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A state appellate court ruled sovereign immunity did not block an insurer that paid no-fault insurance benefits to two people injured in a school bus crash from obtaining reimbursement from the school board that owned the bus.

The Case

On Aug. 24, 2014, two passengers on the Lee County School Board bus were injured. State Farm Mutual Automobile Insurance Co. paid no-fault benefits of $10,000 to each injured party.

State Farm then demanded reimbursement from both the school board and its insurer, Safety National Casualty Corp. Both the school board and Safety National rejected State Farm's demand, and State Farm sued.

State Farm moved for summary judgment, arguing it was entitled to reimbursement as a matter of law under Florida Statutes Section 627.7405(1) because it was undisputed that the school board owned the bus and that Safety National insured it.

The school board also moved for summary judgment, arguing State Farm's claim was barred by sovereign immunity, which it raised as an affirmative defense, and Florida's no-fault law did not contain an express waiver of sovereign immunity.

The trial court concluded sovereign immunity was not a bar to State Farm's entitlement to reimbursement from the school board, and the school board appealed. It argued school boards were government agencies entitled to the benefit of sovereign immunity and no Florida law clearly and unequivocally waived sovereign immunity in this instance.

Florida Law

Section 627.7405(1) provides: “Notwithstanding ss. 627.730-627.7405, an insurer providing personal injury protection benefits on a private passenger motor vehicle shall have, to the extent of any personal injury protection benefits paid to any person as a benefit arising out of such private passenger motor vehicle insurance, a right of reimbursement against the owner or the insurer of the owner of a commercial motor vehicle, if the benefits paid result from such person having been an occupant of the commercial motor vehicle or having been struck by the commercial motor vehicle while not an occupant of any self-propelled vehicle.”

Section 627.732(3)(b) defines “commercial motor vehicle” as “any motor vehicle which is not a private passenger motor vehicle” but does not include “a mobile home or any motor vehicle which is used in mass transit, other than public school transportation, … and which is owned by a municipality, a transit authority or a political subdivision of the state.”

The Decision

The appellate court affirmed, reasoning Florida's no-fault law specifically included public school buses in the definition of “commercial motor vehicle” and thereby subjected owners of public school buses to the reimbursement provision.

In its decision, the appellate court rejected the school board's contention that Florida law had not waived sovereign immunity for school boards in no-fault cases. The appellate court conceded Chapter 627 did not include the phrase “the state … waives sovereign immunity” but said it could “not ignore the fact” that the Legislature specifically excluded motor vehicles used for public school transportation from its definition of what was “not a commercial motor vehicle.”

The appellate court reasoned that, by expressly including vehicles used for public school transportation in the definition of “commercial motor vehicle,” while expressly excluding other vehicles “used in mass transit” and “owned by a municipality, a transit authority or a political subdivision of the state,” the Legislature “clearly and unequivocally waived sovereign immunity” for actions brought under Section 627.7405(1) for reimbursement of PIP benefits paid to people injured on vehicles used for public school transportation, which necessarily included public school buses.

The appellate court concluded by rejecting the school board's argument that it should be exempt from reimbursement because the Legislature expressly exempted motor vehicles used as school buses from the statutory requirement to maintain no-fault insurance coverage, concluding the express exemption of school buses from the requirement to maintain no-fault insurance did not conflict with the express inclusion of school buses in the definition of a “commercial motor vehicle,” the owner of which was subject to the reimbursement provision.

The case is Lee County School Board v. State Farm Mutual Automobile Insurance, Case Nos. 2D17-4595, 2D17-4899 (Fla. Ct. App. May 24). Attorneys involved include: Andrew S. Bolin of Beytin, McLaughlin, McLaughlin, O'Hara, Bocchino & Bolin, Tampa, for appellant Lee County School Board. Jeremy W. Rogers of Freeman Mathis & Gary, Tampa, for appellant Safety National Casualty Corp. David B. Kampf and Sarah M. Sorgie of Ramey & Kampf, Tampa, for appellee State Farm Mutual Automobile Insurance Co.

This story is reprinted with permission from the Insurance Coverage Law Center, the industry's only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.

Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. Meyerowitz is the Director of the Insurance Coverage Law Center and editor-in-chief of journals on insurance law, banking law, bankruptcy law, energy law, government contracting law, and privacy and cybersecurity law, among other subjects. Contact him at smeyerowitz@meyerowitzcommunications.com.