Michigan Court of Appeals; Docket #361218; Unpublished
Judges Kelly, Swartzle, and Feeney; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Obligation of Claimant to Submit to Physician Examination [§3151]
Court Orders for Failure to Comply with Section 3151 and 3152 [§3153]
TOPICAL INDEXING:
Equitable Estoppel
Mend the Hold
SUMMARY:
In this unanimous, unpublished, per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order dismissing Plaintiff Ahmed Alshammam’s action for no-fault PIP benefits and underinsured motorist (“UIM”) coverage against Defendant Home-Owners Insurance Company (“Home-Owners”). The Court of Appeals held that the trial court did not abuse its discretion in dismissing Alshammam’s action as a sanction for failing to comply with its prior order that he attend Home-Owners’ defense medical examinations (“DMEs”).
Ahmed Alshammam was injured in a motor vehicle collision, after which he sought PIP benefits and UIM coverage from his automobile insurer, Home-Owners. When Home-Owners refused to pay his benefits, Alshammam filed suit, and during discovery, Home-Owners ordered that Alshammam attend a DME, originally scheduled for November 13, 2019. Thirty minutes before the examination, Alshammam informed Home-Owners that he had a neuropsychological examination scheduled the same day and could not attend Home-Owners' DME. Home-Owners then re-noticed the DME for December 9, 2019, but Alshammam again did not attend, later claiming that he had a meeting with his case manager at the same time.
After Alshammam missed the two DMEs, Home-Owners filed a motion to compel and for reimbursement of the $700 it incurred in no-show fees for the two missed examinations. The trial court granted Home-Owners motion and ordered Alshammam to appear for all future DMEs, to appear for a deposition, and to reimburse Home-Owners the $700. Pursuant to the court’s order, Alshammam did appear for the DME on January 23, 2020, and the medical examiner concluded that Alshammam did not require any further care or services as a result of the collision. Based on its examiner’s conclusion, Home-Owners terminated Alshammam’s benefits altogether, and later ordered that he appear for two additional DMEs. When Alshammam failed to attend the additional DMEs, Home-Owners filed a motion for summary disposition, arguing that Alshammam’s action should be dismissed altogether as a sanction for his failure to comply with the court’s order. The trial court agreed, granting Home-Owners’s motion.
The Court of Appeals affirmed the trial court’s summary disposition order, holding that the trial court did not abuse its discretion in dismissing Alshammam’s action as a sanction for his failure to comply with its order that he attend all future DMEs. The Court noted that the factors for determining whether dismissal is an appropriate sanction in PIP cases were set forth in Vicencio v Ramirez, 211 Mich App 501 (1995), and include the following:
“(1) whether the violation was willful or accidental; (2) the party’s history of refusing to comply with previous court orders; (3) the prejudice to the opposing party; (4) whether there exists a history of deliberate delay; (5) the degree of compliance with other parts of the court’s orders; (6) attempts to cure the defect; and (7) whether a lesser sanction would better serve the interests of justice.”
The Court also noted that, contrary to Alshammam’s argument on appeal, the trial court was not required to separately consider these factors with respect to Alshammam’s PIP claim and UIM claim, because the “same legal framework is applicable to dismissals as a sanction under the no-fault act and dismissals as a sanction under the court rules for failure to comply with discovery requests.”
Applying the Vicencio factors to this case, then, the Court determined that Alshammam’s violation of the court’s order was willful, given his “cursory and unsupported excuses for missing the first two DMEs, his unexplained failure to appear for the last two DMEs, and his history of not complying with discovery requests.” The Court determined that Home-Owners was prejudiced by Alshammam’s violation because it caused Home-Owners to incur no-show charges and because it precluded Home-Owners from investigating the extent of Alshammam’s injuries. The Court noted that Alshammam clearly violated the part of the court’s order compelling him to attend all future DMEs, and that Alshammam made no attempt to cure the defect of missing the last two DMEs. And lastly, the Court determined that a lesser sanction would not better serve the interests of justice because the trial court had previously imposed a lesser sanction and it did not work to compel Alshammam’s cooperation in discovery. Accordingly, the trial court did not err in dismissing both his PIP and UIM claims.
“First, the court found that the violation of the request for Alshammam to appear for four DMEs was willful, not accidental. See Vicencio, 211 Mich App at 507. As noted above, this was based on Alshammam’s cursory and unsupported excuses for missing the first two DMEs, his unexplained failure to appear for the last two DMEs, and his history of not complying with discovery requests, which had led to Home-Owners filing multiple motions to compel discovery. Second, the court noted Alshammam’s history of refusing to comply with previous court orders. See id. The record, after all, reflects that after Alshammam was ordered to appear for all future DMEs, he failed—without notice or explanation—to appear for two additional DMEs. The court considered the prejudice to the opposing party. See id. In doing so, the court found that Home-Owners incurred no-show charges and, because Alshammam was not appearing for the DMEs, Home-Owners was being precluded from investigating the extent of Alshammam’s injuries. Moreover, although the court did not use the term ‘deliberate delay,’ see id., the court found that Alshammam had not proferred any notice or explanation for failing to appear for the last two DMEs and that it was only two months after the last missed DME that Alshammam suggested that he might be objecting to the need for the last two DMEs. The court recognized that Alshammam had complied with parts of the courts orders. See id. Specifically, Alshammam complied with the court order directing that he appear for the DME scheduled for January 23, 2020. Next, Alshammam did not attempt to cure the defect caused by missing the last two DMEs. See id. As recognized by the trial court, his failure to appear at the last two DMEs was without notice or explanation, and it was only two months after the last DME was scheduled that he suggested he might have an objection to the last two DMEs.
Alshammam argues that the trial court failed to consider whether a lesser sanction would better serve the interests of justice. In Vicencio, this Court held that the trial court’s failure to place its reasoning and consideration of alternative sanctions on the record is an abuse of discretion. Vincencio, 211 Mich App at 507 (‘Before imposing [dismissal], the trial court is required to carefully evaluate all available options on the record and conclude that the sanction of dismissal is just and proper.’). However, the court’s opinion and order expressly noted that lesser sanctions had, in fact, been imposed based on Alshammam’s failure to attend the first two DMEs. Again, the court entered an order compelling Alshammam to attend a DME scheduled for January 23, 2020, to appear for his deposition, and to attend all future DMEs. As a sanction for the failure to comply with the requests for the DMEs, the court ordered him to reimburse Home-Owners for the no-show charges. Despite that lesser sanction being imposed, and despite the existence of a court-order, Alshammam failed to attend two additional DMEs. Thus, it was only after considering the relevant facts and circumstances that the court found that dismissal was an appropriate ‘sanction in this context.’ Although the court could have provided a more detailed analysis as to why the lesser sanctions were not appropriate, the court’s actual imposition of lesser sanctions, and its decision only to impose the drastic sanction of dismissal in light of Alshammam’s continued non-compliance, was not an abuse of discretion.”
Next, the Court of Appeals rejected Alshammam’s attempt to invoke the doctrine of equitable estoppel to preclude Home-Owners from seeking additional DMEs after already terminating his benefits. The Court noted that Alshammam was in litigation at the time Home-Owners sought the additional DMEs, and thus required to submit to them under MCL 500.3151(1).
“Alshammam contends he was induced to believe his present medical condition was no longer relevant, and as a result, additional DME’s were no longer required based on a July 28, 2020 correspondence notifying him that Home-Owners terminated payment for benefits on June 11, 2019. However, Alshammam fails to point to language in the correspondence that would have reasonably led him to believe his appearance at future DME’s was no longer required. Rather, the correspondence states that ‘[a]ll rights, terms, conditions, and exclusions in the insurance code are in full force and effect and are completely reserved.’ And, under MCL 500.3151(1), at the request of Home-Owners, Alshammam was required to submit to mental or physical examinations by physicians so long as his mental or physical condition was material to his claim for benefits under the no-fault act. Thus, contrary to Alshammam’s argument, the language in the correspondence specifically stated provisions of the insurance code, including MCL 500.3151, were still in effect. Indeed, notwithstanding the denial of benefits, Alshammam was still maintaining a suit against Home-Owners for nonpayment of benefits. As a result, Alshammam was not justified in assuming additional DME’s were no longer necessary.”
Lastly, the Court of Appeals rejected Alshammam’s attempt to invoke the mend-the-hold doctrine in arguing that “the only reason for additional DMEs would have been for Home-Owners to ‘pivot’ and rely on an alternative basis for denying [his] claim for benefits.’ The Court noted, again, that Alshammam was in litigation against Home-Owners regarding his injuries, and Home-Owners was therefore entitled to examine him.
“The mend-the-hold doctrine has been applied in the insurance context. Smith v Grange Mutual Fire Ins Co of Mich, 234 Mich 119, 122-123; 208 NW 145 (1926). Under the doctrine, ‘once an insurance company has denied coverage to its insured and stated its defenses, the insurer has waived or is estopped from raising new defenses.’ Michigan Twp Participating Plan v Federal Ins Co, 233 Mich App 422, 436; 592 NW2d 760 (1999). Yet, ‘the doctrine’s applicability is limited to only those defenses that are based on the terms of the policy.’ Childers by Childers v Progressive Marathon Ins Co, ___ Mich App ___, ___; ___ NW2d ___ (2022) (Docket No. 356915); slip op at 5. ‘[T]he purpose of the doctrine is to prevent an insurance company from misleading an insured about the reasons for denying coverage under the terms of a policy. In those circumstances, the insurer is estopped from advancing new theories for denying coverage under the policy’s provisions[.]’ Id. Here, Home-Owners has not changed or raised new defenses to deny his coverage during the litigation. Instead, Home-Owners closed its investigation into Alshammam’s claims for benefits, and therefore, there were no longer any questions relating to his injuries or the reasonableness of his postaccident treatment. However, Home-Owners was still defending against Alshammam’s suit in the trial court, so his condition was still material to a claim for PIP benefits. As a result, Home-Owners’ defense is not predicated on the terms of the insurance policy, but rather on the mental or physical condition of Alshammam for the payment of PIP benefits. Therefore, the trial court did not abuse its discretion when it failed to find Home-Owners should have been estopped from requiring additional DMEs.”
