Michigan Court of Appeals; Docket No. 224933; Published
Judges Fitzgerald, Hoekstra and Markey; unanimous; per curiam
Official Michigan Reporter Citation: 250 Mich. App. 719, Link to Opinion
12% Interest Penalty on Overdue Benefits – Nature and Scope [3142(2)(3)]
One-Year Back Rule Limitation [3145(1)]
Requirement That Benefits Were Unreasonably Delayed or Denied [3148(1)]
Revised Judicature Act – Miscellaneous Provisions
Revised Judicature Act – Tolling of Statutes of Limitations
In this unanimous published per curiam opinion, the Court of Appeals issued several significant holdings in the context of this lawsuit brought by the University of Michigan Hospital against two (2) no-fault insurers who failed to pay hospital charges because of a priority dispute between the two insurers.
First, the court held that the claim of the University was not barred by the one (1) year PIP statute of limitations contained in section 3145 of the Act, for the reason that the University was a political subdivision of the state of Michigan and, therefore, the no-fault statute of limitations is superceded by the provisions of MCL 600.5821(4), which permits the State or its political subdivisions to recoup from third parties the cost of medical care notwithstanding the provisions of any statute of limitations to the contrary. This statutory provision clearly evidences the Legislature’s intention to exempt the state of Michigan and its political subdivisions from all statutes of limitations contained in any other public acts. Therefore, the claim of the University of Michigan was not time barred by section 3145.
Second, the court held that the University of Michigan had a direct cause of action against the insurers for recovery of PIP benefits. Citing Munson Medical Center v Auto Club Insurance Association [Item No. 1872] and LaMothe v Auto Club Insurance Association of Michigan [Item No. 1828], the court held that, “under the no-fault act, when a person is injured in an automobile-related accident, a hospital that provides medical care is to be reimbursed by the injured person’s no-fault insurance company.”
Third, the court held that attorney fees were properly awarded under section 3148(1) because the only dispute in this case was a priority dispute involving which of two insurers should pay. In that scenario, an unreasonable delay/denial is deemed to occur when the insurers do not pay the benefits and litigate the priority issue between themselves. In this regard, the court stated:
“when the only question is which of two insurers will pay, it is unreasonable for an insurer to refuse payment of benefits.... Because the only dispute concerned [the injured person’s] domicile, and because there is no dispute that [the injured person] was entitled to no-fault benefits, the trial court’s finding that the defendants acted unreasonably was not clearly erroneous. We find no error in award of attorney fees to plaintiff.”
Fourth, the court held that plaintiff University of Michigan Hospital was entitled to recover the attorney fee award under section 3148 because it is properly considered “a claimant” under the statute and thus, is entitled to enforce the attorney fee provisions of section 3148(1). In this regard, the court stated:
“Plaintiff is seeking recovery of costs paid for treating [the injured person] while [the injured person] was in the hospital.... Plaintiff, after the death of [the injured person], sought recovery of money expended for the medical care of [the injured person] and essentially became the claimant. The insurance companies in this case substantially delayed in paying plaintiff. Thus, requiring these insurance companies to pay attorney fees would fulfill the purpose behind the no-fault act.”
Fifth, the court held that the trial court erred by not awarding civil judgment interest at the rate of 12% as is provided in the “written instruments” provisions of MCL 600.6013(5). Citing Auto Club Insurance Association v State Farm Insurance Company [Item No. 1913], the court held that the lawsuit brought by the plaintiff University of Michigan was a suit based upon an insurance policy which is a “written instrument” as contemplated by the RJA. In this regard, the court stated, “The trial court erred by concluding that judgment in this case was not based on an insurance policy. While the trial court was required to examine the no-fault act to determine which insurer was primarily liable for benefits, that liability would not have existed without the insurance policy. Therefore, the twelve percent interest rate applies.” Interest was also properly awarded under section 3142 of the no-fault statute because the claim was not paid within 30 days of when the insurers’ received reasonable proof of the fact and the amount of the loss. However, the Court of Appeals remanded the case to the trial court for recalculation of interest because the trial court had commenced the running of this interest prior to when the insurers had actually received proof of the amount of the loss. Thus, it was necessary to recalculate the interest.
Finally, the court examined the priority dispute issue relating to domicile and in the process reviewed case law identifying the various factors that should be taken into consideration when determining a person’s domicile. With regard to this issue, the Court of Appeals held that the trial court properly granted summary disposition.