Michigan Supreme Court; Docket No. 84510; Published
Opinion by Justice Boyle; 6 -1 (with Justice Archer Dissenting)
Official Michigan Reporter Citation: 435 Mich 33; Link to Opinion 
STATUTORY INDEXING:
Allowable Expenses: Reasonable Necessity Requirement [§3107(1)(a)]
Allowable Expenses: Reasonable Charge Requirement [§3107(1)(a)]
TOPICAL INDEXING:
Legislative Purpose and Intent
CASE SUMMARY:
In this 6-1 Opinion by Justice Boyle, with Justice Archer dissenting, the Supreme Court reversed the trial court entry of summary disposition in favor of plaintiff/claimant in a case where the defendant insurance company had contested the reasonableness of plaintiff s medical expenses.
The trial court had found that defendant's challenge of the reasonableness and necessity of the medical expenses was not a valid defense to a contract action under the no-fault law, and entered summary disposition in favor of the insured. The Court of Appeals affirmed (Nasser I; Item No. 1136), and on rehearing, issued a clarifying opinion again affirming the trial court (Nasser II; Item No. 1204).
In its clarifying opinion, the Court of Appeals stated that since there was clear proof that there had been an automobile accident and at least some degree of injury, the insurance company could not be allowed to defend on the general basis that the expenses were unreasonable or unnecessary.
In reversing the Court of Appeals and remanding to the trial court for further proceedings, the Supreme Court stated that although under §3105 of the No-Fault Act an insurer is liable to pay PIP benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle, under §3107, an insurer is not liable for any medical expense to the extent that it is not a reasonable charge for a particular product or service, or if the product or service itself is not reasonably necessary. As stated by the Supreme Court:
“The plain and unambiguous language of §3107 makes both reasonableness and necessity explicit and necessary elements of a claimant's recovery, and thus renders their absence a defense to the insurer's liability."
The court further stated that it is each particular expense that must be both reasonable and necessary. The concept of liability cannot be detached from the specific payments involved, or expenses incurred. Thus, the fact that the defendant may be liable for some of the expenses, does not necessarily establish its liability for all of the expenses, including any unreasonable charges for unnecessary services.
The court noted that undoubtedly what troubled both the trial court and the Court of Appeals in this case was the fact that, while some of the products and services received by plaintiff might have been either unreasonable or unnecessary, there were bound to be some expenses that were both reasonable and necessary, such as the expense of an initial visit to a doctor immediately following the accident. Yet, in this case, defendant chose to withhold payment on all expenses. The Supreme Court noted that it may in some cases be possible for the trial court to decide the question of the reasonableness or necessity of such particular expenses as a matter of law in much the same way that under certain circumstances it may decide whether a plaintiff has sustained a threshold injury under Section 3135 of the Act. Further, an insurer still runs the risk of sanctions under Section 3142 of the Act if its liability ultimately is established and payments are found to be overdue.
In another issue decided on this appeal, the Supreme Court addressed the admissibility of evidence of collateral source benefits such as health insurance received by the plaintiff. The trial court had barred such evidence under the collateral source rule. On remand, the Supreme Court suggested that the trial court reconsider defendant's argument that the evidence of the collateral sources of insurance was admissible to prove malingering or exaggeration of injuries by plaintiff. Although the general rule of evidence and case law bar such evidence, the trial court may admit such evidence after balancing the relevance of such evidence against any prejudicial impact. The trial court may admit such evidence only if it appears to the trial judge from other evidence that there is a real possibility that plaintiff was motivated by receipt of collateral source benefits to remain inactive as long as he did.
In his dissent, Justice Archer noted that the trier of fact, trying the case without a jury, expressly found that plaintiff’s medical treatment was necessary and that the expenses incurred were reasonable. Consequently, defendant had its day in court.
