Michigan Court of Appeals; Docket No. 60400; Published
Judges Cavanagh, Riley, and Brennan; Unanimous
Official Michigan Reporter Citation: 120 Mich App 568; Link to Opinion 
STATUTORY INDEXING:
12% Interest Penalty on Overdue Benefits – Nature and Scope [§3142(2), (3)]
Interest Penalty Additive to Judgment Interest [§3142]
TOPICAL INDEXING:
Civil Judgments and Interest (MCL 600.6013)
CASE SUMMARY:
In this unanimous Opinion by Judge Cavanagh dealing with the interest provisions of §3142 of the Act, the Court rejected the defendant insurer's argument that interest under the no-fault statute should only be charged as a penalty for willful procrastination," and should not be assessed when the carrier erroneously misinterprets a statute in good faith. In this case, the defendant insurer claimed an offset for Medicare benefits received by plaintiff prior to the decision of the Supreme Court in LeBlanc v State Farm, item number 414, which found such a set-off to be invalid. In holding that the plaintiff was entitled to recover 12 percent interest on the withheld Medicare payments, the Court stated that where an insurer rejects a claim for legal reasons, it does so at its own risk and will be responsible for payment of interest if its legal interpretation proves to be incorrect. The Court stated:
"The defendant did not challenge the reasonableness of the plaintiff’s claim, or the accuracy of the proof. Instead, the defendant asserted that it was legally entitled to subtract Medicare benefits from its coverage. Since this position proved to be unjustified, the benefits were overdue. Interest is owing because the defendant's defense is not recognized by §3142(2). The plaintiff’s right to interest is not dependent upon the presence or absence of the insurer's good faith in rejecting a claim. A carrier rejects a claim at its own risk. It will owe interest if its interpretation of the statute proves to be erroneous. . . . .If this result seems harsh, it must be remembered that the defendant had full and unimpeded use of the sum during this dispute."
In addition, the Court, relying on the Supreme Court's recent opinion in Wood v DAIIE, item number 535, ruled that plaintiff was entitled to recover 12 percent interest under the no-fault statute as well as civil judgment interest.
