Michigan Court of Appeals; Docket #313976 and #315878; Unpublished
Judges Jansen, Saad, and Donofrio; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Conduct Establishing Unreasonable Delay or Denial [§3148]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion involving the assessment of attorney fees under MCL 500.3148(1) for an insurer’s refusal pay no-fault benefits, the Court of Appeals vacated the fee award because a factual uncertainty existed about whether the insured’s medical treatment was necessary, the denial of benefits was not necessarily unreasonable based on the information the insurer had before it at the time.
In making its ruling, Court of Appeals emphasized that: 1) the No-Fault Act does not state the time period in which an independent medical exam (IME) must be scheduled to establish “reasonable proof of loss” and that, in this case, a four-month period to conduct an exam was not unreasonable, and 2) rather than considering whether the decision to deny benefits was reasonable, the trial court erroneously focused on the amount of time that passed from the date of the insured’s first surgery until the time when benefits were denied.
When plaintiff was injured in a car accident, defendant no-fault insurer paid benefits but later suspended payment, pending an investigation of whether plaintiff’s treatment, including surgery, was related to the injuries sustained in the accident. Plaintiff then brought an action seeking benefits. A jury found that plaintiff sustained an accidental bodily injury and awarded allowable expenses, work loss benefits, and replacement services. The jury also found that benefits were overdue and awarded more than $70,000 in interest, resulting in a total judgment greater than $347,000. Plaintiff filed a motion for attorney fees under §3148(1), which the trial court granted because defendant unreasonably refused to pay benefits. At defendant’s request, the trial court held an evidentiary hearing and again found that defendant unreasonably denied benefits. The trial court ultimately awarded attorney fees of more than $263,000.
The Court of Appeals held the fee award was erroneous because defendant had reasonably denied benefits based on the information that it had at the time. The court noted that defendant acknowledged plaintiff was injured in the accident, but that defendant’s record indicated a “factual uncertainty” about whether plaintiff’s subsequent treatment was necessary.
According to the Court of Appeals, instead of considering whether defendant’s decision to deny benefits was reasonable, the trial court improperly relied on the amount of time that had passed from the date of plaintiff’s first surgery post-accident until benefits were denied. The appeals court said:
“[T]he no-fault act does not stipulate the time period in which an examination must be scheduled to establish the reasonable proof of loss. It is important to note that no testimony or evidence indicated that defendant had prior knowledge of the surgery and unreasonably delayed setting up the [independent medical examination]. There was no evidence to suggest that the four-month timeframe to schedule and perform the IME was unreasonable.”
Therefore, the Court of Appeals said the trial court wrongly held that a four-month time period to complete an IME, “with no other exacerbating circumstances,” was an unreasonable denial of benefits.
The Court of Appeals concluded:
“Therefore, because the denial of benefits was overdue but not unreasonable, the trial court abused its discretion in awarding plaintiff attorney fees under the no-fault act.”
