Michigan Court of Appeals; Docket # 326597; Unpublished
Judges Riordan, Saad and M.J. Kelly; Unanimous Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
When Claimants Can Receive PIP Benefits through the Assigned Claims Facility [§3172(1)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion involving an assigned no-fault insurer's claim for reimbursement, the Court of Appeals held the trial court erroneously ruled that Bristol West was not liable, as a matter of law, to reimburse Auto Club for PIP benefits that Auto Club had paid by way of the Assigned Claims Plan.
Aaron Starkey was injured in a motorcycle accident with a silver SUV that was driven by Tianna Hunter. Bristol West insured the silver SUV. Starkey sued Hunter, her unidentified insurer and others for damages. Because Hunter did not respond to the lawsuit, Starkey did not know the name of Hunter's no-fault insurer, and so the Assigned Claims Facility assigned his claim to Auto Club, which participated in the underlying litigation. After Hunter and her mother testified at depositions, Hunter's mother notified Bristol West of the litigation for the first time. Auto Club settled the matter with Starkey and Beaumont Hospital, which had intervened in the matter to obtain payment for medical services it provided Starkey. The trial court dismissed the suit after the settlement. Starkey then brought a second action against Hunter, her mother and another individual. Bristol West was not notified of this second lawsuit. In April 2014, Bristol West denied coverage for the accident and the trial court also entered a default against Hunter and the other defendants in the second lawsuit. At this time, Auto Club also sued Bristol West for reimbursement of the benefits that it had paid on behalf of Bristol West's insured. Auto Club then moved for summary disposition, asserting that Bristol West was the higher priority insurer and was obligated to reimburse Auto Club. Bristol West also moved for summary disposition, claiming that Starkey was ineligible for benefits and it was not liable to pay benefits to Hunter or her mother because they failed to notify it of the accident and subsequent lawsuits. The trial court granted Bristol West's motion for summary disposition.
The Court of Appeals reversed, finding that Bristol West could be held liable for reimbursing Auto Club. In so holding, the Court rejected Bristol West's argument that it was not obligated to pay no-fault benefits because its insured failed to give it notice of the underlying lawsuit, which prejudiced its ability to defend.
In making this argument, Bristol West relied on the defense in MCL 257.520(f)(6), which is part of the Financial Responsibility Act. The Court of Appeals noted, however, that the Michigan Supreme Court has since ruled that the Financial Responsibility Act was erroneously incorporated into the No-Fault Act through a series of appellate rulings. According to the Court of Appeals, the Supreme Court has said the requirements in MCL 257.520(f) only apply to a "motor vehicle liability policy" and a "motor vehicle liability policy" is defined as one certified under MCL 257.518 or MCL 257.519.
In light of the Supreme Court's ruling, the Court of Appeals said:
"Because Bristol West did not present any evidence that the policy at issue was certified under the financial responsibility act, the defense stated under MCL 257.520(f)(6) does not apply."
The Court of Appeals further explained that, pursuant to MCL 500.3172(1), an insurer assigned to handle a no-fault claim is entitled to reimbursement from the defaulting insurers to the extent of their financial responsibility. According to the Court:
"Because the right to obtain reimbursement is statutory and not part of a subrogation action, the assigned-claims insurer's right to reimbursement cannot be defeated by defenses that might apply to the underlying claim for coverage. ...Thus, even if lack of notice might be a valid ground for denying coverage, it is not a defense to Auto Club's right to reimbursement under MCL 500.3172(1)."
Based on the foregoing, the Court of Appeals concluded the trial court erred when it determined that, as a matter of law, Bristol West was not obligated to reimburse Auto Club under §3172(1) on the ground that its insured did not give it proper notice.
