Michigan Court of Appeals; Docket No. 92840 ; Published
Judges Gillis, Weaver, and Allen; Unanimous; Opinion by Judge Weaver
Official Michigan Reporter Citation: 171 Mich App741; Link to Opinion 
STATUTORY INDEXING:
Allowable Expenses: Reasonable Necessity Requirement [§3107(1)(a)]
12% Interest Penalty on Overdue Benefits – Nature and Scope [§3142(2), (3)]
TOPICAL INDEXING:
Civil Judgments and Interest (MCL 600.6013)
CASE SUMMARY:
In this decision on rehearing from its earlier holding (Item No. 1136), the Court of Appeals felt it necessary to elaborate on its previous opinion so as to prevent any possible misreading of its holdings.
The plaintiff was injured in a minor motor vehicle accident, and it was undisputed that plaintiff incurred medical expenses amounting to $25,059.29. After receiving the report of plaintiff’s attending physician and all medical records pertaining to plaintiff’s hospital treatment, the defendant insurer refused to pay any benefits. Approximately two months later, a doctor hired by defendant wrote letters stating that the hospitalization and much of the testing performed on plaintiff had been "unnecessary." The trial court granted summary disposition on the basis that defendant's claim of unreasonable medical expense was not a valid defense to liability in a contract action, and that only the amount of damages was at issue. As to the reasonableness of the amount of medical expenses, defendant conditionally waived a jury trial. The trial court awarded the full amount of medical expenses plus 12% judgment interest, but declined to award plaintiff penalty interest or attorney fees. The Court of Appeals affirmed the trial court's judgment with judgment interest, but reversed on the issue of penalty interest. The Court of Appeals also affirmed the trial court's decision refusing attorney fees.
Clarifying its earlier opinion, the Court of Appeals, on rehearing, stated that where at least some degree of liability is clear, as in this case, the reasonableness of an insured's medical expenses may not be used as a defense to all liability in a no-fault accident case. Liability having been established, the question of reasonableness of plaintiff’s medical expenses went to the issue of damages. In this case, defendant waived the right to a jury trial on the issue of damages, and left it to the trial court to reject or accept defendant's contention that plaintiff’s medical expenses were unnecessary and unreasonable.
Therefore, the Court of Appeals reaffirmed its ruling that, in light of plaintiff’s proofs that he had in fact incurred the challenged expenses and was entitled to payment of at least some benefits, the issue of unnecessary or unreasonable medical expenses went to the question of damages, not liability. Thus, there was no genuine issue of material fact regarding the issue of liability, except as to damages, and the damages issue was decided by the trial court in favor of plaintiff.
