Michigan Court of Appeals; Docket # 331253; Unpublished
Judges Fort Hood, Cavanagh and Ronayne Krause; Unanimous, Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Resident Relatives [§3114(1)]
One-Year Notice Rule Limitation [§3145(1)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion, the Court of Appeals held the trial court improperly granted summary disposition for SMART, a self-insured entity, on plaintiff’s claim for PIP benefits based on the fact that plaintiff failed to notify his mother’s insolvent insurer – which would have had higher priority to pay benefits – of his injury.
According to the Court of Appeals, the proper procedure is for the insurer that pays benefits to either 1) file suit for reimbursement from the higher priority insurer or 2) join the higher priority insurer in a lawsuit. “[A] no-fault insurer may not deny benefits on the basis of a potentially existing higher-priority insurer,” the Court held.
Plaintiff was injured in March 2013 when the driver of a Suburban Mobility Authority for Regional Transportation (SMART) bus shut the door on plaintiff’s arm and pressed the brakes while plaintiff was trying to board the bus. Although plaintiff did not have a no-fault policy because he did not own a vehicle at the time, he was living with his mother, who had a no-fault policy with American Fellowship Mutual Insurance Company (American). At the time of plaintiff’s injury, American was in Chapter 81 rehabilitation. Plaintiff notified SMART, which was self-insured, of his injury pursuant to MCL 500.3145(1), but did not notify American. Shortly after notice was sent to SMART, American was liquidated and a December 12, 2013 deadline was set for filing any insurance claims. Plaintiff never provided American notice of his injury and did not attempt to commence any action against American or the Michigan Property and Casualty Guaranty Association (MPCGA). When this lawsuit was brought solely against SMART on December 22, 2014, SMART moved for summary disposition. The trial court granted SMART’s motion, finding that plaintiff’s claim was untimely.
The Court of Appeals reversed, finding it was not disputed that American was the higher priority insurer because, under MCL 500.3114(1), the insurer of a relative with whom a plaintiff resides is the higher priority insurer for an injured person who was not required to have insurance of his own, such as plaintiff in this case.
The Court continued by explaining the next insurer in priority would be “the insurer of the owner or registrant of the vehicle occupied” and thereafter “the insurer of the operator of the vehicle occupied.” Thus, in a typical situation, American would have been the highest priority insurer. However, because American was insolvent, the issue presented in this case was what effect, if any, American’s insolvency had on the priority of insurers.
To answer this question, the Court of Appeals examined §3145(1), which provides that a claim for no-fault benefits must be filed within one year of the injury, unless the insurer was properly notified of the injury within that one year. Here, the Court noted that plaintiff’s accident occurred on March 29, 2013, and that American was liquidated and the deadline for filing claims against it expired before the no-fault limitations period expired. Thus, by the time American ceased to exist, several months remained under §3145(1) to file notice or a claim for benefits. Accordingly, the Court held the trial court erroneously concluded that plaintiff’s claim was untimely.
Furthermore, the Court of Appeals found that MPCGA was not a “substitute” insurer and, instead, was an insurer of “last resort,” making it liable only if no other solvent insurer existed at any level of priority. Here, SMART was indisputably a solvent insurer at some level of priority, the Court said:
“If plaintiff’s mother’s policy did not cover plaintiff, or did not exist at all, there is no question that SMART would be liable. It is therefore definitionally at a higher priority than the MPCGA. Plaintiff therefore properly did not file his claim against the MPCGA, and the MPCGA cannot be liable in place of SMART.”
Next, the Court of Appeals rejected SMART’s assertion that, because American was solvent at the time of plaintiff’s injury and for a short time thereafter, plaintiff had to file a claim against American in order to proceed against SMART. The Court wrote:
“This argument elevates procedure over substance. As discussed, it might be accurate had American still existed when the no-fault limitations period expired; however, that limitations period did not obligate plaintiff to provide notice or file a claim until after it was no longer possible to proceed against American in any way. SMART’s argument would at this point simply mandate jumping through useless procedural hoops. In any event, a no-fault insurer may not deny benefits on the basis of a potentially existing higher-priority insurer.”
In reaching this conclusion, the Court of Appeals said it did not find any case law requiring insureds to file claims against their own insurer in addition to lower priority insurers. Rather, the Court said the expected procedure is for the paying insurer to 1) sue the higher priority insurer or 2) join the higher priority insurer in a lawsuit.
Based on the foregoing, the Court of Appeals held that plaintiff’s suit against SMART should not have been dismissed for failing to file a claim against American.
