Michigan Court of Appeals; Docket #357926; Unpublished
Judges Jansen, Servitto, and Gadola; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Payment in Good Faith Defense [§3112]
Reasonable Proof Requirement [§3142(2)]
General / Miscellaneous [§3148]
In this unanimous, unpublished, per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order in favor of Plaintiff Husinka Group, LLC (“Husinka”), in Husinka’s first-party action seeking to recover unpaid no-fault PIP benefits from Defendant Farm Bureau General Insurance Company of Michigan (“Farm Bureau”). The Court of Appeals vacated, however, the trial court’s awards of no-fault penalty interest and attorney fees to Husinka, and remanded for factual findings regarding the appropriateness of such awards. In affirming the trial court’s summary disposition order, the Court of Appeals held that Farm Bureau failed to present any evidence to support its affirmative defense that it did not owe any additional benefits to Husinka—a subcontractor, hired by another home health agency, TheraSupport, to provide attendant care services to Roger Taliaferro, an individual catastrophically injured in a motor vehicle accident—because payment for Husinka’s services was included in a $900 per diem Farm Bureau paid to TheraSupport. In vacating the trial court’s award of no-fault penalty interest, the Court of Appeals held that a question of fact existed as to whether payment on Husinka’s claim was overdue. And in vacating the trial court’s award of no-fault attorney fees, the Court of Appeals held that the trial court failed to make a factual determination, on the record, regarding the reasonableness of Husinka’s claimed attorney fees.
Roger Taliaferro was catastrophically injured in a motor vehicle accident in 1988, after which he received “supported independent living” services from TheraSupport. TheraSupport, in turn, contracted with Husinka to provide attendant care services to Taliaferro. Taliaferro’s insurer, Farm Bureau, paid TheraSupport for the services it provided to Taliaferro at a per diem rate of $900, but did not pay Husinka for the services it provided to Taliaferro, arguing, instead, that Husinka’s services were included in the per diem it paid to TheraSupport. Husinka proceeded to file suit against Farm Bureau, and Farm Bureau both answered Husinka’s complaint and filed its own third-party lawsuit against TheraSupport, alleging in both that further payment to Husinka would be duplicative of the benefits it already paid to TheraSupport for Taliaferro’s services. More specifically, Farm Bureau argued that its obligation to pay further benefits to Husinka was discharged by its “good faith” payment to TheraSupport, pursuant to MCL 500.3112.
Husinka moved for summary disposition, which the trial court granted, finding that Farm Bureau failed to present evidence that the payments were duplicative. The trial court also awarded penalty interest and attorney fees to Husinka, and dismissed Farm Bureau’s third-party action against TheraSupport.
The Court of Appeals affirmed the trial court’s summary disposition order in favor of Husinka, holding that Farm Bureau failed to present any evidence to support its affirmative defense based on MCL 500.3112. Husinka and TheraSupport both provided billing statements to establish that they were billing for separate services, and there was no evidence of any agreement between Farm Bureau and any of the other parties in which it was agreed that a single per diem, inclusive of all attendant care services provided to Taliaferro, would be paid to TheraSupport.
“As applied in this case, in relying on MCL 500.3112, Farm Bureau essentially asserts that it is being double-billed for Husinka’s services because it made payments to TheraSupport that covered Husinka’s charges. The problem with Farm Bureau’s position is that Farm Bureau failed to factually support its allegations when responding to Husinka’s motion for summary disposition. In the trial court, both Husinka and TheraSupport submitted billing statements and records of the services provided, showing the hours for the services they provided to support that they were not double-billing but billing for separate services. In response, Farm Bureau did not identify anything in the proofs submitted—nor did Farm Bureau offer any additional evidence to support—that Husinka’s hourly charges were included in TheraSupport’s statements.
Instead, Farm Bureau alleges that it paid TheraSupport a per diem and that Farm Bureau believed that this per diem included all possible attendant-care services. There is, however, no agreement between Farm Bureau and Taliaferro regarding payment of a per diem to TheraSupport. And more specifically, there is no evidence of an agreement indicating that a per diem paid to TheraSupport was inclusive of all attendant-care services that Taliaferro might need.7 Nor has Farm Bureau identified any contractual language in an agreement (1) between Taliaferro and TheraSupport or Husinka, (2) between Farm Bureau and TheraSupport or Husinka, or (3) even between TheraSupport and Husinka, to support that there was a ‘per diem’ rate paid by Farm Bureau to TheraSupport that included all Taliaferro’s attendant care needs or that, more specifically, also covered Husinka’s charges. Stated differently, there is no basis for Farm Bureau to believe that payments for services provided by Husinka should instead be paid to third-party TheraSupport.
On this record, Farm Bureau’s mere assumption about what was included in its $900 a day payment to TheraSupport does not provide a basis for discharging Farm Bureau’s liability to Taliaferro or Husinka with regard to Husinka’s services. Indeed, MCL 500.3112 only discharges the insurer’s liability to the extent of the payments. And the evidence—that Farm Bureau failed to rebut—is that the $900 payment extended only to cover services provided by TheraSupport.”
The Court of Appeals vacated, however, the trial court’s awards of no-fault penalty interest and attorney fees to Husinka. With respect to the former, the Court held that there was insufficient evidence to establish when, exactly, Husinka submitted its bills to Farm Bureau. Husinka’s principal testified that he “probably” began billing Farm Bureau in July of 2018, but Husinka admitted that it had no ‘paper trail’ to establish when its bills were actually submitted. This lack of relevant evidence left a question of fact as to whether the benefits were “overdue” for purposes of MCL 500.3142.
“As applied in this case, fact questions related to when the benefits payable for Husinka’s services became ‘overdue’ preclude an award of a specific amount of interest at the summary disposition stage. In this regard, it is Husinka’s burden to prove, as part of its damages, that the benefits sought were overdue. See id. The only evidence Husinka offered regarding when it submitted proof of loss to Farm Bureau was the testimony of Husinka’s principal, Matthew Husinka, who testified at his deposition that he first faxed or e-mailed bills to Farm Bureau ‘probably’ sometime in June 2018. However, Husinka also conceded in the trial court—specifically in its reply brief relating to its motion for summary disposition—that it had ‘no paper trail’ to support this assertion. Further, although Husinka’s principal testified that he probably first submitted bills in June 2018, Husinka is seeking payment for services through November 2018, and it is entirely unclear when these additional bills were first submitted to Farm Bureau. Indeed, in the trial court, Husinka appeared to acknowledge the lack of certainty regarding when its bills were submitted to Farm Bureau, asserting in the alternative to its June 2018 estimate that, ‘[a]t the latest,’ Farm Bureau received the bills during discovery in April 2019.
Although a fact-finder might ultimately accept the testimony that Husinka’s principal submitted bills to Farm Bureau in June 2018, at the summary disposition stage, the missing ‘paper trail’ to support these assertions casts doubt on Matthew’s credibility and supports the existence of a fact question on when Farm Bureau received reasonable proof of Husinka’s claim. See White, 275 Mich App at 625. It also remains unclear when subsequent bills, for services through November 2018, were submitted, and as noted, Husinka’s briefing acknowledged some uncertainty regarding when proof of loss was provided, identifying April 2019 as the latest date that proof of loss might have been submitted. On this record, fact questions remain regarding the date when proof of loss was provided to Farm Bureau. Further, without a ‘paper trail,’ it is hard to conceive how the trial court could have determined—particularly at the summary disposition stage—that Husinka submitted reasonable proof of loss to Farm Bureau. Husinka bears the burden, both in moving for summary disposition and in ultimately proving that the benefits were overdue within the meaning of MCL 500.3142. And on the record presented, Husinka did not meet its burden of proving that no questions of fact remained and that summary disposition on the issue of penalty interest was warranted as a matter of law. See MCR 2.116(C)(10); MCR 2.116(G)(4).”
With respect to the trial court’s award of attorney fees, the Court of Appeals held that the trial court failed to make “any factual findings regarding the reasonableness or unreasonableness of Farm Bureau’s initial refusal to pay Husinka.” Thus, the trial court remanded for (1) a determination by the trier of fact of whether payment of Husinka’s bills was overdue, and (2) factual findings by the trial court regarding the reasonableness of Husinka’s claimed attorney fees.
“In this case, Husinka sought attorney fees in its motion for summary disposition. When ruling on this motion, the trial court dispensed with oral argument, see MCR 2.119(C)(3), meaning there were no factual findings on the record. The trial court’s written order also contains no factual findings regarding the reasonableness or unreasonableness of Farm Bureau’s initial refusal to pay. The written order addressed factors from Smith9 in an attempt to determine a reasonable amount of attorney fees, but missing from the lower court record are any factual findings regarding the reasonableness or unreasonableness of Farm Bureau’s initial refusal to pay Husinka. Attorney fees are not automatic in no-fault cases, and they are not warranted merely because Husinka prevailed or because Farm Bureau’s MCL 500.3112 defense proved unsuccessful. See Bronson Methodist Hosp, 295 Mich App at 456. Instead, MCL 500.3148(1) expressly requires the trial court to find that the insurer unreasonably refused to pay the claim or unreasonably delayed in making payment. Absent fact-finding by the trial court on the reasonableness of Farm Bureau’s initial refusal to pay, the record is insufficient for our review, and the appropriate course in these circumstances is to remand for additional fact-finding by the trial court.”
Farm Bureau appealed the trial court’s dismissal of its third-party action against TheraSupport. After filing, Farm Bureau attempted to amend its complaint to add an allegation—that TheraSupport was an unlicensed adult foster-care provider, and therefore providing services to Taliaferro unlawfully—but the trial court denied leave without explanation. The Court of Appeals held that the trial court erred in that regard, because trial courts must “provide a particularized reason for denying leave to amend.”