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Oostdyk v Auto Owners Ins Co; (COA-UNP, 12/30/2014; RB #3399)


Michigan Court of Appeals; Docket #317221; Unpublished  
Judges M.J. Kelly, Cavanagh, and Meter; Unanimous; Per Curiam  
Official Michigan Reporter Citation: Not Applicable; Link to Opinion alt
The Michigan Supreme Court denied leave to appeal on 11/13/2015 with explanation; Link to Orderalt

Entitlement to PIP Benefits: Arising Out of/Causation Requirement [§3105(1)]
Entitlement to PIP Benefits: Transportational Function Requirement [§3105(1)]
Allowable Expenses: Incurred Expense Requirement [§3107(1)(a)]
One-Year-Back Rule Limitation [§3145(1)]

Not Applicable  

In this unanimous unpublished per curiam Opinion involving a child who fell and sustained injuries on a school bus while suffering an epileptic seizure, the Court of Appeals issued several holdings regarding plaintiff’s claim for no-fault benefits:

1)    A question of fact existed about whether the child’s injuries “arose out of” the use and operation of the school bus as a motor vehicle under MCL 500.3105(1), because there was sufficient evidence that the child’s injury occurred on the bus, which was moving and was transporting the child to school.

2)    Amounts owed for medical treatment rendered to the child constituted an “incurred” expense, even though another insurer mistakenly paid the expense, because the amounts were incurred at the time medical treatment was accepted and provided.

3)    The intervening plaintiffs’ claims were not barred by the one-year-back rule in MCL 500.3145(1) because the action had already commenced and was “successful” at the time the plaintiffs sought to intervene.

4)    A health insurer’s claim was not barred by the one-year-back rule because the health insurer was subrogated to plaintiff’s claim.

The plaintiff was the father of a minor child who suffered an epileptic seizure while riding a school bus. During the seizure, the child partially fell from the bus seat, such that his head and neck were on the floor. He was not breathing when the bus arrived at school and he suffered a permanent brain injury. The child received treatment for his injuries, which was paid for in part by Medicaid and an additional health insurer, Golden Rule.

Defendant Auto Owners denied plaintiff’s claim for no-fault benefits, asserting the injury did not “arise out of” the use of a motor vehicle as a motor vehicle. Alternatively, Auto Owners contended it had no obligation to pay the remaining amounts owed for treatment rendered to the child because these amounts did not constitute an “incurred” expense. Auto-Owners further argued the amounts sought by intervening plaintiffs were not recoverable because they were barred by the one-year-back rule. Meanwhile, the hospitals that had rendered treatment to the child intervened in the case after Auto-Owners claimed theses hospitals were not entitled to recover the amounts they had charged for medical treatment.

After a jury trial, judgment was entered in plaintiff’s favor. The Court of Appeals affirmed, rejecting Auto-Owners’ arguments.

Regarding the claim that the child’s injuries did not “arise out of” the use of the bus as a motor vehicle, the Court of Appeals said the bus was engaged in its “transportational function” when the child was injured. The court reasoned:

“Here, at the time [the child] was injured, the bus was being operated as a bus and was being used to transport him to school. … That is, the bus was engaged in its ‘motoring’ or transportational function when [the child] was injured. Thus, defendant’s claim that the bus was being used for a ‘safekeeping function’ rather than for its transportational function at the time [the child] was injured was properly rejected by the trial court. … [A] question of fact existed whether the connection between [the child’s] injury and the operation or use of the bus as a motor vehicle was more than incidental, fortuitous, or ‘but for.’ … In this case, we agree with the trial court that a genuine issue of material fact existed as to whether [the child’s] anoxic brain injury arose out of, or was caused by, the operation or use of the bus.”

As for Auto-Owners’ argument that medical expenses were not “incurred,” the Court of Appeals said the expenses were indeed incurred when medical treatment was provided, and that Auto-Owners was liable for the expenses as long as the amounts were reasonably necessary and the charges were reasonable. The court explained:

“[T]o allow defendant to deny coverage and then avoid payment of any medical expenses — contrary to a finding of liability — simply because another insurer mistakenly paid some of those expenses contravenes the legislative purpose behind the no-fault act to provide an assured, adequate, and prompt recovery to persons injured in motor vehicle accidents. … Nowhere in the [No-Fault Act] does it state that the contractual amounts agreed upon by the medical providers and health care insurers or the statutory amounts allowed for government benefits like Medicaid is binding on medical providers under the no-fault act. … Thus, when medical providers accept reduced payments for their services from health care insurers or Medicaid for a patient who was wrongfully refused no-fault benefits, they are not then later prohibited from seeking the ‘reasonable amount’ or customarily charged amount for their services from the no-fault insurer. To hold otherwise would make it profitable for a no-fault insurer to deny coverage, and then claim it only has to pay the more favorable rate accepted by medical providers from other insuring agencies, which is contrary to the legislative intent behind the no-fault act.”

According to the Court of Appeals, the trial court did not err by refusing to reduce the amounts owed by Auto-Owners to zero or to the amount the hospitals had mistakenly accepted from Medicaid and Golden Rule for medical treatment that was provided. The court stated:

“The trial court correctly held that defendant was responsible for the full amount of [the child’s] incurred medical expenses and, thus, properly denied defendant’s motion for summary disposition.”

Regarding whether the intervening plaintiffs’ claims were barred by the one-year-back rule in §3145(1), the Court of Appeals noted the hospitals intervened to address Auto-Owners’ assertion that they were not entitled to recover the amounts they had charged for medical treatment. The court held:

“[F]or purposes of the one-year-back rule, the action for recovery of PIP benefits was already commenced — and was successful — at the time the hospitals sought to intervene. Therefore, defendant’s argument that the hospitals’ claims were barred by the one-year-back rule is without merit.”

The Court of Appeals further held that the one-year-back rule did not bar a claim brought by Golden Rule, the additional health insurer. The court reasoned:

“Golden Rule paid an obligation owed to the hospitals by [the child] and is entitled to be reimbursed by defendant — the insurer liable for those medical expenses. … Golden Rule, as subrogee of [the child], acquired the same rights to recover against defendant as [the child] had to recover against defendant. … A subrogee stands in the shoes of the subrogor. … In this case, Golden Rule was subrogated to plaintiff’s claim, which was timely filed under MCL 500.3145(1); thus, the one-year back rule did not bar Golden Rule’s action.”

Accordingly, the Court of Appeals affirmed the trial court’s ruling in all respects.

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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