Michigan Court of Appeals; Docket No. 46299; Published
Judges Cavanagh, Holbrook, and Piercey; Unanimous
Official Michigan Reporter Citation: 106 Mich App 731; Link to Opinion
General Rule of Priority [§3114(1)]
Determination of Domicile [§3114(1)]
Resident Relatives [§3114(1)]
12% Interest Penalty on Overdue Benefits – Nature and Scope [§3142(2), (3)]
Interest Penalty Additive to Judgment Interest [§3142]
One-Year Notice Rule Limitation [§3145(1)]
Tolling of Limitations for Mental Incompetence [§3145]
Civil Judgments and Interest (MCL 600.6013)
Intervention by Service Providers and Third Party Payors in PIP Claims
Revised Judicature Act – Tolling of Statutes of Limitations (MCL 600.5851 – 600.5856)
In this unanimous Opinion by Judge Piercey the Court of Appeals rendered several significant holdings regarding the right of an institutionalized incompetent person to recover no-fault benefits. The injured person in this case had been declared a mentally incompetent adult at an early age. He had been living at a private group living facility owned by a private couple, Mr. and Mrs. Edward Baumgarten, pursuant to a contract with a state agency known as The Center For Human Development The incompetent adult was riding a bicycle and sustained serious and permanent injuries when struck by an automobile. The Court ruled as follows:
1. The injured person was entitled to recover no-fault benefits from the insurance company insuring vehicles owned by Mr. and Mrs. Baumgarten. This conclusion was premised upon the specific language utilized in the insurance policy issued by INA to Mr. and Mrs. Baumgarten. Under the policy language, coverage was available to an "eligible injured person” which was defined as a "relative" including a "ward" of the named insured who is a resident of the same household as the named insured. The Court found that the term "ward" as used in the INA policy should not be restricted in its definition to include only a person on behalf of whom a legal guardian has been appointed by a court of competent jurisdiction. The Court stated, "Rather, a common and ordinary dictionary definition of 'ward,' offered by Webster's Third New International Dictionary (1965), p 2575, is 'a person under the protection or tutelage of a person."' It was therefore necessary to examine the factual context of the case at bar to determine whether or not the insured person was a ward of the Baumgartens as "that word is used in common parlance." The Court concluded that under all of the circumstances, the injured person in this case was a ward of the Baumgartens. He resided on the same premises, participated in social occasions with the family, was assisted in such things as bathing, shaving, dressing, and medication administration.
2. The Court also concluded that the injured person in this case was domiciled in the same household as the Baumgartens and thus entitled to PIP benefits under their policy. In so holding, the Court applied the criteria enunciated by the Supreme Court in Workman v DAIIE (item number 143) regarding the determination of residency and domicile. Among other things, the Court noted that the insured person's stay at the foster home was indefinite, that a relatively informal atmosphere prevailed at the home, that the injured person resided upon the same premises as the insured, and that the injured person did not have a separate domicile.
3. Citing Rawlins v Aetna (item number 230), the Court held that the one year no-fault statute of limitations set forth in §3145(1) did not apply to this action for the reason that the injured person was mentally incompetent at all relevant times prior to and following the accident. The Court noted that Michigan law is clear that the general saving provisions of the RJA (MCLA 600.5851) apply to causes of action created by specific Michigan statutes. The insanity provisions of the RJA thus would extend the time during which a suit could be filed on behalf of the incompetent person.
4. The Court ruled that the state Attorney General had the authority to "intervene by right" under GCR 209.1 for purposes of recovering those funds expended by the state on behalf of the injured person which were related to the automobile accident. Because the state is permitted intervention by right, the intervention does not have to be "timely" in terms of the one year statute of limitation set forth in the No-Fault Act.
5. The Court agreed with the prior holding in Wood v DAIIE (item number 343) that the trial court was correct in ordering the defendant insurance company to pay 12 percent interest under §3142 of the No-Fault Act as well as the six percent interest under the RJA, for a total effective interest rate of 18 percent per annum on the money judgment entered below.
6. The Court ruled that the fact that plaintiff was operating a bicycle at the time of the accident did not alter the priorities set forth in the No-Fault Act Under the logic of the Supreme Court's opinion in Underhill v Safeco (item number 249) a bicyclist was no different than a motorcyclist.