Michigan Court of Appeals; Docket No. 303217; Unpublished
Judges Ronayne Krause, Saad, and Borrello; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Penalty Attorney Fees [§500.3148]: Presumption of Unreasonableness
Penalty Attorney Fees [§500.3148]: Conduct Establishing Unreasonable Delay or Denial
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous unpublished per curiam opinion regarding plaintiff’s claim for statutory attorney fees, the Court of Appeals held that the defendant’s refusal to pay PIP benefits was not unreasonable under the meaning of MCL 500.3148(1) because while “legally incorrect,” the defendant’s initial refusal to pay was not “devoid of any arguable merit or advanced in bad faith.”
The plaintiff in this case was granted summary disposition and awarded PIP benefits for medical treatment arising out of a 1978 auto accident – for which the plaintiff also received Medicare benefits. The plaintiff was further awarded attorney fees under MCL 500.3148(1). In a prior decision issued on August 28, 2012, the Court of Appeals affirmed the trial court’s grant of summary disposition and award of PIP benefits, but the Court did not consider the issue of whether penalty attorney fees were awarded in addition. After the Court of Appeals affirmed the award of PIP benefits, the defendant filed an application for leave in the Michigan Supreme Court. The Supreme Court denied leave to appeal the award of PIP benefits but remanded the case back to the Court of Appeals for further determination of whether the trial court properly awarded penalty attorney fees. On remand, the Court of Appeals held in this unanimous decision that “the trial court did not.”
In reaching this result, the Court noted that it was undisputed that the benefits at issue were “overdue,” which therefore gave rise to a rebuttable presumption of the requisite “unreasonableness” that must be shown to award attorney fees under §3148(1). However, the Court concluded that the presumption of unreasonableness was properly overcome. The court reasoned that while the defendant’s refusal to pay the benefits at issue was “legally incorrect, the refusal was not “devoid of even arguable merit or advanced in bad faith.” The Court further explained:
“Simply put, as we previously noted, the double recovery allowed in this case is bizarre and unfair, even if this Court has found it to be permitted by the Legislature and our Supreme Court has declined to review that conclusion. More importantly, given our legal system’s general predisposition to compensating people for losses while avoiding windfalls, it is not a result one would naturally tend to expect. We do not believe that it was unreasonable for the defendant to seek to persuade a Court to absolve it of responsibility, nor do we believe that defendant’s proffered argument was not based on a legitimate question of statutory interpretation.”
The Court went on to further conclude that this result was consistent with MCL 500.3148's purpose of insuring prompt payment to the insured, and concluded that the plaintiff in this case was not within the class of persons intended to be protected by the attorney fee provision set forth in §3148. In this regard, the court found it significant that here, the “plaintiff was, in fact, fully paid, and sought in this suit to be paid again.” (Emphasis on again in original). The Court distinguished this situation from other situations where the refusal to pay a claim forces a claimant “to either absorb medical expenses without compensation or forego treatment.”
Therefore, for the foregoing reasons, the Court of Appeals REVERSED the trial court’s grant of attorney fees.
