Michigan Court of Appeals; Docket # 349903; Published
Judges Gleicher, Kelly, and Shapiro; per curiam
Official Michigan Reporter Citation: ___ Mich App ___ (2021); Link to Opinion
STATUTORY INDEXING:
§500.3113 Disqualification From PIP Benefit Entitlement (Misrepresentation / Fraud as a Basis to Rescind Coverage)
TOPICAL INDEXING:
Fraud/Misrepresentation
SUMMARY:
In this unpublished 2-1 opinion (Judge Kelly dissenting), the Court of Appeals reversed the trial court’s grant of summary disposition to defendant on the issue of whether defendant had properly voided plaintiff’s policy due to her violation of an antifraud provision by making false statements to defendant after her auto accident. In doing so, the Court of Appeals relied on the Michigan Supreme Court’s recent holding in Meemic Ins Co v Fortson, ___ Mich ___ (2020) (Docket No. 158302) that found antifraud provisions are invalid to the degree they apply to postprocurement fraud.
This case arose from an automobile collision in which plaintiff was injured. Plaintiff filed a claim for personal protection insurance (PIP) benefits with defendant, her no-fault insurer, which denied her claim. After plaintiff brought suit, defendant moved for summary disposition on the ground that plaintiff’s policy and corresponding PIP coverage was void because plaintiff had violated an antifraud provision in the policy by making false statements to defendant after the auto accident regarding her employment, extent of injuries, and need for assistance. Plaintiff’s policy specifically provided that the policy would be void if a claimant made a material misrepresentation “either in procuring the policy or in the course of postprocurement claims.” The trial court granted defendant’s motion.
On appeal, the Michigan Court of Appeals based its decision in light of the Michigan Supreme Court’s recent decision in Meemic Ins Co v. Fortson. In Meemic, the Michigan Supreme Court “unambiguously concluded that antifraud provisions are invalid to the degree they purport to apply to misrepresentations or fraud that occur after the policy has been issued (postprocurement fraud) but upheld such provisions as long as they are limited to fraud in the inducement (preprocurement fraud).” Noting that the allegedly fraudulent statements in the case at bar were made postprocurement and did not induce the policy’s procurement, the Michigan Court of Appeals held that the law clearly set forth in Meemic required reversal of the trial court’s decision.
In its holding, the Michigan Court of Appeals noted that whether postprocurement fraud could violate a PIP policy has only become significant since the Court’s holding in Bahri v. IDS Prop Cas Ins Co, 308 Mich App 420 (2014) that a fraud exclusion in an insurance policy may be enforced when the fraud relates to proof of loss as a claim. However, the Court noted that Bahri “never considered whether the antifraud provision it upheld was consistent with the no-fault act insofar as it was applied to fraud other than fraud in the inducement.” The Court of Appeals determined that “[b]y addressing Bahri only tangentially and declining to adopts its holding, the Meemic Court left it to our Court to sort out what now remains of Bahri. We conclude that Bahri remains goods law only to the extent that it is consistent with the no-fault act and common law as explained in Meemic. In other words, it applies only in cases of fraud in the inducement.”
In her dissent, Justice Kelly focused her argument on the evidence of statements made by plaintiff that appeared to be false. However, the Majority concluded that “[t]he question in this case is not whether plaintiff committed postprocurement fraud[,] [but] whether the fraud provision in defendant’s policy is enforceable as to postprocurement fraud so as to enable a court to sustain a preemptive denial of all coverage, even where some or all of claim is meritorious.”