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Manley, et al. v DAIIE; (COA-PUB, 7/19/1983; RB #662)


Michigan Court of Appeals; Docket No. 64882; Published  
Judges Bronson, Gillis, and MacKenzie; Unanimous; Opinion by Judge Mackenzie  
Official Michigan Reporter Citation: 127 Mich App 444; Link to Opinion alt   

Allowable Expenses for Attendant Care [§3107(1)(a)]  
Allowable Expenses for Room And Board [§3107(1)(a)]  
Allowable Expenses: Reasonable Necessity Requirement [§3107(1)(a)]  
Allowable Expenses: Reasonable Charge Requirement [§3107(1)(a)]    
Allowable Expenses: Incurred Expense Requirement [§3107(1)(a)]  
12% Interest Penalty on Overdue Benefits – Nature And Scope [§3142(2), (3)]  
One-Year Back Rule Limitation [§3145(1)]  
Tolling of Limitations For Minors [§3145(1)]

Extra Contractual / Mental Anguish Damages
Revised Judicature Act – Tolling of Statutes of Limitations (MCL 600.5851 – 600.5856)     

This unanimous Opinion by Judge MacKenzie sets forth several significant holdings with regard to the obligation of an insurer to pay "allowable expenses" under §3107(a), and, in particular, the extent of that obligation in cases involving catastrophically injured minor children. The Court held:

1. The Court held that "the legal duty of parents to support their children has no effect on whether services performed by a parent for a child are an allowable expense." In so holding, the Court relied upon the decision of the Michigan Supreme Court in Kushay v Sexton Dairy, 394 Mich 69 (1975) (a workers' compensation case), Visconti v DAIIE (item number 201) and Van Marter v American Fidelity (item number 517). Based on these cases, the Court rejected the argument that an expense is not "allowable" under §3107(a) because of the alleged "legal duty" of the provider to perform the service or because a "conscientious" spouse or parent would perform the task without compensation.

2. The obligation of an insured to pay for "allowable expenses" Under. §3107(a) extends only to those products, services and accommodations which are reasonably necessary for the injured person's care, recovery or rehabilitation. Therefore, the performance of "ordinary household tasks" would not fall within this section because "such tasks must be performed whether or not anyone is injured.... Product services or accommodations which are as necessary for an uninjured person as for an injured person are not 'allowable expenses.'"

3. After stating its conclusion regarding the non compensability of "ordinary household tasks," the Court went on to draw an important distinction between those injured persons who are institutionalized as opposed to those who are cared for at home. In this regard, the Court stated that the food which is served an institutionalized injured person is an "allowable expense" covered by §3107(a). The Court stated the following in regard to this distinction, "in applying this rule, it is necessary to distinguish between injured persons for whom institutionalization in a hospital or a nursing home is reasonably necessary and injured persons cared for at home. For example, food is as necessary for an uninjured person as for an injured person. Food, therefore, is not ordinarily an 'allowable expense' for an injured person cared for at home, unless the nature of the injury makes a special diet reasonably necessary. However, ordinarily an institutionalized injured person must obtain food through the institution, and the cost of obtaining food through the institution presents an extraordinary expense not analogous to the cost of obtaining food at home. Therefore, for the institutionalized injured person, food obtained through the institution is ordinarily an allowable expense.'"

4. With regard to the valuation of an allowable expense, the Court noted that a comparison to rates charged by institutions for such services provides "a valid method for determining whether the amount of an expense was reasonable and for placing a value on comparable services performed." The services which were performed by the child's parents in this case were construed by the Court to be "implicitly purchased by [the child] at their reasonable market value."

5. It was proper to utilize the mechanism of a declaratory judgment for determining whether an expense will be "allowable" under §3107(a) before this expense is actually incurred. This procedure affords plaintiffs a way to avoid the risk of incurring expenses for which the insurer will not reimburse them. In addition, the trial court may retain jurisdiction to determine whether expenses previously declared to be "allowable" are "subsequently actually incurred" and to enter a judgment against the insurer for such allowable expenses. However, the trial court may not require the defendant to make payment for expenses declared to be allowable "without regard to whether such expenses were actually incurred." The trial court improperly did this in the case at bar and thus that portion of the judgment so providing was reversed.

6. The Court adopted the holdings of several other panels of the Court of Appeals and held that the claims of a minor for allowable expenses and those of "persons claiming under" the minor [the parents] were tolled by the minority savings provision of MCLA 600.5851.

7. An award of interest under §3142 of the statute is not dependant upon a showing of unreasonable conduct by the insurance company. The Court stated, "the existence of a bona fide dispute does not prevent an award of penalty interest if the insurer received reasonable proof of the fact and amount of the loss but failed to make benefits on time." Furthermore, the plaintiffs may rely upon the evidence which was introduced at the trial as the evidence constituting "reasonable proof of fact and the amount" of the loss as provided in §3142. The court noted that mere is nothing in the no-fault interest statute which "prevents the evidence introduced at trial from being the reasonable proof of the fact and amount of the loss which starts the 30 day period to run." Therefore, the plaintiffs were entitled to penalty interest beginning 30 days after evidence was introduced at trial constituting proof of the fact and the amount of the losses sought.

8. The Supreme Court's opinion in Kewin v Massachusetts Mutual (item number 338) that damages for mental anguish are ordinarily not recoverable in an action for breach of a commercial insurance contract applies to no-fault automobile insurance contracts.

9. The modification of the special verdict form contained in SJI 2d 6701 was not an improper departure from the Standard Jury Instructions in violation of Jarvis v Ypsilanti Board in light of the fact that the Note On Use states the modification of the form is necessary in certain situations.

10. The trial court did not err by declining to appoint a guardian for the minor child to receive payments of allowable expenses on the child's behalf. In this case the parents of the child had been appointed by the circuit court to serve as "next friend" for purposes of prosecuting the action. The validity of the proceedings was not adversely affected by this procedure.

Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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