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Progressive Southeastern Ins. Co. v. Brown, 2022 WL 575417 (Ind. 2022)

In June 2021, we reported on the Indiana Court of Appeals’ decision in this matter, which concerns the MCS-90 endorsement. The MCS-90 endorsement is required by federal law to be included in insurance policies issued to motor carriers operating under the regulations of the United States Department of Transportation (“USDOT”).  The purpose of an MCS-90 endorsement is to ensure that “motor carriers maintain an appropriate level of financial responsibility for motor vehicles operated on public highways.”  49 C.F.R. § 387.1. In our previous report, we noted how courts’ interpretations and applications of the MCS-90 endorsement are constantly changing.  The Indiana Supreme Court recently weighed in on the application of the MCS-90 endorsement and held that it does not apply to intrastate motor carrier travel in Indiana.

B&T Bulk was a USDOT-registered motor carrier that hauled cement in Indiana and Michigan. It possessed a commercial automobile liability policy with Progressive Southeastern that included the MCS-90 endorsement.  A B&T driver was on his way to pick up cargo that was to be hauled intrastate within Indiana when he was involved in an accident with another vehicle, resulting in the death of the other vehicle’s driver. When a liability claim was presented by the driver’s estate, B&T submitted it to Progressive Southeastern.  Even though the B&T truck was not listed on the Progressive policy, the MCS-90 endorsement, if applicable, would require the policy to provide coverage up to the statutory coverage limits.

Progressive contended that the MCS-90 endorsement was inapplicable because it applied only to interstate travel.  The trial court disagreed and held that the MCS-90 endorsement applied even though the B&T driver was on an intrastate trip.  The Court of Appeals held that, pursuant to Indiana law, the requirements of the MCS-90 endorsement were incorporated by an Indiana statute, even if they were not applicable under federal law. Thus, the Court of Appeals held that the MCS-90 endorsement extended and applied to intrastate travel in Indiana.

The Indiana Supreme Court granted transfer to address the issue. The Court first looked to see whether, under federal law, the MCS-90 applied to intrastate travel.  In reviewing the federal provisions incorporated into the MCS-90, the Court observed that the financial requirements apply only when a motor carrier is transporting property in foreign or interstate commerce, or the carrier is engaged in intrastate commerce and transporting hazardous property.

Next, the Court addressed whether Indiana law required the application of the MCS-90.  The Supreme Court disagreed with the conclusion of the Court of Appeals that Indiana law incorporated the MCS-90 endorsement requirements for intrastate travel.  The Court engaged in a specific review of the general Indiana Code and federal regulations and found that their wording did not require the MCS-90 endorsement’s application when a motor carrier is performing intrastate operations. Accordingly, the Court concluded that the MCS-90 endorsement did not apply because the B&T driver was engaged in intrastate operations and was not hauling hazardous material.

The Court of Appeals’ decision expanded the application of the MCS-90 endorsement beyond interstate travel to include intrastate travel. The Supreme Court’s reversal of that decision appears to make Indiana’s interpretation of the MCS-90 endorsement consistent with most federal courts addressing this issue.