Michigan Court of Appeals; Docket No. 299307; Unpublished
Judges Wilder, Hoekstra, and Borrello; unanimous, Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion:
On February 6, 2013, in lieu of granting leave to appeal, the Michigan Supreme Court REVERSED the Court of Appeals decision, in part, with respect to the attorney-fee award and AFFIRMED the decision in all other respects; Link to Order:
STATORY INDEXING:
Reasonable Proof Requirement [§3142(2)]
12% Interest Penalty on Overdue Benefits – Nature and Scope [§3142(2) (3)]
Interest Penalty for Service Providers
Requirement That Benefits Were Unreasonably Delayed or Denied [§3148(1)]
Presumption of Unreasonableness
Bona Fide Factual Uncertainty / Statutory Construction Defense
TOPICAL INDEXING:
Not Applicable
In this unanimous unpublished per curiam Opinion, the Court of Appeals AFFIRMED the trial court's award of penalty interest to Defendant Spectrum Health for amounts on a claim that USAA disputed in good faith, which included amounts owed in excess of conditional payments received from the injured claimant's insurer, because an insurer’s good faith refusal to initially pay a claim is irrelevant for purposes of awarding penalty interest, and because receipt of the partial conditional payments did not relieve the claimant of the liability for the remaining amounts owed to Spectrum and therefore constituted incurred expenses. The Court further AFFIRMED the trial court’s award of statutory attorney fees to Defendant Rimbey because after a review of “the trial court's opinion and the record evidence presented,” the Court was not left with a “definite and firm conviction” that a mistake was made below when the trial court held that there existed no legitimate question of factual uncertainty warranting denial of the claim.
This declaratory action was filed by United Services Auto Association (USAA) and sought a determination of USAA’s liability to pay no-fault PIP benefits for injuries sustained by Rana Reyes - who was seriously injured after she intentionally exited her boyfriend's moving vehicle during a relationship dispute. The Court described the facts surrounding the accident as follows:
"In the early morning hours of November 16, 2008, Rana Reyes was severely injured when she intentionally exited a moving vehicle driven by Gabriel Tagg, after becoming emotional because Tagg did not reply in kind when Reyes told him that she loved him. Tagg and Reyes had been in a dating relationship for the preceding six months, although there was evidence that Tagg had taken measures to denounce that relationship a few days previous. During the evening and night of November 15, 2008, Tagg and Reyes joined friends at a local establishment to celebrate Reyes's birthday. The couple engaged in intimacy in Tagg's vehicle before entering the bar. Once inside the bar, Reyes began drinking alcohol. She consumed a substantial amount of alcohol over the course of the evening, and, on more than one occasion, Reyes told Tagg that she loved him. Tagg did not reply in kind. Reyes became "drunkenly emotional" on more than one occasion as a result and had to be calmed by her sister, Leah Rimbey, who advised Reyes that it was apparent that Tagg was interested in her. Then, as Tagg and Reyes were returning to Tagg's residence, Reyes confronted Tagg about his failure to reciprocate her expressions of love for him. Tagg again declined to tell Reyes that he loved her;. Reyes became emotional and began saying that she needed to "get out of' the vehicle. Tagg did not feel it was safe to let Reyes out of the vehicle in her intoxicated state, because they were "in the middle of nowhere." Instead, he attempted to calm Reyes and he advised her that she "just need[ed] to go home and sleep this off." As they were travelling along the roadway, at a speed of 35 to 45 miles per hour, Reyes again said "I need to get out of here," opened the door and exited the moving vehicle. Reyes was struck by the rear passenger tire, suffering a significant closed head injury."
Following the accident, Reyes received treatment from Spectrum, for which Spectrum received conditional payment, in part, from Reyes's health insurer. USAA initially refused to pay no-fault benefits after concluding that Reyes’s injuries were self-inflicted. USAA reached this initial conclusion for various reasons. Shortly after treatment began, Spectrum noted in its Care Assessment Report that Ms. Reyes "may have intentionally tried to hurt herself." The traffic crash report and local newspapers also reported that "Reyes likely jumped from a moving vehicle during a dispute with her boyfriend." Gabriel Tagg further revealed that Reyes had told him previously that she was a "cutter." Tagg further revealed in a phone interview to USAA that prior to the accident, Reyes stated to him that she "needed to exit the vehicle." USAA later hired an investigator and went on to conclude that Reyes’s injuries were not the result of “accidental bodily-injury.” Shortly thereafter, USAA filed this declaratory action seeking a determination of its liability to provide PIP benefits for Reyes. However, after conducting formal discovery, USAA concluded that Reyes’s claim was in fact warranted and tendered payment to Spectrum in full for the medical services that it had provided to Reyes. This amount included unpaid amounts that Spectrum billed to Reyes’s health insurer for which Spectrum only received partial payments. Reyes remained liable for these amounts until payment was received in full by USAA.
Defendant Spectrum went on to seek penalty interest under MCL 500.3142 --- which the trial court awarded for all outstanding amounts, including the amounts that remained unpaid for services that were paid for in part by Reyes’s health insurer. Defendant Rimbey went on to seek a statutory award of attorney fees under MCL 500.3148, which the trial court also granted after finding that USAA’s denial of the claim was “unreasonable” because no evidence was presented to support a finding that Reyes actually intended to injure herself, but rather she intended only to exit the vehicle --- such that there existed no legitimate factual uncertainty warranting USAA’s denial of the claim. This appeal followed and the Court of Appeals affirmed as to both rulings.
In seeking reversal of the penalty-interest award, USAA first argued that “it did not have reasonable proof of the fact and of the amount of the loss . . . because the evidence available to it reflected that Reyes may have intended to harm herself when she intentionally exited Tagg's moving vehicle. “ However, the Court rejected this argument, explaining that:
“[p]enalty interest must be assessed against a no-fault insurer if the insurer [that] refused to pay benefits and is later determined to be liable, irrespective of the insurer's good faith in not promptly paying the benefits. . . . [O]nce reasonable proof of injuries and losses is received, the insurer bears liability for statutory interest on any payments that become overdue. To reiterate, an insurer's good faith in withholding payment of benefits . . . is irrelevant to liability under the penalty interest statute.”
The Court then concluded that USAA was provided with reasonable proof of the fact and of the amount of the loss. In this regard, the Court reasoned:
“ . . .the record establishes that by that date plaintiff knew that Reyes had been injured in an incident involving a motor vehicle plaintiff also knew it was the responsible insurer and that Spectrum was providing medical care to Reyes. The record also reveals that . . . plaintiff had received Spectrum's treatment records and its first billing invoices. Despite any initial question as to whether coverage might be excluded, plaintiff ultimately determined that it was liable for the payment of the claim. Consequently, because any good faith by plaintiff in withholding payment is wholly irrelevant to the award of penalty interest, the trial court did not clearly err by determining that benefits were overdue as of January 12, 2009, and awarding Spectrum penalty interest accordingly.” (Internal quotations omitted)
USAA further argued that under the case Williams v AAA of Michigan, 250 Mich App 249 (2002), Spectrum's receipt of partial payment by Reyes's health insurer precluded Spectrum from receiving penalty interest for the amounts still owed in excess of what was paid for by Reyes’s health insurer because the excess amounts were never billed to Reyes and do not constitute an “incurred” expense. However, the Court found Williams to be distinguishable and rejected this argument, noting that "in Williams this conclusion was based on the fact that once plaintiff insured's medical bills were paid by his health insurer in an amount agreed to by his health care providers, plaintiff insured had 'no liability for the full medical service amounts initially charged by [the insured's] health care providers.' Id. Such is not the case here as plaintiff insured bears legal responsibility under the no-fault act for the full cost of Reyes's medical treatment by Spectrum. This obligation exists irrespective of any agreement between Spectrum and a health insurance provider to accept lesser amounts in cases where the health insurer bears responsibility for payment of bills for medical treatment rendered to its insured(s) by Spectrum."
The Court then found that the trial court properly calculated the interest in an amount that reflected Spectrum’s receipt of the partial payment.
In affirming the trial court’s award of attorney fees, the Court found that the record below sufficiently supported the trial court’s conclusion that no legitimate question of factual uncertainty existed as to whether Reyes suffered an accidental bodily injury. In reaching this conclusion, the Court first explained:
“The no-fault act provides PIP benefits for accidental bodily injury arising out of the . . . use of a motor vehicle, and it defines accidental bodily injury as injury not suffered intentionally by the injured person or caused intentionally by the claimant. Thus, the no-fault act does not cover injuries caused intentionally. One acts intentionally if he intended both the act and the injury. The subjective intent of an actor is the focus of determining whether the actor acted intentionally.”
With the foregoing in mind, the Court then conducted a thorough review of the record below and concluded that “that plaintiff had no evidence that Reyes intended to injure herself, and thus, plaintiff's delay in paying PIP benefits was unreasonable” such that the trial court’s statutory attorney-fee award was proper under MCL 500.3148. In doing so, the found it pertinent that “the trial court took into consideration all evidence available to plaintiff regarding Rana's mental state and corresponding testimony from those who were with Rana on the date of the incident. The trial court made extensive use of the record evidence provided by the only eyewitness to the incident. Furthermore, the trial court also found that when queried, representatives of plaintiff could not proffer what evidence plaintiff needed as proof that the injury was accidental. Lastly, the trial court found that much of the delay in payment was due to plaintiff's decision to delay deposing witnesses." Thus, the trial court held that plaintiff had failed to rebut the presumption under Ivezaj.
Based on the foregoing, the Court was not left with a “definite and firm conviction that a mistake has been made” and affirmed the trial court’s award of attorney fees.
