Michigan Supreme Court; Docket #142842; Published
Justice Brian Zahra joined by Justices Markman, M.B. Kelly, and Young; Justice Cavanagh dissenting;
Official Michigan Reporter Citation: ______ Mich _____ (2013); Link to Opinion 
STATUTORY INDEXING:
Allowable Expenses for Products and Medical Equipment [§3107(1)(a)]
Allowable Expenses for Handicapper Motor Vehicles [§3107(1)(a)]
Allowable Expenses for Home Accommodations [§3107(1)(a)]
Allowable Expenses for Room and Board [§3107(1)(a)]
Allowable Expenses for Medical Transportation Mileage [§3107(1)(a)]
Allowable Expenses: Reasonable Necessity Requirement [§3107(1)(a)]
Allowable Expenses: Reasonable Charge Requirement [§3107(1)(a)]
Allowable Expenses: Causation Requirement [§3107(1)(a)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this 4 – 1 Opinion by Justice Zahra, joined by Chief Justice Young and Justices Markman and M.B. Kelly, the Supreme Court reversed the Court of Appeals and held that under the allowable expense provisions of § 3107(1)(a) of the No-Fault Act, Defendant Auto-Owners was only obligated to pay for the cost of special adaptive modifications to plaintiff’s handicapper van and was not obligated to pay for the base price of the van. In so holding, the majority opinions stated:
“We conclude that defendant is only required to pay for the modifications because only the modifications are allowable expenses ‘for an injured person's care, recovery, or rehabilitation’ under MCL 500.3107(1)(a). Because the base price of the van is an ordinary transportation expense - an expense that is as necessary for the uninjured as the injured - and is easily separated from the modifications, defendant is not required to pay for it under the no-fault insurance act.”
In reaching this conclusion, the Court reaffirmed its earlier decision in Griffith v State Farm, concluding that the base price of plaintiff’s van was similar to the cost of ordinary food consumed by plaintiff in his home, which was characterized in Griffith as being something that was needed only for plaintiff’s “ordinary means of sustenance, rather than something that possessed ‘curative properties.’” The Court further noted and reaffirmed the distinction drawn in Griffith between ordinary food consumed in a patient’s home and ordinary food consumed in a hospital setting. The latter of which is compensable under § 3107(1)(a) because “the person is required to eat hospital food precisely because of his or her need for care in the hospital.”
The Court then went into a lengthy analysis of what is covered as an allowable expense under § 3107(1)(a) and what is not covered by that section. This discussion began with the Court commenting on the requisite causal connection that must be demonstrated between the product or service, which is the subject of the claim, and the plaintiff’s injuries. In this regard, the Court again referenced its earlier decision in Griffith and reaffirmed the notion that “a claimant can recover as an allowable expense the charge for a product, service, or accommodation that has the object or purpose of effectuating the injured person’s care, recovery, or rehabilitation. The causal connection is further implied in the statutory language making compensable only those products, services, or accommodations that are ‘for an injured person’s care, recovery and rehabilitation.’ This language suggests that any product, service, or accommodation consumed by an uninjured person over the course of his or her everyday life cannot qualify because it lacks the requisite causal connection with effectuating the injured person’s care, recovery, or rehabilitation.” The Court then elaborated on the noncompensability of so-called “ordinary, everyday expenses” and stated:
“An ordinary, everyday expense simply cannot have the object or purpose of effectuating an injured person’s care, recovery, or rehabilitation because it is incurred by everyone whether injured or not. . . . In sum, an ordinary, everyday product, service, or accommodation is not compensable under MCL 500.3107(1)(a) because that expense cannot be for the claimant’s care, recovery, or rehabilitation.”
After having concluded that “ordinary, everyday expenses” are not compensable under § 3107(1)(a), the Court went further and concluded that only expenses “of a wholly different essential character than expenses borne by the person before the accident” are compensable. In this regard, the Court stated:
“A mere change in the injured person's postaccident expenses is insufficient to satisfy MCL 500.3107(1)(a); the new expense must be of a wholly different essential character than expenses borne by the person before the accident to show that it is for the injured person's care, recovery, or rehabilitation. But if an expense is new in its essential character, and thus actually for the injured person's care, recovery, or rehabilitation, MCL 500.3107(1)(a) requires that it be covered in full regardless of whether the expense represents an increase or decrease in the injured person's preaccident costs. Indeed, the provision states that allowable expenses consist of ‘all reasonable charges incurred for reasonably necessary products, services and accommodations. ...’ Thus, if a product, service, or accommodation satisfies the statutory criteria, it is fully compensable.”
After articulating the rule that only new expenses “of a wholly different essential character” are compensable and that there is no sett-off available to insurers allowing them to reduce such expenses “by the margin of the injured person’s preinjury expenses of the same character,” the Court went on to address the specific issue of “special accommodations or modifications to an ordinary item.” The Court stated that these types of claims “present a particular challenge.” In analyzing these claims, the Court divided them into two categories: (1) those involving “combined” products, and (2) those involving “integrated” products. Claims involving “combined” products can be “separated easily into unit costs” wherein only the unit costs that “are of a new character” are compensable. However, and “integrated” product is fully compensable because it inherently “involves the blending of an ordinary expense with one that is for the injured person’s care, recovery, or rehabilitation.” The Court elaborated on these two categories of claims in the following passage:
“Special accommodations or modifications to an ordinary item present a particular challenge. A ‘combined’ product or accommodation results from an ordinary expense, unchanged as a result of the injury, being joined with an accommodation or product that is actually for the injured person’s care, recovery, or rehabilitation. An ‘integrated’ product or accommodation involves the blending of an ordinary expense with one that is for the injured person’s care, recovery, or rehabilitation in a way that the resulting product or accommodation cannot be separated easily into unit costs. Unlike an integrated product or accommodation, a combined product or accommodation can be separated easily, both conceptually and physically, so that the fact-finder can identify which costs are of a new character and are thus for the injured person’s care, recovery, or rehabilitation and which costs are ordinary, everyday expenses that are unchanged after the accident. As this Court suggested in Griffith, MCL 500.3107(1)(a) requires the insurer to cover a truly integrated product or accommodation in full because the entire expense, including the portions that might otherwise be considered ordinary, is necessary for the injured person’s care, recovery, or rehabilitation. But because a combined product or accommodation can be easily separated into components related to the injured person’s care, recovery, or rehabilitation and components unrelated to that care, recovery, or rehabilitation, only the related expenses are actually compensable. MCL 500.3107(1)(a) mandates this result because, when the product or accommodation can be easily separated into an ordinary expense and an expense for care, recovery, or rehabilitation, requiring the insurer to pay for the ordinary expenses would destroy the cost-containment aspect of the no-fault insurance act, something of which this Court has long been mindful.”
Based upon this analysis, the Court returned to its decision in Griffith and stated that the cost of ordinary food consumed in a hospital and the cost of custom shoes for someone sustaining ambulatory injuries are examples of “integrated products” which are compensable in full without any set off. In this regard, the Court stated:
“This analysis is consistent with this Court’s application of MCL 500.3107(1)(a) in Griffith. In its discussion of insurance coverage for hospital food during the insured’s hospital stay, the Griffith Court stated that compensation was required because the insured was required to eat “that particular food.” This is an example of an integrated accommodation. The food, clothing, shelter, and any other ordinary products that are provided by the hospital as part and parcel of the hospital stay are not easily separated from the products, services, and accommodations provided by the hospital for the injured person’s care. Thus, the statute requires the insurer to pay the entire cost. The same could be said for the custom medical shoes briefly discussed in Griffith. When a medical products company produces a custom shoe, the shoe is an integrated product because the medical nature of the shoe, which is for the injured person’s care, recovery, or rehabilitation, cannot be separated from the ordinary need for shoes by an uninjured person. Thus, the entire cost of the shoe is an allowable expense.” After having set forth all of these various rules, the Court summarized its analysis of allowable expense claims under § 3107(1)(a) in the following passage: “In sum, MCL 500.3107(1)(a) only requires an insurer to pay for products, services, and accommodations that are reasonably necessary to the object or purpose of “an injured person’s care, recovery, or rehabilitation.” Postaccident expenses of a wholly new essential character satisfy the statutorily required causal connection that expenses be for the injured person’s care, recovery, or rehabilitation. Ordinary expenses that are the same for an injured and an uninjured person are not recoverable at all because the claimant cannot show that the expense is for his or her care, recovery, or rehabilitation. However, if an expense satisfies the statute, then it is recoverable in full; there is no setoff based on the injured person’s preinjury expenses of the same character. Some products, services, or accommodations might otherwise be ordinary but are so integrated with a product, service, or accommodation that is actually for the injured person’s care, recovery, or rehabilitation that the entire product, service, or accommodation must be included as an allowable expense under MCL 500.3107(1)(a). But if the ordinary expense is merely combined with a product, service, or accommodation for the injured person’s care, recovery, or rehabilitation in a way that is physically and conceptually separable, the ordinary expense fails to satisfy the statute and is not compensable.”
After the Court set forth its new analytical approach to allowable expense claims, the Court turned its attention to plaintiff’s claim for the full cost of a handicapper van. The Court concluded that the base price of the van was not an allowable expense. Rather, “only the van’s modifications” satisfy the standards applicable to § 3107(1)(a). In concluding that the base price of the van is “an ordinary transportation expense of the same essential character as plaintiff would have incurred regardless of whether he was injured in an accident,” the Court stated the following regarding the van issue:
“While plaintiff’s choice of transportation before his injury might not have been a van, the essential character of plaintiff’s preinjury need for transportation has not changed. Like Griffith’s need for sustenance, had plaintiff never sustained his injury, or were he to fully recover, his need for ordinary transportation would be unchanged. Accordingly, the statute does not require that defendant reimburse plaintiff for the base price of the van. Certain transportation expenses may be recoverable under MCL 500.3107(1)(a) because they are part of plaintiff’s care, recovery, or rehabilitation. For instance, plaintiff requires some form of transportation to and from his medical appointments. Medically necessary transportation needs represent a change in character from plaintiff’s preinjury requirements because the trips would not have been necessary in a life unmarred by injury. But by paying for the van’s modifications and so-called medical mileage, defendant has met its statutory obligations. . . .
This Court’s decision in Griffith leads inexorably to this result. The van itself is akin to the food that Griffith was eating at home. The character of plaintiff’s general need for transportation—like Griffith’s food requirements—did not change as a result of the accident. And unlike the hospital food in Griffith, the van does not constitute an integrated product because the modified van, as a whole, was not actually for plaintiff’s care, recovery, or rehabilitation. Hospital food is compensable because the injured person is required to eat that particular food during the hospital stay for his or her care and recovery. The Court likened hospital food to a special diet. But plaintiff only requires some form of transportation for his care, not any particular form, so his transportation needs are not akin to a special diet. Indeed, if defendant provided plaintiff with a taxi service that accounted for his disability, defendant would only be required to provide that service for those trips that had the object or purpose of plaintiff’s care, recovery, or rehabilitation. . . .
Thus, defendant was required to and did compensate plaintiff for the cost of the modifications pursuant to MCL 500.3107(1)(a). But the van is just a van; and while a van may not have been plaintiff’s transportation preference, it remains an ordinary means of transportation used by the injured and uninjured alike.”
Finally, the Court stated that to the extent its analysis is inconsistent with the previous opinions of the Court of Appeals in the cases of Ward v Titan Ins Co, Hoover v Michigan Mut Ins Co, and Begin v Michigan Bell, those decisions are overruled. In so holding, the Court stated that the decisions in Ward and Hoover incorrectly utilized and “incremental approach to allowable expenses” holding that an insurer is only liable for the increase in certain costs, such as housing, which are attributable to the injury. The Titan and Hoover decisions mistakenly concluded that Griffith simply required a comparison of the injured person’s preinjury expenses to the person’s postinjury expenses with only the difference being compensable. The Begin decision incorrectly concluded that if a particular product or service satisfies § 3107(1)(a) then the entire amount is compensable regardless of any further inquiry into the nature of the expense.
Justice Michael Cavanagh dissented. He would have held that the entire cost of plaintiff’s handicapper van is fully compensable “because a van is the only mode of personal transportation available that will accommodate plaintiff’s severe injuries resulting from the motor vehicle accident.” Justice Cavanagh went on to characterize the majority opinion as adopting a “confusing analysis to this case because, in attempting to clarify Griffith, the majority takes an approach that is divorced from the statutory language.” Justice Cavanagh went on to say:
“Specifically, I agree with the majority that ‘nothing in the statutory language of MCL 500.3107(1)(a) supports the notion that postinjury allowable expenses should be reduced by the margin of the injured person’s preinjury expenses of the same character.’ Ante at 14. However, the majority is forced to inject a variety of terms and phrases not found in the statutory language in an effort to ‘clarify’ Griffith in its purported attempt to avoid an incremental approach to allowable expenses. . . .
For example, the majority states that an ‘ordinary, everyday expense’ cannot qualify as an allowable expense under MCL 500.3107(1)(a). However, the phrase ‘ordinary, everyday expense’ is amorphous and, more importantly, absent from the statutory language. Rather, the statute simply provides that allowable expenses are ‘all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation.’ . . .
The majority also proclaims that ‘the new expense must be of a wholly different essential character than expenses borne by the person before the accident . . . .’ Ante at 15 (emphasis added). Again, this undefined statement of what an insured must now show to be eligible for benefits finds no support in the statutes or caselaw. Moreover, the majority’s explanation of expenses that satisfy MCL 500.3107(1)(a) will not add clarity to this area of the law because the majority’s examples are not truly ‘of a wholly different essential character.’ For instance, the majority states that a ‘custom shoe’ would qualify as an allowable expense. However, no matter how much a shoe is customized or modified, it retains its ‘essential character’ as a shoe, i.e., it protects a person’s foot while walking. I question how the bench and bar are to apply the majority’s opinion consistently and fairly when the majority itself struggles to do so. Next, the majority attempts to draw a distinction between a ‘combined’ product, which it deems insufficient to satisfy MCL 500.3107(1)(a), and an ‘integrated’ product, which, according to the majority, does satisfy MCL 500.3107(1)(a). Again, that distinction does not appear in the statutory language, and the majority is unable to cite any support for its judicially created distinction. Moreover, the majority’s explanation of the difference between a ‘combined’ product and an ‘integrated’ product evidences that the majority’s approach is entirely standardless. . . .
In short, although the majority claims to reject the ‘incremental’ approach used in Ward v Titan Ins Co, 287 Mich App 552; 791 NW2d 488 (2010), and Hoover v Mich Mut Ins Co, 281 Mich App 617; 761 NW2d 801 (2008), the majority implicitly adopts that very rule by defining the preinjury need too broadly while simultaneously defining an ‘integrated product’ too narrowly. The majority’s further deviation from the clear statutory language will only perpetuate the confusion that began with the Griffith majority’s erroneous analysis.”
Justice Cavanagh then went on to discuss plaintiff’s van claim and concluded that the majority misapplied its own test as it is clear that the majority was wrong when it incorrectly stated that plaintiff is not limited to a particular form of transportation. Rather, the record was clear that “because of his injuries the only personal vehicle that plaintiff can travel in is a van.” Therefore, Justice Cavanagh concluded that “plaintiff’s postaccident transportation needs are significantly different from his preaccident transportation needs. In fact, it bears repeating that the van itself is for the plaintiff’s care because a van is the only type of vehicle that can accommodate plaintiff’s postaccident condition. . . . Before the accident plaintiff did not require a van. After the accident, however, plaintiff cannot operate a personal vehicle unless it is modified and it is a van. Thus, there is no meaningful difference between the modifications and the van itself for purposes of the majority’s analysis. Plaintiff required neither before the accident, but because of his motor vehicle related injuries, plaintiff now requires both for his care.”
Justices McCormack and Viviano did not participate in the decision.
