Michigan Court of Appeals; Docket No. 294068; Unpublished
Judges Wilder, O’Connell, and Whitbeck; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
One-Year Back Rule Limitation [§3145(1)]
Allowable Expenses: Incurred Expense Requirement [§3107(1)(a)]
12% Interest Penalty on Overdue Benefits – Nature and Scope [§3142(2) (3)]
Conduct Establishing Unreasonable Delay or Denial
Bona Fide Factual Uncertainty / Statutory Construction Defense
TOPICAL INDEXING:
Collateral Estoppel and Res Judicata
CASE SUMMARY:
In this unpublished per curiam Opinion regarding Plaintiff’s claim for no-fault PIP benefits, the Court of Appeals held in a rather lengthy opinion that:
A. The one-year-back rule did not apply to plaintiff’s claim after he was declared incompetent and a next friend was appointed pursue his claim because the next friend did not constitute a new party to which the rule would apply;
B. The trial court properly denied defendant’s motion for JNOV on the issue of whether plaintiff incurred any expenses for amounts billed by the provider that were never paid by the insurer because the evidence was insufficient to establish as a matter of law that the plaintiff was totally relieved of responsibility for paying the unpaid amounts.
C. The Doctrine of Collateral Estoppel precluded the defendant from re-litigating the issue of whether Plaintiff’s injuries were caused by the accident because in a previous trial wherein the plaintiff was awarded PIP benefits for the same injuries, a jury already found that the plaintiff’s injuries were caused by the accident, and the defendant never contested this finding in the present matter;
D. The trial court improperly lowered Plaintiff’s award of penalty interest because the trial court did not follow the procedure required for granting remittur set forth in MCR 2.611when it lowered the award; and
E. The trial court properly denied Plaintiff’s request for attorney fees under MCR 500.3148 because even though the Defendant was later ordered to pay the benefits at issue, the Defendant’s initial refusal to do so was not “unreasonable.”
With respect to the Court's holding regarding the one year back rule, the Defendant in this case successfully moved in prior proceedings to have the plaintiff declared competent from the start of this action. However, the plaintiff was later declared to be incompetent at trial, and Arlon Elser was then appointed as his "next friend." Shortly thereafter, on October 3, 2008, an amended complaint was filed to reflect the Plaintiff’s incompetence and the appointment of Arlon Elser as his next friend. The defendant then argued that the plaintiff was incompetent to initially file suit and any claims arising before October 3, 2007, were barred by the one year back rule set forth in MCL 500.3145(1) because, a "next friend" constitutes a “new party” to which the one year back rule would apply.
The court rejected this argument this argument in its entirety. The court first noted that “[a] party may not take a position in the trial court and later seek redress in an appellate court based on a contrary position” and concluded that defendant's prior contention that the plaintiff was competent from the start of the action precluded the defendant from now arguing on appeal that the plaintiff was incompetent at the time suit was filed. The court then held that Arlon Elser did not constitute a “new party” when he was appointed as plaintiff's next friend. The court reasoned:
“According to MCR 2.201(E)(1), a minor or incompetent person who does not have a conservator only can pursue a cause of action through representation of a next friend. Thus, in general, the appointment of a next friend must typically occur before the lawsuit is filed. However . . . [because] Plaintiff became incompetent while the action was pending. . . .the appointment is treated "as if" the complaint was filed after the appointment, and therefore, the appointment is compliant with MCR 2.201(E)(1).”
Therefore, the court concluded that "while the appointment of next friend in this case occurred after the initiation of the lawsuit, the suit is nonetheless still permissible."
In holding that the trial court properly denied defendant’s Motion for JNOV on the issue of whether plaintiff incurred expenses for amounts billed by healthcare providers that the defendant refused to pay, the defendant argued that the Plaintiff failed to prove that he incurred expenses in an amount greater than what defendant paid to Plaintiff’s providers. However, the court disagreed, noting that “liability for the payment of services generally will arise when the services have been rendered. While there are circumstances in which a claimant or an insured may be relieved of liability and, accordingly, not incur a full charge, the evidence at trial, viewed in a light most favorable to plaintiff, did not establish that [a decision] to forgo collection proceedings on plaintiff’s debt discharged the debt plaintiff incurred for services rendered.”
The court further noted that while one of plaintiff’s providers agreed to provide services at a per diam amount, the plaintiff subsequently injured his cervical vertebra and required additional treatment for which additional amounts were unsuccessfully sought. Therefore, the Court was not persuaded that the plaintiff, and therefore the insurer, was totally relieved of the expenses incurred after Plaintiff injured his vertebra.
In holding that the doctrine of collateral estoppel barred the defendant from re-litigating the issue of whether the Plaintiff’s injuries were caused by his motor vehicle accident, the court noted that the plaintiff in this case had filed a prior action wherein it was previously determined by a jury that the injuries for which the Plaintiff sought PIP benefits in the present case were caused by the plaintiff’s motor vehicle accident, and that it was not contested that Plaintiff’s condition in this case was “the same as his condition at the first trial.” After further noting that there was “no question that the parties had a full and fair opportunity to litigate the causation issue” during the first trial, the Court held that the defendant could not re-litigate the issue of whether Plaintiff’s injuries were the result of his motor vehicle accident.
As for the Court’s holding that the trial court improperly reduced Plaintiff’s award of penalty interest, the jury awarded over $2 Million Dollars in penalty interest—which both parties acknowledged was more than the 12% per annum provided for under the statute. However, the parties disagreed on the proper manner in which to lower the award, and the trial court judge entered a lower amount in the final judgment. The Court of Appeals found that while the trial court’s methodology in lowering the award was reasonable given the record, it was ultimately an abuse of discretion for the trial court to do so under the circumstances, because in lowering the award, the trial court judge did not properly follow the procedures for remittur set forth in MCR 2.611(E)(1). In this regard, the Court explained that:
“The problem in this case is that the verdict form lacked any detail regarding how the jury resolved each of Lake Forest’s invoices that plaintiff claimed was overdue to determine how the penalty interest was computed. Judge Kumar recognized the difficulty of determining the basis for the jury’s partial award of the requested Lake Forest expenses at the posttrial hearing on December 10, 2008. At the next hearing on March 18, 2009, plaintiff proposed reducing the highest bills. But Judge Kumar ruled that plaintiff’s approach did not “make sense.” Instead, she decided that each invoice should be reduced by the same percentage. While this approach is reasonable, given Judge Kumar’s inability to determine the intent of the jury and failure to find any other error, the appropriate course under MCR 2.611(E)(1) would have been to afford defendant an opportunity for a new trial unless plaintiff agreed to entry of a judgment for no fault penalty interest in the highest amount supported by the evidence.”
Finally, with respect to Plaintiff’s request for statutory attorney fees under MCL 500.3148(1), the Court concluded that there was support for the trial court’s determination that the Defendant made a reasonable decision in refusing to pay the benefits at issue here and therefore the trial court’s refusal to award attorney fees was not an abuse of discretion. In reaching this conclusion, the Court clarified that even though Defendant’s decision to do so was ultimately wrong, it does not “diminish from its reasonableness at the time.” In this regard, the Court explained:
“Here, defendant offered several justifications for its refusal to pay Lake Forest’s expenses in its response to plaintiff’s motion for entry of judgment. Defendant argued that it was justified in paying one-third of the amounts billed on the basis of the outcome of the 1994 action because nothing had changed since that trial. Defendant argued that it had also raised bona fide questions of fact regarding causation, as well as the proper application of the doctrine of res judicata to these issues. Defendant also alleged that it relied on a market survey to pay later bills at the monthly rate of $5,000.”
The court then noted that while the trial court failed to address other contentions that Plaintiff had raised with regard to whether the defendant’s initial refusal to pay the amounts recovered in this action, the record as a whole did not support a finding that the trial court’s refusal to award attorney fees was an abuse of discretion.
