New SJC Decision Regarding PIP and Rental Car Companies

Mike Tracy over at Rudolph Friedmann LLP, http://www.rflawyers.com/, an excellent insurance coverage litigator and a mentor to me over the last five years, has sent me a decision handed down yesterday by the Supreme Judicial Court of Massachusetts, Enterprise Rent-A-Car Co. of Boston, Inc. v. Arbella Mut. Ins. Co. In that case Joseph Navis rented a car from Enterprise. He was in an accident in which three of his passengers were injured. Enterprise was self-insured and paid the passengers a total of $16,171.60 in Personal Injury Protection ("PIP") benefits. Enterprise then sought to recover that amount in subrogation from Navis' own insurer, Metropolitan.

At issue was whether a rental car agency (Enterprise) that made PIP payments to the renting driver's passengers can seek subrogation from the renting driver's own insurer (Metropolitan).

The SJC first held that the question of whether Enterprise was entitled to subrogation was not one that must be decided by an arbitrator. Although under the PIP statute insurers seeking subrogation from one another must arbitrate the issue of whose insured is at fault, fault was not at issue in this case. Rather, the case involved the interpretation of the PIP statute, which the courts were entitled to determine.

The SJC held that Enterprise was entitled to seek subrogation from Metropolitan. The SJC rejected the argument by Metropolitan that such a decision would relieve car rental companies from the obligation to provide PIP coverage to renting driver's passengers if the renting driver has insurance. The SJC stated that the argument overlooks the fact that a subrogation claim will only be successful if the renting driver was at fault, and that not all renting drivers have a Massachusetts insurance policy.

More background on PIP in a later post.