Michigan Court of Appeals; Docket No. 206120; Published
Judges McDonald, Neff, and Smolenski; Unanimous
Official Michigan Reporter Citation: 241 Mich App 159; Link to Opinion 
STATUTORY INDEXING:
Penalty Interest on Overdue Benefits: Reasonable Proof Standard [§3142(1)]
TOPICAL INDEXING:
Uninsured Motorist Benefits: Exclusions from Underinsured Motorist Benefits
Private Contract (Meaning and Intent)
Legislative Purpose and Intent
CASE SUMMARY:
In this unanimous published Opinion by Judge McDonald, the Court of Appeals held in a case of first impression, that the No-Fault Act does not provide for any requirement that an insured make a "examination under oath," and such provisions in a no-fault policy are not valid. However, because an uninsured motorist endorsement is a matter of contract, an insured is obligated to submit to an examination under oath required by the policy, and failure to do so will result in dismissal of plaintiff s claim for uninsured motorist benefits.
Plaintiff was involved in a motor vehicle accident, and alleged entitlement to both uninsured motorist benefits and first-party no-fault benefits. State Farm relied upon the provisions of its insurance policy, which required that the insured making the claim shall submit to an examination under oath (EUO) regarding the claim. Plaintiff refused to submit to an examination under oath regarding either his uninsured motorist benefits claim or his first-party no-fault benefits claim. Plaintiff proceeded to an arbitration and obtained an award, even though State Farm refused to participate. Plaintiff then filed a claim to confirm the arbitration award, and the trial court dismissed plaintiffs claim for no-fault benefits, and required that the plaintiff submit to an EUO as a condition precedent to proceeding with his claim for uninsured motorist benefits.
On appeal, the Court of Appeals held that the trial court erred in granting summary disposition in favor of State Farm regarding plaintiffs claim for no-fault benefits for refusal to submit to an EUO. Determination of this issue of first impression is based upon the No-Fault Act. Nothing in the No-Fault Act authorizes an EUO. The No-Fault Act sets forth the insured's duties of cooperation, including the requirement that suit be commenced no later than one year from the date of the accident, unless written notice has been given [section 3145], that plaintiff submit to a mental or physical examination [section 3151], and that other information be provided regarding a claimant's earnings, medical history, condition and treatment [section 3158(1)].
The Court of Appeals held that PIP benefits are mandated by statute and therefore, the terms of the statute are crucial. Clearly, the EUO provision was not authorized by the No-Fault Act, and therefore, not valid. Even though the Michigan Department of Insurance had approved the EUO provision, such approval of a form is not conclusive proof that the endorsement complies with the statute. In this regard, the court held:
"Because personal injury protection no-fault benefits are mandated by the no-fault statute, the statute is the 'rule-book' for deciding the issues involved in questions regarding awarding those benefits. ...We recognize that the no-fault act does not specifically preclude or permit an EUO provision. However, we agree with plaintiff that the no-fault act sets forth the insured's duties of cooperation, and because it does not provide for an EUO provision, the provision is contrary to the no-fault act.... In reaching our holding today, we reject defendant's argument that the fact that the EUO provision was filed with the Michigan Department of Insurance and approved by the insurance commissioner shows that the provision is consistent with the no-fault act. In Michigan, the insurance commissioner may reject forms which are in conflict with the statute. Franklin Life Ins Co v Comm 'r of Ins, 159 Mich 636; 124 NW 522 (1910). However, the approval of a form by the insurance commissioner is not conclusive proof that the endorsement complies with the statute. Instead, the insurance commissioner's approval is only somewhat persuasive that the policy complies with the statute. Drogula v Federal Life Ins Co, 248 Mich 645, 648; 227NW 692 (1929); Progressive Mutual Ins v Taylor, 35 Mich App 633, 643; 193 NW2d 54 (1971). Moreover, we have examined the cases from other jurisdictions defendant cites which have upheld EUO provisions, but we decline to follow these cases."
Concerning plaintiffs claim for uninsured motorist benefits, the Court of Appeals held, however, that the EUO provision is enforceable in the context of plaintiff s claim for uninsured motorist benefits. Uninsured motorist benefits are not statutorily required by the No-Fault Act, and the language of the insurance policy controls.
Regarding the remedy for failure to comply with the request for an EUO, the court held that cases in the context of homeowner's insurance policies have held that dismissal of the action is the remedy for failure to comply with a requirement to submit to an EUO. However, unless non-compliance with this requirement is found to be "willful non-compliance," the dismissal should be without prejudice.
