Michigan Court of Appeals; Docket #300288; Published
Judges Murphy, Stephens, and Riordan; unanimous; per curiam
Official Michigan Reporter Citation: 297 Mich App 354; Link to Opinion
STATUTORY INDEXING:
Insurer’s Right to Penalty Attorney Fees for Fraudulent / Excessive Claims [§3148(2)]
TOPICAL INDEXING:
Not applicable
In this unanimous published per curiam Opinion, the Michigan Court of Appeals vacated the trial court’s Order denying defendant State Farm’s post-judgment motion for attorney fees and taxable costs. The case involved a five-day jury trial in which the jury found no cause of action with respect to the plaintiff’s claim for attendant care benefits under MCL 500.3107(1)(a). The Court of Appeals reasoned that it was clear error for the trial court to deny State Farm’s request for attorney fees given that the trial court denied the attorney fees on the premise that since there was no dispute that the plaintiff had sustained injuries and was in need of attendant care, there could be no finding that the plaintiff’s claim for attendant care benefits was, in some respect, fraudulent or so excessive as to have no reasonable foundation. Accordingly, the court remanded the case back to the trial court to make further factual findings regarding fraud, excessiveness, and unreasonableness in the proper context of whether the injured person’s family actually provided attendant care services and whether the rate of pay was appropriate.
The injured person in this case, John Gentris, sustained injuries in a motor vehicle accident that occurred in 1997. For several years, State Farm paid no-fault benefits, including attendant care benefits, for John Gentris’ injuries. This case was about attendant care claims after July 31, 2009. The plaintiff sought payment in the amount of approximately $100,000 for these attendant care expenses, plus penalty interest. Notably, State Farm had discovered several significant factual discrepancies regarding the attendant care claims at issue. For example, surveillance revealed that at many different times during which attendant care was being claimed, no one was providing attendant care. Furthermore, there were apparently times when attendant care was claimed when the providers were in jail or were not present with the injured person.
On the verdict form, the jury answered that no benefits were owed by State Farm. Following the trial, State Farm sought $101,415 in attorney fees pursuant to MCL 500.3148(2). The trial court denied the request for attorney fees on the basis there was no dispute that John Gentris was injured and in need of attendant care services and the only trial issues concerned whether the caregivers actually performed the services and what hourly rate should be paid.
On appeal, the Court of Appeals ruled that the trial court erred in reasoning that simply because there was no dispute that John Gentris was injured and in need of attendant care, State Farm could not recover attorney fees under MCL 500.3148(2). The court recognized that under the language of MCL 500.3148(2), “an insurer may be allowed by a court an award of a reasonable sum against a claimant as attorney fees for the insurer’s attorney and defense against a claim that was in some respect fraudulent or so excessive as to have no reasonable foundation.” The court further recognized that based on this language, a trial court’s decision to award or deny attorney fees was reviewed for abuse of discretion. The court ultimately reasoned that “the plaintiff’s claim for benefits could still be deemed somewhat fraudulent or so excessive as to have no reasonable foundation regardless of the fact that there was no dispute that John sustained serious injuries necessitating attendant care services.” Accordingly, the court remanded the case back to the trial court to make additional factual findings regarding fraud, excessiveness, and unreasonableness in the proper context of whether the injured person’s family actually provided attendant care services and whether the rate of pay was appropriate. In this regard, the court stated:
“We vacate the denial of attorney fees and remand for further proceedings. The trial court’s ruling was based on a problematic and faulty legal premise. The court was of the opinion that simply because there was no dispute that John had injuries and was in need of attendant care services, there could be no finding that plaintiff’s claim for benefits was in some respect fraudulent or so excessive as to have no reasonable foundation. The trial court correctly recognized that the primary dispute concerned whether the Thomases actually performed the services for which they sought benefits. Certainly, issues of fraud, excessiveness, and unreasonableness can conceptually permeate the issue regarding whether services were performed. Here, plaintiff’s claim for benefits could still be deemed somewhat fraudulent or so excessive as to have no reasonable foundation regardless of the fact that there was no dispute that John sustained serious injuries necessitating attendant care services. There was no clear error with regard to the trial court’s finding that John was in need of attendant care services, but there was a legal error in the analytical conclusion that the establishment of need precluded the existence of fraud or a finding of excessiveness with no reasonable foundation. A court abuses its discretion when it makes an error of law. Kidder v Ptacin, 284 Mich App 166, 170; 771 NW2d 806 (2009). Accordingly, we remand the case to the trial court so that the court, absent the faulty legal premise, can make factual findings regarding fraud, excessiveness, and unreasonableness in the proper context of whether the Thomases actually provided the attendant care services and whether the rate of pay was appropriate. See People v Sanders, 491 Mich 889; 810 NW2d 36 (2012) (not proper for this Court to make factual findings after rejection of trial court’s incorrect legal premise where the lower court did not have an opportunity to make its own findings absent the legal error). Consistent with the Supreme Court’s order and the well accepted notion that trial courts (or juries) and not panels of this Court are generally the appropriate fact finders, we remand for further proceedings.”
The Court of Appeals also vacated the trial court’s Order denying taxable costs to State Farm. There were several issues with how State Farm documented its taxable costs, as well as the trial court’s ruling denying all taxable costs. The Court of Appeals remanded the issue of taxable costs back to the trial court so the trial court could properly determine what costs were owed pursuant to MCR 2.625.
