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Tipou v Marsh (COA - UNP; 2/27/2018; RB # 3710)

Michigan Court of Appeals; Docket # 331956; Unpublished
Judges Talbot, Meter, and Tukel; Unanimous, per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Allowable Expenses for Attendant Care [§3107(1)(a)]

Actual Fraud

In this unpublished unanimous per curium opinion examining the fraud-exclusion provision of an insurance policy, the Michigan Court of Appeals affirmed summary disposition in favor of defendant insurance company.  Video surveillance revealed that plaintiff had independently operated his vehicle for personal use on the same days he requested medical transportation services.  The Court found that plaintiff committed fraud and held that willful endorsement and submission of inflated transportation reimbursement logs constituted material misrepresentations.  Defendant was entitled to summary disposition even though plaintiff’s false statements were not verbal.  With regard to case evaluation sanctions, the Court vacated the award and ordered the trial court to reevaluate the “interest of justice exception” under the proper standard.

Plaintiff, Gazi Tipou, was injured in an automobile accident after co-defendant, Lashanda Marsh, struck his vehicle.  His physician issued a “Disability Certificate,” which stated plaintiff was “unable to drive and require[ed] transportation services.”  Co-defendant, Farm Bureau General Insurance Company, issued plaintiff’s insurance policy.  The policy contained the following fraud provision:

The entire policy will be void if, whether before or after a loss, you, any family member, or any insured under this policy has:

(1) intentionally concealed or misrepresented any material fact or circumstance;

(2) engaged in fraudulent conduct; or

(3) made false statements, relating to this insurance or to a loss to which this insurance applies.

Plaintiff’s insurance policy provided medical transportation as a compensable expense.  His travel log read, “By signing in the space below, I verify and agree I have received transportation to and from the [medical] facility . . . based on my doctor’s authorization due to my physical limitation of driving.” 

Defendant hired a private investigator to observe plaintiff following the accident.  Videotaped surveillance footage showed the transportation company dropping off plaintiff at his home.  And on more than one date on which plaintiff obtained transportation services, plaintiff was observed driving himself to “a gas station, to a bank, to a banquet hall, and then returning home.” 

Defendant sought to enforce the fraud-exclusion provision after concluding its surveillance.  Plaintiff subsequently sued defendants seeking PIP benefits and appealed the trial court’s award of summary disposition to Farm Bureau.

The Court began by affirming the holding in Bahri v IDS Prop Cas Ins Co, 308 Mich App 420, 421 (2014).  Summary disposition is appropriate when there is no material question of fact that a defendant “successfully proved a plaintiff committed acts encompassed by the fraud-exclusion provision of the insurance policy.” 

To void a policy because the insured has willfully misrepresented a material fact, an insurer must show that (1) the misrepresentation was material, (2) that it was false, (3) that the insured knew that it was false at the time it was made or that it was made recklessly, without any knowledge of its truth, and (4) that the insured made the material misrepresentation with the intention that the insurer would act upon it. A statement is material if it is reasonably relevant to the insurer’s investigation of a claim. (Quotation marks and citation omitted).

The Court addressed plaintiff’s contention that he never made a misrepresentation regarding his claim for transportation reimbursement because he “legitimately required medical treatment” as the physician’s certification indicated.  Medical treatment and transportation were reimbursable allowable expenses.  Plaintiff further asserted that Bahiri requires verbal statement(s) to prove a misrepresentation.  Under his theory, plaintiff’s signing of the medical transportation log would have been insufficient to constitute a material misrepresentation. 

In dismissing plaintiff’s contention, the Court clarified that false written attestations sufficiently prove fraud; no additional form of verbal evidence is required.  What is more, the physician issued the medical certification based plaintiff’s physical inability to drive any vehicle, regardless of the intended destination.  It did not follow that the doctor’s statement, which plaintiff incorporated and adopted by signing the transportation log, took affect only when plaintiff required transportation to medical visits.  Plaintiff’s use of transportation services inflated his allowable expense claims.  Because he had demonstrated the physical ability to drive to establishments of personal interest, plaintiff’s behavior was fraudulently misleading.

While a reasonable expense for transportation to treatment may well have been allowable, that expense would have been significantly lower if based on the actual fact of plaintiff being able to drive himself, as he was plainly able to do. . . . The combination of a false certification of a physical limitation of a physical limitation of driving, together with an inflated rate based on defendant being driven rather than driving himself, constituted fraud.  

Next, the Court dismissed plaintiff’s contention that even if he made a misrepresentation, it was immaterial.  Plaintiff relied on both Bahri and Thomas v Frankenmuth Mutual Ins Co, 284 Mich App 536 (2009), to illustrate his argument.  Bahri involved a fraudulent claim for replacement services.  Video surveillance captured that plaintiff “bending, lifting, carrying objects, running errands, and driving” on the same dates she claimed reimbursement for assistance with such tasks.  That plaintiff committed fraud when she submitted a false statement “indicating that she required assistance and that someone had provided such services to her.”  Importantly, “there was no indication in Bahri that the plaintiff had testified falsely, or had made any false statement beyond the submission of the statement falsely indicating that she required assistance and that someone had provided such services to her.”  The Court held that summary disposition was proper under the circumstances. 

The holding in Thomas is not dissimilar.  That plaintiff was caught driving “multiple times” on a day he requested and used medical transportation services.  He repeatedly lied about it during his deposition and perpetuated his misstatements.  The Court also upheld the trial court’s grant of summary disposition because the evidence showed that “plaintiff made material, false statements or representations “relat[ed] to this insurance or to a loss to which this insurance applies.”   Thomas illustrates that:

while false deposition testimony about a claim is sufficient to invoke the fraud disqualification, it is not the only means for doing so; the law does not require that the material misrepresentation be in the form of false deposition testimony. In other words, there is no requirement that in addition to making a fraudulent claim, a plaintiff must also make additional false statements about the claim. If that were the case, the law would in fact require two, not one, material misrepresentations.

Lastly, plaintiff argued that the trial court’s issuance of case evaluation sanctions against him was improper because the prevailing party, defendant, had engaged in excessive gamesmanship, thereby inflating actual litigation costs.  While the Court acknowledged the degree of deference accorded to the trial court when reviewing such matters, it found that the trial court did not apply the proper standard of review. 

A trial court’s decision whether to award costs pursuant to the ‘interest of justice’ provision set forth in MCR 2.403(O)(11) is discretionary. . . . The interest of justice exception under MCR 2.403(O)(11) is narrow and may only be invoked in “unusual circumstances. . . . In the present case, it is not clear that the trial court applied that standard. . . . The trial court acknowledged that plaintiff’s argument that Farm Bureau had unnecessarily drawn out the litigation and thereby potentially increased its litigation costs was “a reasonable argument. . . . Notably absent from the court’s comments is any reference to whether Farm Bureau’s delay in filing the motion for summary disposition was reasonable or done in good faith. We thus vacate the award of attorney’s fees and remand to the trial court to re-evaluate the interest of justice exception under the proper standard.

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