Michigan Court of Appeals; Docket No. 75536; Published
Judges Danhof, Gribbs, and Fitzgerald; Unanimous
Official Michigan Reporter Citation: 142 Mich App 1; Link to Opinion 
STATUTORY INDEXING:
Requirement That Benefits Were Unreasonably Delayed or Denied [§3148(1)]
Conduct Establishing Unreasonable Delay or Denial [§3148]
General / Miscellaneous [§3148]
Relevancy of Assigned Claims Handling and Disposition Costs in Regulating Rates [§3176]
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
Fraud/Misrepresentation
Legislative Purpose and Intent
CASE SUMMARY:
This unanimous Opinion by Chief Judge Danhof contains several important holdings regarding first-party claims.
First, the court held that a no-fault insurer may only void a policy of insurance ab initio where an innocent third-party is not affected thereby, and where it can be shown that the insured intentionally misrepresented a material fact which was communicated at the time of affecting the insurance. Such a misrepresentation must substantially increase the risk of loss insured against so as to bring about a rejection of the risk by the insurer or the charging of an increased premium. However, the court went on to specifically reject the lower court's conclusion that a policy of insurance could not be voided once an accident occurred or where the alleged misrepresentation of fact had no ostensible relationship to the accident which caused the injury. The lower court's erroneous application of the appropriate standard for declaring a policy void ab initio was not material, however, because the misrepresentations which occurred in this case were made by the insured's wife with no proof that the insured joined in them in any way. In addition, the misrepresented fact (having to do with whether plaintiff ever had a restricted license at any time during the previous three years) was not material in light of the fact that the insurance company went ahead and issued the policy four days after receiving a copy of the insured's driving record.
The court's second holding dealt with the recovery of attorney fees under §3148 in priority disputes. The court affirmed the lower court's award of attorney fees against both of the competing insurance companies. It was clear that plaintiff was entitled to benefits from someone. Based upon the reasoning in Kalin v DAIIE (Item No. 494), insurance companies involved in priority disputes should share in the payment of no-fault benefits to an injured accident victim and settle the priority question between themselves so that timely receipt of benefits is not delayed. Where insurers refuse to do that, then an award for attorney fees for §3148 is proper.
Third, the court held that a no-fault insurer who pays benefits pursuant to its obligations under the assigned claims plan is not entitled to recover attorney fees or interest from other insurers who are ultimately adjudicated to be responsible for the payment of no-fault benefits. If attorney fees and interest were intended to be included in the amount which should be reimbursed to an assigned carrier under the plan, those items would have been specifically mentioned in the statute. They are not Furthermore, §3176 allows insurers to include the costs incurred in the handling and disposition of assigned claims in their rate structure. That fact, and the fact that fees and costs are not mentioned in §3172, leads to the conclusion that the legislature did not intend for attorney fees and costs to be recoverable by an insurer paying claims under the assigned claims plan.
