Michigan Court of Appeals; Docket No. 270773; Published
Judges O’Connell, White, and Markey; 2-1 (Judge White concurring); per curiam
Official Michigan Reporter Citation: 273 Mich. App. 558, Link to Opinion 
STATUTORY INDEXING:
Definition of Motor Vehicle (General) [3101(2)(e)]
General Rule of Priority [3114(1)]
Exception for Occupants [3114(4)]
12% Interest 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)]
TOPICAL INDEXING:
Not applicable
CASE SUMMARY:
In this 2-1 published per curiam opinion, the Court of Appeals held that a health care provider who has furnished reasonably necessary products, services, and accommodations for an injured person’s care, recovery, or rehabilitation, is not required under the No-Fault Act to prove that the person is not entitled to benefits from an insurer of higher priority.
On January 23, 2004, Juan Resto was injured in a motor vehicle accident while a passenger in a vehicle insured by defendant Southern Michigan Insurance Company. Plaintiff Borgess Medical Center provided Resto’s medical treatment and submitted its bills to defendant. After defendant failed to pay, plaintiff filed this action. The trial court granted plaintiff’s motion for summary disposition and awarded plaintiff penalty interest and attorney fees.
On appeal, defendant argued that in order for plaintiff to be entitled to payment, under MCL 500.3114(4) plaintiff was required to show there was no insurer with higher priority. Defendant based its argument on the language in subsection (4) which provides that, “a person suffering accidental bodily injury arising from a motor vehicle accident while an occupant of a motor vehicle shall claim personal protection insurance benefits from insurers in the following order of priority. . . .” The Court of Appeals disagreed, explaining that under the plain language of subsection (4), only the injured person is required to follow the order of priority set out in the statute. Instead, the court stated, plaintiff’s entitlement to payment is determined by MCL 500.3114(1) which provides that, “an insurer is liable to pay benefits for accidental bodily injury arising out of the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle.” Therefore, plaintiff can bring an action for all reasonable charges for “reasonably necessary products, services, and accommodations for an injured person’s care, recovery, or rehabilitation.” Moreover, defendant’s argument contravenes the intended purpose of the No-Fault Act, i.e., to provide prompt payment to persons injured in automobile accidents without regard to fault. Adopting defendant’s argument would subject medical providers to protracted coverage disputes and would frustrate the primary purpose of the No-Fault Act. In this regard, the court stated:
“Thus, plaintiff may bring an action ‘for all reasonable charges’ when it has provided ‘reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation. Plaintiff’s ‘right to recover is dependent only on whether the injury arises out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle, as the term “motor vehicle” is defined in MCL 500.3101(2)(c).’ Nowhere in § 3114 or anywhere else in the no-fault act has the Legislature required a health care provider such as plaintiff to prove that it has submitted its claim to or brought suit against the no-fault insurer having the highest priority to pay its claim. . . . Moreover, defendant’s interpretation of the statute is contrary to the purposes the no-fault act and inconsistent with settled case law. . . . But the well-settled case law in this state holds that an insurer may not delay or deny paying an otherwise proper claim in order to first litigate a question of priority among insurers because to do so would frustrate the purpose of the statute. Here, although defendant did not dispute it provided coverage for the accident, defendant denied plaintiff’s claim for no-fault benefits only because another carrier might exist having a higher priority to pay the claim. Michigan case law rejects such a defense as a reason to delay paying a no-fault claim. . . . The no-fault act is intended to provide prompt compensation to persons injured in auto accidents without regard to fault. We find that subjecting medical providers like plaintiff to prorated coverage and priority litigation would frustrate the core purpose of the no-fault act. . . . Here, there was no bona fide dispute that Resto was injured in an accident while a passenger in a motor vehicle whose owner defendant insured with a no-fault policy of insurance. Thus, Resto was entitled to no-fault benefits. Under existing case law, defendant may not assert a real priority dispute as a defense. Certainly it follows that defendant may not assert a hypothetical priority dispute as a defense.”(emphasis in original)
Defendant next argued that the trial court improperly awarded plaintiff interest under MCL 500.3142 and attorney fees under MCL 500.3148(1), because the payment was not “overdue” until after it received positive proof that the care plaintiff provided was “reasonably necessary.” The court rejected this argument, explaining that although a plaintiff must show that benefits were reasonable and necessary in order to prevail in a lawsuit, in order to trigger penalty interest, a plaintiff must only have originally provided “reasonable proof of the fact and the amount of the loss sustained.” Once a plaintiff has provided such proof, it is up to the defendant to conduct its own investigation into the reasonableness of the charges requested. Furthermore, attorney fees can be awarded when benefits are overdue if the defendant was unable to show that its refusal to pay was reasonable. In this regard, the court stated:
“A claimant attempting to sue an insurer for no-fault benefits bears the burden of proving that allowable expenses were both reasonable and necessary. . . . But to obtain penalty interest pursuant to MCL 500.3142(2) only requires that a claimant provide an insurer ‘reasonable proof of the fact and of the amount of loss sustained.’ Once a claimant provides reasonable proof of the fact and amount of the loss, the insurer has a duty to conduct its own investigation into the reasonableness and necessity of the charges and ask for what it deems lacking. . . . Even though benefits were overdue, the trial court may not award attorney fees to a claimant unless ‘the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.’ MCL 500.3148(1). An insurer does not reasonably refuse or delay payment of benefits when it does so because of a legitimate question of statutory construction, constitutional law, or a bona fide factual uncertainty. . . . But when benefits are overdue within the meaning of § 3142(2), a rebuttable presumption of unreasonableness arises and the insurer has the burden to justify its refusal or delay in paying.”
