Michigan Court of Appeals; Docket #262443; Unpublished
Judges Bandstra, Neff, and Markey; 2-1 (Judge Bandstra dissenting in part and concurring in part); per curiam
Official Michigan Reporter Citation: Not applicable, Link to Opinion 
STATUTORY INDEXING:
12% Interest Penalty on Overdue Benefits – Nature and Scope [3142(2)(3)]
Requirement That Benefits Were Overdue [3148(1)]
Obligation of Assigned Insurer to Pay Claim Promptly [3175(1)]
TOPICAL INDEXING:
No-Fault Insurer Claim for Reimbursement: Insurer Assigned Claims Reimbursement
CASE SUMMARY:
In this 2-1 unpublished per curiam opinion, the Court of Appeals held that defendant Farmers Insurance, the insurer to which the Assigned Claims Facility originally assigned this no-fault matter, was liable to plaintiff for penalty interest on overdue insurance payments and attorney fees. The plaintiff in this case sustained injuries in an automobile accident which left her an incomplete quadriplegic. At the time of the accident, plaintiff was believed to be uninsured. Therefore, the Assigned Claims Facility named Farmers Insurance as the assigned claims insurer. Upon investigating the claim, Farmers determined plaintiff’s sister and brother-in-law, who lived on her family’s property in a mobile home, had a no-fault insurance policy with Safeco Insurance Company. Farmers, therefore, denied plaintiff’s claim. Safeco refused to make payment, arguing plaintiff’s sister and brother-in-law were not resident relatives and, therefore, plaintiff was not covered under their no-fault insurance policy.
Plaintiff filed suit against Farmers and Safeco. During discovery, the parties learned plaintiff’s brother, who lived in the residence in which plaintiff lived at the time of the accident, was insured under a no-fault policy with Allstate Insurance Company. Allstate was ultimately found to be liable for plaintiff’s no-fault benefits. Nonetheless, plaintiff filed a motion for penalty interest for overdue no-fault benefits and attorney fees. The trial court granted defendants summary disposition because neither insurer was ultimately liable for plaintiff’s benefits.
The Court of Appeals reversed in part, holding that because Farmers was assigned the claim, under MCL 500.3175(1) it was required to make prompt payment. In this regard, MCL 500.3175(1) provides: “‘. . . An insurer to whom claims have been assigned shall make prompt payment of loss in accordance with this act and is thereupon entitled to reimbursement by the assigned claims facility for the payments. . . .’” Further, because Farmers failed to make prompt payment, it was liable for penalty interest under MCL 500.3142 and attorney fees under MCL 500.3148(1).
In so holding, the Court of Appeals rejected Farmers’ argument that because it was not found to be ultimately liable for the benefits, it should not be sanctioned for failure to make timely no-fault benefit payments. In this regard, the court stated:
“. . . to hold that an assigned claims insurer could delay payment while it investigates a claim would defeat the purpose of the no-fault act and the assigned claims plan, which is ‘to provide prompt monetary relief for losses suffered in vehicular accidents at the lowest cost to the system and the individual.’ . . . That a dispute concerning the liability of potential insurers arose after assignment to Farmers is not a basis for ignoring the well-recognized policy that injured persons should not be subjected to delay in payment.”
As to Safeco, the Court of Appeals agreed it was properly granted summary disposition because Safeco was never liable for plaintiff’s loss.
