United States District Court, Eastern District of Michigan; Case #05-72399
Honorable Judge Nancy G. Edmunds
Official Michigan Reporter Citation: Not Applicable, Opinion not Available 
STATUTORY INDEXING:
Allowable Expenses for Attendant Care [3107(1)(a)]
One-Year Back Rule Limitation [3145(1)]
TOPICAL INDEXING:
Consumer Protection Act (MCL 550.251, et seq.)
Uniform Trade Practices Act (UTPA – MCL 500.2001, et seq.)
CASE SUMMARY:
In this written opinion, Judge Edmunds determined that a plaintiff can bring an action for breach of an insurance contract while simultaneously pursuing independent claims for violation of the Michigan Consumer Protection Act and for fraud and misrepresentation.
In 1995, the plaintiff in this case was involved in a motor vehicle accident that rendered her a quadriplegic. Plaintiff made a claim for first-party benefits and defendant paid for much of her medical care. However, plaintiff filed this action, asserting claims of silent fraud, actual fraud, breach of contract, negligence and violation of the Michigan Consumer Protection Act. Plaintiff claims defendant failed to pay for, or notify her of its responsibility to pay for certain personal injury protection benefits. Specifically, plaintiff states that despite her occupational therapist’s recommendation that she receive 24 hours of attendant care, in 1996 defendant paid for only 12 hours of care at $5 per hour, in 1998 it paid for eight hours at $8 per hour and that it was currently paying for six hours at $12 per hour. Plaintiff also claims her care givers are entitled to be paid the rate a commercial agency would be paid and that she is entitled to housing and educational expenses.
Defendant moved to dismiss, arguing first that non-contract causes of action cannot coexist with breach of contract actions. The court disagreed, holding that the No-Fault Act is not plaintiff’s exclusive remedy where an insurance company is guilty of conduct that is otherwise illegal under other theories of law. Therefore, plaintiff was allowed to pursue independent claims for violation of the MCPA and for fraud and misrepresentation. In this regard, the Court held:
“. . . Plaintiff’s silent fraud, actual fraud, negligence and MCPA claims are not ‘on the policy.’ While Plaintiff’s contract claim seeks enforcement of the insurance policy, her fraud and negligence claims seek to recover for entirely separate tortious conduct. The MCPA claim alleges that Defendant misrepresented facts, communicated improperly, and failed to explain benefits, amongst other things. As a matter of law, therefore, Plaintiff may pursue negligence, actual fraud, silent fraud and MCPA claims alongside her breach of contract claim.”
Although the court held that plaintiff could pursue her claim for “silent fraud,” it found that she failed to support her claim. For silent fraud, a plaintiff must show that the silence “occurred under circumstances where there was a legal duty to disclose.” To meet this requirement, plaintiff stated that under the Unfair Trade Practices Act (UTPA), defendant was required to affirmatively disclose benefits that were recoverable under the Act. In support of this claim, plaintiff alleged that the defendant “had a policy of not paying family members and others commercially reasonable agency market rates for attendant care and of not informing its insureds of all benefits available under the insurance policy.” Plaintiff argued that this silence was tortious. In rejecting plaintiff’s claim, the Court stated:
“Although the cited section of the UTPA creates, among others, a statutory duty on insurance carriers not to misrepresent benefits to policy holders, a review of the statute does not reveal any form of affirmative duty to disclose. . . . The statutory duty not to misrepresent that does exist under the UTPA would arise if an insured asked her insurance carrier the extent of her benefits, and the insurer gave an incomplete answer. Here, however, Plaintiff merely alleges silence, without any accompanying request to Defendant regarding the extent of her benefits that would trigger a duty to respond with full disclosure.”
Next, the court determined that although a plaintiff may allege that an insurer’s failure to pay commercially reasonable attendant care rates was fraudulent, plaintiff must, under the Federal Rules of Civil Procedure, allege the fraud with specificity and particularity. The Court held this means that a plaintiff must:
“. . . allege the time, place and content of the alleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud. . . . A review of Plaintiff’s allegations of fraud . . . show that they do not meet the Rule 9(b) standard, as there is no specificity whatsoever regarding the time, place and content of the alleged fraud. . . . Plaintiff’s other allegations of fraud . . . essentially state that by notifying her that Defendant would pay a certain level of attendant care benefits, Defendant created a ‘false impression’ that these were the only benefits Plaintiff was entitled to under the policy. Such action was fraudulent, Plaintiff asserts, because Defendant knew she was entitled to a higher level of benefits than it originally offered to her. At no point does Plaintiff claim that she questioned Defendant regarding the possibility of being eligible for additional benefits than those Defendant offered, nor does she offer any pertinent case law to support the assertion that false impressions are sufficient to support a claim for fraud. . . . Without any allegations that Defendant affirmatively told Plaintiff that the benefits offered were all she was entitled to, and that this statement was known by Defendant to be false, Plaintiff’s fraud claim must fail as a matter of law.”
The court further found that the Michigan Supreme Court has not foreclosed the theory that the no-fault statutory one year back rule does not apply to claims for independent tortious conduct such as fraud. However, in this case, the plaintiff did not plead a viable fraud claim and therefore, this issue was moot. In so holding, the Court stated:
“This is not to say that the Michigan Supreme Court has held the one year rule is completely inflexible, with no place for certain equitable ideals to extend the applicable damages period. In Devillers, the court noted that ‘courts undoubtedly possess equitable power, but such power has traditionally been reserved for unusual circumstances such as fraud or mutual mistake.’ . . . Plaintiff claims that the alleged fraud in this case is just such an unusual circumstance that warrants this Court applying equitable principles to suspend the one year back rule. As noted previously, however, Plaintiff’s fraud claims are not valid as a matter of law, so there is no actionable fraud under which to suspend the one year back rule here.”
As to the plaintiff’s claims under the MCPA, the court held that the 2001 amendment to the MCPA barring claims dealing with the nonpayment of insurance benefits does not apply retroactively. Therefore, even though a plaintiff has no claim under the MCPA for any damages suffered after March 28, 2001, a plaintiff can pursue an MCPA claim for damages sustained prior to the 2001 amendment and, with respect to such claim, the MCPA six year statute of limitations would be applicable. In this regard, the Court held:
“Under current Michigan law, and effective since March 28, 2001, there is no cause of action under the MCPA for actions that also violate certain provisions of the UTPA that apply to insurance companies. MCL § 445.904(3). Therefore, Plaintiff has no claim under the MCPA for any damages incurred since March 28, 2001, as all of her MCPA claims rest on violations of the UTPA. A question exists, however, as to whether she has an MCPA claim for her damages over the period of approximately one year and nine months going back from March 28, 2001 until July 1, 1999, when the MCPA’s six year statute of limitations would kick in and bar any older claims. MCL § 445.911(7). . . .
. . . despite the Michigan legislature’s amendment to the MCPA, the Michigan Supreme Court appears to have held that Smith remains good law as to claims relating to events occurring prior to the MCPA amendment. In other words, the Michigan Supreme Court’s decision reversing Grant I implicitly held that MCL § 445.904(3) does not apply retroactively, because there would have been no claim on which to remand the case if the court felt otherwise.
Michigan law on the retroactivity of newly enacted statutes buttresses this conclusion as well. . . .
The Michigan Supreme Court’s understanding of the amendment in Grant II is well-reasoned because the amendment does not contain any language stating or implying that it should apply retroactively . . . Finally, this amendment is substantive, not procedural, because if applied retroactively, it would deny Plaintiff of her vested right to bring a cause of action based on the MCPA, a right that vested prior to the 2001 amendment. Therefore, the Court finds that the amendment only applies prospectively, and Plaintiff’s MCPA claim is not barred as a result of the 2001 amendment to the MCPA.”
(emphasis added)
Finally, the court held that the UTPA’s one year back rule, limiting plaintiff’s breach of contract damages claim, does not apply to bar her MCPA claim. The court noted that to hold otherwise would mean that plaintiff’s MCPA damages that predated the 2001 amendment would be wiped out by the one year back rule contained in the UTPA. The court held that such a conclusion had been implicitly rejected by the Supreme Court in its decisions in Grant I and Grant II. The Court then went on to comment about the pending Grant case and stated:
“. . . The Michigan Court of Appeals’ decision on remand in Grant v. AAA Michigan Wisconsin, Inc., 272 Mich App 142 (2006) (‘Grant III’) that basically reissued its earlier decision in Grant I is currently being appealed to the Michigan Supreme Court, so a definitive answer may be given if that court again decides to review the case. Under such circumstances, this Court is not convinced that the Michigan Supreme Court would allow Grant I and Grant III to stand if it were to review the case again, and finds that the one year back rule of the UTPA does not apply to Plaintiff’s claim under the MCPA. Therefore, Plaintiff has a claim under the MCPA for her damages accruing between July 1, 1999 and March 28, 2001.”
