Michigan Court of Appeals; Docket No. 65211; Published
Judges Beasley, Brennan, and Wahls; Per Curiam
Official Michigan Reporter Citation: 126 Mich App 144; Link to Opinion 
STATUTORY INDEXING:
12% Interest Penalty on Overdue Benefits – Nature and Scope [§3142(2), (3)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
This surprising per curiam Opinion is in total conflict with several other opinions by the Court of Appeals on the same point. Moreover, it creates this conflict without even mentioning the substantial line of cases whose conclusions it rejects.
In this decision, the Court held that a no-fault insurer did not owe interest under §3142 of the statute when it erroneously withheld a portion of plaintiff’s survivors' loss benefits in the amount of the decedent's personal consumption level in reliance on the Court of Appeals decision in Miller v State Farm, which decision was ultimately reversed by the Michigan Supreme Court. The Court reasoned that the 12 percent interest sanction set forth in §3142 of the Act is intended to penalize a recalcitrant insurer. The insurer in this case simply relied upon a decision of the Court of Appeals which ultimately proved to be incorrect and was reversed. In reaching its conclusion, the Court stated, "Inasmuch as the intent of the interest provision for overdue payments is not to compensate the insured, but rather to penalize an insurance company that is dilatory in paying a claim, we conclude that defendant's justifiable withholding of a portion of plaintiff’s benefits should not subject it to an interest penalty." Therefore, the Court remanded the case back to the trial court to compute interest from 30 days after the Supreme Court issued its opinion in Miller.
[Author's Comment: It is respectfully submitted that this decision is absolutely contrary to the specific language of §3142 of the No-Fault Act and is totally inconsistent with previous appellate decisions. Nowhere in the no-fault statute is there any indication whatsoever that the award of 12 percent interest is dependent in any way upon the reasonableness of the insurer's conduct. On the contrary, the only requirement under the statute is to show that a benefit has not been paid within 30 days after the insurer received reasonable proof of the fact and the amount of the loss (see §3142). In the same respect, several panels of the Court of Appeals specifically rejected the notion that the reasonableness of an insurer's conduct is relevant for purposes of the interest sanction. Some of these cases are Cook v DAIIE (item number 501), Nash v DAIIE (item number 580), Farqurharson v Travelers Insurance (item number 587), Johnston v DAIIE (item 612). As a matter of fact, Judge Brennan sat both on this case and the Nash decision, thus joining in two diametrically opposed holdings.]
