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Spectrum Health v Grahl and Titan Insurance Company v Farmers Insurance Exchange and Health Alliance Plan of Michigan; (COA-PUB, 3/14/2006, RB #2683)


Michigan Court of Appeals; Docket #264185; Published
Judges Bandstra, White, and Hood; unanimous; per curiam
Official Michigan Reporter Citation: 270 Mich. App. 248, Link to Opinion alt

Procedures Applicable to Disputes Between Two or More Insurers [3172(3)]
Reimbursement to Servicing Insurer or ACF [3172(3)]

No-Fault Insurer Claims for Reimbursement: Insurer Assigned Claims Reimbursement

In this unanimous published per curiam opinion, the Court of Appeals held that where there is no priority dispute, an assigned claims insurer is not entitled to an attorney fee from a higher priority insurer under MCL 500.3172(3). The claimant in this case was injured in an automobile accident and taken to Spectrum Health for treatment. The claimant believed she was uninsured and that the owner of the vehicle she was driving was uninsured on the day the accident occurred. She also asserted she did not live with anyone who had an automobile policy. Thus, the claimant filed an application for bodily injury benefits with the Assigned Claims Facility (ACF). The ACF subsequently assigned the claim to Titan Insurance Company. When Titan refused to pay claimant’s medical bills, Spectrum filed the underlying action. Titan then filed a third party action against defendant Farmers Insurance Exchange, arguing the injured claimant was entitled to coverage under her estranged husband’s no-fault policy. Farmers contested the claim. Titan ultimately paid Spectrum and then filed a motion for summary disposition, requesting reimbursement, costs, attorney fees and interest under MCL 500.3172. Before the motion for summary disposition was argued, Farmers reimbursed Titan for the amount it paid Spectrum. However, Farmers refused to pay costs, attorney fees and interest. The trial court granted Titan’s motion, and entered an order awarding Titan $16,784.99 to cover the costs, attorney fees and interest Titan incurred pursuing its claim against Farmers.

The Court of Appeals reversed, holding that costs, attorney fees and interest is only available under MCL 500.3172 when two or more insurance companies dispute liability and the ACF is forced to appoint one of the insurers to provide the injured person’s benefits. That was not the situation in this case. When ACF assigned Titan the claim, the injured person believed she was uninsured. Only when Titan began investigating the claim did it discover the claimant had personal protection insurance through her estranged husband. In this regard the court explained:

A plain reading of MCL 500.3172 does not support Titan’s interpretation. By its terms, MCL 500.3172(3) only applies ‘[i]f the obligation to provide personal protection insurance benefits cannot be ascertained because of a dispute between 2 or more automobile insurers concerning their obligation to provide coverage. . . .’ When such a dispute occurs, MCL 500.3172(3) establishes a procedure by which a claimant is provided personal protection insurance benefits while the insurers resolve their dispute, and only at that time does the Assigned Claims Facility assign an insurer to provide personal protection insurance benefits. MCL 500.3172(3)(f) requires insurers to reimburse the Assigned Claims Facility to the extent of their responsibility for benefits coverage, and to include in this reimbursement costs, attorney fees, and interest, but only when the Assigned Claims Facility was brought in to provide personal protection insurance benefits because the insurers earlier identified as sources of coverage dispute their respective obligations to provide this coverage. . . . Titan was assigned this claim because, at the time the Assigned Claims Facility received Grahl’s application for benefits, neither Grahl nor the Assigned Claims Facility could identify any personal protection insurance applicable to Grahl’s automobile accident. Titan only discovered Farmers’ potential obligation to provide personal protection benefits to Grahl after the Assigned Claims Facility assigned Titan the claim. Titan was not assigned this claim because a dispute between two or more insurers regarding their respective obligations to provide insurance coverage meant that the applicable personal protection insurance could not be ascertained. Therefore, the provisions of MCL 500.3172(3) do not apply, and Titan is not eligible to recover costs, attorney fees, and interest under MCL 500.3172(3)(f).

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