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Auto Club Ins Assoc v State of Michigan (COA – UNP 12/10/2020; RB #4192)


Michigan Court of Appeals; Docket # 352044; Unpublished
Judges Letica, Riordan, and Cameron; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Motor-Vehicle Exception to Governmental Tort Liability Act

Court of Claims Litigations

In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s denial of the defendant State of Michigan’s motion for summary disposition, in which the defendant sought dismissal of plaintiff Auto Club Insurance Group’s (Auto Club) action to recover half the amount it paid in PIP benefits on a claim for which the State of Michigan and Auto Club were equal in priority.  Auto Club reached a settlement with the claimant in the claimant’s underlying first-party action against it—approximately 18 months after the subject motor vehicle collision—and subsequently filed the underlying action against the State of Michigan for reimbursement for half the settlement amount.  The State of Michigan argued that Auto Club action was barred by MCL 600.6431(1), however, because Auto Club’s claim accrued on the date of the collision, not on the date of the settlement.  The Court of Appeals disagreed, holding that Auto Club’s claim accrued on the date of the settlement, and that its claim against the State of Michigan for reimbursement, therefore, was not barred by MCL 600.6431(1).

Following a crash involving a motorcycle and two motor vehicles, one of which was owned and self-insured by the State of Michigan, and the other of which was insured by Auto Club, the injured motorcycle operator sought no-fault PIP benefits from Auto Club and the State of Michigan, both of which were equal in priority.  Auto Club and a third-party administrator working on behalf of the State of Michigan agreed that Auto Club would pay the claimant’s benefits in full and that the State of Michigan would compensate it for half the amounts paid, but then on April 11, 2017, almost three years after the crash, the State of Michigan sent Auto Club two emails in which it informed Auto Club that it would not make any additional payments until the claimant submitted to an IME.  After Auto Club failed to schedule any IME, the State of Michigan stopped reimbursing Auto Club for its share of the benefits Auto Club paid. 

Ultimately, the claimant filed a first-party action against both Auto Club and the third-party administrator, in which, for reasons left unclear by the record, the third-party administrator was dismissed and Auto Club reached a settlement with the claimant for $245,000, on October 12, 2018.  The State of Michigan refused to reimburse Auto Club for 50% of the settlement amount, however, prompting Auto Club to file the instant action against it.  The State of Michigan moved for summary disposition, arguing that Auto Club’s claim accrued on the date it sent the emails regarding an IME, April 11, 2017, not the date of the settlement, October 12, 2018.  Thus, the State of Michigan argued, Auto Club’s lawsuit against it was barred by MCL 600.6431(1).  Ultimately, the trial court denied the State of Michigan’s motion, “concluding that the April 11, 2017 e-mails did not constitute ‘unequivocal denials of any future payments,’” but were instead “‘demands for further information in order to allow the State to make a full determination as to whether continued benefits were required for the underlying claimant.’”  Thus, the trial court further concluded that Auto Club’s claim accrued on the date of the settlement, and was therefore not barred by MCL 600.6143(1).

The Court of Appeals affirmed the trial court’s denial of the State of Michigan’s motion for summary disposition, holding that the April 11, 2017 emails did not constitute an altogether refusal to make additional payments, and that April 11, 2017 could therefore not be deemed the operative date for determining when Auto Club’s claim accrued.

In this case, the State argues that Auto Club’s claim accrued no later than April 11, 2017. We disagree. The April 11, 2017 e-mails only reflect that Hanes was trying to determine whether an IME had been conducted or scheduled so that the State could receive “confirmation” that the claimant still required treatment and “that there [was] still a problem.” The e-mails did not indicate that the State would no longer pay Auto Club if an IME report was not provided. Rather, one of the e-mails indicated that, if an IME had not been scheduled, Hanes would schedule an examination and would “determine at that time what [was] still needed from the incident of 7/20/14.” Consequently, the April 11, 2017 e-mails did not constitute a denial of additional payment by the State. Rather, as noted by the trial court, Hanes was asking for additional information to determine whether the claimant was still entitled to PIP benefits given that it had been almost three years since the accident.

Furthermore, Hanes’s affidavit and notes after April 11, 2017, do not support that the State never intended to make additional payments. Indeed, the notes between June 2017 and March 2018 reflect that the State was not willing to make more payments until additional information was received. On April 4, 2018, Hanes noted that she had spoken with the attorney who was representing Auto Club in the Washtenaw County litigation. Although Hanes expressed frustration with the fact that the claimant had not submitted to an IME, counsel for Auto Club informed Hanes that an IME was being “done” and that the report would be provided to Hanes. Hanes’s notes reflect that the matter was discussed with the State on April 5, 2018, and that Hanes was not provided with any “additional information” in the months of May, June, July, and August 2018. On September 18, 2018, Hanes noted that she had received an e-mail from counsel for Auto Club, who wanted to discuss whether the State would “commit to paying half” if the Washtenaw County case settled. Hanes indicated “we will not,” but instructed counsel to contact the Attorney General’s Office to discuss the matter. Hanes’s notes after September 18, 2018, reflect that counsel for Auto Club had spoken with “the State” but that Hanes had not received any additional information from the State or from the Attorney General’s Office. On October 12, 2018, Auto Club and the claimant reached a settlement in the Washtenaw County action, and Auto Club’s efforts to recoup funds from the State in June and early July 2019 were unsuccessful.

In sum, there is no evidence that the State denied liability or altogether refused to provide any additional payments to Auto Club before the Washtenaw County lawsuit settled in October 2018. Instead, the evidence supports that the State wanted additional information so that it could determine whether the claimant was still entitled to PIP benefits; because the State did not receive the information, payments were not made after March 2017. Therefore, the undisputed evidence establishes that the harm did not occur until after Auto Club settled the lawsuit with the claimant in October 2018. When the complaint was filed on July 16, 2019, it had only been nine months since the settlement was reached. Because there is no factual dispute, we conclude that Auto Club complied with MCL 600.6431(1). Thus, the trial court did not err by denying the State’s motion for summary disposition under MCR 2.116(C)(7).

Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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