Justia Michigan Supreme Court Opinion Summaries

Articles Posted in Insurance Law
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Meemic Insurance Company filed suit against Louise and Richard Fortson, individually and as conservator of their son, Justin Fortson, alleging that Richard and Louise had fraudulently obtained payment for attendant-care services they did not provide to Justin. In 2009, Justin was injured when he fell from the hood of a motor vehicle, necessitating constant supervision and long-term care. Richard and Louise opted to provide attendant care to Justin in their home on a full-time basis. Justin received benefits under his parents’ no-fault policy with Meemic, and from 2009 until 2014, Louise submitted payment requests to Meemic for the attendant-care services she and her husband provided, asserting that they provided full-time supervision; Meemic routinely paid the benefits. In 2013, Meemic investigated Richard and Louise’s supervision of Justin, and discovered Justin had been periodically jailed for traffic and drug offenses and had spent time at an inpatient substance-abuse rehabilitation facility at times when Richard and Louise stated they were providing full-time supervision. The underlying policy contained an antifraud provision stating that the policy was void if any insured person intentionally concealed or misrepresented any material fact or circumstance relating to the insurance, the application for it, or any claim made under it. Louise and Richard counterclaimed, arguing that Meemic breached the insurance contract by terminating Justin’s benefits and refusing to pay for attendant-care services. Meemic moved for summary judgment, and the trial court initially denied the motion, reasoning that under the innocent-third-party rule, Meemic could not rescind the policy on the basis of fraud to avoid liability for benefits owed to Justin, an innocent third party. Meemic moved for reconsideration of that decision after the Court of Appeals later concluded in Bazzi v. Sentinel Ins. Co., 315 Mich App 763 (2016), the innocent-third-party rule was no longer good law. On reconsideration, the trial court granted summary judgment in favor of Meemic. Louise and Richard appealed. The Court of Appeals reversed, first reasoning that Bazzi did not apply because the fraud in this case did not occur in the procurement of the policy and did not affect the validity of the contract. The court concluded, however, that the policy’s antifraud provision was invalid because it would enable Meemic to avoid the payment of personal protection insurance (PIP) benefits mandated by MCL 500.3105. The Michigan Supreme Court affirmed, holding that contractual provisions like the one asserted by Meemic, in the context of the mandate of the no-fault act, are valid when based on a defense to mandatory coverage provided in the no-fault act itself or on a common-law defense that has not been abrogated by the act. Because Meemic’s fraud defense was grounded on neither the no-fault act nor the common law, it was invalid and unenforceable. Accordingly, the Court of Appeals was affirmed on different grounds, and the case remanded to the trial court for further proceedings. View "Meemic Ins. Co. v. Fortson" on Justia Law

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Plaintiff Skanska USA Building Inc. served as the construction manager on a renovation project for Mid-Michigan Medical Center–Midland (the Medical Center); plaintiff subcontracted the heating and cooling portion of the project to defendant M.A.P. Mechanical Contractors, Inc. (MAP). MAP obtained a commercial general liability insurance policy (the CGL policy) from defendant Amerisure Insurance Company (Amerisure). Plaintiff and the Medical Center were additional named insureds on the CGL policy. In 2009, MAP installed a steam boiler and related piping for the Medical Center’s heating system. MAP’s installation included several expansion joints. Sometime between December 2011 and February 2012, plaintiff determined that MAP had installed some of the expansion joints backward. Significant damage to concrete, steel, and the heating system occurred as a result. The Medical Center sent a demand letter to plaintiff, asserting that it had to pay for all costs of repair and replacement. Plaintiff sent a demand letter to MAP, asserting that MAP was responsible for all costs of repair and replacement. Plaintiff repaired and replaced the damaged property, at a cost of $1.4 million. Plaintiff then submitted a claim to Amerisure, seeking coverage as an insured. Amerisure denied the claim. The issue this case presented for the Michigan Supreme Court's review centered on whether the unintentional faulty subcontractor work that damaged an insured’s work product constituted an “accident” under a commercial general liability insurance policy. Because the Court concluded the answer was yes, it reversed the Court of Appeals’ judgment to the contrary. View "Skanska USA Building, Inc. v. M.A.P. Mechanical Contractors, Inc." on Justia Law

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Matthew Dye brought an action against Esurance Property and Casualty Insurance Company and GEICO Indemnity Company, seeking personal protection insurance (PIP) benefits under the no-fault act, MCL 500.3101 et seq., for injuries he sustained in a motor vehicle accident while driving a vehicle he had recently purchased. At plaintiff’s request, plaintiff’s father had registered the vehicle in plaintiff’s name and obtained a no-fault insurance policy from Esurance. The declarations page of the policy identified only plaintiff’s father as the named insured. At the time of the accident, plaintiff was living with his wife, who owned a vehicle that was insured by GEICO. After Esurance and GEICO refused to cover plaintiff’s claim, plaintiff filed a breach-of-contract claim against both insurers along with a declaratory action, alleging that either Esurance or GEICO was obligated to pay his no-fault PIP benefits and requesting that the trial court determine the parties’ respective rights and duties. The issue this case presented for the Michigan Supreme Court’s review centered on whether an owner or registrant of a motor vehicle involved in an accident was excluded from receiving statutory no-fault insurance benefits under the no-fault act when someone other than an owner or registrant purchased no-fault insurance for that vehicle. The Court of Appeals concluded that “[a]t least one owner or registrant must have the insurance required by MCL 500.3101(1), and ‘when none of the owners maintains the requisite coverage, no owner may recover [personal injury protection (PIP)] benefits.’ ” The Supreme Court concluded an owner or registrant of a motor vehicle was not required to personally purchase no-fault insurance for his or her vehicle in order to avoid the statutory bar to PIP benefits. Rather, MCL 500.3101(1) only requires that the owner or registrant “maintain” no-fault insurance. The Court reversed in part the judgment of the Court of Appeals and remanded this case to the circuit court for further proceedings. View "Dye v. Esurance Property & Casualty Ins. Co." on Justia Law

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Plaintiff Ali Bazzi, was injured while driving a vehicle owned by his mother, third-party defendant Hala Baydoun Bazzi, and insured by defendant Sentinel Insurance Company (Sentinel). Plaintiff sued Sentinel for mandatory personal protection insurance (PIP) benefits under Michigan’s no-fault act, and Sentinel sought and obtained a default judgment rescinding the insurance policy on the basis of fraud. The issue this case presented for the Michigan Supreme Court was whether the judicially created innocent-third-party rule, which precludes an insurer from rescinding an insurance policy procured through fraud when there is a claim involving an innocent third party, survived its decision in Titan Ins Co v. Hyten, 817 NW2d 562 (2012), which abrogated the judicially created easily-ascertainable-fraud rule. The Supreme Court held "Titan" abrogated the innocent-third-party rule but that the Court of Appeals erred when it concluded that Sentinel was automatically entitled to rescission in this instance. Accordingly, the Court affirmed in part, reversed in part, and remanded to the trial court to consider whether, in its discretion, rescission was an available remedy. View "Bazzi v. Sentinel Ins. Co." on Justia Law

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Daniel Kemp sued his no-fault insurer, Farm Bureau General Insurance Company of Michigan, seeking personal protection insurance (PIP) benefits under the parked motor vehicle exception in MCL 500.3106(1)(b) for an injury he sustained while unloading personal items from his parked motor vehicle. Farm Bureau moved for summary disposition under MCL 2.116(C)(10) on the basis that Kemp had not established any genuine issue of material fact regarding whether he satisfied MCL 500.3106. Kemp responded by asking the trial court to deny Farm Bureau’s motion and, instead, to grant judgment to Kemp under MCR 2.116(I)(2). The trial court granted Farm Bureau's motion for summary judgment. The Michigan Supreme Court reversed, finding that Kemp satisfied the transportational function required as a matter of law, and created a genuine issue of material fact concerning whether he satisfied the parked vehicle exception in MCL 500.3106(1)(b) and the corresponding causation requirement. Therefore, the trial court erred in granting summary judgment, and the Court of Appeals erred in affirming the trial court. The matter was remanded for further proceedings. View "Kemp v. Farm Bureau Gen. Ins. Co. of Michigan" on Justia Law

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Only two sections of the Michigan no-fault act mention healthcare providers, MCL 500.3157 and MCL 500.3158, and neither of those sections confers on a healthcare provider a right to sue for reimbursement of the costs of providing medical care to an injured person. Although MCL 500.3112 allows no-fault insurers to directly pay PIP benefits to a healthcare provider for expenses incurred by an insured, MCL 500.3112 does not entitle a healthcare provider to bring a direct action against an insurer for payment of PIP benefits. Covenant Medical Center, Inc., brought suit against State Farm Mutual Automobile Insurance Company to recover payment under the no-fault act for medical services provided to State Farm’s insured, Jack Stockford, following an automobile accident in which Stockford was injured. State Farm denied payment. In the meantime, Stockford had filed suit against State Farm for no-fault benefits, including personal protection insurance (PIP) benefits. Without Covenant’s knowledge, Stockford and State Farm settled Stockford’s claim for $59,000 shortly before Covenant initiated its action against State Farm. As part of the settlement, Stockford released State Farm from liability for all allowable no-fault expenses and any claims accrued through January 10, 2013. State Farm moved for summary judgment under MCR 2.116(C)(7) (dismissal due to release) and MCR 2.116(C)(8) (failure to state a claim). The trial court granted State Farm’s motion under MCR 2.116(C)(7), explaining that Covenant’s claim was dependent on State Farm’s obligation to pay no-fault benefits to Stockford, an obligation that was extinguished by the settlement between Stockford and State Farm. View "Covenant Medical Center, Inc. v. State Farm Mutual Automobile Ins. Co." on Justia Law

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In 2004, George and Thelma Nickola, were injured in a car accident. The driver of the other car was insured with a no-fault insurance policy provided the minimum liability coverage allowed by law: $20,000 per person, up to $40,000 per accident. The Nickolas’ (acting through their attorney) wrote to their insurer, defendant MIC General Insurance Company, explaining that the no-fault liability insurance policy was insufficient to cover the Nickolas' injuries. The letter also advised MIC that the Nickolas were claiming UIM benefits under their automobile policy. The Nickolas’ policy provided for UIM limits of $100,000 per person, up to $300,000 per accident, and they sought payment of UIM benefits in the amount of $160,000; $80,000 for each insured. An adjuster for defendant MIC denied the claim, asserting that the Nickolas could not establish a threshold injury for noneconomic tort recovery. The matter was ultimately ordered to arbitration, the outcome of which resulted in an award of $80,000 for George’s injuries and $33,000 for Thelma’s. The award specified that the amounts were “inclusive of interest, if any, as an element of damage from the date of injury to the date of suit, but not inclusive of other interest, fees or costs that may otherwise be allowable.” The trial court affirmed the arbitration awards but declined to award penalty interest under the UTPA, finding that penalty interest did not apply because the UIM claim was “reasonably in dispute” for purposes of MCL 500.2006(4). The Court of Appeals affirmed the trial court, holding that the “reasonably in dispute” language applied to plaintiff’s UIM claim because a UIM claim “essentially” places the insured in the shoes of a third-party claimant. The Michigan Supreme Court held that an insured making a claim under his or her own insurance policy for UIM benefits cannot be considered a “third party tort claimant” under MCL 500.2006(4). The Court reversed the Court of Appeals denying plaintiff penalty interest under the UTPA, and remanded this case back to the trial court for further proceedings. View "Estate of Nickola v MIC General Ins. Co." on Justia Law

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In 2009, plaintiff Dragen Perkovic was operating a semitruck in Nebraska when he swerved to avoid hitting a car that had spun out in front of him. Plaintiff’s truck then crashed into a wall. Plaintiff’s resulting injuries were treated at The Nebraska Medical Center. At the time of the accident, plaintiff maintained personal automobile insurance with Citizens Insurance Company of the Midwest (Citizens) and a bobtail insurance policy with Hudson Insurance Company (Hudson). Plaintiff’s employer was insured by defendant Zurich American Insurance Company. The issue this case presented for the Supreme Court's review centered on the notice requirements of the no-fault act, specifically those set forth in MCL 500.3145(1): whether a nonparty medical provider’s provision of medical records and associated bills to an injured person’s no-fault insurer within one year of the accident causing injury constitutes proper written notice under MCL 500.3145(1), so as to prevent the one-year statute of limitations in MCL 500.3145(1) from barring the injured person’s subsequent no-fault claim. The Michigan Supreme Court held that when, as in this case, the documentation provided by the medical provider contained all of the information required by MCL 500.3145(1) and was provided to the insurer within one year of the accident, the statutory notice requirement was satisfied and the injured person’s claim was not barred by the statute of limitations. Therefore, the Court reversed the judgment of the Court of Appeals, vacated the trial court’s order granting summary disposition in favor of defendant Zurich American Insurance Company, and remanded to the trial court for further proceedings. View "Perkovic v. Zurich American Ins. Co." on Justia Law

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The issue presented in this case was whether, by signing a contract providing that plaintiff agreed “to reimburse [defendants’] attorney fees and costs as may be fixed by the court,” the parties agreed that the amount of reasonable attorney fees would be fixed by a court rather than a jury. After review, the Supreme Court held that the parties did so agree. Accordingly, the Court vacated part of the Court of Appeals’ opinion and reversed that portion of the judgment that reversed the award of contractual attorney fees and costs, as well as that portion of the judgment that reversed the award of case evaluation sanctions. The Court otherwise denied the application and cross-application for leave to appeal and left in place the remainder of the Court of Appeals’ opinion. View "Barton-Spencer v. Farm Bureau Life Ins. Co. of Michigan" on Justia Law

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Linda Hodge filed suit against State Farm Mutual Automobile Insurance Company for first-party no-fault benefits related to injuries she sustained when she was struck by a car insured by State Farm. Hodge’s complaint indicated that the amount in controversy was $25,000, which was within the district court’s jurisdiction. During discovery, State Farm came to believe that Hodge would present at trial proof of damages in excess of the district court’s $25,000 jurisdictional limit. The trial court denied State Farm’s motion in limine to prevent Hodge from presenting evidence of claims exceeding $25,000, and to prevent the jury from awarding damages in excess of $25,000. At trial, Hodge did present proof of injuries exceeding $25,000, and the jury returned a verdict of $85,957. The district court reduced the verdict to the jurisdictional limit of $25,000, and it awarded $1,769 in no-fault interest. State Farm appealed, claiming that the amount in controversy exceeded the district court’s jurisdictional limit and that capping Hodge’s damages at $25,000 could not cure the defect. The circuit court agreed and reversed the district court’s order of judgment. The Court of Appeals affirmed the circuit court’s decision that the district court was divested of jurisdiction when pretrial discovery, counsel’s arguments, and the evidence presented at trial pointed to damages in excess of $25,000. The Supreme Court held "what the jurisprudence of this state has long established:" in its subject-matter jurisdiction inquiry, a district court determines the amount in controversy using the prayer for relief set forth in the plaintiff’s pleadings, calculated exclusive of fees, costs, and interest. Hodge’s complaint prayed for money damages “not in excess of $25,000,” the jurisdictional limit of the district court. Even though her proofs exceeded that amount, the prayer for relief controlled when determining the amount in controversy, and the limit of awardable damages. Because there were no allegations, and therefore no findings, of bad faith in the pleadings, the district court had subject-matter jurisdiction over the plaintiff’s claim. View "Hodge v. State Farm Mutual Automobile Ins. Co." on Justia Law