One Court of Justice

In a 4-3 decision filed on July 31, 2010, the Michigan Supreme Court overruled its 2006 decision that held that actions brought pursuant to MCL 600.5851(1) are subject to the no-fault automobile insurance act’s one-year-back rule. In Univ of Mich Regents v. Titan Ins Agency, No. 136905, the Michigan Supreme Court held that MCL 600.5821(4), which preserves the rights of state entities to file suit, also preserves the state entities’ rights to recover damages incurred more than one year before the action is filed.  Specifically, MCL 600.5821(4) exempts state entities from the statutory one-year-back rule, which precludes recovery “for any portion of the loss incurred more than 1 year before the date on which the action was commenced.”  MCL 500.3145(1). The Michigan Supreme Court overruled Liptow v. State Farm Mut Ins Co, a Court of Appeals decision which held to the contrary, and Cameron v Auto Club Ins Ass’n, the 2006 Michigan Supreme Court case on which Liptow relied.  The majority opinion, authored by Chief Justice Kelly, and joined by Justices Cavanagh, Hathaway, and Weaver (except for the “Stare Decisis” part), concluded that Cameron was wrongly decided and that a compelling justification exists for overruling it. The Michigan Supreme Court concluded that there was a compelling justification to overturn precedent based on its determination that Cameron has proved unworkable, that reliance on its holding has been of short duration, that it is detrimentally prejudicial to public interests and that it represents an abrupt and largely unexplained departure from precedent.  Read more »

Under Michigan’s no-fault automobile-insurance statute, an accident victim typically does not have the right to sue the person who caused the accident.  Instead, the victim is entitled to recover directly from the insurer, without regard to fault, thereby obtaining a certain and prompt recovery for economic loss, but giving up the uncertain possibility of greater relief through tort law.  The statute provides, however, a limited exception:  an injured person may sue under tort law “if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement.”  MCL § 500.3135(1) (emphasis added).  The legislature defined “serious impairment of body function” to mean “an objectively manifested impairment of an important body function that affects the person’s general ability to lead his or her normal life.”  MCL § 500.3135(7).

In McCormick v. Carrier, No. 136738 (July 31, 2010), the Michigan Supreme Court interpreted the phrase “serious impairment of body function” and, in a 4-to-3 decision, overturned the Court’s 2004 decision in Kreiner v. Fisher, 471 Mich. 109 (2004), that had interpreted the same language.  The majority (with Justice Cavanagh writing for Chief Justice Kelly and Justices Weaver and Kelly) held that a serious impairment of body function exists if there is “(1) an objectively manifested impairment (observable or perceivable from actual symptoms or conditions) (2) of an important body function (a body function of value, significance, or consequence to the injured person) that (3) affects the person’s general ability to lead his or her normal life (influences some of the plaintiff’s capacity to live in his or her normal manner of living).”  In a lengthy dissent, Justice Markman (joined by Justices Corrigan and Young) argued that the majority improperly eliminated any temporal requirement from consideration of the third prong.  The justices also divided over the proper application of stare decisis:  Justice Cavanagh spoke for his and Chief Justice Kelly’s view in the primary opinion, Chief Justice Weaver and Hathaway each wrote separately on the topic, and Justice Markman devoted a substantial part of the dissent to the doctrine.  The different opinions in McCormick thus provide insight not just into the current state of no-fault insurance law but also into the ongoing debate among the justices over judicial philosophy and the role of stare decisis.  Further discussion of the case follows after the jump.

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The Court of Appeals has just published its opinion in United Services Auto Association v. Michigan Catastrophic Claims Association, No. 289579, as authored by Judge Donofrio.  This case arises from costs associated with a Florida accident, which were paid under a Michigan no-fault insurance policy and for which the insurer seeks statutory reimbursement from the MCCA.  The trial court concluded that because the insurer did not pay a premium to MCCA for this vehicle, it was not entitled to reimbursement and awarded summary disposition to MCCA.  On appeal, the Court of Appeals concluded that the car involved in the accident was not required to be licensed in Michigan and thus the statutory duty to reimburse was not triggered, and affirmed summary disposition on that basis.  Specifically, the Court relied on the facts showing that the insured had moved to Florida, purchased/registered the car in Florida, and had never driven (or intended to drive) the car in Michigan, to conclude that the vehicle was not required to be registered in Michigan, and thus not required to be insured in Michigan.

On June 22, 2010, the Court of Appeals approved its per curiam opinion in TBCI, P.C. v. State Farm Mutual Automobile Insurance Co., No. 288853, for publication.  In this case a service provider was seeking to recover no-fault benefits to cover services provided to an insured.  In prior litigation between the insured and the no-fault insurer, a trial court had determined that the relevant claim was fraudulent and rejected the claim for benefits.  The Court of Appeals found that initial determination of fraud barred the service provider’s subsequent litigation by res judicata.  Specifically, it held that the insurer stood in the shoes of the insured in asserting the insurance claim, and thus was a privy of the insured and bound by the legal judgments that applied to the insured.  Therefore, the Court of Appeals affirmed the trial court’s award of summary disposition of the service provider’s claim against the no-fault insurer.

On June 15, 2010, the Court of Appeals issued its consolidated per curiam opinion in the cases of American Home Assurance Company v. Michigan Catastrophic Claims Association, No. 287153 and Ace American Insurance Company v. Michigan Catastrophic Claims Association, No. 292539.  Both of these cases raised the question of the effect of a deductible (in the underlying insurance policy between a no-fault insurer and its policyholder) on the Michigan Catastrophic Claims Association’s (“MCCA”) statutory indemnification responsibility.  Under MCL § 500.3104(2), the MCCA is obligated to indemnify member insurers for ultimate net loss that exceeds $325,000.  The MCCA had taken the position that member insurers could not include deductible amounts owed by policyholders in reaching the $325,000 threshold.  The Court of Appeals disagreed, ruling that the No-Fault Act held the insurer liable for the entire amount of no-fault benefits owed, regardless of the deductible, and therefore the entire amount of benefits paid count toward the statutory threshold, regardless of the existence of a deductible.  However, the Court of Appeals did find that a member insurer must turn over the deductible amounts it receives from the policyholder, up to the amount the MCCA reimbursed the insurer.  Additionally, the Court found that MCCA is subrogated to the insurer’s rights to the deductible, and is entitled to pursue payment of that deductible if the insurer does not.

On June 8, 2010, the  Court of Appeals published its decision in Henry Ford Health System v. Esurance Insurance Co., No. 288633.  In this case, a hospital was seeking to recover no-fault insurance benefits from a vehicle’s insurer to cover the costs incurred in treating a passenger injured when that vehicle hit a utility pole.  At the time of the accident, however, the vehicle had been stolen from its owner.  The trial court had denied cross motions for summary disposition, and a jury had found that this passenger had unlawfully taken the vehicle, and the trial court entered a judgment in favor of the insurer.  In an opinion authored by Judge Murphy, the Court of Appeals found that the trial court had erred in denying the hospital’s motion for summary disposition, reversed the trial court’s judgment, and directed judgment be entered in favor of the hospital.  The case focused on the section of the No-Fault Act that provides that a person is not entitled to benefits if “[t]he person was using a motor vehicle or motorcycle which he or she has taken unlawfully . . . .”  MCL § 500.3113(a).  Judge Murphy focused on the words “has taken,” pointing out that the phrase indicates a past or completed act.  In this case, the injured person did not take the vehicle—it had already been stolen, and his girlfriend had borrowed the car (knowing it was stolen) and picked him up, and he simply rode as a passenger through the time he was injured.  Thus, the injured person did not participate in the “taking” of the vehicle.  Judge Murphy argues that if the Legislature had wanted to exclude unlawful “use” of the vehicle from no-fault benefits, it easily could have done so.  But because the Legislature chose to limit the exclusion to someone who had actively “taken”  the vehicle, that exclusion did not apply in this case and the hospital was entitled to recover no-fault benefits.

On May 13, 2010, the Court of Appeals published its opinion in Miller v. Citizens Insurance Company, No. 290522.  In this case, a medical center that had provided services to an injured plaintiff was challenging the trial court’s decision to award the plaintiff’s attorney one-third of the medical expenses that the no-fault insurer agreed to pay pursuant to a settlement with the plaintiff.  In an opinion authored by Judge Cavanagh, the Court of Appeals affirmed the award of fees to the plaintiff’s attorney.  The Court of Appeals focused on the fact that there was a contingent fee agreement between the plaintiff and his attorney that entitled the attorney to a one-third share of any recovery—which, in this case, included the medical expenses owed to the center.  The center argued that this had the effect of reducing recovery they were entitled to, and that they did not have any agreement with the attorney for such a reduction.  In response, the Court of Appeals noted that the center was aware that plaintiff’s attorney was pursuing the recovery of these expenses, but chose not to intervene in the litigation or otherwise assert its rights independently.  Additionally, the Court of Appeals noted that the center received the benefits of the plaintiff’s attorney’s efforts and the resulting settlement, without incurring any of the expenses associated with obtaining that result.  Thus, the Court of Appeals cited the “common fund” rule that allows such fee recovery where the prevailing party creates a fund that benefits himself and others.  Here, the settlement benefited both the plaintiff and the medical providers, including the center.

On Wednesday, March 24, 2010, the Michigan Supreme Court denied eight applications for leave to appeal, denied one motion for reconsideration, and ordered oral argument on the application for leave to appeal in Janson v. Sajewski Funeral Home, Inc., No. 140071.   The Court also took substantive action in two criminal and two civil cases which are discussed after the jump. Read more »

On Tuesday, March 16, 2010, the Michigan Court of Appeals published its opinion in Ward v. Titan Insurance Company, No. 284994.  In Ward, the Court considered whether the Kent County Circuit Court erred in ruling that plaintiff was not entitled to work-loss benefits where he was paid “under the table” and his employer could not produce documentation evidencing his employment.  The Court also decided whether the trial court erred in awarding plaintiff housing costs based on the full amount he paid for rent.  In a 2-to-1 opinion, the Court reversed the trial court concluding that factual questions existed with respect to plaintiff’s wage-loss claim and therefore summary disposition was inappropriate, and that the court erred in awarding plaintiff housing costs to the extent the costs were not greater as a result of the car accident. A copy of the Court’s order can be found here. Read more »

In Berkeypile v. Westfield Insurance Co., No. 137353, the Michigan Supreme Court reversed the decision of the Court of Appeals and reinstated the circuit court’s order granting summary disposition to the defendant.  The Court heard oral argument on the application on December 8, 2009.  On Friday, March 12, 2010, the Court concluded that the defendant insurance company was not liable to the plaintiff for uninsured motorist coverage because the plaintiff’s policy limited her the maximum recovery to the highest policy limit of any single policy available.  The highest policy available was $300,000, the limit of the defendant’s uninsured motorist coverage.  But the plaintiff recovered $332,500 in settlements with underinsured drivers–more than the highest policy limit of any single policy available.

Chief Justice Kelly and Justice Hathaway would have denied leave to appeal.  Justice Weaver would have granted leave to appeal.

On December 29, 2009, the Court of Appeals published a 2-1 opinion in Morrison v. Secura Insurance, No. 286936, affirming the trial court’s grant of summary disposition in favor of Plaintiffs.  Plaintiffs suffered injuries after their motorcycle was struck by a Chevrolet Cavalier.  Plaintiffs brought this declaratory judgment action against the Defendant insurance company regarding the validity of the no-fault insurance policy covering the Cavalier.  The insurance policy at issue was purchased by the driver’s mother in October 2005.  The mother was listed as the named insured, and both the mother and the driver were listed as “drivers” of the vehicle, even though only the driver drove the Cavalier.  The driver’s mother paid the premiums for the entire year up front.  At the time the insurance policy was purchased, the driver’s mother was the owner and registrant of the Cavalier.  In March 2006, the driver’s mother transferred title to the Cavalier to the driver, who applied for a new title and registered the Cavalier in her own name.  The accident happened on April 16, 2006.  Defendant argued that the insurance policy was void at the time of the accident because the insured did not have an “insurable interest” in the Cavalier at the time.  The Court of Appeals determined that the trial court’s ruling was correct because the driver’s mother had an “insurable interest” at the time the insurance policy was purchased and paid for, the insured-against risk had not changed, the basis for the “insurable interest” requirement is weak, and public policy favoring family units is strong.  The Court of Appeals did not find the need to reach the issue of whether the driver’s mother had an “insurable interest” in the Cavalier at the time of the accident.  Judge Talbot’s dissenting opinion can be found here.

The Court of Appeals has published its opinion in Bronson Methodist Hospital v. Allstate Insurance Company, No. 286087.  In this case, a hospital was trying to recover the medical expenses (incurred in December 2006-January 2007) related to the treatment of an individual injured in an auto accident.  The vehicle involved was uninsured, so the hospital submitted an application to the Michigan Assigned Claims Facility, which in turn assigned the claim to Allstate Insurance Company in January 2008.  Allstate did not pay the claim, and the hospital sued in February 2008.  Generally, there is a one-year statute of limitations to recover such benefits, but there is a statutory exception which allows an assigned claim to be brought within 30 days after the receipt of notice of the assignment.  Thus, the suit was timely.  In addition to establishing a limitations period, the No-Fault Act also establishes a recovery limitation which only allows recovery of benefits for losses incurred within one year before the action begins.  The Court of Appeals concluded that the statutory extension to the limitations period did not similarly extend the recovery period.  Here, the statute only provided that “[a]n action by the claimant shall not be commenced more than 30 days after receipt of notice of the assignment.”  MCL § 500.3174.  There is no language in this provision related to the recovery limitation.  Thus, because the medical expenses in this case were incurred more than one year before the action commenced, the Hospital is no longer entitled to recover those losses.

On Friday, October 9, 2009, the Michigan Supreme Court peremptorily reversed and remanded two cases, ordered oral argument on the application in one case, and denied leave to appeal in five cases.  In Auto-Owners Insurance Co. v. Ferwerda Enterprises, Inc., the Court peremptorily reversed the Court of Appeals decision because the Court concluded that the defendants’ claim clearly fell within the coverage provided by the Auto-Owners’ policy.  The Court remanded the case to the Court of Appeals to consider whether the trial court properly assessed attorneys’ fees and penalty interest against Auto-Owners.   

In Andres v. State Farm Mutual Automobile Insurance Co., the Court also peremptorily reversed the Court of Appeals’ decision.  The Court concluded that even though State Farm may not have plead fraud with specificity as an affirmative defense to the plaintiff’s claim, because State Farm did mention fraud in its affirmative defenses and the trial court’s consideration of State Farm’s fraud defense, the Court of Appeals erred by failing to consider State Farm’s fraud defense to the parties’ attendant care agreement.  The Court remanded the case to the Court of Appeals for further consideration.

In Shay v. Aldrich, the Court ordered oral argument on the application for leave to appeal.  The Court ordered the parties to determine whether Romska v. Opper is rightly decided.  Romska, an opinion written by Justice Markman while he was on the Court of Appeals, holds that a where a driver releases “all other parties, firms or corporations who are or might be liable,” the releasor is barred from asserting claims against third parties to the release.

On Friday, September 25, 2009, the Michigan Supreme Court granted leave to appeal in Hoover v. Michigan Mutual Insurance Co.  The Court ordered the parties to address whether under the No-Fault Act, the defendant is obligated to pay for various costs including increases in property taxes, standard utility bills, homeowner’s insurance, home maintenance costs, telephone bills, dumpster expenses, elevator inspection expenses, cleaning stipends paid to the accident victim’s mother for time spent cleaning the victim’s area of the home, and snow removal.  The Court further ordered the parties to address whether Griffith v. State Farm Mutual Automobile Insurance Co., 472 Mich. 521 (2005) was correctly decided.  In Griffith, the Court concluded that food consumed by an accident victim while being cared for at home are not recoverable as “allowable expenses” under the No-Fault Act.  The Coalition Protecting Auto No-Fault, an advocacy group including various health care provider groups and the Michigan Association of Justice, submitted an amicus brief.

The Court also vacated the Court of Appeals’ judgment Braverman v. McCormick (In re McCormick), and remanded the case to the probate court to require an itemized accounting of the amounts that the petitioner and the receiver were paid from the estate.   In People v. Lloyd, in lieu of granting leave to appeal, the Court remanded the case to the Court of Appeals to reconsider whether the trial court’s error in admitting a 911 call was constitutional, whether the court had applied the proper “harmless beyond a reasonable doubt” standard, and whether the error was in fact harmless beyond a reasonable doubt. 

Finally, the Court denied leave to appeal in four cases.

On July 21, 2009, the Michigan Supreme Court issued its latest opinion in U.S. Fidelity Ins. & Guaranty Co. v. Michigan Catastrophic Claims Ass’n, Nos. 133466, 133468.  This opinion explicitly reverses the Court’s earlier ruling on these same cases, published on December 29, 2008.  Our blog post discussing that initial opinion can be found here.  Several weeks after the initial opinion, and after Justice Hathaway replaced Chief Justice Taylor on the Court, the Michigan Supreme Court granted rehearing in the case, but declined to require any additional briefing or argument on the case.  Our post on that decision can be found here.  In December 2008, the Court concluded where the No Fault Act requires the Michigan Catastrophic Claims Association (“MCCA”) to indemnify member insurers “for 100% of the amount of ultimate loss sustained under personal protection insurance coverages in excess of [$250,000].”  MCL 500.3104(2), and where the member insurer’s policy to claimants only covers “reasonable charges,” then MCCA has the authority to refuse to indemnify member insurers unreasonable charges paid to claimants.   In this latest opinion, the Court reached the opposite conclusion and found that the MCCA does not have the authority to refuse to indemnify member insurers for unreasonable charges.  As with December 2008 opinion, this was a 4-3 decision.

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On Friday, June 5, 2009, the Michigan Supreme Court denied leave to appeal in four cases; stayed the trial court proceedings in Hanners v. Sankaran, No. 138702, pending the Court’s consideration of the defendant’s application for leave to appeal; and ordered oral argument on the application for leave to appeal in State Farm Mutual Automobile Insurance Co. v. Hudson, No. 137698. 

The Court also granted reconsideration of its December 3, 2008 order in Scott v. State Farm Mutual Automobile Insurance Co., No. 136502.  In its 2008 order, the Court partially vacated the Court of Appeals’ decision because the Court concluded that the Court of Appeals did not apply the proper standard for causation in a no-fault action.  Specifically, the Court rejected the Court of Appeals statement that “[a]lmost any causal connection or relationship will do” to satisfy the causation requirement for a no-fault action.  The Court vacated the 2008 order, and denied the application for leave to appeal making the Court of Appeals’ decision on the defendant’s interlocutory appeal final.  Justices Corrigan, Markman, and Young dissented, stating that the “new majority”  was ignoring (rather than overruling) settled precedent, such as Thornton v. Allstate Insurance Co., 425 Mich. 643 (1986), and Putkamer v. Transamerica Insurance Corp of America, 454 Mich. 626 (1997).  Chief Justice Kelly filed a concurring opinion in which she explained her reasoning for vacating the 2008 order.

On May 12, 2009, the Court of Appeals published its decision in Johnson v. Wausau Ins. Co., holding that the one-year-back rule of MCL 500.3145(1) barred Tammy Johnson’s claim for benefits accruing before July 20, 2005, and that Johnson had failed to establish the reliance element of her fraud claims.  Johnson is the guardian of Nancy Eastman, who was severely injured in a car accident in 1983, when she was ten months old.  Johnson claimed that the insurance companies materially misrepresented the scope of benefits available for Eastman’s care beyond a $20 (later $21) per day care stipend.

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On Friday, April 24, 2009, the Michigan Supreme Court denied leave to appeal in five cases, denied a motion to waive fees in another case, and ordered oral argument on whether to grant leave the five cases discussed below.  In each case, the Court gave the parties 42 days to submit supplemental briefing, all but guaranteeing that these arguments will occur in the Court’s 2009-2010 term. 

Finally, the Court denied leave to appeal in VanSlembrouck v. Halperin, No. 135893, after hearing oral argument on whether to grant leave to appeal.  In VanSlembrouck, a medical malpractice action, the parties addressed whether medical malpractice plaintiffs relying on the 10-years-of-age provision in MCL § 600.5851(7) are entitled to the benefit of the notice-of-intent tolling provision in MCL § 600.5856(c). The parties focused their arguments on whether MCL § 600.5851(7) is a savings provision, rather than a statute limitation.  The Court’s denial of leave affirms the Court of Appeals’ decision that the plaintiffs are entitled to benefit from the tolling provision in MCL § 600.5856(c).   Justices Corrigan, Markman, and Young dissented.  This decision may be a harbinger of a relaxation of the Court’s jurisprudence strictly applying statutes of limitation.  Our earlier post on VanSlembrouck is here. Read more »

On Friday, the Michigan Court of Appeals issued a published per curiam opinion in which it clarified Michigan law on “first priority insurer” status in a dispute between two insurance companies related to “personal injury protection” (PIP) under Michigan’s no-fault insurance law.  Tevis v. Amex Assurance Co. (Case No. 282412).  Plaintiff incurred serious injuries as he was driving his motorcycle.  The automobile involved in the accident was insured by Amex through a policy issued in the state of Washington.  Amex, though it had registered in Michigan under MCL § 500.3163, did not provide no-fault coverage to the automobile driver.  However, the automobile driver’s parents did have a no-fault policy issued through Geico Indemnity Co.  When both insurers declined to play plaintiff PIP benefits, plaintiff filed suit.  

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On March 10, 2009, the Insurance Commissioner announced that seven automotive insurers will not receive requested rate increases because those insurers use a driver’s credit score and history in determining premiums.  Whether an automobile insurer may use credit scores to set rates has been the subject of a legal battle in Michigan since 2005.  As it stands today, resolution of that issue awaits leave to appeal to the Michigan Supreme Court.

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