United States District Court, Eastern District of Michigan; Case #13-cv-14118
Hon. Gershwin A. Drain
Official Michigan Reporter Citation: Not Applicable; Opinion Not Available 
On 11/9/2015, the 6th U.S. Circuit Court of Appeals AFFIRMED the federal district court's decision; Link to Opinion
STATUTORY INDEXING:
Requirement That Benefits Were Unreasonably Delayed or Denied [§3148(1)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this Federal written Opinion involving a plaintiff’s request for penalty attorney fees under MCL 500.3148(1), Judge Gershwin A. Drain held that defendant unreasonably delayed payment of PIP benefits and plaintiff was entitled to penalty attorney fees because plaintiff had provided reasonable proof of his need for the benefits and defendant failed to “evaluate that proof.”
The defendant in this case, St. Paul Protective Insurance (doing business as Travelers), denied plaintiff’s claim for additional PIP benefits. Plaintiff had suffered injuries in an auto accident, one which required amputation of his leg above the knee. Plaintiff later suffered further injury after stepping into a hole on his own property. When plaintiff sought additional PIP benefits, St. Paul claimed it had fully paid plaintiff all the benefits to which he was entitled. Plaintiff then filed this action, arguing St. Paul unreasonably refused to pay, or unreasonably delayed paying, the additional benefits. Plaintiff and St. Paul later settled the PIP benefits claim. Therefore, the only issue before Judge Drain in this case was plaintiff’s motion for penalty attorney fees under §3148(1).
At the outset, Judge Drain noted that St. Paul did not challenge whether plaintiff’s benefits were overdue. Rather, St. Paul claimed it neither unreasonably refused to pay, nor unreasonably delayed, benefit payments. Regarding this argument, Judge Drain said that, in effect, St. Paul was “attempt[ing] to use its IME report to overcome the presumption of unreasonableness embodied in the attorney’s fees provision of the Michigan No-Fault statute.”
St. Paul claimed the opinion of its IME created a “factual uncertainty” that countered the medical opinion of plaintiff’s treating physician and this justified its initial delay in paying benefits. However, plaintiff noted that St. Paul’s IME had only examined plaintiff “for 26 minutes” and also pointed to the testimony of St. Paul’s claims representative, who had testified that the records of plaintiff’s treating physician were not “very clear.”
Relying on Moore v Secura Ins, 482 Mich 507 (2008), where the Michigan Supreme Court said “an insurer acts at its own risk in terminating benefits in the face of conflicting medical reports,” Judge Drain addressed the parties’ arguments and said:
“Plaintiff bolsters the significance of [the claims representative’s] testimony to support the idea that Defendant failed to properly evaluate the evidence in the first instance. … Additionally, while the insurer is not required to ‘go beyond’ the opinion of its own IME or to resort to a ‘tie-breaker’, ‘an insurer acts at its own risk in terminating benefits in the face of conflicting medical reports.’ … The insurer must justify its refusal or delay. … Plaintiffs essentially contend that Travelers ‘acted at its own risk’ when it terminated Dixon’s attendant care benefits in the face of conflicting medical reports. Plaintiff argues that this judicial language suggests that a conflicting medical report from an insurer’s IME does not create a per se factual uncertainty that would relieve Defendant’s burden of showing that it acted reasonably when it terminated Dixon’s attendant care benefits. The Court agrees with Plaintiff. The seemingly conflicting language in Moore is reconcilable. While [the IME’s] report conflicted with that of [plaintiff’s doctor], this does not relieve the Court of its burden to look at the factual circumstances in its entirety. … Defendant’s implication that Plaintiff Dixon’s attending physician provided a dearth of information concerning the functionality of his upper extremities is unfounded. Plaintiffs provided reasonable proof of Plaintiff Dixon’s need for attendant care. It appears that Defendant has failed to evaluate that proof. For this reason, the Court finds that Defendant has not availed itself of its burden to demonstrate that it did not act unreasonably in refusing to timely pay Plaintiff’s attendant care benefits.”
Based on this finding, Judge Drain then held that plaintiff was entitled to penalty attorney fees pursuant to §3148(1). However, because the record was not sufficiently developed to determine the amount of fees, Judge Drain ordered the parties to submit supplemental briefs and affidavits in this regard.
