Under these provisions, if the injury was caused by an unsecured person, the injured party’s reparation obligor may obtain BRB reimbursement directly from the unsecured person ; but if the injury was caused by a secured person, the injured party’s reparation obligor may obtain BRB reimbursement only from the secured person’s reparation obligor. Young v. United States, 71 F.3d 1238, 1243 (6th Cir. 1995) (construing KRS 304.39-070(2) & (3)).

The City admits that it has not filed the requisite form with the commissioner of insurance and has not obligated itself to pay BRB; thus, it cannot be a reparation obligor and is not subject to liability for State Farm’s subrogation claim under KRS 304.39- 070(3). However, for the same reason, neither the City nor Alpiger is a "secured person" against whom a subrogation claim is precluded by KRS 304.39-070(2) ; thus, both are subject to liability for State Farm’s subrogation claim under that statute.

Michael Stevens, ed.

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