Michigan Court of Appeals; Docket #260454 and #261917; Unpublished
Judges Cooper, Jansen, and Markey; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable, Link to Opinion 
STATUTORY INDEXING:
Requirement That Benefits Were Overdue [3148(1)]
Insurer’s Right to Penalty Attorney Fees for Fraudulent / Excessive Claims [3148(2)]
TOPICAL INDEXING:
Uninsured Motorist Benefits: Uninsured Motorist Coverage in General
CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals reversed an award of attorney fees for plaintiffs, finding that defendant insurance company was justified in refusing to pay first-party benefits for attendant care because there was sufficient evidence of a dispute regarding both the need for the care and whether expenses for the care had been incurred. The court also affirmed summary disposition in defendant’s favor, finding that plaintiffs forfeited their rights to uninsurance benefits based on material factual misrepresentations they made regarding their claim.
The plaintiff in this case injured her wrist in a March 28, 1998 automobile accident for which she had arthroscopic surgery on May 29, 1998. Although she attended physical therapy, she continued to have pain and discomfort. About a year later, plaintiff began experiencing pain in her left shoulder, elbow, neck and jaw. In May 1999, plaintiff underwent shoulder surgery and in September she had surgery on her elbow. In December 1999, plaintiff’s doctor restricted her from performing household chores or activities requiring repetitive use of her hands. Shortly after plaintiff’s work-loss and replacement service benefits expired, she submitted a claim for attendant care beginning April 1, 2001, for which she claimed she paid $30 an hour for eight to ten hours a day. Defendant paid plaintiff $9,452.50 through August 2001 at the rate of $9.50 per hour. Plaintiffs sued defendant seeking unpaid medical expenses and reimbursement for unpaid attendant care. At trial, defendant asserted that plaintiff’s injuries were caused by a pre-existing condition and falls that occurred after the motor vehicle accident. Defendant also asserted that discovery revealed that payment for the alleged attendant care was not properly documented and accounted for. The jury awarded plaintiffs $2,517.16 for medical care plaintiff received for her elbow but found that plaintiff’s shoulder injury was unrelated to the motor vehicle accident. As to the attendant care, it awarded plaintiff $23,913.13, as well as interest in the amount of $7,786.95. Further, the jury answered in the affirmative a special question regarding whether plaintiff’s attendant care claim was excessive. Both parties sought attorney fees. The trial court awarded plaintiff $106,712.50 in attorney fees and costs in the amount of $16,522.04. It then awarded defendant attorney fees in the amount of $65,500.00. On appeal, both parties claim the other party was improperly awarded attorney fees under MCL 50.3148, which provides:
“(1) An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue . . . if the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.
(2) An insurer may be allowed by a court an award of a reasonable sum against a claimant as an attorney’s fee for the insurer’s attorney in defense against a claim that was in some respect fraudulent or so excessive as to have no reasonable foundation.”
The court first addressed plaintiff’s argument that defendant was improperly awarded attorney fees because her claim had a reasonable foundation, i.e., the jury found that she was entitled to medical expenses for her elbow injury and that she was entitled to an award for attendant care, albeit at a reduced rate. The Court of Appeals disagreed, ruling the trial court independently determined that plaintiff’s claim was excessive and that plaintiff had previously acquiesced to that ruling. In this regard, the court stated:
“We agree that § 3148(2) plainly requires that for attorney fees to be awarded to an insurer because a claim is excessive, the claim must be so ‘excessive as to have no reasonable foundation.’ Plaintiff argues on appeal that her claims had a reasonable foundation because although the jury rejected one medical claim, plaintiff’s treating physicians opined her injuries were related to the automobile accident at issue. Further, with respect to attendant care, plaintiff argues the jury awarded her compensation for the hours of care she claimed albeit at a reduced hourly rate. But, plaintiff did not argue this issue below until the fourth of four hearings in which attorney fees were addressed. At a minimum, the record reflects plaintiff’s counsel acquiesced to the trial court believing its ruling that plaintiff’s claim was excessive was sufficient to award attorney fees to defendant. ‘Error requiring reversal must be that of the trial court, and not error to which an aggrieved party contributed by plan or negligence.’ . . . Further, plaintiff sought to foreclose a ruling by the trial court that plaintiff’s claim was ‘in some respect fraudulent’ – a ruling that abundant record evidence would have supported. Under these circumstances, it is simply not fair to allow plaintiff to finesse a non-ruling on whether plaintiff’s claim was ‘in some respect fraudulent’ while still being permitted to pack her appellate parachute with respect to so ‘excessive as to have no reasonable foundation.’ . . . . The record reflects that the trial court readily concluded that defendant should be awarded attorney fees under § 3148(2) when it sua sponte ruled it would do so. This Court will affirm a trial court when it reaches the correct result even if for an incorrect reason. . . . In sum, we are not left with a definite and firm conviction that the trial court clearly erred by awarding defendant attorney fees under § 3148(2).”
The court next addressed defendant’s argument that the trial court improperly awarded plaintiff attorney fees under §3148(1) because the benefits were overdue. The Court of Appeals agreed with defendant, finding the record supported the existence of a dispute regarding both the need for attendant care and whether the expenses had been incurred. In support of its conclusion, the court noted that defendant presented evidence that a private investigator observed plaintiff performing functions she claimed were performed for her by her care giver. It also noted the timing of the claim for benefits was suspicious and the cost for the benefits was not supported by the type of care that was provided, nor the care giver’s qualifications. Moreover, the court determined that even though the trial court ultimately found for plaintiff in part, that is not determinative to the question whether defendant was justified in its refusal to continue paying benefits. In this regard, the court stated:
“In sum, at the point defendant stopped paying plaintiff’s attendant care claim, there was evidentiary support for finding defendant possessed legitimate questions regarding both the need for attendant care and whether attendant care expenses had actually been incurred. Thus a bona fide dispute existed regarding ‘proof of the fact and the amount of the loss sustained. . . . Further, an insurer’s refusal or delay in paying a benefit is not unreasonable if before it becomes overdue a ‘bona fide factual uncertainty’ exists whether the incurred expense is causally related to the insured event.’”
The court then affirmed summary disposition for defendant on plaintiff’s claim for underinsured benefits, finding that defendant properly rescinded the policy based on fraud. Plaintiff argued that she was unaware that fraud was being committed and, therefore, she should not be penalized. However, the policy does not require the injured party to have committed the fraud, the policy can be rescinded if any insured committed fraud. Based on undisputed testimony, there was sufficient evidence that although plaintiff may not have initially known fraud was being committed, she eventually learned that her husband, who was also an insured under the policy, was fabricating evidence and neither plaintiff nor her husband admitted the fraud until they were confronted with its proof at their depositions. In this regard, the court stated:
“. . . [T]he material question in this case is whether any ‘insured’ under defendant’s business auto insurance policy, . . . ‘at any time, intentionally conceal[ed] or misrepresent[ed] a material fact concerning . . . [a] claim’ under the policy. The plain language of this policy condition does not require that defendant have actually paid a fraudulent claim. . . . The issue . . . is whether defendant produced admissible evidence from which reasonable minds could only conclude that the answer to the abuse question is ‘yes.’ . . . Here, it is undisputed that Kristin Stoops submitted copies of checks to defendant as evidence of payment for attendant care services. It is also undisputed that the checks were drawn on a personal checking account in Kristin Stoops’ name and never cleared the bank on which they were drawn. Accepting plaintiffs’ story about the checks as being true, the checks were still false evidence of payment for the alleged attendant care expenses. From Kristin Stoops’ own deposition testimony, it is clear that at some point she knew these checks were false evidence. Further, from plaintiff Joseph Stoops’ own testimony, he at all times knew the checks were false evidence. Yet both plaintiffs concealed the truth about the checks from defendant until confronted with bank records to the contrary at their depositions. Moreover, Joseph Stoops admitted that he manufactured false evidence of the alleged cash payment for attendant care benefits in the form of purported 2001 receipts. From this admissible evidence reasonable minds could not differ, even when viewing the evidence in the light most favorable to plaintiffs, that plaintiffs intentionally concealed or misrepresented material facts regarding a claim under defendant’s business auto insurance policy. Thus, reasonable minds could only conclude that the general policy condition regarding concealment or misrepresentation voided the policy’s underinsurance coverage.”
