Michigan Court of Appeals; Docket #351838; Unpublished
Judges Jansen, Murray, and Cameron; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion; Link to Concurrence
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
Fraud/Misrepresentation
SUMMARY:
In this unanimous, unpublished, per curiam decision (Murray, concurring), the Court of Appeals, on remand from the Supreme Court, vacated the trial court’s denial of Defendant Geico Indemnity Company’s (“Geico”) motion for summary disposition seeking dismissal of Plaintiff Kimberly Johnson’s first-party action on the basis of fraud. The Court of Appeals originally reversed the trial court’s denial of Geico’s motion—and remanded to the trial court for entry of an order granting summary disposition in Geico’s favor—based on Bahri v IDS Prop Cas Ins Co, 308 Mich App 420 (2014). Johnson then sought leave to appeal to the Supreme Court, which vacated the Court of Appeals’ reversal and remanded for reconsideration under Meemic Ins Co v Fortson, 506 Mich 287 (2020). Applying Meemic on remand, the Court of Appeals held that Geico could not rescind Johnson’s policy altogether on the basis of fraud, but would still be entitled to summary disposition as to any claims Johnson submitted which were clearly fraudulent.
Kimberly Johnson was injured in a motor vehicle accident in 2017, after which she submitted claims for attendant care and replacement services benefits to Geico. Geico discovered that certain of Johnson’s claims covered time periods during which she was out of state and thus could not have received the alleged care from the providers listed on the claim forms. Geico then moved for summary disposition, seeking either to void Johnson’s policy altogether based on the policy’s fraud provision, or to defend against only Johnson’s claims which it asserted were fraudulent.1 The trial court denied Geico’s motion, but the Court of Appeals, in reliance on Bahri, reversed the trial court’s denial and remanded for entry of an order granting summary disposition in Geico’s favor. After the Court of Appeals denied Johnson’s motion for reconsideration, Johnson sought leave to appeal to the Supreme Court, which vacated the Court of Appeals’ prior judgment based on Meemic, which the Supreme Court decided in the interim.
On remand, the Court of Appeals vacated the trial court’s denial of Geico’s motion for summary disposition, but noted that Geico was still “seemingly entitled to summary disposition as to those claims for attendant care and replacement services that are obviously false,” even though, under Meemic and Williams v Farm Bureau Mut Ins Co of Mich, 335 Mich App 574 (2021), Geico could no longer “rescind the policy,” nor “flatly reject any and all claims for attendant care or replacement services.”
“With that in mind, we believe that Fortson’s statement that an insurer can reject fraudulent claims is a recognition that, if a specific claim is clearly fraudulent, the plaintiff will not be able to establish entitlement to benefits under the no-fault act. That is an issue distinct from an antifraud provision. Ultimately, and regardless of any antifraud provision of a policy, a claimant must establish that any PIP benefits sought are actually payable. See MCL 500.3107. In this case, for example, it is clear that plaintiff did not actually incur claimed benefits for attendant care and replacement services while she was out of state and away from her named caregivers. She cannot recover benefits for those claims. But that would not necessarily preclude plaintiff from recovering for attendant care or replacement services that she actually did incur at other times, or for other PIP benefits to which she can prove entitlement. This holding does not conflict with Williams or Fortson, as the issue ultimately boils down to whether plaintiff can prove those specific claims, not whether the antifraud provision applies.
The order denying defendant’s motion for summary disposition is therefore vacated, and this matter is remanded for reconsideration of the motion. Following the Williams interpretation of Fortson, defendant cannot rescind the policy, and cannot flatly reject any and all claims for attendant care or replacement services. However, defendant is seemingly entitled to summary disposition as to those claims for attendant care and replacement services that are obviously false. It is up to the trial court to make this determination on remand. We do not retain jurisdiction.”
Judge Murray concurred with the majority, but wrote separately to posit that the Court should have relied on Fashho v Liberty Mut Ins Co, 333 Mich App 612 (2020) in resolving this case, not Meemic and Williams. Judge Murrary reasoned that only Fashho addressed the issue in this case, of whether an insurer can defend a claim for benefits based on post-procurement fraud committed during the claim submission process.
“This case is resolved through the application of Fashho v Liberty Mutual Ins Co, 333 Mich App 612; 963 NW2d 695 (2020), where this Court upheld the grant of summary disposition to defendant on the basis that there was no genuine issue of material fact that the plaintiff had committed fraud in applying for no-fault benefits, and thus defendant properly denied the claim based on fraud. Fashho, 333 Mich App at 615, 621-622. As here, the plaintiff’s insurance policy in Fashho allowed defendant to deny a claim (as opposed to voiding a policy, which it could also do) based on false misrepresentations, and the denial was based upon misrepresentations made both before the suit was filed, and after it was filed during discovery. Id. See also, Shelton v Auto-Owners Ins Co, 318 Mich App 648; 899 NW2d 744 (2017).
However, in my view neither Meemic Ins Co v Fortson, 506 Mich 287, 309-310; 954 NW2d 115 (2020), which held that the applicable antifraud contract provision was void because it was based upon post-procurement misrepresentations, nor Williams v Farm Bureau Ins Co, 335 Mich App 574; 967 NW2d 869 (2021), which in its holding merely reaffirmed what Meemic held, address what is at issue here: whether an insurer can defend a claim for benefits (and not seek to void the entire policy) on the basis that the post-procurement information submitted in support of the claim was fraudulent. The Meemic Court, in fact, specifically disclaimed that it was addressing this issue. Meemic, 506 Mich at 307 n 15. Thus, I would abstain from any reliance on Meemic or Williams, as both dealt with defendants seeking to void policies with post-procurement misrepresentations. VHS of Mich, Inc v State Farm Mut Auto Ins Co, __ Mich App __, __; __ NW2d __ (2021) (Docket No. 352881); slip op at 9 (‘this case is factually distinguishable from Haydaw, Meemic, and Williams, where the insurers sought to rescind or void the subject insurance policies on the basis of allegations of fraud on the part of the insured. Here, defendant has not sought to rescind its policy. Rather, it is seeking to plead fraud with particularity in order to justify denial of claimed benefits.’). Defendant is not seeking to do that here, and the policy allows it to defend against the claim based upon fraud.”
1 The Court’s opinion is not entirely clear on this point: on pages one and two, the Court states, “Defendant moved for summary disposition, arguing that plaintiff’s insurance policy was void under the fraud provision,” but on page five, the Court states, “defendant does not seek to rescind the entire policy, but rather, to rely on plaintiff’s fraudulent conduct to defend against paying those benefits sought in the complaint.”
