Michigan Court of Appeals; Docket No. 232282; Published
Judges Cooper, Jansen and Danhof; 2-1 (Danhof dissenting)
Official Michigan Reporter Citation: 254 Mich. App. 702, Link to Opinion 
STATUTORY INDEXING:
Allowable Expenses for Home Accommodations [3107(1)(a)]
12% Penalty On Overdue Benefits – Nature and Scope [3142(2) (3)]
Requirement That Benefits Were Overdue [3148(1)]
Requirement That Benefits Were Unreasonably Delayed or Denied [3148(1)]
Presumption of Unreasonableness [3148]
TOPICAL INDEXING:
Not applicable
CASE SUMMARY:
In this 2-1 published opinion written by Judge Cooper, the Court of Appeals analyzed a no-fault insurer’s legal duty and penalty sanctions liability in a claim for residential accommodations under section 3107(1)(a) of the No-Fault Act. The plaintiff in this case sustained severe injuries in a motor vehicle accident which resulted in the amputation of her right leg above the knee. As a result of her injury, plaintiff’s home required certain modifications. On December 2, 1997, plaintiff submitted a letter to defendant with an occupational therapist’s report detailing the need for modifications to plaintiff’s home. Plaintiff also advised defendant that she had contacted a local architect to prepare a proposal and an estimate for the necessary modifications. The architect charged plaintiff $815 for the proposal. The architect’s proposal, estimate and bill were forwarded to defendant in March, 1999. According to plaintiff’s architect, the home modifications would cost approximately $215,000. A few months after receiving plaintiff’s proposal, defendant sent its own occupational therapist to assess plaintiff’s situation. Based upon its therapist’s evaluation, defendant claimed that the home modifications could be accomplished for substantially less money. Defendant further denied plaintiff’s request for reimbursement for the architectural bill and failed to pay any money whatsoever to plaintiff toward the home modifications she requested. Defendant conceded the necessity of home modifications, but maintained that plaintiff’s request were unreasonable. At the time of trial, plaintiff’s home remained unmodified.
At trial, the jury found that home modifications were reasonably necessary in the amount of $220,500. In addition, the jury found that the architect’s bill was reasonably necessary. The jury further found that defendant had received reasonable proof regarding the home modifications on December 2, 1997, when defendant received the occupational therapist’s report. Pursuant to the jury’s verdict, the trial judge entered judgment in favor of plaintiff for the home modifications and the architect’s bill. In addition, the trial court assessed no-fault penalty interest under section 3142 and no-fault attorney fees under section 3148.
The Court of Appeals affirmed the trial court’s rulings regarding the accommodations issues. It began its analysis by noting, “The avowed overall goals and purpose of the no-fault act are defeated if no-fault insurers are allowed to unreasonably deny benefits, thereby requiring their insureds to seek recourse in the legal system.” The court rejected defendant’s argument that it was not obligated to pay no-fault benefits until plaintiff became liable for the home modifications. In rejecting this theory, the court stated the following with regard to the defendant’s responsibility in this home accommodations case:
“. . . defendant agreed that some home modifications were necessary and the record shows that plaintiff was without full access to her home. In spite of this, defendant never presented a plan definitively expressing the modifications it would approve or proffered any money for home modifications to plaintiff during the three years prior to trial. . . .
Defendant essentially asks this court to accept the premise that an insured must be able to pay for or have the economic ability to obligate oneself for all benefits before they become due. . . .
In terms of home modifications, defendant’s position would preempt insureds from receiving potentially costly accommodations unless they could afford the modifications themselves or find someone willing to complete the job without any assurance of payment. Indeed, in the instant case, the home modifications that the jury found to be reasonably necessary totaled nearly a quarter million dollars. To require plaintiff to pay for these modifications before defendant could become liable would be inequitable given the remedial nature of the no-fault act. . . .
At the time of trial, defendant had not paid for any of plaintiff’s home modifications despite its acknowledgment that some modifications were in fact necessary. Even if defendant disagreed to the extent of the modifications, it had a duty to pay for those costs it did not dispute. See, Butt v DAIIE, 129 Mich App 211 (1983). Thus, defendant’s complete refusal to pay for any modifications since December 1997 was unreasonable and ultimately forced plaintiff into litigation.
To find that defendant was not liable for attorney fees, when it was necessary for plaintiff to litigate in order to obtain the necessary home modification benefits, would defeat the purpose of the no-fault act. Access to the court system would be limited to those who had the financial wherewithal to prepay or obligate themselves for modifications or those who could afford to retain the services of an attorney. We award attorney fees in no-fault so that insurers promptly pay injured parties for reasonable claims. Based on the record presented, we find no clear error in the trial court’s determination that the home modifications were overdue and that attorney fees were awardable for defendant’s inaction.”
Similarly, the court held that defendant was obligated to pay for plaintiff’s architectural fees. In this regard, the court noted, “The record indicates that plaintiff hired an architect to determine the feasibility and cost of the home modifications that were recommended and deemed necessary by her occupational therapist. . . . Because the architect’s plans and estimate sought to implement home modifications that were deemed by a jury to be reasonably necessary for plaintiff’s care, we find that the architectural services were an allowable expense chargeable to defendant. . . . Defendant never questioned plaintiff’s intention to hire an architect. . . . It is apparent that defendant’s dispute lies with the extent of the modifications recommended and not with plaintiff’s consultation with an architect. Thus, we find no clear error with the trial court’s award of attorney fees.”
The court also rejected defendant’s argument that it did not owe no-fault interest because any benefits it owed plaintiff for home modifications were not “overdue” under the No-Fault Act because they had not yet been incurred. In rejecting this argument, the court stated, “Again, we disagree with defendant’s contention that an insured has to become personally indebted in order to receive benefits under the no-fault system. The same principles that we discussed in determining defendant’s liability for attorney fees based on the home modification award applies to no-fault interest.”
Finally, the court agreed with defendant that plaintiff was not entitled to RJA judgment interest on future home accommodations, because those expenses are “future damages,” as defined in MCL 600.6013 and MCL 600.6301.
Judge Robert Danhof dissented regarding the holding that defendant was obligated for interest and attorney fees because he would find the expenses for the home modification were not overdue because plaintiff had not yet incurred those expenses and there was a bona fide factual dispute over the necessity of the modifications.
