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Adanalic v Harco Nat’l Ins Co; (CO-PUB, 2/5/2015; RB #3406)


Michigan Court of Appeals; Docket #317764; Published  
Judges Borrello, Servitto, and Shapiro; Unanimous; Opinion by Judge Shapiro  
Official Michigan Reporter Citation: 309 Mich App 173; Link to Opinion alt  

Exception for Loading/Unloading [§3106(1)(b)]
Exclusion for Parked Vehicles Covered by Workers Comp [§3106(2)]
Exception for Employer Provided Vehicles [§3114(3)]
Requirement That Benefits Were Unreasonably Delayed or Denied [§3148(1)]

Not Applicable  

In this unanimous published Opinion written by Judge Shapiro involving a claim for injuries suffered by an independent contractor who was loading a vehicle, the Court of Appeals rendered the following holdings:

1)    the claimant was entitled to PIP benefits as a matter of law because there was no question that the claimant’s injuries were the direct result of physical contact with property being lifted onto or lowered from the vehicle during the loading and unloading process, within the meaning of MCL 500.3106(1);
2)    the claimant was not excluded from receiving PIP benefits under the workers’ compensation exclusion in MCL 500.3106(2) because the claimant had been denied workers’ comp benefits and, therefore, they were not “available” to him pursuant to the statute;
3)    defendant Michigan Millers was the priority insurer responsible for paying PIP benefits to the claimant because, under the economic reality test, the claimant was not an “employee” who suffered accidental bodily injury within the meaning of MCL 500.3114(3); and
4)    the trial court properly awarded penalty attorney fees to the claimant pursuant to MCL 500.3148(1) because Michigan Millers’ denial of the no-fault claim clearly conflicted with the plain language of the No-Fault Act, in multiple respects.

Plaintiff truck driver was injured when transferring cargo from his semi-truck to a box truck. The injury occurred when a pallet (to which he was attached with straps) fell, pulling him to the ground. The parties in the case did not dispute the circumstances of plaintiff’s injury. Rather, the central issue was whether plaintiff’s injuries were compensable under the No-Fault Act. Defendant Harco insured the box truck and the semi-trailer, while defendant Michigan Millers was plaintiff’s personal no-fault insurer. Both Harco and Michigan Millers denied plaintiff’s claim for PIP benefits. Plaintiff had also filed for workers’ comp benefits, which were denied because he was deemed to be an independent contractor. Plaintiff brought this action for no-fault coverage. The trial court held that Michigan Millers was liable for benefits, as well as for penalty interest for unreasonably delaying payment. However, the trial court denied plaintiff’s request for attorney fees.
The Court of Appeals addressed four issues on appeal:

1)    whether plaintiff’s injuries were compensable under §3106(1)(b) because he was loading/unloading a parked vehicle;
2)    whether plaintiff could receive PIP benefits under the workers’ comp exclusion in §3106(2);
3)    whether Michigan Millers was the insurer of higher priority under §3114(3); and
4)    whether plaintiff was entitled to penalty attorney fees under §3148(1).

Addressing these issues, the Court of Appeals held:

1)    plaintiff was entitled to PIP benefits because his injuries were the result of physical contact with property that was being lifted onto or lowered from the vehicle during the loading and unloading process, pursuant to §3106(1);
2)    plaintiff was not excluded from receiving PIP benefits under the workers’ comp exclusion in §3106(2) because plaintiff had been denied workers’ comp benefits, and so they were not “available” to him;
3)    Michigan Millers was the priority insurer liable for paying PIP benefits because, based on the economic reality test, plaintiff was not an employee who suffered accidental bodily injury under §3114(3); and
4)    penalty attorney fees should have been awarded to plaintiff pursuant to §3148(1) because Michigan Millers’ unreasonably refused to pay benefits.

Entitlement to PIP Benefits

Regarding the claim for PIP benefits, Michigan Millers argued that plaintiff’s injuries were not caused by the falling pallet and, instead, were caused by him striking the ground. The Court of Appeals said it agreed with the trial court’s reasoning on this issue and quoted the trial court, saying:

“In this case, [plaintiff] was pulling the pallet with a belt wrapped around the pallet. The ramp connecting the trailer and the disabled box car collapsed, which caused the pallet to fall to the ground, which, in turn, caused [plaintiff] to fall to the ground. These facts establish that [plaintiff’s] injuries were ‘a direct result of physical contact’ with the pallet. … [T]he statute does not require that the property, itself, inflict the injuries. It only requires that the injuries directly result from physical contact with the property. Therefore, the statute is satisfied here, where [plaintiff’s] physical contact with the pallet caused him to fall to the ground, directly resulting in his injuries.”

The Court of Appeals went on to admonish Michigan Millers for its argument regarding why it had denied PIP benefits, finding the rationale to be contrary to the statute. The court said:

“Millers attempts to fundamentally rewrite the statute to state that a plaintiff’s injury must occur as a result of being struck by the property being loaded or unloaded. However, the word ‘struck’ is nowhere in the statute. Rather, it requires that there be ‘physical contact’ with the property being loaded and that such physical contact ‘directly result’ in injury. … [T]here is little dispute that [plaintiff’s] fall and injury occurred in a single, unbroken, and immediate course of events that occurred because he was in contact with the pallet. … While hitting the ground when falling occurs at a different instant than the moment the fall begins, it begs credulity (and the law of gravity) to suggest that a fall ending with impact with the ground is not a direct process. Indeed, [plaintiff’s] injuries were literally the result of ‘proceeding in an unbroken line of descent.’ … The trial court correctly held that [plaintiff] satisfied the parked vehicle exception of MCL 500.3106(1)(b).”

Workers’ Comp Exclusion

Regarding the claim that PIP benefits were precluded because workers’ comp coverage was available to plaintiff under §3106(2), the Court of Appeals noted that plaintiff’s workers’ comp claim was denied because he was deemed to be an independent contractor.

The Court of Appeals then rejected Michigan Millers’ assertion that, where insurers dispute whether the workers’ comp or no-fault system is responsible for benefits, the injured person is entitled to “no benefits at all.” The court said:

“We reject the notion that because an individual may be covered by two broad systems of insurance, he is not entitled to any benefits whatsoever for however long it takes for the matter to be adjudicated. … In sum, workers’ compensation benefits were not ‘available’ to [plaintiff] and Millers was not entitled to withhold payment of PIP benefits under MCL 500.3106(2).”

Insurer Priority

Regarding Michigan Millers’ contention that plaintiff was an employee of DIS Trucking (the entity that contracted with him to haul cargo) and that, under §3114(3), defendant Harco, as the insurer of the trucks, was higher in priority, the Court of Appeals found that plaintiff was an independent contractor — not an employee of DIS Trucking — and therefore Harco was not liable for benefits.

Penalty Attorney Fees

Regarding penalty attorney fees, the Court of Appeals held plaintiff was entitled to fees under §3148(1) because Michigan Millers unreasonably refused to pay benefits. The court said:

“Millers does not pose a legitimate question of statutory interpretation by simply inventing an alternative reading that is inconsistent with the statute as written and the prior caselaw applying it. Millers’s denial of PIP benefits on the grounds that workers’ compensation benefits were available to [plaintiff] under MCL 500.3106(2) is similarly unreasonable. … Accordingly, we hold that Millers’s refusal to pay [plaintiff’s] PIP benefits was unreasonable and that the trial court erred by concluding otherwise.”

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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