STATE OF MICHIGAN

IN THE SUPREME COURT

MEEMIC INSURANCE COMPANY,

Plaintiff/Counter-Defendant/Appellant, Supreme Court No. 158302

v Court of Appeals No. 337728 LOUISE M. FORTSON, RICHARD A. FORTSON, Berrien County Circuit Court Individually, and RICHARD A. FORTSON, as No. 14-260-CK Conservator for JUSTIN FORTSON,

Defendants/Counter-Plaintiffs/Appellees.

AMICUS CURIAE BRIEF OF THE MICHIGAN ASSOCIATION FOR JUSTICE

DONALD M. FULKERSON (P35785) ROBERT B. JUNE (P51149) Attorney for Amicus Curiae Law Offices of Robert June, P.C. Michigan Association for Justice Attorney for Amicus Curiae P.O. Box 85395 Michigan Association for Justice Westland, MI 48185 415 Detroit Street, 2nd Floor (734) 467-5620 Ann Arbor, MI 48104-1117 donfulkerson@comcast.net (734) 481-1000 bobjune@junelaw.com

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TABLE OF CONTENTS

Page

INDEX OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

JURISDICTIONAL STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

STATEMENT OF QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii

STATEMENT OF INTEREST OF AMICUS CURIAE . . . . . . . . . . . . . . . . . . . . . . . . 1

STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 STANDARD OF REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

I. THE COURT OF APPEALS CORRECTLY HELD MEEMIC MAY NOT VOID THE POLICY, WHICH WAS EXECUTED AND IN EFFECT BEFORE DEFENDANT’S ACCIDENT, AND TERMINATE ALL PIP BENEFITS TO DEFENDANT, WHO UNDISPUTEDLY COMMITTED NO FRAUD AND TO WHOM MEEMIC IS LIABLE, BASED SOLELY ON FRAUD OF HEALTHCARE PROVIDERS WHO, AT THE TIME, COULD NOT BE “INSUREDS” BECAUSE THEY WERE NOT INJURED CLAIMANTS AND LACKED STANDING TO RECOVER PIP BENEFITS UNDER THE POLICY, MCL 500.3112 AND COVENANT MEDICAL CENTER, INC V STATE FARM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Argument Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

A. MEEMIC fails to meet its burden of voiding the policy under the “Concealment or Fraud” provision. Defendant, who is the only injured claimant insured under the policy’s “insuring agreement,” undisputedly did not commit any fraud. Louise and Richard Fortson committed fraud not as insureds, but solely as healthcare providers. Because the Defendant insured claimant committed no fraud, the “Concealment or Fraud” provision does not allow MEEMIC to void the policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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B. At all times pertinent, the no-fault act mandated that Defendant, the only person suffering a compensable injury under MCL 500.3105(1), was insured under the policy pursuant to MCL 500.3114(1), and was the only party with standing to claim benefits from MEEMIC under MCL 500.3112 and Covenant. In contrast, healthcare providers, like Louise and Richard Fortson, lacked standing to claim PIP benefits from MEEMIC. The Court of Appeals therefore correctly held that the no-fault act precluded MEEMIC from voiding the policy and terminating all of Defendant’s PIP benefits based on the Fortsons’ healthcare provider fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

II. AUTHORIZING MEEMIC TO VOID THE POLICY IN THIS CASE

WILL CAUSE THE MANIFEST INJUSTICE OF FOREVER BARRING DEFENDANT, A PERMANENTLY BRAIN-INJURED CLAIMANT WHO NEITHER COMMITTED, PARTICIPATED IN OR KNEW ABOUT HIS ATTENDANT CARE PROVIDERS’ FRAUD, FROM RECOVERING PIP BENEFITS. AT A MINIMUM, PURSUANT TO BAZZI, BEFORE ALLOWING MEEMIC TO VOID/RESCIND THE POLICY IN CONTRAVENTION OF THE NO-FAULT ACT, THIS COURT MUST EITHER ORDER THE TRIAL COURT TO “BALANCE THE EQUITIES” TO DETERMINE WHETHER MEEMIC IS ENTITLED TO THIS RELIEF OR RECONSIDER ITS REJECTION OF THE INNOCENT THIRD-PARTY DOCTRINE. . . . . . . . . . . . . . . . . . . . . . . 16

Argument Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

A. While MEEMIC has a remedy against Mrs. and Mr. Fortson, if the trial court’s summary disposition order is reinstated, Defendant will be forever barred from recovering PIP benefits. . . . . . . . . . . . . . . . . . . . . . . . . 16

B. Should this Court reverse the Court of Appeals’

decision, the Court must, pursuant to Bazzi, order the trial ourt to “balance the equities” to determine whether MEEMIC may void coverage, rescind the policy, and terminate Defendant’s PIP benefits. As Bazzi reaffirmed, rescission is an equitable remedy, not “a matter of right.” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

C. This Court should reconsider its rejection of the

innocent third-party doctrine. . . . . . . . . . . . . . . . . . . . . . . . . 25

RELIEF REQUESTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

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INDEX OF AUTHORITES

Page(s)

Cases Cited ACGIA v Andrzejewski, 292 Mich App 565; 808 NW2d 537 (2011) . . . . . . . . . . 6 Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich 441;

208 NW2d 469 (1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Auto–Owners Ins Co v Churchman, 440 Mich 560; 489 NW2d 431 (1992) . . . . 6 Auto-Owners Ins Co v Seils, 310 Mich App 132; 871 NW2d 530 (2015) . . . . . . . 7 Bahri v IDS Prop Cas Ins Co, 308 Mich App 420; 864 NW2d 609 (2014) . . . . . . 21 Bazzi v Sentinel Ins Co, 315 Mich App 763; 891 NW2d 13 (2016) . . . . . . . . . . . . . . 3 Bazzi v Sentinel Ins Co, 502 Mich 390; 919 NW2d 20 (2018) . . . . . . . . . . . . . . . . . . passim Bronson Methodist Hosp v Allstate Ins Co, 286 Mich App 219;

779 NW2d 304 (2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Canavan v Hanover Ins Co, 356 Mass 88; 248 NE2d 271 (1969) . . . . . . . . . . . . 27 Cannon v Farm Bureau Ins Co, unpublished opinion per curiam of the Court

of Appeals, issued February 21, 2019 (No. 342173) (Appendix A) . . . . . . 12

Cardiology Associates of Southwestern Michigan, PC v Zencka, 155 Mich App 632; 400 NW2d 606 (1985) . . . . . . . . . . . . . . . . . . . . . . . . 23-24

Chenango Mutual Ins Co v Charles, 652 NYS2d 134 (1997) . . . . . . . . . . . . . . . 24

Churchman v Rickerson, 240 Mich App 223; 611 NW2d 333 (2000) . . . . . . . . . 9-10

Citizens Ins Co v Secura Ins, 279 Mich App 69; 755 NW2d 563 (2008) . . . . . . . 6

Cohen v ACIA, 463 Mich 525; 620 NW2d 840 (2001) . . . . . . . . . . . . . . . . . . . . . 14 Continental Western Ins Co v Clay, 248 Kan 889; 811 P2d 1202 (1991) . . . . . . 27

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Covenant Medical Center, Inc v State Farm Mutual Auto Ins Co, 500 Mich 191; 895 NW2d 490 (2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Churchman v Rickerson, 240 Mich App 223; 611 NW2d 333 (2000) . . . . . . . . . 9,10 Cruz v State Farm Mutual Auto Ins Co, 466 Mich 588; 648 NW2d 591 (2002) . . 9 Darnell v Auto–Owners Ins Co, 142 Mich App 1; 369 NW2d 243 (1985) . . . . . . . 26 Devillers v Auto Club Ins Ass'n, 473 Mich 562; 702 NW2d 539 (2005) . . . . . . . . . 18 Dolson v Secretary of State, 83 Mich App 596; 269 NW2d 239 (1978) . . . . . . . . 18 Dunn v Safeco Ins Co of Am, 14 Kan App 2d 732; 798 P2d 955 (1990) . . . . . . . 27 Farm Bureau General Ins Co of Mich v ACE American Ins Co,

503 Mich 903 (2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-23,25 Fisher v New Jersey Auto Full Ins Underwriting,

224 NJ Super 552; 540 A2d 1344 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . 27 George v Sandor M Gelman, PC, 201 Mich App 474; 506 NW2d 583 (1993) . . . 23

Grange Ins Co of Michigan v Lawrence, 296 Mich App 319; 819 NW2d 580 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Harkrider v Posey, 24 P3d 821 (Okla 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-29 Heniser v Frankenmuth Mut Ins Co, 449 Mich 155; 534 NW2d 502 (1995) . . . . 7 Holtzlander v Brownell, 182 Mich App 716; 453 NW2d 295 (1990) . . . . . . . . . . 20 Huda v Integon National Ins Co, 341 Fed Appx 149 (6th Cir 2009) . . . . . . . . . . 19 Jones v ACIA, unpublished opinion per curiam of the Court of Appeals,

issued August 23, 2005 (No. 261089) (MEEMIC Appx, p 210a) . . . . . . . 15 Kambeitz v Acuity Ins Co, 772 NW2d 632 (ND 2009) . . . . . . . . . . . . . . . . . . . . . 29 Katinsky v Auto Club Ins Ass'n, 201 Mich App 167; 505 NW2d 895 (1993) . . . . 26

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Kemp v Farm Bureau Gen Ins Co of Mich, 500 Mich 245; 901 NW2d 534 (2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Lash v Allstate Ins Co, 210 Mich App 98; 532 NW2d 869 (1995) . . . . . . . . . . . . 19 Madugula v Taub, 496 Mich 685; 853 NW2d 75 (2014) . . . . . . . . . . . . . . . . . . . 21 McCourt v Lebenbom, unpublished opinion per curiam of the Court of

Appeals, issued May 23, 2019 (No. 343003) (Appendix B) . . . . . . . . . . . . 13 Mendelson Orthopedics PC v Everest National Ins Co,

___ Mich App ___; ___ NW2d ___ (May 28, 2019; No. 341013) . . . . . . . . . . 17 Michigan Gun Owners Inc v Ann Arbor Public Schools,

502 Mich 695, 918 NW2d 756 (2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Mills v Titan Insurance Company, unpublished opinion per curiam of the

Court of Appeals, issued August 8, 2017 (No. 339693) (Appendix C) . . . 13 Mooney v Nationwide Mut Ins Co, 149 NH 355; 822 A2d 567 (2003) . . . . . . . . . 29 Muci v State Farm Mutual Automobile Insurance Co, 478 Mich 178;

732 NW2d 88 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Munroe v Great American Ins, 234 Conn 182; 661 A2d 581 (1995) . . . . . . . . . . 28 Nahshal v Fremont Ins Co, 324 Mich App 696; 922 NW2d 662 (2018) . . . . . . . . 7 National Ins Ass'n v Peach, 926 SW2d 859 (Ky App 1996) . . . . . . . . . . . . . . . . . 28 Omaha Prop and Cas Co v Crosby, 756 F Supp 1380 (D Mont 1990) . . . . . . . . . 27 Omnicom of Michigan v Giannetti Investment Co,

221 Mich App 341; 561 NW2d 138 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . 20 Rohlman v Hawkeye-Security Ins Co, 442 Mich 520; 502 NW2d 310 (1993) . . . . 10,13 Roberts v Titan Ins Co (On Reconsideration), 282 Mich App 339;

764 NW2d 304 (2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-26

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Secura Ins v Thomas, unpublished opinion per curiam of the Court of Appeals, issued December 1, 2015 (No. 322240) (MEEMIC Appx, p 186a) . . . . . . . 14-15

Shavers v Attorney General, 402 Mich 554; 267 NW2d 72 (1978) . . . . . . . . . . . . 9 Shelton v Auto-Owners Insurance Co, 318 Mich App 648;

899 NW2d 744 (2017), lv den 501 Mich 951 (2018) . . . . . . . . . . . . . . . . . 12 Singer v American States Ins, 245 Mich App 370; 631 NW2d 34 (2001) . . . . . . . 6 Spectrum Health Hosps v Farm Bureau Mut Ins Co of Mich,

492 Mich 503; 821 NW2d 117 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 State Farm Mut Auto Ins Co v Hawkeye–Security Ins Co,

115 Mich App 675; 321 NW2d 769 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . 10 Stoops v Farm Bureau Ins Co, unpublished opinion per curiam of the

Court of Appeals, issued March 23, 2006 (Nos. 260454, 261917) (MEEMIC Appx, p 194a) . . . . . . . . . . . . . . . . . . . . 15

Teeter v Allstate Ins Co, 9 AD2d 176; 192 NYS2d 610, 615 (1959),

aff'd 9 NY2d 655; 212 NYS2d 71; 173 NE2d 47 (1961) . . . . . . . . . . . . . . 29 Titan Ins Co v Hyten, 491 Mich 547; 817 NW2d 562 (2012) . . . . . . . . . . . . . . . . 6,10,13 Turner v ACIA, 448 Mich 22; 528 NW2d 681 (1995) . . . . . . . . . . . . . . . . . . . . . . . 9 United Security Ins Co v Comm'r of Ins, 133 Mich App 38;

348 NW2d 34 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Van Horn v Atlantic Mut Ins Co, 334 Md 669, 641 A2d 195 (1994) . . . . . . . . . . . . 30

Visner v Harris, unpublished opinion per curiam of the Court of Appeals, issued December 6, 2012 (Nos. 307506, 307507) (Appendix D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

West v Farm Bureau Mut Ins Co of Mich, 402 Mich 67; 259 NW2d 556 (1977) . . 7,19

Statutes Cited MCL 500.2103(1)(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

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MCL 500.3101, et seq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,9 MCL 500.3105(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim MCL 500.3107(1)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 MCL 500.3112 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,4,9,10 MCL 500.3112(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,24 MCL 500.3113(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 MCL 500.3114(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim MCL 500.3114(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 MCL 500.3145(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 MCL 500.3173a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 MCL 500.3174 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,18 MCL 500.4503 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Court Rules Cited MCR 2.116(C)(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 MCR 2.311 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 7.312(H)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi Other Authorities Cited See Anno: Rescission or avoidance, for fraud or misrepresentation, of

compulsory, financial responsibility, or assigned risk automobile insurance, 83 ALR2d 1104 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

7 Am Jur, 2d Automobile Insurance, § 61 (2015) . . . . . . . . . . . . . . . . . . . . . . . . . 26 1981 Attorney General opinion: OAG, 1981, No 6016 (December 1, 1981) . . . . . 18

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6 Couch on Ins, § 82:23 (June 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

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JURISDICTIONAL STATEMENT

The Michigan Association for Justice submits this amicus curiae brief pursuant to

the Supreme Court’s May 22, 2019 order and MCR 7.312(H)(1).

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STATEMENT OF QUESTIONS PRESENTED

I. Whether the Court of Appeals correctly held MEEMIC may not void the policy, which was executed and in effect before Defendant Justin Fortson’s accident, and terminate all PIP benefits to Defendant, who undisputedly committed no fraud and to whom MEEMIC is liable, based solely on fraud of Healthcare providers who, at the time, could not be “insureds” because they were not injured claimants and lacked standing to recover PIP benefits under the policy, MCL 500.3112 and Covenant Medical Center, Inc v State Farm.

II. Whether authorizing MEEMIC to void the policy in this case

will cause the manifest injustice of forever barring Defendant, a permanently brain-injured claimant who neither committed, participated in or knew about his attendant care providers’ fraud, from recovering PIP benefits; and, accordingly, whether, at a minimum, pursuant to Bazzi v Sentinel Ins Co, 502 Mich 390; 919 NW2d 20 (2018), before allowing MEEMIC to void/rescind the policy in contravention of the no-fault act, this Court must either order the trial court to “balance the equities” to determine whether MEEMIC is entitled to this relief or reconsider its rejection of the innocent third-party doctrine.

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STATEMENT OF INTEREST OF AMICUS CURIAE

The Michigan Association for Justice (“MAJ”) is an organization of Michigan

lawyers engaged primarily in litigation and trial work. The MAJ recognizes an obligation

to assist this Court on important issues that would substantially affect the orderly

administration of justice in the courts of this state.

On May 22, 2019, this Court granted the application of Plaintiff/Counter-

Defendant-Appellant, MEEMIC Insurance Company (“MEEMIC”). (5/22/19 order). The

Court’s leave-grant order states that “[p]ersons or groups interested in the determination

of the issues presented in this case may move the Court for permission to file briefs

amicus curiae.” (Id). On October 4, 2019, this Court granted the Insurance Alliance of

Michigan’s (“the IAM’”) motion to file a brief amicus curiae. (10/4/19 order).

This appeal addresses whether fraud by health care providers who, at the time,

lacked standing to recover personal injury protection (“PIP”) benefits under the subject

policy, MCL 500.3112 and Covenant Medical Center, Inc v State Farm Mutual Auto Ins

Co, 500 Mich 191; 895 NW2d 490 (2017), entitles an insurer to void an auto insurance

policy executed and vested before the subject motor vehicle accident and terminate all

PIP benefits to an individual, who undisputedly committed no fraud, and to whom the

insurer was undisputedly liable under the policy and the no-fault act, MCL 500.3101, et

seq. The clients the MAJ’s members represent have a substantial interest in this

jurisprudentially significant issue. The MAJ accordingly submits this amicus brief

supporting Defendant/Counter-Plaintiff-Appellee Justin Fortson (“Defendant”) and

respectfully requests that this Honorable Court affirm the Court of Appeals’ May 29,

2018 decision.

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STATEMENT OF FACTS

The material facts are undisputed and bear summarizing:

1. On July 29, 2009, MEEMIC issued a six-month auto insurance policy to Defendant’s parents, Louise and Richard Fortson. (MEEMIC brief, p 1).

2. On September 18, 2009, while the policy was in effect, Defendant

suffered severe brain injuries in a motor vehicle accident. MEEMIC brief, p 1; Defendant brief, p 1).

3. At the time of the accident, Defendant was a resident relative of his

parents. (Defendant brief, p 1). Accordingly, MCL 500.3105(1) and MCL 500.3114(1) mandate, and the MEEMIC policy provides, Defendant PIP coverage in the accident. (Id).

4. After Defendant submitted notice of the accident and an application

for PIP benefits, (COA majority opinion, p 7 n 3, MEEMIC Appx, p 178a), in approximately September 2009, MEEMIC started paying Defendant’s benefits, (MEEMIC brief, p 1). These benefits included attendant care provided by Defendant’s parents. (Defendant brief, p 2).

5. On January 29, 2010, MEEMIC issued a six-month renewal auto

policy to Defendant’s parents. (MEEMIC brief, p 2). MEEMIC cancelled this policy, due to issues over Defendant’s driving record, on July 29, 2010. (MEEMIC brief, p 2).

6. MEEMIC asserts that, in May 2013, it discovered evidence that

Louise Fortson had submitted statements to MEEMIC requesting payment for attendant care which she and Richard Fortson claimed they rendered to Defendant during times Defendant was in jail or in a rehabilitation facility. (MEEMIC brief, p 2; Defendant brief, pp 1-2).

7. Citing the policy’s “Concealment or Fraud” provision, (Policy,

General Policy Conditions, ¶ 22, MEEMIC Appx 24a), MEEMIC terminated all of Plaintiff’s PIP benefits. (MEEMIC brief, p 2).

8. MEEMIC’s allegations of fraud relate exclusively to Louise and

Richard Fortson in their role as Defendant’s attendant care providers. MEEMIC has neither alleged nor submitted evidence establishing that Defendant committed any fraud in connection with

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his claim for PIP benefits.1 MEEMIC also has never alleged that any fraud occurred in procuring the subject, July 29, 2009 policy.

9. On October 19, 2014, MEEMIC filed suit in the Berrien County

Circuit Court seeking a judgment declaring its right to void the policy. (MEEMIC brief, p 3).

10. MEEMIC originally moved for summary disposition on April 19,

2015, arguing that the alleged fraud of Louise and Richard Fortson, who are named insureds under the policy, constituted grounds to void the entire policy. (MEEMIC brief, p 3; Defendant brief, p 4). Concluding the innocent third-party rule precluded MEEMIC from terminating Defendant’s benefits due to his parents' alleged fraud, the trial court denied MEEMIC’s first motion for summary disposition. (MEEMIC brief, p 4; Defendant brief, p 4).

11. After the Court of Appeals issued Bazzi v Sentinel Ins Co, 315 Mich

App 763; 891 NW2d 13 (2016), affirmed in part, reversed in part, 502 Mich 390; 919 NW2d 20 (2018), on August 22, 2016, MEEMIC filed its second motion for summary disposition. (MEEMIC brief, p 4; Defendant brief, pp 4-5). Defendant responded, arguing, in pertinent part, that (a) Bazzi, supra, which voided a fraudulently procured policy ab initio, does not authorize MEEMIC’s termination of Defendant’s PIP benefits under an operative policy, and (b) the MEEMIC cannot void the policy and terminate Defendant’s benefits based on alleged fraud of a healthcare provider. (Defendant brief, p 5).

12. Concluding that Bazzi was dispositive, the trial court granted

MEEMIC’s second motion for summary disposition. (MEEMIC brief, p 4; Defendant brief, p 5).

13. On May 29, 2018, in a published 2-1 decision, the Court of Appeals

reversed. (COA decision, MEEMIC Appx, pp 172a-185a). The court’s majority held, in pertinent part, because MEEMIC elected to provide PIP benefits to insured claimants, and because the no-fault act mandates Defendant’s recovery of benefits under MEEMIC’s policy, which was in effect at the time of his accident, the “Concealment or Fraud” provision violates the no-fault act and cannot void the policy and terminate Defendant’s benefits. (Id, MEEMIC Appx, p 176a).

1 The IAM falsely alleges Defendant “knowingly and willfully benefit(ed) from the proceeds derived from the fraud.” (IAM brief, pp 9-10). Absolutely no admissible evidence supports an accusation that Defendant participated in, or had prior knowledge of, Louise and Richard Fortson’s fraud.

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The MAJ now presents its amicus curiae brief. For the reasons presented, the

Court of Appeals majority decision must be affirmed.

STANDARD OF REVIEW

The de novo standard of review is set forth in Defendant’s and MEEMIC’s briefs.

ARGUMENT

I. THE COURT OF APPEALS CORRECTLY HELD MEEMIC MAY NOT VOID THE POLICY, WHICH WAS EXECUTED AND IN EFFECT BEFORE DEFENDANT’S ACCIDENT, AND TERMINATE ALL PIP BENEFITS TO DEFENDANT, WHO UNDISPUTEDLY COMMITTED NO FRAUD AND TO WHOM MEEMIC IS LIABLE, BASED SOLELY ON FRAUD OF HEALTHCARE PROVIDERS WHO, AT THE TIME, COULD NOT BE “INSUREDS” BECAUSE THEY WERE NOT INJURED CLAIMANTS AND LACKED STANDING TO RECOVER PIP BENEFITS UNDER THE POLICY, MCL 500.3112 AND COVENANT MEDICAL CENTER, INC V STATE FARM.

Argument Summary

The Court of Appeals majority correctly held that MEEMIC cannot void the policy

and terminate Defendant’s mandatory, previously-vested PIP benefits based on fraud

by non-claimant healthcare providers who, at the time, were not insured claimants and

lacked standing to recover benefits under the policy and no-fault act. MEEMIC

mistakenly argues the fraud by Defendant’s parents, while acting in the role of attendant

care providers rather than injured insured claimants, allows MEEMIC to void the entire

policy and permanently terminate Defendant’s PIP benefits under that the “Concealment

or Fraud” paragraph. (Policy, General Policy Conditions, ¶ 22, MEEMIC Appx 24a).

MEEMIC and its amicus, the IAM, avoid the fact that MEEMIC is not liable to

Defendant’s attendant care providers as insureds under the policy because, at all times

pertinent, they were not covered under the policy’s insuring agreement and lacked

standing to claim PIP benefits under MCL 500.3112 and Covenant Medical Center, Inc

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v State Farm Mutual Auto Ins Co, 500 Mich 191; 895 NW2d 490 (2017). Michigan

cases repeatedly hold that an insurer may not void coverage when the insured claimant

committed no fraud. In turn, MEEMIC and the IAM fail to cite any authority supporting

its attempt to void coverage under an operative policy (which has not been voided ab

initio due to fraudulent procurement) based not on fraud by the injured insured claimant,

but solely on healthcare provider fraud. The Court of Appeals’ decision must be

affirmed.

A. MEEMIC fails to meet its burden of voiding the policy under the “Concealment or Fraud” provision. Defendant, who is the only injured claimant insured under the policy’s “insuring agreement,” undisputedly did not commit any fraud. Louise and Richard Fortson committed fraud not as insureds, but solely as healthcare providers. Because the Defendant insured claimant committed no fraud, the “Concealment or Fraud” provision does not allow MEEMIC to void the policy.

MEEMIC mistakenly argues that, because Louise and Richard Fortson are

named insureds and misrepresented material facts relating to a claim made under the

policy, it may void the policy under the “Concealment or Fraud” provision. (Policy,

General Policy Conditions, ¶ 22, MEEMIC Appx 24a). In relying exclusively on the

“Concealment or Fraud” paragraph, MEEMIC and its amicus, the IAM, conspicuously

avoid the fact that Defendant, who undisputedly committed no fraud, is the only insured

injured claimant under the policy’s “insuring agreement.” Mrs. and Mr. Fortson, who

were not insured claimants under the PIP policy, did not commit fraud as “insureds” but

as healthcare providers.2 As such, before even addressing the no-fault act, MEEMIC

2 In addition, as demonstrated below, at all times pertinent, (a) MCL 500.3105(1) and MCL 500.3114(1) mandated coverage to Defendant, and (b) Mrs. and Mr. Fortson, as healthcare providers, lacked standing to claim PIP benefits from MEEMIC under MCL

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has not met its burden of establishing its right to void the policy based on a false

swearing defense. The trial court erroneously granted MEEMIC’s motion for summary

disposition. The Court of Appeals correctly reversed.3

“Insurance policies are contracts ‘subject to the same contract construction

principles that apply to any other species of contract.’” Bazzi v Sentinel Ins Co, 502

Mich 390, 399; 919 NW2d 20 (2018), quoting Titan Ins Co v Hyten, 491 Mich 547, 554;

817 NW2d 562 (2012) (additional citation omitted). “An insurance contract must be

read as a whole and meaning given to all terms.” Singer v American States Ins, 245

Mich App 370, 374; 631 NW2d 34 (2001), citing Auto–Owners Ins Co v Churchman,

440 Mich 560, 566; 489 NW2d 431 (1992) (emphasis added). This includes

exclusionary clauses, which cannot be construed in isolation but rather as part of the

policy “as a whole” in order to effectuate the parties’ intent. ACGIA v Andrzejewski, 292

Mich App 565, 569; 808 NW2d 537 (2011) (citation omitted; emphasis added).4

“Exclusionary clauses in insurance policies are strictly construed in favor of the insured.”

Churchman, supra, 440 Mich at 567. Interpretation of an insurance policy is a question

of law for the Court. Citizens Ins Co v Secura Ins, 279 Mich App 69, 72; 755 NW2d 563

(2008).

500.3112 and Covenant. Accordingly, as the Court of Appeals correctly held, the no-fault act, which governs and precludes contrary policy provisions, prohibits MEEMIC from voiding Defendant’s PIP coverage. 3 The MAJ takes no position on the Court of Appeals’ majority’s conclusion that MEEMIC’s post-accident cancellation of the policy terminated Louise and Richard Fortsons’ status as insureds. Even if this conclusion was incorrect, this Court “frequently affirms” lower court decisions when they have “reached the right result for the wrong reason.” Michigan Gun Owners Inc v Ann Arbor Public Schools, 502 Mich 695, 918 NW2d 756 (2018) (citation omitted). 4 Moreover, as addressed below, PIP policies must conform with the No-Fault Act.

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Under Michigan law, the “insured bears the burden of proving coverage, while

the insurer must prove than an exclusion to coverage is applicable.” Heniser v

Frankenmuth Mut Ins Co, 449 Mich 155, 161 n 6; 534 NW2d 502 (1995) (citation

omitted). In particular, the insurer bears the burden of proving that a party's intentional

misrepresentation triggers a policy's fraud exclusion. Nahshal v Fremont Ins Co, 324

Mich App 696, 720; 922 NW2d 662 (2018); Auto-Owners Ins Co v Seils, 310 Mich App

132, 146; 871 NW2d 530 (2015). When an insurer attempts to defeat a claim for

coverage based on an anti-fraud clause, the insurer must prove that the claimant

“actually intended to defraud the insurer.” West v Farm Bureau Mut Ins Co of Mich, 402

Mich 67, 69; 259 NW2d 556 (1977).

“It is a firmly established rule of construction that policies of insurance will be

liberally construed to uphold the contract, and conditions contained in them which

create forfeitures will be construed most strongly against the insurer and will never be

extended beyond the strict words of the policy.” West, supra, 402 Mich at 69 (citation

and quotation marks omitted). “The court will never seek for a construction of a

forfeiture clause in a policy which will sustain it, if one which will defeat it is reasonably

deducible from the terms and words used to express it.” Id.

Application of the PIP policy, as a whole, establishes that no forfeiture permitting

MEEMIC to void the policy occurred. In exclusively relying on the policy’s

“Concealment or Fraud” provision, MEEMIC and the IAM avoid the “insuring

agreement,” which states, in pertinent part:

We agree to pay only as set forth in the Code the following benefits to or for an insured person … who suffers accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle … [a]ll reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s

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care, recovery or rehabilitation. (Policy, Michigan No-Fault, Insuring Agreements, ¶ 1.A, MEEMIC Appx, p 9a; emphasis added).5

Because Defendant was injured in a motor vehicle accident while the policy was in

effect, and because he was a resident relative of his parents, who are the named

insureds, (see MCL 500.3114(1); Policy, Michigan No-Fault, Definitions, ¶ 5.C, MEEMIC

Appx, p 9a), MEEMIC is liable to Defendant, as the injured insured claimant under the

policy’s insuring agreement, for all recoverable PIP benefits.

MEEMIC’s attempt to void the policy and terminate Defendant’s PIP benefits

based on the fraud of his parents – while acting solely as attendant care providers – is

untenable. At the time, Mrs. and Mr. Fortson, as healthcare providers, were not entitled

to claim benefits under the policy.6 The Fortsons’ did not suffer “accidental bodily injury

arising out of the ownership, operation, maintenance or use of a motor vehicle as a

motor vehicle” triggering MEEMIC’s liability under the policy’s insuring agreement.

(Policy, Michigan No-Fault, Insuring Agreements, ¶ 1.A, MEEMIC Appx, p 9a; emphasis

added). Accordingly, when the Fortsons engaged in fraud, they were not acting as

“insureds.” Their fraud does not void the policy or preclude Defendant from recovering

PIP benefits. In addition to the policy, the no-fault act mandates this conclusion.

5 This provision codifies MCL 500.3105(1), which mandates that, “[u]nder personal protection insurance an insurer is liable to pay benefits for accidental bodily injury arising out of the ownership, operation maintenance or use of a motor vehicle, subject to the provisions of this chapter.” It also codifies MCL 500.3107(1)(a), establishing that PIP “benefits are payable for … [a]llowable expenses consisting of reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation.” 6 Or, as demonstrated below, under the No-Fault Act, which is determinative.

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B. At all times pertinent, the no-fault act mandated that Defendant, the only person suffering a compensable injury under MCL 500.3105(1), was insured under the policy pursuant to MCL 500.3114(1), and was the only party with standing to claim benefits from MEEMIC under MCL 500.3112 and Covenant. In contrast, healthcare providers, like Louise and Richard Fortson, lacked standing to claim PIP benefits from MEEMIC. The Court of Appeals therefore correctly held that the no-fault act precluded MEEMIC from voiding the policy and terminating all of Defendant’s PIP benefits based on the Fortsons’ healthcare provider fraud.

Even if the policy arguably authorized MEEMIC to void the policy based on Mr.

and Mrs. Fortsons’ fraud, as the Court of Appeals correctly held, the no-fault act

precludes MEEMIC from doing so. The no-fault act, MCL 500.3101, et seq, is a

“comprehensive legislative enactment designed to regulate the insurance of motor

vehicles in this state and the payment of benefits resulting from accidents involving

those motor vehicles.” Cruz v State Farm Mut Auto Ins Co, 466 Mich 588, 595; 648

NW2d 591 (2002). The no-fault act is “complete within itself.” Advisory Opinion re

Constitutionality of 1972 PA 294, 389 Mich 441, 477; 208 NW2d 469 (1973); see also

Muci v State Farm Mutual Automobile Insurance Co, 478 Mich 178, 187-188; 732 NW2d

88 (2007).

In enacting the no-fault act, the Legislature intended to achieve the goal of

providing “victims of motor vehicle accidents assured, adequate, and prompt reparation

for certain economic losses,” Shavers v Attorney General, 402 Mich 554, 579; 267

NW2d 72 (1978). No-fault act is remedial and should be liberally construed in favor of

those it is intended to benefit. Turner v ACIA, 448 Mich 22, 28; 528 NW2d 681 (1995)

(citation omitted); Grange Ins Co of Michigan v Lawrence, 296 Mich App 319, 323; 819

NW2d 580 (2012); Churchman v Rickerson, 240 Mich App 223, 228-229; 611 NW2d

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333 (2000). This rule of liberal construction applies to the payment of benefits to injured

parties, who were intended to benefit from the adoption of no-fault legislation.

Churchman, supra. “Where appropriate, the act should be broadly construed to

effectuate coverage.” Id.

The no-fault act requires a first-party automobile insurer to provide PIP benefits

for certain injuries related to a motor vehicle. Kemp v Farm Bureau Gen Ins Co of Mich,

500 Mich 245, 252; 901 NW2d 534 (2017); MCL 500.3105(1). PIP benefits are

statutorily-mandated and cannot be abridged by contract. Bazzi, supra, 502 Mich at

399. “When a provision in an insurance policy is mandated by a statute, the policy and

the statute must be construed together as though the statute were part of the policy,

and ‘the rights and limitations of the coverage are governed by that statute.’” Id, quoting

Titan, supra, 491 Mich at 554. The statute is the “rule book” for deciding the issues

involved in questions regarding awarding those benefits. Bazzi, supra, quoting

Rohlman v Hawkeye-Security Ins Co, 442 Mich 520, 524-525; 502 NW2d 310 (1993).

Any clause in a no-fault policy “attempting to limit an insurer's liability to less than that

mandated by statute is void as against public policy.” State Farm Mut Auto Ins Co v

Hawkeye–Security Ins Co, 115 Mich App 675, 681; 321 NW2d 769 (1982).

Aside from being an injured insured claimant under the policy’s language,

(Policy, General Policy Conditions, ¶ 22, MEEMIC Appx 24a; Policy, Michigan No-Fault,

Definitions, ¶ 5.C, MEEMIC Appx, p 9a), Defendant also suffered a compensable injury

under MCL 500.3105(1). In addition, notwithstanding the policy’s terms, Defendant is

insured and entitled to PIP benefits from MEEMIC as a resident relative of the persons

named in the policy under MCL 500.3114(1).

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Even more, at all times pertinent, pursuant to MCL 500.3112 and Covenant,

supra, Defendant is the only person with standing to claim PIP benefits from MEEMIC.

MCL 500.3112(1) states, in material part, that PIP “benefits are payable to or for the

benefit of an injured person ….” In Covenant, supra, overruling numerous previous

cases, this Court, interpreting this unambiguous language of MCL 500.3112(1), held

that the no-fault act does not grant healthcare providers standing to directly claim

statutory PIP benefits from the insurer. Id, 500 Mich at 196, 210-218.7

Conspicuously, MEEMIC’s Supreme Court brief and reply brief fail to even cite,

let alone address, MCL 500.3112(1) and Covenant. MEEMIC clearly recognizes that

the attendant care providers’ lack of standing is fatal to its position.

MEEMIC’s amicus, the IAM, spuriously cites the “or for the benefit of the injured

person” clause of MCL 500.3112(1) for the proposition that Defendant’s PIP benefits

were properly terminated because he purportedly benefitted ‘from the proceeds derived

from the fraud.”8 (IAM brief, pp 9-10). As this Court explained in Covenant:

This language … does not state that benefits are payable ‘to the provider,’ or otherwise indicate that a provider itself has an entitlement to benefits. To the contrary, it expressly leaves that entitlement with the injured person and merely recognizes that one who does not have a direct cause of action against a no-fault insurer may be paid directly by the insurer, but only in order to benefit the injured person.”

Id, 500 Mich at 210.

7 This case predates, and therefore does not address, the June 2019 amendment to MCL 500.3112(1) arguably repealing Covenant and authorizing a provider’s direct action against and recovery of PIP benefits from an insurer. 8 As indicated above, the IAM’s allegation that Defendant “knowingly and willfully” benefitted from the providers’ fraud is totally unsupported.

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The liability enabling statutes, MCL 500.3105(1), priority provision of MCL

500.3114(1), plain-language of MCL 500.3112(1) and Covenant (in effect when

MEEMIC terminated Defendant’s benefits and moved to void the policy), conclusively

establish that the Court of Appeals correctly reversed the trial court’s summary

disposition ruling. MEEMIC cannot void the policy and terminate Defendant’s

statutorily-mandated benefits. Michigan cases confirm the Court of Appeals reached the

correct result.

In Cannon v Farm Bureau Ins Co, unpublished opinion per curiam of the Court of

Appeals, issued February 21, 2019 (No. 342173) (Appendix A), a case on point, the

Court of Appeals held that, because the plaintiff was “eligible for benefits under the

terms of the (third-party driver’s) policy (and) … under the priority statute,” MCL

500.3114(4), (Id, p 7), and ‘there was no evidence presented” that the plaintiff claimant

“committed any fraud,” (Id, p 1), the insurer cannot abridge the plaintiff’s “statutory

entitlement to benefits … by the terms of the policy based on” fraud allegedly committed

by an attendant care provider.9

While unpublished, Cannon’s unassailable analysis necessitates the same

conclusion in this case. Because MCL 500.3114(1) mandated coverage of Defendant

under MEEMIC’s policy, because, at the time, Defendant was the only person with

standing to claim PIP benefits from MEEMIC, and because Defendant committed no

fraud, the no-fault act precludes MEEMIC from invoking the “Concealment or Fraud” 9 Cannon cited, in part, the holding in Shelton v Auto-Owners Ins Co, 318 Mich App 648, 654-656; 899 NW2d 744 (2017), lv den 501 Mich 951 (2018), that a carrier may not void the PIP claims of a claimant not insured under a policy, even if the claimant participated in the fraud. Since Defendant did not participate in the subject fraud, Shelton’s holding does not apply. MEEMIC’S request to overrule Shelton is wholly misplaced.

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provision to void the policy and terminate Defendant’s benefits. The no-fault act, as it

existed, precluded MEEMIC from voiding coverage based on fraud committed by

healthcare providers who lacked standing to claim or recover benefits.10 The policy

cannot abridge Defendant’s statutorily-mandated PIP benefits. Bazzi, supra, 502 Mich

at 399.11

Other Michigan cases reaffirm that an insurer may not void a policy for alleged

false swearing when the injured claimant did not participate in or know about the fraud.

See McCourt v Lebenbom, unpublished opinion per curiam of the Court of Appeals,

issued May 23, 2019 (No. 343003) (Appendix B, p 3), (concluding that the insurer may

not void policy based on false swearing because “there is no record evidence that

plaintiff in fact knew that (the attendant care provider) provided false information at the

time the forms were submitted to defendant.”); Mills v Titan Insurance Company,

unpublished opinion per curiam of the Court of Appeals, issued August 8, 2017 (No.

339693) (Appendix C, p 5) (affirming denial of summary disposition under MCL

500.3173a because “the record does not contain any indication that plaintiff “[knew]

that the statements [submitted by the attendant care providers] contained false

information concerning a fact or thing material to the claim ....”). Indeed, no Michigan

10 Citing Rohlman, supra, 442 Mich App 523 n 3, MEEMIC mistakenly argues that the policy’s “Concealment or Fraud” provision is merely supplemental to, may be harmonized with, the No-Fault Act and invoked to bar Defendant’s coverage based on his attendant care providers’ fraud. Because the No-Fault Act mandated coverage to Defendant under MCL 500.3105(1) and MCL 500.3114(1), and disqualified healthcare providers like Mrs. And Mr. Fortson as insured claimants, MEEMIC’s position is untenable. MEEMIC cannot abridge, by contract, Defendant’s statutorily-mandated benefits. Bazzi, supra, 502 Mich at 399, quoting Titan, supra, 491 Mich at 554. 11 Had Mrs. or Mr. Fortson been the injured claimant and committed fraud, the no-fault act would authorize MEEMIC voiding the policy. A policyholder’s fraud disqualifies him or her from insured status and recovery of PIP benefits under MCL 500.3113(b).

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case has ever held that an insurer may void an operative policy to bar an injured

claimant, who committed no fraud, from recovering PIP benefits.12

MEEMIC and the IAM fail to cite any statutes supporting their position that the

no-fault act authorizes voiding the policy and terminating Defendant’s PIP benefits. The

IAM’s reliance on MCL 500.2103(1)(c) and MCL 500.4503 is unavailing. MCL

500.2103(1)(c) permits disqualification only for fraud by an “eligible person.” As

established, Defendant, the only “eligible person” to claim and recover PIP benefits in

this case, committed no fraud. Louise and Richard Fortson were not “eligible

person(s).” Their fraud does not affect Defendant’s statutory right to PIP benefits.

MCL 500.4503 also is not dispositive. This statute merely outlines the type acts

constituting fraud under the Insurance Code. It does not authorize MEEMIC to void the

PIP coverage of Defendant, who committed no fraudulent act.

None of MEEMIC’s cited cases support voiding the policy and Defendant’s PIP

benefits based on fraud by someone other than the injured claimant. Cohen v ACIA,

463 Mich 525, 526-530; 620 NW2d 840 (2001) (Cohen is materially distinguishable from

this case. The actual insured claimant, rather than a healthcare provider, committed

fraud. In addition, this Court emphasized that the case addressed voiding an optional

uninsured motorist (“UM”) policy for fraud, not mandatory PIP coverage); Secura Ins v

Thomas, unpublished opinion per curiam of the Court of Appeals, issued December 1,

12 Of course, Bazzi, supra addressed voiding a policy ab initio due to fraudulent procurement, not voiding an operative policy not procured by fraud. In doing so, this Court emphasized that before ordering rescission, a court must “balance the equities” to determine whether an insurer may rescind a policy to bar coverage to an innocent party. Id, 502 Mich at 410-412. As demonstrated in Argument II, if this Court concludes the Court of Appeals erroneously reversed the trial court’s order granting summary disposition under Bazzi, then, pursuant to Bazzi, the “Concealment or Fraud” provision may not be implemented to void the policy as to Defendant, an innocent party, without first balancing the relevant equities.

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2015 (No. 322240) (MEEMIC Appx, p 186a) (Materially distinguishable because the

fraud was committed by the injured claimant, not by a healthcare provider, and because

the policy addressed optional underinsured motorist (“UIM”) insurance, not mandatory

PIP coverage) (Id, p 4; MEEMIC Appx, p 189a); Stoops v Farm Bureau Ins Co,

unpublished opinion per curiam of the Court of Appeals, issued March 23, 2006 (Nos.

260454, 261917) (MEEMIC Appx, p 194a) (Also materially distinguishable from this

case. The Court of Appeals affirmed summary disposition voiding a claim under non-

mandatory UIM policy based on the plaintiff claimant insured’s fraudulent scheme to

falsify evidence and abscond with attendant care benefits defendant insurer paid. Here,

there is no evidence Defendant either participated in, or had knowledge of, his non-

claimant parents’ fraud.) (Id, pp 13-16; MEEMIC Appx, pp 206a-209a); Jones v ACIA,

unpublished opinion per curiam of the Court of Appeals, issued August 23, 2005 (No.

261089) (MEEMIC Appx, p 210a) (Again materially distinguishable; the fraud was not by

non-claimant healthcare providers, but by injured claimant in a claim under an “optional”

UM policy. The Court of Appeals limited its holding to UM claim, which did not involve

mandatory no-fault benefits.) (Id, pp 2-3; MEEMIC Appx, pp 211a-212a). To reiterate,

no Michigan case has ever held that an insurer may void an operative policy to bar an

injured claimant, who committed no fraud, from recovering PIP benefits.

The Court of Appeals correctly held that MEEMIC cannot void the policy and

terminate Defendant’s PIP benefits based on the fraud of his attendant care providers.

The Court of Appeals’ decision must be affirmed. Defendant’s PIP benefits must be

reinstated.

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II. AUTHORIZING MEEMIC TO VOID THE POLICY IN THIS CASE WILL CAUSE THE MANIFEST INJUSTICE OF FOREVER BARRING DEFENDANT, A PERMANENTLY BRAIN-INJURED CLAIMANT WHO NEITHER COMMITTED, PARTICIPATED IN OR KNEW ABOUT HIS ATTENDANT CARE PROVIDERS’ FRAUD, FROM RECOVERING PIP BENEFITS. AT A MINIMUM, PURSUANT TO BAZZI, BEFORE ALLOWING MEEMIC TO VOID/RESCIND THE POLICY IN CONTRAVENTION OF THE NO-FAULT ACT, THIS COURT MUST EITHER ORDER THE TRIAL COURT TO “BALANCE THE EQUITIES” TO DETERMINE WHETHER MEEMIC IS ENTITLED TO THIS RELIEF OR RECONSIDER ITS REJECTION OF THE INNOCENT THIRD-PARTY DOCTRINE.

Argument Summary

Lost in MEEMIC’s rush to void the policy is the fact that, if the summary

disposition ruling is reinstated, Defendant, a permanently brain-injured claimant who

had nothing to do with the fraud his parents committed as attendant care providers, will

be forever barred from recovering PIP benefits. This manifestly unjust, and

unnecessary, result must be avoided. Should this Court conclude that MEEMIC is

entitled to void the policy, it must either order the trial court, pursuant to Bazzi, supra, to

“balance the equities” in order to determine whether MEEMIC is entitled to void and,

resultingly, rescind the policy based on a provision which conflicts with the no-fault act,

or reconsider its previous rejection of the innocent third-party doctrine.

A. While MEEMIC has a remedy against Mrs. and Mr. Fortson, if the trial court’s summary disposition order is reinstated, Defendant will be forever barred from recovering PIP benefits.

As the Court of Appeals emphasized, MEEMIC has a remedy against Louise and

Richard Fortson. (COA majority decision, p 8 n 5, MEEMIC Appx, p 179a). Yet, if this

Court reinstates the trial court’s summary disposition order, it presumably is now too

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late for Defendant to seek PIP benefits through the Michigan Assigned Claim Plan

(“MACP”).

Defendant was injured on September 18, 2009. MEEMIC brief, p 1; Defendant

brief, p 1). MEEMIC terminated benefits sometime between May, 2013 and October 19,

2014, when it filed suit. (MEEMIC brief, pp 2-3; Defendant brief, pp 1-2). After denying

MEEMIC’s original motion for summary disposition on August 17, 2015, the trial court

granted MEEMIC’s second motion on March 14, 2017. (MEEMIC brief, p 4). The Court of

Appeals reversed on May 29, 2018. (COA decision, MEEMIC Appx, p 172a).

With this passage of time, if MEEMIC is permitted to void the policy, Defendant is

now forever barred from recovering any PIP benefits – including through the MACP. MCL

500.3174 provides that “a person claiming through the assigned claims plan shall notify

the Michigan automobile insurance placement facility (“MAIPF”) of his or her claim

within the time that would be allowed for filing an action for personal protection

insurance benefits if identifiable coverage applicable to the claim had been in effect.” Id

(emphasis added). The underlined language establishes that a claimant must notify the

MAIPF of the claim within the limitations period for filing a civil action for PIP benefits.

That limitation period, set forth in MCL 500.3145(1), is one year after the accident. Far

more than one year has elapsed since the September 18, 2009 accident.

At all times pertinent,13 Michigan law was clear that this notice was required within

one year after the accident. See Bronson Methodist Hosp v Allstate Ins Co, 286 Mich

App 219, 225–226; 779 NW2d 304 (2009) (Holding that MCL 500.3174 and MCL

500.3145(1), establishes that a claimant must provide notice to the MAIPF within one

13 Before the release of Mendelson Orthopedics PC v Everest National Ins Co, ___ Mich App ___; ___ NW2d ___ (May 28, 2019; No. 341013), which does not impact this case.

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year of the accident.). Accordingly, a claimant who failed to provide notice to the MIAPF

within one year of the accident could not maintain an action for PIP benefits. Id; see

also Dolson v Secretary of State, 83 Mich App 596, 598, 600; 269 NW2d 239 (1978)

(Explaining that the ACF is effectively placed in the same position as a private insurer,

so the one-year notice provision applies with equal force to private insurers and the

MAIPF.). Id at 600.14

Under existing case law, once MEEMIC terminated benefits sometime after May

2013, Defendant’s one-year deadline for notifying the MAIPF expired.

Accordingly, if this Court reverses the Court of Appeals’ decision and reinstates

the summary disposition order, Defendant will be forever barred from recovering PIP

benefits. He no longer has the option of claiming benefits through the MACP.

B. Should this Court reverse the Court of Appeals’ decision, the Court must, pursuant to Bazzi, order the trial court to “balance the equities” to determine whether MEEMIC may void coverage, rescind the policy, and terminate Defendant’s PIP benefits. As Bazzi reaffirmed, rescission is an equitable remedy, not “a matter of right.”

As established above, both the policy and no-fault act preclude MEEMIC from

voiding coverage and terminating Defendant’s PIP benefits. Should this Court

nonetheless reverse the Court of Appeals’ decision, instead of reinstating the summary

disposition ruling, pursuant to Bazzi, supra, the Court must remand and order the trial 14 Even more, the Court of Appeals rejected 1981 Attorney General opinion: OAG, 1981, No 6016 (December 1, 1981), which indicated that a MACP claim was tolled if the claimant notified a private insurer found not to cover the loss. See Visner v Harris, unpublished opinion per curiam of the Court of Appeal, issued December 6, 2012 (Nos. 307506, 307507) (Appendix D, pp 2-3) (holding that the Supreme Court overruled the basis for the Attorney General opinion in Devillers v Auto Club Ins Ass'n, 473 Mich 562; 702 NW2d 539 (2005), and that notice to a private insurer later determined to not provide coverage does not toll the MAIPF notice requirement in MCL 500.3174).

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court to “balance the equities” in order to determine whether MEEMIC may void

coverage, rescind the policy, and terminate Defendant’s PIP benefits. Id, 502 Mich at

410. As this Court reaffirmed in Bazzi, rescission is an equitable remedy and is “not

strictly a matter of right.” Id, 502 Mich at 409 (citation omitted). It is “granted only in the

sound discretion of the court.” Id (citation and quotation marks omitted).

MEEMIC filed suit to void the entire policy under the “Concealment or Fraud”

provision, which states:

CONCEALMENT OR FRAUD

This entire Policy is void if any insured person has intentionally concealed or misrepresented any material fact or circumstance relating to:

A. This insurance; B. The Application for it; C. Or any claim made under it. (Policy, General Policy Conditions, ¶ 22,

MEEMIC Appx 24a).

Known as a “rescission clause,” this provision, if applicable and enforceable under the

no-fault act, allows an insurer to void the entire policy. See Huda v Integon National Ins

Co, 341 Fed Appx 149, 158 (6th Cir 2009) (applying Michigan law; citations omitted).

This constitutes rescission, where the policy is not merely terminated, but annulled,

restoring “the parties to the relative positions which they would have occupied if no such

contract had ever been made.” (COA majority decision, p 4 n 1; MEEMIC Appx, p

175a, citing Lash v Allstate Ins Co, 210 Mich App 98, 102; 532 NW2d 869 (1995)).

When insurers seek to rescind policies based on alleged fraud, to prevent unjust

results, Michigan courts follow three rules. First, when an insurer attempts to defeat a

claim for coverage based on an anti-fraud clause, the insurer must prove that the

claimant “actually intended to defraud the insurer.” West v Farm Bureau Mut Ins Co of

Mich, 402 Mich 67, 69; 259 NW2d 556 (1977). As demonstrated above, there is

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absolutely no evidence Defendant even knew about the fraud – let alone that he

“actually intended to defraud” MEEMIC.

Second, to warrant rescission, Michigan law requires “there must be a material

breach affecting a substantial or essential part of the contract.” (COA majority decision,

p 4 n 1; MEEMIC Appx, p 175a, quoting Holtzlander v Brownell, 182 Mich App 716, 721;

453 NW2d 295 (1990)); see also Omnicom of Michigan v Giannetti Investment Co, 221

Mich App 341, 348; 561 NW2d 138 (1997). In West, supra, this Court explained that

these rules ensure “that a false claim regarding a small portion of the loss may not

result in forfeiture of the entire coverage unless the insured is shown to be clearly

culpable.” Id, 402 Mich at 69 (footnote, citations omitted). Since Defendant neither

participated in or had knowledge of his parents’ actions, their fraud was not a material

breach of MEEMIC’s exclusive obligation owed to Defendant – as the sole injured

claimant with standing under the no-fault act.

Third, in Bazzi, supra, this Court held that when an insurer seeks rescission,

relief is not automatic. Instead, “the trial court must balance the equities to determine

whether the (insurer) is entitled to the relief (it) seeks.” Id, 502 Mich at 410. The Court

concluded that, “although the policy between Sentinel and the insured, Mimo

Investment (was) void ab initio due to the fraudulent manner in which it was acquired,

the trial court must now determine whether, in its discretion, rescission of the insurance

policy is available as between Sentinel and” the plaintiff, who undisputedly committed

no fraud. Id at 412 (original emphasis).

Encapsulating the above-three rules, the Court of Appeals’ majority correctly

indicated that, “because rescission is generally viewed as an equitable remedy, … it

should not be routinely granted if it would achieve an inequitable result.” (COA majority

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decision, p 4 n 1; MEEMIC Appx, p 175a, citing Madugula v Taub, 496 Mich 685, 712;

853 NW2d 75 (2014)). The majority added that, in contrast to Bahri v IDS Prop Cas Ins

Co, 308 Mich App 420, 424-425; 864 NW2d 609 (2014), the equities in this case weigh

against allowing MEEMIC to void/rescind the policy to preclude Defendant’s PIP claim:

We recognize that in Bahri, this Court held that when an insured claimant makes a fraudulent claim for replacement services, an insurer may use a fraud-exclusion clause to void the entire contract despite the fact that the fraud arose after the policy was procured. Bahri, 308 Mich App at 424-426. However, in this case, equity appears to lean in favor of protecting the innocent third party who was statutorily mandated to seek coverage under a validly procured policy and was, unlike the claimant in Bahri, wholly uninvolved in the fraud committed after the policy was procured. (COA majority decision, p 4 n 1; MEEMIC Appx, p 175a; original emphasis).

The Court of Appeals’ majority correctly concluded that equity strongly weighs

against allowing MEEMIC to void the policy and forever bar Defendant from

recovering PIP benefits.

Justice Markman’s concurrence to the vacation order in Farm Bureau General

Ins Co of Mich v ACE American Ins Co, 503 Mich 903 (2018) confirms the Court of

Appeals’ conclusion. As a follow-up to Bazzi, in his Farm Bureau concurrence, Justice

Markman wrote that:

[B]ecause the burden of establishing a right to rescission lies with the party seeking rescission, the defrauded insurer bears the burden of establishing that rescission is warranted. Thus, where neither party is more or less “innocent” than the other, it would seem to be the case that the insurer has failed to satisfy its burden of proof and rescission would not be warranted with respect to the third party. Id (Markman, J, concurring; citation omitted).

Justice Markman added that:

In resolving the ultimate issue in innocent-third-party cases, courts should consider the following nonexclusive list of factors, as applicable to the case at hand:

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First, the extent to which the insurer, in fact, investigated or could have investigated the subject matter of the fraud before the innocent third party was injured, which may have led to a determination by the insurer that the insurance policy had been procured on a fraudulent basis. If the insurer could have with reasonable effort obtained information indicating that the insured had committed fraud in procuring the insurance policy, equity may weigh against rescission because the insurer may be deemed to have acted without adequate professional diligence in issuing and maintaining the policy. Second, the specific relationship between the innocent third party and the fraudulent insured. If the innocent third party possessed some knowledge of the fraud – perhaps because of a familial or other relationship – equity may weigh in favor of rescission because that individual is seeking to recover from the insurer despite knowledge of the fraud. Third, the precise nature of the innocent third party’s conduct in the injury-causing event. Where the innocent third party acted recklessly or even negligently in the course of the injury-causing event, equity may weigh in favor of rescission because the innocent third party could have avoided the injury by acting more prudently. Fourth, whether the innocent third party possesses an alternative avenue for recovery absent enforcement of the insurance policy. Such an avenue for recovery may include, for example, the assigned claims plan or health insurance. Where the innocent third party possesses an alternative means of recovery, equity may weigh in favor of rescission because the insurer need not suffer loss because of the fraud. Fifth, whether enforcement of the insurance policy would merely relieve the fraudulent insured of what would otherwise be the insured’s personal liability to the innocent third party. That is, whether enforcement of the insurance policy would subject the insurer to coverage for tort liability for an at-fault insured. In such a case, equity may weigh in favor of rescission because enforcement of the policy would transfer liability to the innocent third party from the insured who committed the fraud to the insurer that did not commit wrongdoing. Id (footnotes omitted). Justice Markman’s Farm Bureau concurrence verifies the Court of Appeals’ ruling

that the equities strongly weigh against permitting MEEMIC to void the policy in this

case. At the outset, because both MEEMIC and Defendant are equally “innocent,”

MEEMIC has “failed to satisfy its burden of proof and rescission would not be warranted

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with respect to the third party.” Id, 503 Mich at 903. Evaluating Justice Markman’s

recommended factors confirms MEEMIC cannot meet its burden of establishing

grounds for rescission, because: (factor 2) Defendant possessed no knowledge of the

fraud; (factor three) no record evidence has been presented that Defendant acted

“recklessly or even negligently in the course of the injury-causing event;” (factor four)

because the deadline for notifying the MAIPF has lapsed, Defendant does not

“possesses an alternative avenue for recovery absent enforcement of the insurance

policy;” and (fifth factor) there is no evidence that the parents’ fraud will subject

MEEMIC to tort liability.

Trying to avoid the fact that it seeks a manifestly unjust result, MEEMIC argues it

is “not seeking equitable relief,” but merely enforcing a contractual provision. (MEEMIC

brief, p 13). MEEMIC is mistaken.

The equitable nature of rescission is not changed simply because the right to

relief is stated in a contract. It is quite common for contract provisions to be enforced

through equitable devices. For example, the attorney's contingent fee agreement is

contractual, but it is enforced through an attorney's charging lien – an equitable device.

See George v Sandor M Gelman, PC, 201 Mich App 474, 476; 506 NW2d 583 (1993)

(“An attorney's “special or charging lien is an equitable right to have the fees and costs

due for services secured out of the judgment or recovery in a particular suit.”). The lien

is not enforced automatically in the face of a dispute, but must be reasonable and

actually earned in accordance with principles of equity. An employment contract may

contain a non-compete clause, but the injunction to enforce it is still subject to equitable

scrutiny to determine its reasonable application. See Cardiology Associates of

Southwestern Michigan, PC v Zencka, 155 Mich App 632, 635-636; 400 NW2d 606

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(1985) (action to enforce contractual non-compete clause is equitable in

nature). Although the contract in this case contains language ostensibly giving

MEEMIC the right to void coverage under certain circumstances, rescission remains an

equitable remedy to be considered among other equitable remedies by the trial court in

accordance with our well-developed equitable jurisprudence.

National cases hold that an attempt to void a policy under a false swearing

provision constitutes an equitable defense. See, e.g., Chenango Mutual Ins Co v

Charles, 652 NYS2d 134, 137 (1997). Furthermore, since, as demonstrated above, the

no-fault act in effect at the time (MCL 500.3105(1), MCL 500.3112(1) and MCL

500.3114(1)) mandated Defendant’s exclusive recovery under the MEEMIC policy and

precluded enforcement of the “Concealment or Fraud” provision in this case, Bazzi,

supra, 502 Mich at 399, MEEMIC attempted rescission constitutes non-contractual,

equitable relief. This requires MEEMIC, who has the burden of proof, of demonstrating,

on balance, the equities entitle it to rescind the policy. As shown, MEEMIC cannot

possibly meet this burden.

Finally, MEEMIC erroneously contends that Bazzi’s equitable standard is

inapplicable because it does not allege the policy was fraudulently procured. The

policy’s “Concealment or Fraud” provision, quoted above, does not merely address

fraudulent claim submission, but fraudulent procurement. (Policy, General Policy

Conditions, ¶ 22.B, MEEMIC Appx 24a). The entire paragraph constitutes an omnibus,

equitable defense, triggering MEEMIC’s burden, before rescission is authorized, of

proving that the balance of equities weighs in its favor. In addition, whether alleging

fraudulent procurement or fraud in the claim, the “Concealment or Fraud” provision, if

operative, has the same effect. In both circumstances, the policy is rescinded.

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As Justice Markman’s Farm Bureau concurrence contemplates, rather than

treating fraud in the claim process different categorically than fraud in the procurement,

it makes more sense to address the stage at which the fraud was committed as one of

the factors to be weighed in the equitable balancing process. All of the circumstances

of the fraud should be considered together with all aspects of the parties' relative

positions in order to reach the right remedy for the case. In this case, the fact that there

was no fraud in the procurement should weigh against rescission. Defendant was

locked into this coverage when the fraud occurred in the claim process, and he had no

role in the fraudulent conduct. Rescission would be manifestly inequitable under these

circumstances.

Therefore, should this Court reverse the Court of Appeals’ decision, its remand

order must instruct the trial court, before entering a declaratory judgment, of “balancing

the equities” to determine whether MEEMIC has met its burden of establishing grounds

for rescission.

C. This Court should reconsider its rejection of the innocent third-party doctrine.

The MAJ alternately requests that, if this Court considers reversing the Court of

Appeals’ decision, for the reasons presented in Justice McCormack’s Bazzi dissent, it

reconsider its rejection of the innocent third-party doctrine. Id, 502 Mich at 412-437

(McCormack, J, dissenting).

Before Bazzi, for over 30 years, Michigan courts held that an insurer may not

rescind and render void ab initio a personal injury protection (“PIP”) policy to deny

benefits to an innocent third party who was previously injured in a motor vehicle

accident. See Roberts v Titan Ins Co (On Reconsideration), 282 Mich App 339, 360–

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361; 764 NW2d 304 (2009), overruled in part on other grounds, Spectrum Health Hosps

v Farm Bureau Mut Ins Co of Mich, 492 Mich 503, 529-535; 821 NW2d 117 (2012);

Katinsky v Auto Club Ins Ass'n, 201 Mich App 167, 170; 505 NW2d 895 (1993); Darnell

v Auto–Owners Ins Co, 142 Mich App 1, 9; 369 NW2d 243 (1985); United Security Ins

Co v Comm'r of Ins, 133 Mich App 38, 43; 348 NW2d 34 (1984).

Our courts were in harmony with their sister states. It is national hornbook law

that:

Generally, an automobile insurer cannot, on the ground of fraud or misrepresentation, retrospectively avoid coverage under a compulsory or financial responsibility insurance law so as to escape liability to a third party. . . . Where personal injury protection (PIP) coverage is compulsory for any automobile registered or principally garaged in a state, neither the applicant's failure to register a car principally garaged in the state, nor his subsequent misrepresentation would preclude a plaintiff's right of recovery; to hold otherwise and allow the insurer to declare a compulsory automobile liability insurance policy void ab initio after a third party is injured simply because the insured was not a qualified applicant would undermine the legislative purpose of the state's No-Fault Act.

7 Am Jur, 2d Automobile Insurance, § 61 (2015) (emphasis added); see also 6 Couch

on Ins, § 82:23 (June 2015) (“A state's comprehensive scheme of compulsory no-fault

automobile insurance arguably requires as a matter of policy that an insurer rather than

innocent third parties bear the risk of intentional material misrepresentations by

insureds.”).15

15 The national rule is equally clear as to compulsory liability auto coverage. See Anno: Rescission or avoidance, for fraud or misrepresentation, of compulsory, financial responsibility, or assigned risk automobile insurance, 83 ALR2d 1104, § 2 (“It has been universally held or recognized that an insurer issuing an automobile liability policy pursuant to any of the various statutory plans designed to protect the public against the inability to collect damages in tort from financially irresponsible owners or operators of motor vehicles cannot escape liability to a third party injured through the culpable

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National courts have unanimously held that an insurer may not rescind a

statutorily-mandated auto policy to deny coverage to an innocent third party. Canavan v

Hanover Ins Co, 356 Mass 88; 248 NE2d 271, 273 (1969) (“The contention to the

contrary overlooks the fact that the purpose of the compulsory motor vehicle law,”

particularly including cancellation requirements, “is the protection of the traveler on the

public ways by providing compensation to persons injured through the operation of an

automobile insured by the owner.”); Fisher v New Jersey Auto Full Ins Underwriting, 224

NJ Super 552; 540 A2d 1344, 1348 (1988) (“[I]t has been universally held or recognized

that an insurer cannot, on the ground of fraud or misrepresentations relating to the

inception of the policy, retrospectively avoid coverage under a compulsory or financial

responsibility insurance law so as to escape liability to a third party.”); Dunn v Safeco

Ins Co of Am, 14 Kan App 2d 732; 798 P2d 955, 958 (1990) (“[A]ll courts that have

considered the question as it pertains to an innocent third party have held that an

insurer cannot, on the ground of fraud or misrepresentation, retrospectively avoid

coverage under a compulsory insurance or financial responsibility law so as to escape

liability to an innocent third party.”); Omaha Prop and Cas Co v Crosby, 756 F Supp

1380, 1384 (D Mont 1990) (citations omitted) (“When a state compulsory insurance

statute exists, courts have ‘universally held or recognized that an insurer cannot, on the

ground of fraud or misrepresentations relating to the inception of the policy,

retrospectively avoid coverage . . . so as to escape liability to a third party.’”);

Continental Western Ins Co v Clay, 248 Kan 889; 811 P2d 1202, 1205-1206 (1991)

operation of the vehicle insured, during and within the coverage afforded, because of any fraud or misrepresentations relating to the inception of the policy which might have afforded the insurer a cause for rescinding, reforming, canceling ab initio, or otherwise avoiding, an ordinary, voluntary liability policy, so as to escape such liability.”).

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(“Regardless of the reasoning used, all courts that have considered the question as it

pertains to an innocent third party have held that an insurer cannot, on the ground of

fraud or misrepresentation, retrospectively avoid coverage under a compulsory

insurance or financial responsibility law so as to escape liability to an innocent third

party.”); Munroe v Great American Ins, 234 Conn 182; 661 A2d 581, 584, 586 (1995)

(“We conclude that the compulsory automobile insurance statutes, read as a whole,

abrogate the right of an insurer to rescind automobile insurance ab initio so as to deny

recovery to an innocent third party victim.” “We note that our result today is consistent

with the conclusion reached by other courts that have addressed the effect of a

legislative scheme of compulsory automobile insurance on the common law right of

rescission. . . . Although many of these cases arise out of different statutory

enactments, they reflect the common policy of providing financial protection for those

injured in automobile accidents.”); National Ins Ass'n v Peach, 926 SW2d 859, 861-862

(Ky App 1996) (“Without exception, [national] courts have held that where an innocent

third party has suffered injury from an insured's operation of an automobile, the insurer

is prohibited from rescinding the policy—even where the insurance coverage was

procured through the misrepresentations of the insured. They have held that

compulsory insurance statutes have abrogated the insurance company's right to rescind

the policy with regard to claims of persons not involved in making the misrepresentation

and that the only remedy for an insurer is a prospective cancellation of the policy in

accordance with the statutory scheme regulating motor vehicle insurance.” Insurer's

right to rescind a policy with regard to claims of persons not involved in making the

misrepresentation is accordingly abrogated in light of the “remedial” nature and purpose

of ... Kentucky's mandatory insurance scheme); Harkrider v Posey, 24 P3d 821, 828,

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831-832 (Okla 2000) (footnote omitted) (“a misrepresentation which would relieve an

insurer of liability to its insured ... does not relieve the insurer of liability to an innocent

third party whose protection is mandated by Oklahoma's compulsory insurance law”;

“Today's pronouncement is consistent with the approach taken by many other state

courts, which have held their various statutory provisions relating to compulsory

automobile liability insurance prevent post-loss rescission to defeat the insurer's liability

to an innocent third party. Although the rationale varies from state to state, it is generally

agreed that rescission of a non-void contract is inconsistent with the public policy that

underlies compulsory automobile liability insurance.”); Mooney v Nationwide Mut Ins Co,

149 NH 355; 822 A2d 567, 570 (2003) (“courts have uniformly held that an insurer

cannot avoid coverage under a compulsory insurance or financial responsibility law

because of fraud when the claimant is an innocent third party”); Kambeitz v Acuity Ins

Co, 772 NW2d 632, 637-638 (ND 2009) (to permit insurer to rescind policy mandated by

omnibus statute would defeat “basic” and “overriding” purpose of statutory “financial

responsibility laws”).

One of the earliest cases, Teeter v Allstate Ins Co, 9 AD2d 176; 192 NYS2d 610,

615 (1959), aff'd 9 NY2d 655; 212 NYS2d 71; 173 NE2d 47 (1961), explained that

rescission to deny a previously-injured third party of coverage is irreconcilable with

compulsory auto insurance law:

It is impossible to reconcile the existence of a right to rescind ab initio with the general scheme of the compulsory insurance law. The purpose of the statute is to assure, so far as possible, that there will be no certificate of registration outstanding without concurrent and continuous liability insurance coverage. . . . But it would be obviously impossible for an insured to comply with his statutory obligation if a common-law right to rescind ab initio were allowed to exist alongside the statutory provision for termination by notice. If a rescission were allowed to be effective

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retroactively as of the date of the issuance of the policy, it would be impossible for the insured to do what the statute requires him to do, i.e., either procure new insurance or surrender his number plates, prior to the date upon which the termination of the coverage became effective.

This is because, as the Maryland Supreme Court persuasively demonstrated, rescission

precludes enforcement of standard compulsory auto policy provisions, such as “required

security” for the vehicle, mandatory PIP coverage, criminal penalties for driving an

uninsured vehicle, and statutes specifying procedures for cancellation that may be

prospective only. Van Horn v Atlantic Mut Ins Co, 334 Md 669, 641 A2d 195, 199–202

(1994).

This Court’s repudiation of the innocent third-party doctrine runs counter to the

enlightened jurisprudence of the rest of our country. Even so, as long as the Court’s

safe-harbor requirement that a trial court “balance the equities” before authorizing

rescission to deprive an innocent third-party of PIP benefits applies, the unjust

consequences of repudiation of the innocent third-party doctrine are ameliorated.

The relief MEEMIC and the IAM request not only ignores the fact that the no-fault

act mandated that the policy cover Defendant, who was the only insured injured

claimant with standing to recover PIP benefits and who was innocent of any fraud, but, if

implemented, will achieve a fundamentally unjust result. For the reasons presented, the

MAJ respectfully requests that the Supreme Court affirm the Court of Appeals’ decision.

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RELIEF REQUESTED

WHEREFORE, the Michigan Association for Justice respectfully requests this

Honorable Court affirm the Court of Appeals’ May 29, 2018 decision.

Respectfully submitted,

/s/ Donald M. Fulkerson /s/ Robert B. June DONALD M. FULKERSON (P35785) ROBERT B. JUNE (P51149) Attorney for Amicus Curiae Law Offices of Robert June, P.C. Michigan Association for Justice Attorney for Amicus Curiae P.O. Box 85395 Michigan Association for Justice Westland, MI 48185 415 Detroit Street, 2nd Floor (734) 467-5620 Ann Arbor, MI 48104-1117 donfulkerson@comcast.net (734) 481-1000 bobjune@junelaw.com Dated: October 23, 2019

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INDEX OF APPENDIX TO AMICUS CURIAE BRIEF OF THE MICHIGAN ASSOCIATION FOR JUSTICE

Description Designation Cannon v Farm Bureau Ins Co, unpublished opinion per curiam of

the Court of Appeals, issued February 21, 2019 (No. 342173) . . . . . A McCourt v Lebenbom, unpublished opinion per curiam of the Court of

Appeals, issued May 23, 2019 (No. 343003) . . . . . . . . . . . . . . . . . . . B Mills v Titan Insurance Company, unpublished opinion per curiam of the

Court of Appeals, issued August 8, 2017 (No. 339693) . . . . . . . . . . . C Visner v Harris, unpublished opinion per curiam of the Court of Appeals,

issued December 6, 2012 (Nos. 307506, 307507) . . . . . . . . . . . . . . . D

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Appendix A

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Cannon v. Farm Bureau Insurance Company, Not Reported in N.W. Rptr. (2019)

© 2019 Thomson Reuters. No claim to original U.S. Government Works. 1

2019 WL 845863Only the Westlaw citation is currently available.

UNPUBLISHED OPINION. CHECKCOURT RULES BEFORE CITING.

UNPUBLISHEDCourt of Appeals of Michigan.

Ida CANNON, Plaintiff-Appellee,v.

FARM BUREAU INSURANCECOMPANY, Defendant-Appellant,

andAlysia Ann Sanders, Defendant.

No. 342173|

February 21, 2019

Oakland Circuit Court, LC No. 2016-155879-NF

Before: Gleicher, P.J., and K. F. Kelly and Letica, JJ.

Opinion

Per Curiam.

*1 Farm Bureau Insurance Company discovered that IdaCannon's caregivers filed fraudulent claims for attendant care,case management, and replacement services and stoppedpaying her first-party no-fault benefits. Cannon sued FarmBureau. The circuit court summarily dismissed Cannon'sclaim for additional attendant care, case management, andreplacement services. However, the court denied FarmBureau's motion to dismiss Cannon's claims in their entirety.

The circuit court correctly determined that Cannon wasnot entitled to reimbursement for fraudulent claims forattendant care, case management, and replacement services.As Cannon was not the named insured and there wasno evidence presented that she committed any fraud, thecourt correctly determined that the insurance policy's fraudexclusion provision did not void the entire contract; theinsurer could not avoid its statutory duty to pay personalprotection insurance (PIP) benefits for wage-loss and medicalclaims (absent evidence of fraud directly relating to thoseclaims). We affirm those rulings in the circuit court's order.

Cannon also sought underinsured (UIM) and uninsured (UM)motorist coverage under the policy. These benefits weresolely contractual and the caregivers' indisputable fraudtriggered the policy's fraud-exclusion provision. Accordingly,the circuit court erred in denying Farm Bureau's motionto summarily dismiss Cannon's claims for UIM and UMbenefits, and we reverse that portion of the court's order.

Farm Bureau presented a valid claim for attorney fees underMCL 500.3148, but the circuit court rejected the requestout of hand. We vacate that portion of the court's order andremand for further consideration.

I. BACKGROUND

Cannon was injured in an automobile accident on May2, 2016, while operating a vehicle owned by Ivy Harp.Because Cannon did not own a vehicle, and was not insuredunder any family member's no-fault policy, she submitteda claim for PIP benefits to Farm Bureau, the insurer ofHarp's vehicle. Cannon was hospitalized from May 2 to May13. She allegedly sustained injuries to her neck, back, andlimbs, and a traumatic brain injury that severely impaired hermemory and caused her to suffer nearly constant headachesand migraines. In her application for benefits, Cannon deniedreceiving any Social Security disability or retirement benefits.She also claimed employment at the time of the accident asan event coordinator for Elite & Fabulous Events, for whichshe received weekly compensation of $ 1,500.

Harp is not related to Cannon, but the women referred to eachother as sisters throughout their dealings with Farm Bureau.After Cannon's discharge from the hospital, Harp submittedclaim forms requesting reimbursement for attendant careservices provided to Cannon. The forms indicated thatCannon received 24 hours of attendant care daily, usually15 hours by Harp, and nine hours by Cannon's daughter,Blakely Williams, or Harp's daughter, Dianna Lewis.Harp's son, Xavier Burns, submitted reimbursement requestsfor replacement services. Lewis submitted reimbursementrequests for case management services, which overlappedwith her separate requests for attendant care reimbursement.Farm Bureau discovered that Cannon's claims for attendantcare, replacement services, and case management serviceswere fraudulent. Specifically, Harp claimed she providedattendant care services to Cannon while Harp was actually ona 10-day vacation in Aruba. Blakely requested reimbursementfor services during the same period. Further, Lewis claimed

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Cannon v. Farm Bureau Insurance Company, Not Reported in N.W. Rptr. (2019)

© 2019 Thomson Reuters. No claim to original U.S. Government Works. 2

that she provided attendant care services while she wasactually in the hospital giving birth.

*2 As a result of this fraud, Farm Bureau cut off Cannon'sbenefits. Cannon responded with this suit to recover PIP,UIM, and UM benefits allegedly due under the insurancepolicy. Farm Bureau moved for summary disposition pursuantto MCR 2.116(C)(10), arguing that Cannon's fraudulentclaims triggered the following fraud exclusion in the policy:

C. Fraud or Concealment

The entire policy will be void if, whether before or aftera loss, you, any family member, or any insured under thispolicy has:

1. Intentionally concealed or misrepresented any materialfacts or circumstance;

2. engaged in fraudulent conduct; or

3. made any false statements[ ]

relating to this insurance or to a loss to which the insuranceapplies.

The circuit court granted Farm Bureau's motion with respectto Cannon's PIP claims for attendant care, replacement, andcase management services, but denied the motion with respectto her claims for wage-loss benefits and medical expenses, aswell as UM and UIM benefits.

Farm Bureau moved for reconsideration of the court'sdecision, arguing that the court erred by failing to voidCannon's entire claim pursuant to the fraud exclusion.Farm Bureau also submitted newly discovered evidence thatCannon had been receiving Social Security disability benefitsfor several years before the accident, and that she did notearn any wages from Elite & Fabulous Events, contrary tothe representations in her application for benefits. The circuitcourt denied Farm Bureau's motion for reconsideration. Bothparties filed applications for leave to appeal. This Court

granted Farm Bureau's application, 1 but denied Cannon's. 2

1 Cannon v. Farm Bureau Ins. Co., unpublished order ofthe Court of Appeals, entered March 15, 2018 (DocketNo. 342173).

2 Cannon v. Farm Bureau Ins. Co., unpublished order ofthe Court of Appeals, entered March 15, 2018 (DocketNo. 341623).

II. EFFECT OF FRAUD EXCLUSION

A. STANDARD OF REVIEW

“A motion for summary disposition brought pursuant toMCR 2.116(C)(10) tests the factual support for a claim.”Innovative Adult Foster Care, Inc. v. Ragin, 285 Mich. App.466, 474-475, 776 N.W.2d 398 (2009). Under (C)(10), thecircuit court must consider the evidence in the light mostfavorable to the nonmoving party. Innovation Ventures v.Liquid Mfg., 499 Mich. 491, 507, 885 N.W.2d 861 (2016).Summary disposition is appropriate if the proffered evidencefails to establish a genuine issue of a material fact, and themoving party is entitled to judgment or partial judgment asa matter of law. Id. A genuine issue of material fact exists ifreasonable minds could differ on an issue. West v. Gen. MotorsCorp., 469 Mich. 177, 183, 665 N.W.2d 468 (2003).

“This Court reviews for an abuse of discretion a trial court'sruling on a motion for reconsideration.” Sanders v. McLaren-Macomb, 323 Mich. App. 254, 264, 916 N.W.2d 305 (2018).A court abuses its discretion “only when the trial court'sdecision is outside the range of reasonable and principled

outcomes.” Id. (cleaned up). 3

3 This opinion uses the new parenthetical (cleaned up)to improve readability without altering the substanceof the quotation. The parenthetical indicates thatnonsubstantive clutter such as brackets, alterations,internal quotation marks, and unimportant citations havebeen omitted from the quotation. See Metzler, CleaningUp Quotations, 18 J. App. Pract. & Process 143 (2017).

B. GENERAL PRINCIPLES CONCERNING NO-FAULT COVERAGE AND FRAUD EXCLUSIONS

*3 Farm Bureau argues that the circuit court's refusalto enforce the policy's fraud exclusion to void Cannon'sentire claim was an error warranting reconsideration. MCR2.119(F)(3) requires that a party moving for reconsideration“demonstrate a palpable error by which the court andthe parties have been misled and show that a differentdisposition of the motion must result from correction ofthe error.” Sanders, 323 Mich. App. at 264, 916 N.W.2d305 (cleaned up). The court has “considerable discretionin granting reconsideration to correct mistakes, to preserve

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judicial economy, and to minimize costs to the parties.” Id. at264-265, 916 N.W.2d 305 (cleaned up).

The insurer bears the burden of proving that a party'sintentional misrepresentation triggered a policy's fraudexclusion. Nahshal v. Fremont Ins. Co., 324 Mich. App. 696,720, 922 N.W.2d 662 (2018). In this case, the applicabilityof the fraud exclusion raises questions concerning whether itmay be applied to statutorily mandated benefits, or whetherit is affected by Cannon's status as a non-policyholder, herlack of knowledge of or participation in the fraud, and theexistence of genuine issues of material fact whether fraud wasperpetrated.

“The Michigan no-fault insurance act requires a no-faultautomobile insurer to provide first-party injury protectionfor certain injuries related to a motor vehicle.” Kemp v.Farm Bureau Gen. Ins. Co. of Mich., 500 Mich. 245, 252,901 N.W.2d 534 (2017) (cleaned up); MCL 500.3105(1).“Because ‘PIP benefits are mandated by statute under theno fault act, ... the statute is the “rule book” for decidingthe issues involved in questions regarding awarding thosebenefits.’ ” Bazzi v. Sentinel Ins. Co., 502 Mich. 390, 399,919 N.W.2d 20 (2018), quoting Rohlman v. Hawkeye-SecurityIns. Co., 442 Mich. 520, 524-525, 502 N.W.2d 310 (1993).“Consequently, automobile insurance contracts are governedby a combination of statutory provisions and the commonlaw of contracts.” Bazzi, 502 Mich. at 399, 919 N.W.2d 20.“Insurance policies are contracts ‘subject to the same contractconstruction principles that apply to any other species ofcontract.’ ” Id., quoting Titan Ins. Co. v. Hyten, 491 Mich. 547,554, 817 N.W.2d 562 (2012) (additional citation omitted).“When a provision in an insurance policy is mandated by astatute, the policy and the statute must be construed togetheras though the statute were part of the policy, and ‘the rightsand limitations of the coverage are governed by that statute.’” Bazzi, 502 Mich. at 399, 919 N.W.2d 20, quoting Titan,491 Mich. at 554, 817 N.W.2d 562. “In the absence of anyapplicable statute, however, ‘the rights and limitations ofthe coverage are entirely contractual and construed withoutreference to the statute.’ ” Bazzi, 502 Mich. at 399-400, 919N.W.2d 20, quoting Titan, 491 Mich. at 554, 817 N.W.2d 562(emphasis added by Bazzi ). UM and UIM coverage are notcompulsory under the no-fault act. Accordingly, the terms ofsuch coverage are controlled by the language of the contractalone. Andreson v. Progressive Marathon Ins. Co., 322 Mich.App. 76, 84-85, 910 N.W.2d 691 (2017).

A no-fault insurance policy “applies to accidental bodilyinjury to the person named in the policy, the person's spouse,and a relative of either domiciled in the same household,if the injury arises from a motor vehicle accident.” MCL500.3114(1). MCL 500.3114(4) sets an order of priorityfor injured persons not entitled to benefits under a policyas stated in § 3114(1). Pursuant to MCL 500.3114(4)(a),Cannon was eligible for benefits from “[t]he insurer of theowner or registrant of the vehicle occupied.” Farm Bureau'spolicy definition of “insured” includes “any person using yourcovered auto, who is not insured for vehicle liability coverageby any other insurance policy ....” Because Cannon waspermissibly using Harp's vehicle at the time of the accident,and Cannon did not have coverage under any other policy,she was eligible for benefits under the policy issued by FarmBureau to Harp, pursuant to both the no-fault act and the termsof the policy.

C. CASELAW ADDRESSING NO-FAULTPOLICY FRAUD-EXCLUSION PROVISIONS

*4 In Cohen v. Auto Club Ins. Ass'n., 463 Mich. 525,526-527, 620 N.W.2d 840 (2001), the defendant insurerdenied the plaintiff's claim for UM benefits on the groundthat she submitted false documentation regarding her wageloss. Our Supreme Court reviewed caselaw holding thata policy exclusion that conflicts with mandatory coveragerequirements is void as contrary to public policy, anddiscussed the application of this caselaw to the case before it,stating:

In the present case, we believe that theproper application of these principlesis evident. Ms. Cohen seeks [UM]benefits. ACIA denied those benefitsunder a clause that, if applicable tothis case, voids the entire policy.Mindful of the great protection thatthe Legislature and this Court haveprovided for the no-fault benefitsrequired by statute, we need not decidetoday the full extent to which thedisputed clause, if applicable, couldvoid the policy. We need only decidewhether it can void [UM] coverage.It can. A contractual provision thatplainly governs the facts alleged to

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exist in this case is enforceable to theextent that it is not contrary to law.[Id. at 532, 620 N.W.2d 840 (emphasisadded).]

Although Cohen suggested that a fraud-exclusion provisionmight not be enforceable with respect to statutorily mandatedPIP benefits, it refrained from deciding that issue.

In Bahri v. IDS Prop. Cas. Ins. Co., 308 Mich. App. 420,423-424, 864 N.W.2d 609 (2014), the no-fault policy included“a general fraud exclusion, which provided: ‘We do notprovide coverage for any insured who has made fraudulentstatements or engaged in fraudulent conduct in connectionwith any accident or loss for which coverage is sought underthis policy.’ ” The plaintiff sought coverage for PIP andUM benefits from the defendant. Id. at 421, 864 N.W.2d609. The plaintiff testified at her deposition that a third carwas involved, but the police report stated that only two carswere involved. Id. at 421-422, 864 N.W.2d 609. The plaintiffsubmitted statements supporting her claim for replacementservices, but surveillance video for the relevant time periodrevealed that the plaintiff was able to drive, run errands,bend, and lift. Id. at 422, 864 N.W.2d 609. The plaintiffbrought an action against the defendant insurer to recover PIPand UM benefits, and the plaintiff's physicians intervened torecover PIP benefits for the medical services they provided.Id. The defendant moved for summary disposition, arguingthat the plaintiff was precluded from obtaining PIP and UMbenefits because she falsely represented that a third vehiclewas involved. The defendant also argued that the interveningplaintiffs “stood in the shoes of plaintiff”; therefore, theplaintiff's fraudulent representations precluded the medicalproviders from recovering PIP benefits, and the absence ofa third vehicle precluded payment of UM benefits. Id. Thecircuit court granted the defendant's motion for summarydisposition under MCR 2.116(C)(10) with respect to theintervening plaintiffs' claims.

On appeal, this Court held that the plain language of the fraudexclusion barred the plaintiff and intervening plaintiffs fromrecovering benefits. This Court further held that “[b]ecauseintervening plaintiffs stood in the shoes of the named insured,if plaintiff cannot recover benefits, neither can interveningplaintiffs.” Id. at 424, 864 N.W.2d 609. This Court set forththe following requirements for proving fraud in an insuranceclaim:

*5 To void a policy because theinsured has wilfully misrepresented amaterial fact, an insurer must show that(1) the misrepresentation was material,(2) that it was false, (3) that the insuredknew that it was false at the time it wasmade or that it was made recklessly,without any knowledge of its truth, and(4) that the insured made the materialmisrepresentation with the intentionthat the insurer would act upon it. Astatement is material if it is reasonablyrelevant to the insurer's investigationof a claim. [Bahri, 308 Mich. App.at 424-425, 864 N.W.2d 609 (cleanedup).]

This Court held that the plaintiff presented fraudulentstatements to substantiate her claim for replacement services.She sought reimbursement for services that were performedbefore the accident, and surveillance videos revealed thatshe was physically able to perform chores for which shesought assistance. Id. at 425-426, 864 N.W.2d 609. ThisCourt concluded that the defendant was entitled to summarydisposition because “[r]easonable minds could not differ inlight of this clear evidence that plaintiff made fraudulentrepresentations for purposes of recovering PIP benefits.” Id.at 426, 864 N.W.2d 609.

In Shelton v. Auto-Owners Ins. Co., 318 Mich. App. 648, 899N.W.2d 744 (2017), the plaintiff was injured as a passengerin a motor vehicle accident. The plaintiff was not covered bya no-fault policy; consequently, she applied for PIP benefitsfor replacement services and medical expenses pursuant toa policy the defendant issued to the vehicle's owner. Id. at651, 899 N.W.2d 744. The defendant argued that the plaintiffwas not entitled to PIP benefits because she made fraudulentrepresentations in support of her claim for replacementservices. Id. at 651-652, 899 N.W.2d 744. Relying on Bahri,the defendant argued that the policy exclusion for fraudapplied to the plaintiff “despite the fact that she is not apolicyholder ... [.]” This Court concluded that Bahri wasdistinguishable because in that case, the plaintiff was thepolicyholder. Shelton, 318 Mich. App. at 652, 899 N.W.2d744. In Shelton, by contrast, the plaintiff's benefits weregoverned not by the policy language, but by statute. Id. at 653,

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899 N.W.2d 744. This Court remarked that the plaintiff wasnot “an individual named in defendant's policy, a spouse of theperson named in the policy, or a relative of either the personnamed in defendant's policy or his spouse.” Id. at 654, 899N.W.2d 744. The Court analyzed the no-fault priority statute,MCL 500.3114, and concluded:

Under Subsection 1 of the no-fault priority statute, “a [PIP]policy ... applies to ... the person named in the policy, theperson's spouse, and a relative of either domiciled in thesame household ....” MCL 500.3114(1) (emphasis added).Shelton is not an individual named in defendant's policy, aspouse of the person named in the policy, or a relative ofeither the person named in defendant's policy or his spouse.Therefore, pursuant to the statute, defendant's policy doesnot “apply” to Shelton. Rather, Shelton received no-faultbenefits pursuant to Subsection 4, which reads:

Except as provided in subsections (1) to (3), a personsuffering accidental bodily injury arising from a motorvehicle accident while an occupant of a motor vehicleshall claim [PIP] benefits from insurers in the followingorder of priority:

(a) The insurer of the owner or registrant of the vehicleoccupied.

(b) The insurer of the operator of the vehicle occupied.[MCL 500.3114(4).]

Subsection (4) does not state that the owner or operator'sinsurance policy “applies” to the passenger's claim forbenefits, and its text, unlike that of Subsection (1), omitsany mention of a [PIP] policy, instead providing that theinjured person is to “claim [PIP] benefits from insurers,”beginning with “[t]he insurer of the owner or registrantof the vehicle occupied.” MCL 500.3114(4)(a). [Shelton,318 Mich. App. at 654-655, 899 N.W.2d 744 (emphasis inoriginal).]

*6 This Court further distinguished Bahri on the ground that“questions of fact exist as to whether Shelton made materialmisrepresentations, and if so, whether they were made withthe intent to defraud defendant.” Shelton, 318 Mich. App.at 656, 899 N.W.2d 744. This Court rejected the defendant'sargument “that we should depart from the statute as a matter ofpublic policy,” because if the claimant filed suit, “the burdenis on the claimant to prove that he or she is entitled to his orher claimed benefits, a burden that is highly unlikely to be metif the fact-finder concludes that the claim is fraudulent.” Id.at 655, 899 N.W.2d 744.

After this Court granted Farm Bureau's application in thiscase, this Court decided Meemic Ins. Co. v. Fortson, 324Mich. App. 467, 922 N.W.2d 154 (2018), lv pending. InMeemic, a two-judge majority recognized an “innocent-third-party” exception to this Court's decision in Bahri. In Meemic,this Court addressed the “innocent third party rule” in thecontext of applying a fraud exclusion to deny benefits to aninjured party who was not responsible for the submission offraudulent claims. In Meemic, the defendants were insuredunder a no-fault policy issued by the plaintiff. The defendants'son, Justin, suffered a traumatic brain injury while riding onthe hood of a vehicle. The defendants submitted requests forreimbursement for attendant care services provided to Justin,in which they represented that they provided 24-hour dailysupervision and other attendant care necessitated by Justin'ssevere brain injury. The plaintiff's investigation revealed thatJustin was frequently away from his parents' supervision,including spending time in jail and in an inpatient substance-abuse treatment facility. The plaintiff terminated the son'sno-fault benefits and brought suit against the defendants torecover fraudulent claims. The defendants counter-sued forbreach of the insurance policy. Meemic, 324 Mich. App. at472, 922 N.W.2d 154.

This Court concluded that the fraud exclusion was notapplicable as to Justin because he was entitled to no-faultbenefits from the plaintiff, his parents' insurer, pursuant tothe statutory mandatory coverage and priority provisions in

MCL 500.3114(1). 4 This Court noted that if Justin “werenot an ‘insured person’ as defined by the policy, he wouldbe statutorily entitled to benefits under his parents' no-faultpolicy by virtue of the fact that he is a relative of his parentsand was domiciled with them.” Meemic, 324 Mich. App. at478, 922 N.W.2d 154. “In other words, if the policy did notdefine a resident relative as an ‘insured person,’ then Meemicwould be required by statute to pay Justin benefits andwould be unable to terminate his coverage because of fraudcommitted by a policyholder with regard to his claim.” Id.(emphasis in the original). This Court rejected the plaintiff'sargument that the policy language conferring insured status onJustin took precedence over the mandatory coverage status,and subjected Justin to termination of benefits based onthe policy's fraud-exclusion provision, notwithstanding thatJustin was not the individual who perpetrated the fraud. Id. at478, 922 N.W.2d 154. This Court stated:

Under Meemic's logic, by duplicating statutory benefitsin a no-fault policy, an insurer can avoid paying no-

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fault benefits to an injured claimant if someone otherthan the claimant commits fraud and triggers a fraud-exclusion clause that allows the policy to be voided. Wedo not agree that the statutory provisions can be so easilyavoided. “An insurer who elects to provide automobileinsurance is liable to pay no-fault benefits subject to theprovisions of the [no-fault] act.” Lewis v. Farmers Ins.Exch., 315 Mich. App. 202, 209, 888 N.W.2d 916 (2016)(quotation marks and citation omitted; brackets in original).Contractual provisions in an insurance policy that conflictwith statutes are invalid. Corwin v. DaimlerChryslerIns. Co., 296 Mich. App. 242, 261, 819 N.W.2d 68(2012). Because MCL 500.3114(1) mandates coveragefor a resident relative domiciled with a policyholder, thefraud-exclusion provision, as applied to Justin's claim, isinvalid because it conflicts with Justin's statutory rightto receive benefits under MCL 500.3114(1). And, asexplained earlier, his statutory right to receive benefitsunder the no-fault act was triggered because his parents hada validly procured no-fault policy in place at the time of themotor-vehicle incident. See Bazzi [v. Sentinel Ins. Co.], 315Mich. App. [763,] 774[; 891 N.W.2d 13 (2016) ]. [Meemic,324 Mich. App. at 478-479, 922 N.W.2d 154.]

4 This Court stated that Justin was an innocent third partybecause there was no evidence that he participated inor even benefitted from his parents' fraud. Meemic, 324Mich. App. at 475, 922 N.W.2d 154.

*7 This Court in Meemic further concluded that if the fraudexclusion were valid, the defendants' fraud was insufficientto trigger it “because, at the time they committed fraud,they were no longer ‘insured persons’ under the policy.”Id. at 479, 922 N.W.2d 154. This Court explained that theplaintiff terminated the policy on July 29, 2010, thus endingthe defendants' status as insured persons as defined in thepolicy. Because the fraud was committed after the policy wascancelled, the fraud was irrelevant for purposes of triggeringthe fraud exclusion. The cancellation of the policy did notaffect Justin's claim, however, because his claim was madebefore the policy was cancelled. Id. at 479-480, 922 N.W.2d154. This Court reversed the circuit court's order grantingsummary disposition for the plaintiff insurer. Id. at 484, 922N.W.2d 154.

In Meemic, this Court addressed the plaintiff's argument “thatit would be illogical to allow [the defendants] to escape theirobligations under the policy—in this case an obligation not tocommit fraud—while simultaneously mandating that Meemic

continue to provide benefits under the policy.” Id. at 483, 922N.W.2d 154. This Court rejected this argument, stating:

If [the defendants] had made aclaim under the policy before itwas terminated, then their obligationsunder the policy would continuewith respect to their claim, andMeemic's obligations with respectto that claim would also continue.Because [the defendants'] obligationswould continue under such a scenario,if they committed fraud the policy'sfraud-exclusion clause would apply.See Bahri, 308 Mich. App. at 424-426,864 N.W.2d 609 (stating that whenan insured claimant commits fraudin connection with his or her claimthe insurer may use a fraud-exclusionclause to deny benefits under thepolicy). Here, however, because weare obligated to enforce the terms ofthe contract as they are stated in thecontract, we conclude that at the timethey committed fraud, [the defendants]were not insured persons under thepolicy. Consequently, their fraud didnot trigger the fraud-exclusion clause,so Meemic cannot use it to voidthe policy and deny Justin's claim.[Meemic, 324 Mich. App. at 483-484,922 N.W.2d 154.]

We derive the following principles of law from the authoritiesdiscussed above. First, PIP benefits are statutorily mandatedand cannot be abridged by contract. Bazzi, 502 Mich. at399, 919 N.W.2d 20. Second, UM and UIM coverageis not statutorily mandated, and therefore, such coverageis controlled by the language of the insurance policy.Cohen, 463 Mich. at 532, 620 N.W.2d 840; Andreson,322 Mich. App. at 84-85, 910 N.W.2d 691. Third, amedical or healthcare provider, although innocent of fraud,may be denied compensation for services based on aninsured's fraudulent representations for purposes of obtainingreplacement services benefits. Bahri, 308 Mich. App. at424-426, 864 N.W.2d 609. The medical or healthcare providerstands in the shoes of the named insured for purposes of

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entitlement to benefits, and therefore, cannot recover benefitsthat the insured is not permitted to recover. Id. at 424, 864N.W.2d 609. In Bahri, the plaintiff was both the policyholderand the insured party. Id. at 421. Bahri sets forth theelements that must be proved to invoke a fraud exclusionin a policy. Id. at 424-425, 864 N.W.2d 609. Fourth, aninsured who is not a party to the no-fault policy, but who iseligible for benefits pursuant to the no-fault statutory priorityprovision, MCL 500.3114, is not subject to the policy's fraudexclusion. Shelton, 318 Mich. App. at 654-656, 899 N.W.2d744. In Shelton, the non-party claiming PIP benefits underMCL 500.3114 was also the individual who submitted thefraudulent claim for replacement services. Shelton, 318 Mich.App. at 651-652, 899 N.W.2d 744. Fifth, a person who isentitled to coverage under MCL 500.3114(1) (member ofpolicyholder's family and household) does not lose his or herstatutory right to PIP benefits on the basis of fraudulent claimssubmitted by the policyholder. Meemic, 324 Mich. App. at467, 922 N.W.2d 154.

D. APPLICATION OF PRINCIPLESTO PLAINTIFF'S CLAIM

*8 Under Meemic, fraud perpetrated by Harp and othercaregivers does not deprive Cannon of her statutory right toPIP benefits. Cannon is eligible for benefits under the termsof the policy, but she also is entitled to benefits under thepriority statute, MCL 500.3114(4). Therefore, her statutoryentitlement to benefits cannot be abridged by the terms of thepolicy based on Harp's fraud. Indeed, pursuant to Shelton, 318Mich. App. at 654-656, 899 N.W.2d 744, Cannon's claimscannot be voided in full even if she participated in the fraud,because she was not a party to the insurance contract. FarmBureau cannot void Cannon's entire claim pursuant to thefraud exclusion in the policy. Bahri is distinguishable fromthis case because in Bahri there is no indication that theplaintiff insured, who submitted the fraudulent claim, wasa person other than the holder of the policy entitling her tobenefits.

Farm Bureau can, of course, challenge the sufficiency andcredibility of Cannon's entitlement to recover benefits, andcan offer its own evidence to justify denial of recovery.But Farm Bureau cannot rely on the fraud exclusion tofully void Cannon's claims. Accordingly, the circuit courtdid not commit a palpable error by denying Farm Bureau'smotion for summary disposition or denying its motion

for reconsideration as to voiding Cannon's claims for PIPcoverage.

However, Farm Bureau would be entitled to judgment asa matter of law with respect to Cannon's claims for UIMand UM coverage if the insured, “any family member,”or “any insured” intentionally concealed or misrepresentedmaterial facts, engaged in fraudulent conduct, or made anyfalse statements. Bahri, 308 Mich. App. at 428, 864 N.W.2d609. These categories of claims are governed by the policylanguage. Andreson, 322 Mich. App. at 84-85, 910 N.W.2d691. The policy states that the entire policy will be voidif “any insured ” intentionally concealed or misrepresentedmaterial facts, engaged in fraudulent conduct, or made falsestatements.

There is no material question of fact that Harp and Cannonwere insureds under the policy. Lewis and Blakely are familymembers of insureds. There also is no genuine issue ofmaterial fact that Harp was in Aruba from May 24 to June 1,2016. This fact is documented by the flight reservations andHarp's Facebook postings. Harp submitted a reimbursementrequest for 15 hours of services for every day of this periodand later claimed she took Cannon to Aruba with her. Blakelysubmitted a reimbursement request for nine hours of servicesevery day of this period and denied any knowledge ofCannon's trip to Aruba. Harp submitted both requests to FarmBureau, along with a note stating that she and Blakely beganto provide attendant care on May 13, 2016, the day Cannonwas discharged from the hospital. Accordingly, there is nogenuine issue of material fact that either Harp or Blakelysubmitted a false reimbursement claim for attendant careservices offered to Cannon from May 23 to June 1, 2016.There also was no genuine issue of fact that Lewis gave birthon September 3, 2016. Lewis's attempt to reconcile this factwith her claim for services for this date was objectively falsebecause she provided three conflicting explanations—Lewisattended to Cannon while she gave birth, Lewis attended toCannon before she went to the hospital, and Lewis's husbandoffered services in her place. Thus, Harp, Blakely, Lewis,and possibly Cannon made material representations as tothe provision of attendant care services with knowledge thatthe statements were false, with the intent that Farm Bureauwould pay for reimbursement. These misrepresentations aresufficient to trigger the broad fraud-exclusion provision inthe policy, thereby precluding Cannon's claims for contractualUM and UIM benefits.

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We are not persuaded that Farm Bureau has demonstratedthe absence of genuine issues of material fact with respect toits remaining assertions of fraudulent submissions. “The trialcourt is not permitted to assess credibility, weigh the evidence,or resolve factual disputes, and if material evidence conflicts,it is not appropriate to grant a motion for summary dispositionunder MCR 2.116(C)(10).” Pioneer State Mut Ins. Co. v.Dells, 301 Mich. App. 368, 377, 836 N.W.2d 257 (2013).“[W]hen the truth of a material factual assertion depends onthe credibility of a witness, a genuine factual issue existsand summary disposition may not be granted.” Auto ClubIns. Ass'n. v. State Auto Mut. Ins. Co., 258 Mich. App. 328,335-336, 671 N.W.2d 132 (2003).

*9 Farm Bureau argues that the deposition testimonyof Ronald Williams, Cannon's son, disproves Blakely'ssubmission for attendant care services and Burns's submissionfor replacement services. Ronald testified that Blakely did notreturn to Michigan in time to provide attendant care servicesto Cannon in May and June 2016, and Ronald denied seeingBurns perform chores for Cannon. However, Ronald admittedthat he is not close with his mother and was not well-informedof her circumstances. A trier of fact could find that Ronald'sstatements were erroneous, and did not demonstrate that therewas no genuine issue of material fact regarding when Blakelyreturned to Michigan. In addition, Ronald's testimony that hedid not see Burns doing chores at Cannon's house did notnecessarily establish that Burns's claims were false. Burnstestified that he came to Cannon's house on weekends toperform chores while he was enrolled in law school, andthe credibility of that testimony was for the trier of fact toresolve. This evidence involves conflicting statements amongwitnesses, and therefore precludes summary disposition.Pioneer State Mut. Ins. Co., 301 Mich. App. at 377, 836N.W.2d 257; Auto Club Ins. Ass'n., 258 Mich. App. at335-336, 671 N.W.2d 132. Similarly, Harp's testimony thatBlakely learned of the accident “probably a couple of weeks”after the accident was too imprecise to establish a fixed dateof Blakely's arrival. However, the fraudulent submissions byHarp or Blakely and Lewis are sufficient to trigger the fraudexclusion independent of this other evidence of alleged fraud.

In its motion for reconsideration, Farm Bureau submittedevidence that it obtained after its motion for summarydisposition. Cannon was not permitted to file a response tothe motion for reconsideration, MCR 2.119(F)(2); therefore,she has not had an opportunity to respond to this evidence.We acknowledge that the SSA and IRS exhibits appear todisprove Cannon's representations that she was not receiving

disability benefits and that she was employed and earningan income before the accident. This evidence would appearto preclude or substantially limit Cannon's recovery for lostwages. However, Farm Bureau did not submit this evidencein support of its summary disposition motion. Accordingly, itis premature to determine at this juncture that Farm Bureau isentitled to summary disposition with respect to Cannon's PIPclaim for wage loss.

Farm Bureau also argues that evidence that Cannon traveledto Louisiana in 2017 disproves her claims regarding the extentof her injuries. Blakely and Lewis both testified that Cannontraveled to Louisiana by plane. Testimony merely indicatingthat Cannon made a plane trip does not allow any inferencesto be made regarding the extent of her injuries or her recovery.

In sum, the fraud exclusion in the insurance policy cannotoperate to void Cannon's claim to statutory PIP benefits.Meemic, 324 Mich. App. 467, 922 N.W.2d 154. The circuitcourt therefore correctly denied Farm Bureau's motion forsummary disposition with respect to Cannon's claims forPIP benefits other than attendant care, replacement, and casemanagement services. On remand, however, Farm Bureaumay offer its new evidence, obtained after the court decidedits first motion for summary disposition, in a renewed motionwith respect to Cannon's remaining claims for PIP benefits.In addition, the fraud exclusion can apply to void non-mandatory coverage for UM and UIM benefits. Cohen, 463Mich. at 532, 620 N.W.2d 840; Andreson, 322 Mich. App.at 84-85, 910 N.W.2d 691. Farm Bureau established thatthere was no genuine issue of material fact that Harp and/or Lewis submitted fraudulent documentation of attendantcare services provided to Cannon. Accordingly, the circuitcourt erred by denying Farm Bureau's motion for summarydisposition with respect to UM and UIM benefits and wereverse in that regard.

III. ATTORNEY FEES

Farm Bureau argues that the circuit court erred by denying itsrequest for attorney fees under MCL 500.3148(2). We reviewthis decision for an abuse of discretion. Gentris v. State FarmMut. Auto. Ins. Co., 297 Mich. App. 354, 361, 824 N.W.2d609 (2012).

MCL 500.3148(2) provides:

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An insurer may be allowed by acourt an award of a reasonable sumagainst a claimant as an attorney's feefor the insurer's attorney in defenseagainst a claim that was in somerespect fraudulent or so excessive asto have no reasonable foundation. Tothe extent that personal or propertyprotection insurance benefits are thendue or thereafter come due to theclaimant because of loss resulting fromthe injury on which the claim is based,such a fee may be treated as an offsetagainst such benefits; also, judgmentmay be entered against the claimant forany amount of a fee awarded againsthim and not offset in this way orotherwise paid.

*10 Although a court's decision whether to award statutoryattorney fees is discretionary, the court must make findingsregarding whether a claim is fraudulent, excessive, orunreasonable, and those findings “must be able to survivereview under the clearly-erroneous standard.” Gentris, 297Mich. App. at 361-362, 824 N.W.2d 609.

In this case, the circuit court cited Gentris for the propositionthat it had discretion whether to award attorney fees, andit recognized its obligation to make findings that must beable to survive review under the clearly erroneous standard.However, the extent of the court's reasoning for denyingattorney fees was its statement that “[h]aving consideredthe evidence, the Court does not find that it rises to thelevel required by MCL § 500.3148(2).” The court did notindicate what evidence it considered or otherwise explainwhy it did not find the evidence sufficient to support anaward of attorney fees, notwithstanding its determination thatCannon's claims for attendant care, case management, andreplacement services were barred because they were based onfalse statements. In sum, the court did not make any findings

or otherwise explain the factual basis for its decision sufficientto enable review under the clearly erroneous standard.

We have concluded that the circuit court erred by denyingFarm Bureau's motion for summary disposition with respectto Cannon's claims for UM and UIM benefits, but did noterr by denying the insurer's motion for dismissal of Cannon'sclaims for PIP benefits for claims other than attendantcare, replacement, and case management services. A properanalysis of Cannon's claims is also impacted by this Court'sdecision in Meemic, which was decided after the circuit courtdecided this matter and limited the application of Bahri,the case on which Farm Bureau primarily relied in theseproceedings. We have also concluded that Farm Bureau'sevidence of fraud was not as widespread as the insurerrepresents. In addition, Farm Bureau has submitted newevidence suggesting that Cannon misrepresented her receiptof disability benefits and her employment status before theaccident. This evidence was not obtained until after FarmBureau's motion for summary disposition was decided, andwe have concluded that Farm Bureau should be afforded anopportunity to present the evidence in an appropriate motionon remand.

Under these circumstances, and given the circuit court'sfailure to make sufficient findings in support of its denialof attorney fees, it would be premature for us to determinewhether Cannon's claims are “fraudulent or so excessive asto have no reasonable foundation.” Rather, we vacate thatportion of the circuit court's order denying Farm Bureau'srequest for attorney fees and remand for reconsideration ofthis issue in light of further proceedings on remand, and forappropriate factual findings regarding fraud, excessiveness,and reasonableness.

We affirm in part, reverse in part, and vacate in part, andremand for further proceedings consistent with this opinion.We do not retain jurisdiction. As neither party prevailed infull, neither may tax costs pursuant to MCR 7.219.

All Citations

Not Reported in N.W. Rptr., 2019 WL 845863

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Appendix B

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McCourt v. Lebenbom, Not Reported in N.W. Rptr. (2019)

© 2019 Thomson Reuters. No claim to original U.S. Government Works. 1

2019 WL 2235535Only the Westlaw citation is currently available.

UNPUBLISHED OPINION. CHECKCOURT RULES BEFORE CITING.

UNPUBLISHEDCourt of Appeals of Michigan.

Patrick MCCOURT, Plaintiff-Appellant,v.

Stuart LEBENBOM, Defendant,and

Allstate Insurance Company, Defendant-Appellee.

No. 343003|

May 23, 2019

Oakland Circuit Court, LC No. 2016-154361-NI

Before: Sawyer, P.J., and Cavanagh and Servitto, JJ.

Opinion

Per Curiam.

*1 Plaintiff appeals as of right the trial court's order ofdismissal of defendant Stuart Lebenbom in this first-party no-fault action. We reverse and remand.

Plaintiff sustained injuries in an automobile accident onJanuary 24, 2016. Plaintiff filed a complaint againstdefendant Allstate Insurance Company (“defendant”)claiming entitlement to first-party benefits under hisinsurance policy. The trial court granted summary dispositionin favor of defendant pursuant to MCR 2.116(C)(10),concluding that plaintiff's claim for benefits was barred as amatter of law because plaintiff had committed fraud.

Plaintiff argues that the trial court committed error when itgranted defendant's motion for summary disposition becausethere is a genuine issue of material fact as to whetherplaintiff committed fraud in regard to his claims for householdreplacement services and his preaccident medical history. Weagree.

A trial court's decision on a motion for summary dispositionis reviewed de novo. Lowrey v. LMPS & LMPJ, Inc.,500 Mich. 1, 5-6; 890 N.W.2d 344 (2016). A motion for

summary disposition under MCR 2.116(C)(10) challengesthe “factual adequacy of a complaint on the basis of theentire record, including affidavits, depositions, admissions, orother documentary evidence.” Gorman v. American HondaMotor Co., Inc., 302 Mich. App. 113, 115; 839 N.W.2d 223(2013). A trial court's grant of summary disposition underMCR 2.116(C)(10) is proper when the evidence, “viewedin the light most favorable to the nonmoving party, show[s]that there is no genuine issue as to any material fact and themoving party is therefore entitled to judgment as a matter oflaw.” Lowrey, 500 Mich. at 5. “A genuine issue of materialfact exists when the record, giving the benefit of reasonabledoubt to the opposing party, leaves open an issue upon whichreasonable minds might differ.” Gorman, 302 Mich. App.at 116 (citation omitted). “ ‘This Court is liberal in findinggenuine issues of material fact.’ ” Lewis v. Farmer Ins. Exch.,315 Mich. App. 202, 209; 888 N.W.2d 916 (2016), quotingJimkoski v. Shupe, 282 Mich. App. 1, 5; 763 N.W.2d 1 (2008).

The no-fault insurance policy at issue contained a generalfraud exclusion provision, which provided: “We may notprovide coverage for any insured who has made fraudulentstatements or engaged in fraudulent conduct in connectionwith any accident or loss for which coverage is sought underthis policy.”

“Reliance on an exclusionary clause in an insurance policyis an affirmative defense; therefore, defendant has the burdenof proof.” Shelton v. Auto-Owners Ins. Co., 318 Mich. App.648, 657; 899 N.W.2d 744 (2017). “An insurance companyhas the burden to prove that one of the policy's exclusionsapplies.” Id. (citation and quotation marks omitted). “Thus, toobtain summary disposition the insurer must show that thereis no question of material fact as to any of the elements of itsaffirmative defense.” Id. This Court has set forth the followingrequirements for establishing fraud:

In order to establish that an individualcommitted fraud, the insurer mustestablish (1) that the individual made amaterial misrepresentation, (2) that therepresentation was false, (3) that whenthe individual made the representationhe or she knew it was false ormade it with reckless disregard asto whether it was true or false, (4)that the misrepresentation was madewith the intention that the insurer

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would act upon it, and (5) that theinsurer acted on the misrepresentationto its detriment. [Meemic Ins. Co.v. Fortson, 324 Mich. App. 467,473-474; 922 N.W.2d 154 (2018).]

*2 “A statement is material if it is reasonably relevant tothe insurer's investigation of a claim.” Bahri v. IDS PropertyCas. Ins. Co., 308 Mich. App. 420, 425; 864 N.W.2d 609(2014). “Generally, whether an insured has committed fraudis a question of fact for a jury to determine.” Meemic, 324Mich. App. at 473. “However, under some circumstances, atrial court may decide as a matter of law that an individualcommitted fraud.” Id.

I. REPLACEMENT SERVICES

In regard to the misrepresentations provided in plaintiff'sreplacement services forms, plaintiff argues that the trialcourt erred in finding that plaintiff committed fraud becausethe misinformation was merely a mistake on the part ofhis service provider and roommate, Lonnie Adams, in notknowing how to properly complete the forms due to thegeneric directions provided on the forms. Defendant contendsthat plaintiff submitted fraudulent claims for householdreplacement services because plaintiff claimed benefits forservices that Adams would have performed even if plaintiffhad not been injured. MCL 500.3107(1)(c) provides thatpersonal protection insurance benefits are payable for:

(c) Expenses not exceeding $ 20.00 perday, reasonably incurred in obtainingordinary and necessary services in lieuof those that, if he or she had not beeninjured, an injured person would haveperformed during the first 3 years afterthe date of the accident, not for incomebut for the benefit of himself or herselfor of his or her dependent.

Replacement services forms were submitted to defendant forthe months of January, February, March, April, May, andJuly 2016. On the forms, Adams indicated that he cooked forplaintiff every day, he walked plaintiff's dog almost every day,and he did the laundry every Tuesday and Saturday. Adams

testified that prior to the accident, generally, he did 70% ofthe household chores and plaintiff did 30% of the householdchores. However, Adam's also testified that, prior to theaccident, he did all of the cooking, laundry, and he also walkedplaintiff's dog, and after plaintiff was injured, he continued toperform these services. Plaintiff testified, however, that priorto the accident, there was no specific arrangement betweenAdams and plaintiff in regard to household chores, but rather,they split the chores in half depending on who was available.Plaintiff also testified that prior to the accident, he didall household chores that involved his “personal business.”Plaintiff did not specifically indicate what chores those were.Plaintiff testified that after the accident, Adams took over90% of the household chores because plaintiff was only ableto do light cleaning around the house.

In Candler v. Farm Bureau Mut. Ins. Co. of Mich., 321 Mich.App. 772, 776; 910 N.W.2d 666 (2017), this Court considereda plaintiff's fraudulent claim for household replacementservices. The plaintiff, after being struck by a hit-and-run driver, filed a claim for PIP benefits, and in supportof his claim, he submitted to the defendant replacementservice calendars for the months of August, September, andOctober 2015, which were supposedly signed by the plaintiff'sbrother, Andrew. Id. The calendars reflected that Andrew hadprovided care for the plaintiff during those three months. Id.During discovery, the defendant learned that Andrew hadstopped providing services for the plaintiff in July 2015,and after that time, the plaintiff moved from Rochester toDetroit to live with his girlfriend, who started to providethe replacement services. Id. At the trial court, the plaintiff'scounsel admitted that the plaintiff had signed Andrew's nameto the calendars. Id. The defendant moved for summarydisposition arguing that “MCL 500.3173a(2) precluded theplaintiff from recovering any PIP benefits because of thefalse statements that were provided.” Id. The trial courtdenied the defendant's motion for summary disposition. Id.On appeal, this Court concluded that the “plaintiff knew thatthe statement contained false information, which concerned afact or thing material to the claim.” Id. at 781. In support of itsconclusion, this Court concluded that the evidence establishedthat the plaintiff knew that the calendars he submitted werenot correct, he knew that he had moved in with his girlfriend,who provided the replacement services during the threemonths in question, and his counsel conceded that the plaintiffhad signed or forged Andrew's name. Id. at 781. The Courtultimately held that, based on evidence, “[n]o reasonable jurycould conclude that plaintiff, despite the presence of a headinjury, was not aware that he was submitting false information

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that was material to his claims for no-fault benefits.” Id. at781-782.

*3 Here, defendant argues that it is apparent that plaintiffknew that Adams had provided false information in thereplacement services forms, or at a minimum, plaintiffrecklessly allowed incorrect claims to be filed on his behalfwithout verifying the accuracy of the claims. On appeal,plaintiff does not dispute that Adams listed services on theforms that he had provided prior to plaintiff being injured.However, there is no record evidence that plaintiff in factknew that Adams had provided false information at thetime the forms were submitted to defendant. Adams himselfwas forthcoming in his deposition and described all of thehousehold chores that he completed prior to the accidentand after. There was no indication from Adam's testimonythat he was attempting to misrepresent the services that heprovided for plaintiff prior to the injury. Moreover, Adamstestified that he completed the replacement services forms andthen submitted them to plaintiff's attorney. During plaintiff'sdeposition, plaintiff also indicated that Adams was the personwho completed the replacement services forms. Adams alsopersonally signed the forms. The forms were not signed byplaintiff. It is not clear whether plaintiff reviewed the forms;therefore, there is no record evidence that plaintiff in factknew specifically what Adams was claiming in the forms,or that Adam's claims were contrary to MCL 500.3107(1)(c). This case is not analogous to Candler, in which it wouldbe unreasonable for a jury to find that the plaintiff thereindid not know that his statements contained false informationafter the plaintiff lied about who provided his services andthen forged his brother's signature in order to receive benefits.Here, there is a question of fact as to whether plaintiff wasaware of the specific services that Adams claimed or that theforms contained false information. Thus, there is a genuineissue of material fact as to whether plaintiff himself made afalse misrepresentation with reckless disregard for its truth orfalsity, and with the intention that the defendant rely on it.

II. PRIOR MEDICAL HISTORY

Plaintiff also contends that the trial court erred in grantingdefendant's motion for summary disposition on the groundthat plaintiff fraudulently misrepresented his medical history.Defendant argues that the statements that plaintiff made athis deposition contradicted his medical records, and thus,plaintiff committed fraud. Specifically, defendant argues thatplaintiff committed fraud by misrepresenting the medical

conditions that led plaintiff to apply for Social SecurityDisability (SSD) benefits in March 2010. Plaintiff testifiedthat depression and anxiety disorders were the conditionsthat led him to apply for SSD. When asked by defensecounsel whether neck pain, back pain, or pain of anyother extremities caused plaintiff to apply for SSD, plaintiffresponded “No.” Defendant asserts that plaintiff's negativeresponse was a material misrepresentation because plaintiff'sSSD application states that he took medication for “severebody aches and pain.” Defendant also contends that a letterfrom Dr. Stephen Swetech in support of plaintiff's SSDbenefits application, which stated that plaintiff had arthritisof the cervical and lumbar spine, is further evidence thatplaintiff suffered from physical ailments, and thus, plaintiffmisrepresented his medical history.

Defendant's argument regarding plaintiff's SSD benefitsapplication is without merit. Nowhere in plaintiff's SSDapplication did it specifically state that plaintiff sufferedfrom back or neck pain or specific physical ailments; theapplication does not indicate why plaintiff was sufferingfrom severe aches and pains or whether those painswere the result of physical conditions. Moreover, Dr.Swetech's letter does not establish, as a matter of law,that plaintiff fraudulently misrepresented his medical history.During plaintiff's deposition, plaintiff was asked whetherany complaints of back pain, neck pain, or pain of otherextremities caused plaintiff to apply for disability. The factthat Dr. Swetech stated that plaintiff had arthritis of thecervical and lumbar spine as support for plaintiff's applicationdoes not establish that plaintiff was suffering from pain of thecervical and lumbar spine when he applied for SSD benefits,that the condition was one that led plaintiff himself to applyfor SSD benefits, or that plaintiff intentionally withheld thisinformation with the intent that defendant would rely on it.Moreover, there is no evidence that defendant replied onthis information to its detriment. Any inconsistency betweenplaintiff's deposition testimony and his SSD applicationcreated a question of fact as to whether plaintiff's conduct wasfraudulent.

Defendant also asserts that there are inconsistencies betweenplaintiff's testimony regarding his back problems and hismedical records. Defendant points to a March 16, 2010medical record. The medical record stated that plaintiff hada history of low back pain, and an x-ray had revealedthat plaintiff had “multilevel degenerative changes withmild anterior wedging of T12 and L1 and minimal anteriorwedging of L2.” Moreover, a physical therapy record from

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January 10, 2011 indicated that plaintiff had low backpain, and a medical record from June 20, 2012 indicatedthat plaintiff had degenerative joint disease. These medicalrecords created a question of fact as to whether plaintiffcommitted fraud. During plaintiff's deposition testimony hewas forthcoming about having prior back pain, and admittedthat he had sought treatment for back problems in the pastand had been prescribed Motrin to treat the pain. Moreover,the record indicating that plaintiff had degenerative jointdisease was handwritten on the bottom of a form, and therecord did not indicate that the condition was specificallyrelated to plaintiff's back. Thus, these medical records do notestablish that plaintiff knowingly or with reckless disregardmisrepresented his history of back problems.

*4 Defendant also asserts that plaintiff's depositiontestimony regarding his history of neck problems contradictsplaintiff's medical records. During plaintiff's depositiontestimony, plaintiff denied that, prior to the accident, hehad pain in his neck or had sought treatment for neckpain. However, plaintiff's medical records indicate that, onMarch 16, 2010, plaintiff presented to the hospital with neckpain, and an x-ray revealed minimal degenerative changes.Therefore, plaintiff's statement that he had never had neckpain was not accurate. This Court has stated that “[f]raudor false swearing implies something more than mistake offact or honest misstatements on the part of the insured.”Mina v. Gen. Star Indemnity Co., 218 Mich. App. 678, 686;555 N.W.2d 1 (1996), rev'd in part on other grounds 455Mich. 866 (1997). Thus, solely based on this one medicalrecord, it is not clear whether plaintiff knowingly providedfalse information or whether it was an honest mistake.Moreover, there is no evidence that plaintiff intentionallymade this statement with the intent that defendant rely onit. Plaintiff provided defendant with Dr. Swetech's name,who was plaintiff's treating physician when plaintiff presentedwith neck pain, and plaintiff was forthcoming about Dr.Swetech being plaintiff's doctor for approximately 25 yearsprior to the accident, thus covering the period of timethat plaintiff experienced the neck pain. Moreover, due toplaintiff's admissions, defendant was able to obtain plaintiff'smedical records and identify that plaintiff had previouslyhad neck pain. It is also unclear from the record whetherdefendant relied on the inaccurate statement to its detriment.Thus, plaintiff's denial of past neck pain created a question offact for the jury as to whether plaintiff committed fraud.

In the lower court, defendant argued that plaintiff's depositiontestimony regarding a prior brain injury contradicted

plaintiff's medical records. Plaintiff testified that he had notbeen diagnosed with a closed head injury, a concussion,a traumatic brain injury, or head trauma prior to the caraccident. Plaintiff's medical records indicate that plaintiffunderwent two MRIs of his brain in May 2010. The fact thatplaintiff underwent two MRIs of his brain does not contradicthis testimony that he had not been diagnosed with one ofthe specific brain injuries about which defense counsel asked.Plaintiff underwent one MRI due to a possible aneurysm, butno aneurysm was detected; the other MRI was performed dueto hearing loss and blurry visions, and the MRI revealed smallvessel disease.

However, when plaintiff was asked during his depositiontestimony whether he had undergone an MRI of his brain priorto the accident, he responded “No.” However, the medicalrecords indicate that two separate MRIs of the brain wereperformed in May 2010. Nonetheless, plaintiff's incorrectstatement does not establish fraud as a matter of law. Asstated earlier, plaintiff was under the care of Dr. Swetechat the time the MRIs were performed, and plaintiff readilydisclosed that Dr. Swetech was his doctor during this time.It is also unclear whether defendant relied on the statementto its detriment. Thus, there is a genuine issue of materialfact as to whether plaintiff committed fraud in regard to theinconsistencies between his testimony and medical recordsregarding past MRIs.

In the lower court, defendant also asserted that plaintiffmisrepresented his history of leg pain because a handwrittennote in a medical record from June 20, 2012, indicated thatplaintiff had “leg numbness.” There is no explanation inplaintiff's medical records what specifically was meant byleg numbness, whether the numbness was a symptom of acondition or illness, or whether the numbness resulted in pain.Thus, the record evidence does not establish that plaintiffknowingly provided false information when he testified thathe did not have any prior leg pain.

In conclusion, because “summary disposition is rarelyappropriate in cases involving questions of credibility, intent,or state of mind,” In re Handelsman, 266 Mich. App. 433,438; 702 N.W.2d 641 (2005), and because the question offraud is generally a question of fact for the jury, Meemic, 324Mich. App. at 473, the record evidence did not support, as amatter of law, that plaintiff committed fraud to the extent thatthe fraud exclusion clause of the insurance contract barredplaintiff's claim for benefits. Thus, a question of fact existsfor the jury to decide.

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Reversed and remanded for further proceedings consistentwith this opinion. We do not retain jurisdiction.

All Citations

Not Reported in N.W. Rptr., 2019 WL 2235535

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Appendix C

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Mills v. Titan Insurance Company, Not Reported in N.W.2d (2017)2017 WL 3397693

© 2019 Thomson Reuters. No claim to original U.S. Government Works. 1

2017 WL 3397693Only the Westlaw citation is currently available.

UNPUBLISHED OPINION. CHECKCOURT RULES BEFORE CITING.

UNPUBLISHEDCourt of Appeals of Michigan.

James McKinley MILLS, Plaintiff–Appellee,and

City Xpress, LLC, Mercy Transport, LLC, and DetroitAnesthesia Group, PLLC, Intervening–Plaintiffs,

v.TITAN INSURANCE COMPANY,

Defendant–Appellant.

No. 331460|

August 8, 2017

Wayne Circuit Court, LC No. 15–000562–NF

Before: Fort Hood, P.J., and Cavanagh and Ronayne Krause,JJ.

Opinion

Per Curiam.

*1 In this action to recover no-fault benefits under theMichigan Assigned Claims Plan (MACP), defendant, theassigned claims insurer, appeals by leave granted the trialcourt's order granting in part and denying in part defendant'smotion for summary disposition under MCR 2.116(C)(10).We affirm.

Plaintiff, a pedestrian, was struck and injured by anunidentified motor vehicle on March 30, 2014 in ClintonTownship, Michigan. Because plaintiff did not have no-faultinsurance coverage and the driver of the other vehicle couldnot be identified, plaintiff filed a claim with the MACP torecover benefits pursuant to the no-fault act, MCL 500.3101et seq. Defendant was assigned to provide coverage forplaintiff's accident. Plaintiff subsequently filed this action,alleging that defendant failed to pay benefits that were due.In his complaint, plaintiff stated that he “sustained injurieswhich required medical treatment, rehabilitation treatment,household replacement services, attendant care services,prescription items and medical appliances, wage loss benefits,

and other [unspecified] benefits ....” Intervening plaintiffsjoined the action to recover for medical services provided

to plaintiff. 1 As relevant to this appeal, defendant movedfor summary disposition pursuant to MCR 2.116(C)(10),arguing that plaintiff's claims for benefits pursuant to theno-fault act were barred in their entirety because plaintiffsubmitted fraudulent documentation in support of his claimfor attendant care services. The trial court granted defendant'smotion in part, dismissing with prejudice plaintiff's attendantcare claims. After defendant filed an application for leave toappeal the trial court's order, this Court granted defendant's

application. 2

1 In his brief on appeal, plaintiff argues that intervening-plaintiffs, as medical providers, “may sue the responsibleno-fault [personal injury protection] PIP insurer for apatient's unpaid medical bills.” We recognize that theMichigan Supreme Court recently held in Covenant MedCtr v. State Farm Mut Auto Ins Co, ––– Mich. ––––,––––; 895 N.W.2d 490 (2017) (Docket No. 152758); slipop. at 24, 25, that a medical provider does not possessa statutory cause of action pursuant to the no-fault act,MCL 500.3101 et seq., to pursue a no-fault insurerfor PIP benefits. However, the propriety of intervening-plaintiffs' claims is not at issue in this appeal.

2 Mills v. Titan Ins Co, unpublished order of the Court ofAppeals, entered June 2, 2016 (Docket No. 331460).

On appeal, defendant argues that the trial court erred bydismissing only plaintiff's attendant care claims, rather thandismissing the action in its entirety. We disagree.

This Court reviews de novo a trial court's decision regardinga motion for summary disposition. McLean v. Dearborn, 302Mich. App. 68, 72; 836 N.W.2d 916 (2013).

In reviewing a motion under MCR2.116(C)(10), the trial court considersaffidavits, pleadings, depositions,admissions, and other evidenceintroduced by the parties to determinewhether no genuine issue of materialfact exists and the moving party isentitled to judgment as a matter oflaw. The evidence submitted mustbe considered in the light mostfavorable to the opposing party. [Id.

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at 73 (citations and quotation marksomitted).]

*2 As an initial matter, we note that defendant premisedits motion for summary disposition on this Court's decisionin Bahri v. IDS Prop Cas Ins Co, 308 Mich. App. 420;864 N.W.2d 609 (2014). In that case, this Court held thata fraud exclusion in a no-fault insurance policy precludedthe plaintiff's claim for no-fault benefits where there was nogenuine issue of material fact regarding the plaintiff's fraud.Id. at 425–426. In Bahri, the plaintiff had sought householdreplacement services for a period from October 1, 2011 toFebruary 29, 2011, although the motor vehicle accident atissue in that case had not even taken place until October 20,2011. Id. at 425. The plaintiff was also surveilled and foundto be “performing activities inconsistent with her claimedlimitations.” Id.

Defendant urges us to conclude that Bahri controls thedisposition of this case and hold that plaintiff's allegedfraudulent conduct with respect to his attendant care claimsshould bar the remainder of his claims. However, we agreewith plaintiff that Bahri is distinguishable and therefore notdispositive. For example, Bahri involved the application ofa fraud exclusion provision in a no-fault insurance policy.The policy provision in Bahri provided, in pertinent part,that “[the defendant insurance company] [does] not providecoverage for any insured who has made fraudulent statementsor engaged in fraudulent conduct in connection with anyaccident or loss for which coverage is sought under thepolicy.” Id. at 423–424. In contrast, at issue here is plaintiff'sright to receive benefits through the MACP, and plaintiff'srecovery is governed by the statutory provisions of the no-fault act. Our conclusion is consistent with this Court's recentdecision in Shelton v. Auto–Owners Ins Co, 318 Mich. App.648, –––; ––– N.W.2d –––– (2017); slip op. at 3, where thisCourt recognized, in pertinent part, as follows:

The law governing application of the policy exclusion inBahri is not applicable in this case. In Bahri, the provisionapplied to the plaintiff in that case because “[the] defendantissued [the subject] no-fault automobile policy to [the]plaintiff.” Bahri, 308 Mich. App. at 421. In this case,however, [the] plaintiff was not a party to, nor an insuredunder, the policy; she was injured while a passenger andbecause neither she nor her spouse or resident relativehad a no-fault policy, defendant was required to pay her

benefits pursuant to statute, not pursuant to a contractualagreement. [Emphasis added.]

In Shelton, the plaintiff was injured while a passenger ina single-car collision, and she pursued the defendant forpersonal injury protection (PIP) benefits where she did notown a motor vehicle or reside with a relative who owneda motor vehicle. Id.; slip op. at 2. The Shelton Court wenton to recognize that “the exclusionary [fraud] provision indefendant's no-fault policy does not apply to plaintiff andcannot operate to bar plaintiff's claim.” Id.; slip op. at 3.

The applicable no-fault statute in this case is MCL500.3173a(2), which provides, in pertinent part, as follows:

A person who presents or causesto be presented an oral orwritten statement, including computer-generated information, as part ofor in support of a claim tothe Michigan automobile insuranceplacement facility for payment oranother benefit knowing that thestatement contains false informationconcerning a fact or thing materialto the claim commits a fraudulentinsurance act under [MCL 500.4503]that is subject to the penalties imposedunder [MCL 500.4511]. A claimthat contains or is supported by afraudulent insurance act as describedin this subsection is ineligible forpayment or benefits under the assigned

claims plan. [Emphasis added.] 3

3 As relevant to this appeal, MCL 500.4503 provides, inpertinent part, as follows:

A fraudulent insurance act includes, but is not limitedto, acts or omissions committed by any person whoknowingly, and with an intent to injure, defraud, ordeceive:

* * *(c) Presents or causes to be presented to or byany insurer, any oral or written statement includingcomputer-generated information as part of, or insupport of, a claim for payment or other benefit

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pursuant to an insurance policy, knowing that thestatement contains false information concerning anyfact or thing material to the claim.(d) Assists, abets, solicits, or conspires with anotherto prepare or make any oral or written statementincluding computer-generated documents that isintended to be presented to or by any insurer inconnection with, or in support of, any claim forpayment or other benefit pursuant to an insurancepolicy, knowing that the statement contains any falseinformation concerning any fact or thing material tothe claim.

* * *(i) Knowingly and willfully assists, conspires with,or urges any person to fraudulently violate [MCL500.4501 et seq.], or any person who due to thatassistance, conspiracy, or urging knowingly andwillfully benefits from the proceeds derived from thefraud.

*3 In Covenant Med Ctr v. State Farm Mut Auto Ins Co,–––Mich. ––––, ––––; 895 N.W.2d 490 (2017) (Docket No.152758); slip op. at 6, the Michigan Supreme Court recentlyarticulated the applicable rules of statutory construction:

[The Court of Appeals] ... reviewsde novo questions of statutoryinterpretation. The role of [the Courtof Appeals] in interpreting statutorylanguage is to ascertain the legislativeintent that may reasonably be inferredfrom the words in a statute. Thefocus of [the Court's] analysis mustbe the statute's express language,which offers the most reliable evidenceof the Legislature's intent. Whenthe statutory language is clear andunambiguous, judicial construction isnot permitted and the statute isenforced as written. [A] court mayread nothing into an unambiguousstatute that is not within the manifestintent of the Legislature as derivedfrom the words of the statute itself.[Footnotes, citations and quotationmarks omitted.]

MCL 500.3173a(2) defines “a fraudulent insurance act” asoccurring when “[a] person ... presents or causes to be

presented an oral or written statement, including computer-generated information, as part of or in support of a claimto the Michigan automobile insurance placement facilityfor payment or another benefit knowing that the statementcontains false information concerning a fact or thing materialto the claim.” (Emphasis added.) This definition is consistentwith the statutory language of MCL 500.4503(c) and (d).Notably, MCL 500.4503 narrows the focus of that statutoryprovision, and refers to “acts ... committed by any person ...knowingly,” and requires “an intent to ... defraud[ ] ordeceive[.]”

The record evidence contained the deposition testimony andattendant care and household replacement services formsof Angela Bakeley and Jean Mitchell, two women withwhom plaintiff had personal relationships who assisted himfollowing the motor vehicle accident at issue. In supportof its motion for summary disposition, defendant includedBakeley's attendant care claim forms dated July 14, 2014,in which she represented that she provided attendant careto plaintiff from March 31, 2014 until July 31, 2014, withthe exception of May 2 through May 7, 2014. Defendantalso included Bakeley's household replacement servicesstatements dated July 14, 2014, indicating that she providedservices from April 1, 2014 through July 17, 2014. Defendantalso provided the trial court with Mitchell's June 2014attendant care claim forms, dated “June 2014 [,]” in whichMitchell represented that she provided attendant care for

plaintiff from June 15, 2014, until June 31, 2014. 4 Mitchellalso signed an attendant care form dated “July 2014[,]”in which she represented that she provided attendant careservices to plaintiff from July 1, 2014 until July 31, 2014.

4 The last day of June is, in fact, the 30th.

Defendant also included the deposition testimony of plaintiff.His deposition testimony, as well as that of Bakeley and Mills,can be characterized as unclear, confusing and disjointed.For example, in her November 19, 2015 deposition, Bakelyalternatively testified that plaintiff began living with her“[s]ince his [motor vehicle] accident[,]” and “a couple weeks”after the motor vehicle accident. Bakeley would help plaintiffwith “dressing [himself], bathing, shaving, helping him to getout [of] the bed and things of that nature[ ]” until he lefther home on an unspecified date in either July or Augustof 2014. Bakeley later testified that plaintiff was able to gethimself dressed, but that she would help him with taking ashower, and overall she would assist plaintiff with “personal”matters two to three hours a day on a regular basis. Bakeley

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testified that she did not drive plaintiff anywhere or makemeals for him or do his laundry, and it appeared from herdeposition testimony that she opined that plaintiff was capableof completing these tasks on his own. Bakeley further testifiedthat she filled out the attendant care forms and householdreplacement services statements at the same time, and shedid so because “[plaintiff] had got a call from his lawyer andhis lawyer had said to do it all at once and fax those backto [plaintiff's lawyer.]” According to Bakeley's testimonytoward the conclusion of her deposition, plaintiff left herhome on an unspecified date in July 2014 after only stayingwith her intermittently throughout July 2014, and she filledout the attendant care forms for defendant the way that shedid, even though plaintiff did not reside with her every day inJuly 2014, “[b]ecause [plaintiff] stated that his lawyer statedto do that like that [sic].”

*4 Mitchell testified during her May 5, 2015 deposition thatbeginning on an unspecified date in June 2014 when plaintiffmoved in with her, she would assist plaintiff with attendantcare matters such as assisting plaintiff in making his way tothe shower and bathroom and “household chores.” Mitchellalso made sure that plaintiff took his prescribed medication.As of the date of her deposition, May 5, 2015, Mitchell wascontinuing to assist plaintiff, who was still in a great dealof pain and “[h]aving a lot of difficulty[ ]” arising from theMarch 30, 2014 motor vehicle accident. Plaintiff testifiedthat following his March 30, 2014 motor vehicle accident,he resided with Bakeley for approximately two months, andthat she would help him with attendant care and householdservices for about 16 hours a day for that time period. Plaintiffthen moved “back home[ ]” with Mitchell, who, up until thedate of his May 5, 2015 deposition, would assist him withattendant care and household services. According to plaintiff,Bakeley was compensated for her services out of proceedsfrom plaintiff's no-fault insurance claim, but Mitchell hadnot yet been compensated. Notably, during his deposition,plaintiff was not presented with copies of Bakeley's andMitchell's attendant care forms and household replacementservices statements, and was not questioned with regard toany knowledge he may have had regarding how the formswere completed. Likewise, Mitchell was not questionedconcerning how she completed the forms and statements atissue.

During the hearing on defendant's motion for summarydisposition, the trial court recognized that there was evidenceof fraudulent conduct in the record.

You know what? Here's the thing. Even if we separate this,somebody is lying, okay. No. Listen. Dealt with this foryears over in criminal [court]. You can't fool me. Somebodyis lying.

Somebody is trying to be compensated for serviceseither they didn't perform, okay, or just the other personperformed and they want to just tag along, okay.

But the reality is, they put in forms covering dates that twoof these people didn't performs [sic] together. And that's bythe testimony of the plaintiff.

During the motion hearing, plaintiff's counsel informed thetrial court that “there is nothing in [plaintiff's] testimonyto show that [plaintiff has] committed fraud, and he's theunderlying [p]laintiff.” Plaintiff's counsel further informedthe trial court that plaintiff's counsel submitted Bakeley'sattendant care and household replacement services forms todefendant after they were apparently submitted to him byplaintiff, but he could not recall whether plaintiff directlytendered to him the forms pertaining to Mitchell. Accordingto plaintiff's counsel at one point during the motion hearing,“one thing to keep in mind is [Mitchell's claim forms]were never submitted by [plaintiff] [to defendant].” Plaintiff'scounsel essentially characterized the questionable claimforms as the result of inadvertence, repeatedly emphasizingthat Mitchell's claim forms for June 2014 and July 2014 werenot submitted to defendant for payment.

The trial court ultimately decided to strike the attendant careportion of plaintiff's claims, stating, “[t]here's no questionthere's fraud here. There's no question.” The trial court wenton to hold:

I know you [defendant] want the wholeclaim to be dismissed. But the Courtcan't determine whether or not theplaintiff himself orchestrated this, orwe have a competing interest withthese two ladies, and I'm just going toleave it at that; okay? You don't know.

The trial court later stated that it was striking the attendantcare portion of plaintiff's claims “because I can't tell whodid what.” Moreover, the trial court indicated its hesitanceto impose the “extreme remedy ... or penalty” of dismissing

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the entirety of plaintiff's claims without a showing thatplaintiff was aware of, and participating and engaging in, anyfraudulent conduct. Put another way, it is clear from the recordthat the trial court was unable to determine whether plaintiffhad an intent to defraud or deceive defendant. MCL 500.4503.

The trial court's ultimate decision conformed with theplain language of MCL 500.3173a(2), which states that“a fraudulent insurance act” requires a showing that oneacted “knowing that the statement contains false informationconcerning a fact or thing material to the claim ... [.]” Whilethe record evidence is no doubt contradictory, conflictingand often times confusing with regard to when Bakeley andMitchell provided attendant care and household replacementservices for plaintiff following his motor vehicle accident,it is also devoid of any indication of plaintiff's involvementin, or understanding or awareness of, the submission ofthe claim forms by Bakeley and Mitchell with regard toattendant care and household replacement services. Putanother way, as the trial court aptly recognized, the recorddoes not contain any indication that plaintiff “[knew] that thestatements [submitted by Bakeley and Mitchell] containedfalse information concerning a fact or thing material to the

claim ....” 5 MCL 500.3173a(2). Accordingly, we concludethat the trial court correctly denied summary disposition ofthe remainder of plaintiff's no-fault claims.

5 While not dispositive to our analysis, we note thatplaintiff, in his response to defendant's motion forsummary disposition and in his brief on appeal, observesthat Mitchell's claim forms had not been in facttendered to defendant for payment, but were submittedto defendant inadvertently in response to a discoveryrequest.

*5 Affirmed. We do not retain jurisdiction. Plaintiff, as theprevailing party, may tax costs pursuant to MCR 7.219.

Ronayne Krause, J. (concurring).I concur with the majority in all respects other than themajority's reasoning for affirming the trial court's refusal togrant summary disposition in favor of defendant regardingany claims other than the attendant care claims. My readingof the statute is that whether plaintiff was aware of thefalse information is irrelevant. Either a claim was supportedby a fraudulent insurance act or it was not. The findingby the trial court and the majority that the attendant care

claims were supported by claim forms containing dishonestynecessarily precludes payment or benefits pursuant to MCL500.3173a(2). Whether or not plaintiff was involved in orcognizant of Bakeley and Mitchell's dishonesty is, insofar asI can determine, irrelevant.

However, as the majority observes, this is not a case governedby Bahri v. IDS Prop Cas Ins Co, 308 Mich. App. 420;864 N.W.2d 609 (2014). There is no policy to rescind. Thestatute precludes “a claim that contains or is supported bya fraudulent insurance act.” MCL 500.3173a(2) (emphasisadded). The Insurance Code does not contain a definition ofa “claim” that is not self-referential. This Court has held thatwhere an insurance policy fails to define the term “claim,”it should be construed broadly as any sort of assertion ordemand of a right to payment or compensation or otherwisesomething due from another. Pickney Community Schoolsv. Continental Cas Co, 213 Mich. App. 521, 527–530; 540N.W.2d 748 (1995). I would construe “claim” under theInsurance Code analogously. Exclusion of plaintiff's claimsfor attendant care benefits does not necessarily exclude anyother claims he might have, if those other claims are notsupported by or do not contain a fraudulent insurance act.

I note additionally that Bahri held that the interveningplaintiffs in that case “stood in the shoes of the namedinsured,” precluding those intervening plaintiffs fromrecovering benefits if the plaintiff could not. Bahri, 308Mich. App. at 424. Bahri relied on a case involving resjudicata and a plaintiff who was in privity with a priorclaimant and attempting to relitigate the issue, an obviouslycompletely different factual scenario. See TCBI, PC v. StateFarm Mut Auto Ins Co, 289 Mich. App. 39; 795 N.W.2d 229(2010). In Bahri, it was not explained why the interveningplaintiffs stood in the shoes of the plaintiff under those facts,but presumably if the entire policy was rescinded then noclaims premised thereon could be pursued. In any event, bothcases are readily distinguishable: the applicable language hereprecludes discrete claims, whereas the applicable language inboth Bahri and TCBI precluded (or had previously been heldto preclude) an entire policy.

For these reasons, I concur in affirming.

All Citations

Not Reported in N.W.2d, 2017 WL 3397693

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Appendix D

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2012 WL 6097315Only the Westlaw citation is currently available.

UNPUBLISHED OPINION. CHECKCOURT RULES BEFORE CITING.

UNPUBLISHEDCourt of Appeals of Michigan.

Jacqueline VISNER, Plaintiff–Appellant,v.

Annett Marie HARRIS, Jeffrey ToddHarris and Pioneer State Mutual Insurance

Company, Defendants–Appellees.Jacqueline Visner, Plaintiff–Appellant,

v.State Farm Mutual Automobile Insurance

Company, Defendant–Appellee.

Docket Nos. 307506, 307507. | Dec. 6, 2012.

Tuscola Circuit Court; LC Nos. 09–025546–NI, 10–026117–NF.

Before: SAWYER, P.J., and SAAD and METER, JJ.

Opinion

PER CURIAM.

*1 In these consolidated appeals, plaintiff appeals as ofright from the trial court's order granting summary dispositionunder MCR 2.116(C)(10) to defendants Pioneer State MutualInsurance Company and State Farm Mutual AutomobileInsurance Company. For the reasons set forth below, weaffirm.

Plaintiff was struck by a vehicle while standing in herdriveway on August 20, 2008. She suffered serious injuries.Neither the operator of the vehicle nor the vehicle itself wascovered by an insurance policy. At the time, plaintiff waslisted as a “named driver” on an insurance policy issuedby defendant Pioneer, but the insurance policy only listedher then-fiancé as a “named insured .” Under the terms ofthe insurance contract, defendant Pioneer was only liableto provide statutory no-fault personal protection insurance(PIP) benefits to a “named insured” on the insurancepolicy. Nevertheless, plaintiff timely provided notice of herinjuries to defendant Pioneer, and defendant Pioneer began

paying PIP benefits to plaintiff. In February 2010, however,defendant Pioneer realized that it was not liable for PIPbenefits under the terms of the insurance policy becauseplaintiff was not a “named insured.” Accordingly, defendantPioneer ceased paying PIP benefits to plaintiff.

In June 2010, plaintiff provided notice of her injuries to theAssigned Claims Facility (ACF). The ACF denied liabilityfor PIP benefits because it had not received notice within oneyear of the incident. The ACF assigned defendant State Farmto defend this action on its behalf.

Ultimately, the trial court granted defendant Pioneer's motionfor summary disposition under MCR 2.116(C)(10), holdingthat it was not liable for PIP benefits under the plain termsof the insurance policy. The trial court also granted defendantState Farm's motion for summary disposition under MCR2.116(C)(10), holding that it was not liable for PIP benefitsbecause plaintiff failed to provide notice to the ACF withinone year of the incident.

We review de novo a grant or denial of summary dispositionunder MCR 2.116(C)(10). Maiden v. Rozwood, 461 Mich.109, 118; 597 NW2d 817 (1999). For a(C)(10) motion,the trial court must consider the “affidavits, pleadings,depositions, admissions, and other evidence submitted bythe parties, MCR 2.116(G)(5), in the light most favorableto the party opposing the motion.” Id. at 120. “Where theproffered evidence fails to establish a genuine issue regardingany material fact, the moving party is entitled to judgment asa matter of law.” Id. “A genuine issue of material fact existswhen the record, giving the benefit of reasonable doubt to theopposing party, leaves open an issue upon which reasonableminds might differ.” West v. GMC, 469 Mich. 177, 183; 665NW2d 468 (2003). Statutory interpretation also presents aquestion of law reviewed de novo. Hoffman v. Boonsiri, 290Mich.App 34, 39; 801 NW2d 385 (2010).

*2 Plaintiff first argues that the trial court erroneously heldthat defendant State Farm was not liable for PIP benefitsbecause she failed to provide notice to the ACF within oneyear of the incident. Plaintiff contends that her notice to theACF was timely despite the fact that the notice was provided22 months after the incident, in apparent violation of MCL500.3145. We disagree.

MCL 500.3145 provides:

(1) An action for recovery of personal protection insurancebenefits payable under this chapter for accidental bodily

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injury may not be commenced later than 1 year afterthe date of the accident causing the injury unless writtennotice of injury as provided herein has been given to theinsurer within 1 year after the accident or unless the insurerhas previously made a payment of personal protectioninsurance benefits for the injury. If the notice has beengiven or a payment has been made, the action may becommenced at any time within 1 year after the most recentallowable expense, work loss or survivor's loss has beenincurred. However, the claimant may not recover benefitsfor any portion of the loss incurred more than 1 year beforethe date on which the action was commenced. The noticeof injury required by this subsection may be given to theinsurer or any of its authorized agents by a person claimingto be entitled to benefits therefor, or by someone in hisbehalf. The notice shall give the name and address of theclaimant and indicate in ordinary language the name of theperson injured and the time, place and nature of his injury.

(2) An action for recovery of property protection insurancebenefits shall not be commenced later than 1 year after theaccident.

This statute provides two separate rules: the “one-year-backrule” and the one-year notice provision. The term “one-year-back rule” is regularly used in Michigan courts. Seee.g., Henry Ford Health Sys v. Titan Ins Co, 275 Mich.App643, 646; 741 NW2d 393 (2007). The term “one-year noticeprovision” will be used to refer to the statutory one-yearlimitation period. Goethals v. Farm Bureau Ins, 471 Mich.892; 688 NW2d 78 (2004). The one-year-back rule “precludesan action to recover benefits for any portion of a loss incurredmore than one year before the date on which the action wascommenced.” Henry Ford Health Sys, 275 Mich.App at 646.The one-year notice provision completely bars any action torecover benefits if notice is not provided to the insurer withinone year of the accident. Goethals, 471 Mich. at 892.

At the time relevant to this case, MCL 500.3174 provided, inrelevant part:

A person claiming through an assignedclaims plan shall notify the facilityof his claim within the time thatwould have been allowed for filingan action for personal protectioninsurance benefits if identifiablecoverage applicable to the claim had

been in effect.... 1

1 2012 PA 204 amended this statute, but the amendments

are minor and do not relate to the issues in this case.

MCL 500.3174 and MCL 500.3145(1), when read together,provide that a claimant must provide notice to the ACF withinone year of the accident. See, e.g., Bronson Methodist Hospv. Allstate Ins Co, 286 Mich.App 219, 225–226; 779 NW2d304 (2009) (identifying MCL 500.3145 as applying to ACFclaims). If the claimant fails to provide notice to the ACFwithin one year of the accident, the claimant cannot maintainan action for PIP benefits. See, generally, id.; see also Dolsonv. Secretary of State, 83 Mich.App 596, 598, 600; 269 NW2d239 (1978). In other words, the ACF is effectively placed inthe same position as a private insurer, so the one-year noticeprovision applies with equal force to private insurers and theACF. See, generally, id. at 600.

*3 Here, it is not disputed that plaintiff failed to providenotice to the ACF within one year of the incident. Inparticular, plaintiff provided notice to the ACF in June 2010,and the incident occurred in August 2008. This is a differenceof about 22 months. Thus, plaintiff's claim for no-fault PIPbenefits is barred by the one-year notice provision of MCL500.3145. Goethals, 471 Mich. at 892.

Plaintiff asserts that the one-year notice provision shouldbe tolled because she provided notice to a different insurer(defendant Pioneer) within one year of the incident. In supportof this assertion, plaintiff identifies a 1981 Attorney Generalopinion: OAG, 1981, No 6016 (December 1, 1981). Wefirst note that Attorney General opinions are not bindingon this Court. Lysogorski v. Bridgeport Twp, 256 Mich.App297, 301; 662 NW2d 108 (2003). More importantly, theAttorney General opinion identified by plaintiff addressesthe one-year-back rule, not the one-year notice provisionat issue in this case. In addition, the Attorney General inthat opinion relied on this Court's decision in Richards v.

American Fellowship Mut Ins Co, 84 Mich.App 629; 270NW2d 670 (1978). However, Richards was overruled byDevillers v. Auto Club Ins Ass'n, 473 Mich. 562; 702 NW2d539 (2005). For these reasons, the Attorney General opiniondoes not control the outcome of this case.

The facts of this case are similar to the facts of Allen v.Farm Bureau Ins Co, 210 Mich.App 591; 534 NW2d 177(1995). In Allen, the plaintiff could not identify a privateinsurer responsible for no-fault benefits, so he provided noticeto the ACF and commenced a lawsuit within one year ofhis accident. Id. at 593. After the one-year notice period had

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expired, however, the insurer-assignee of the ACF identifieda private insurer that was responsible for no-fault benefits andplaintiff added the private insurer to his lawsuit for wage-lossbenefits. Id. at 593–594. The trial court ultimately dismissedthe plaintiff's action against the private insurer because theplaintiff had not provided notice to the private insurer withinone year of the accident. See id. at 599. This Court affirmed.Id. at 599–600. The Allen Court agreed with the ultimateholding of Hunt v. Citizens Ins Co, 183 Mich.App 660; 455

NW2d 384 (1990), 2 in which the panel concluded that “theperiod of limitation in [MCL 500.3145(1) ] was not tolledwhere ... the injured party filed a claim through the [ACF]of the no-fault act within the one-year limitation period,but failed to notify the higher priority insurer within thelimitation period.” Allen, 210 Mich.App at 599, citing Hunt,183 Mich.App at 666.

2 The Allen Court disagreed with other aspects of Hunt.

The only distinction between Allen and the instant case isthat the plaintiff in Allen provided timely notice to the ACFand untimely notice to the private insurer, whereas plaintiffhere provided timely notice to a private insurer but untimelynotice to the ACF. However, this is a distinction without adifference because the ACF is entitled to the same one-yearnotice as a private insurer. See, e.g., Bronson Methodist Hosp,286 Mich.App at 225–226. Accordingly, we affirm the trialcourt's grant of summary disposition with respect to defendantState Farm.

*4 Next, plaintiff argues that the trial court erroneously heldthat there was no genuine issue of material fact with respectto whether she was a “named insured” of defendant Pioneer.Plaintiff contends that she was entitled to PIP and uninsuredmotorist (UM) benefits under the terms of the insurancepolicy. We disagree.

In Michigan, an “owner or registrant of a motor vehiclerequired to be registered in this state shall maintainsecurity for payment of benefits under personal protectioninsurance[.]” MCL 500.3101(1). Under MCL 500.3114(1),“a personal protection insurance policy described in section3101(1) applies to accidental bodily injury to the personnamed in the policy, the person's spouse, and a relativeof either domiciled in the same household, if the injuryarises from a motor vehicle accident.” In other words, MCL500.3114(1) requires an insurer to provide PIP benefits tothe “named insured,” the spouse of the named insured, andhousehold relatives of the named insured. See Dobbelaere v.

Auto–Owners Ins Co, 275 Mich.App 527, 532; 740 NW2d503 (2007).

Unambiguous provisions in an insurance contract must beenforced as written. See Rory v. Continental Ins Co, 473Mich. 457, 468–470; 703 NW2d 23 (2005). “[M]erely listinga person as a designated driver on a no-fault policy doesnot make the person a ‘named insured.’ “ Harwood v. Auto–Owners Ins Co, 211 Mich.App 249, 253; 535 NW2d 207(1995). To determine whether a person is a “named insured,”a court must examine the language of the insurance policy.See, e.g., id. at 252–254. Similarly, to determine whethera person is entitled to UM benefits, a court must examinethe language of the insurance policy. Klida v. Braman, 278Mich.App 60, 62; 748 NW2d 244 (2008).

In this case, the insurance policy was consistent with statelaw, specifying that a person was entitled to PIP benefits ifthe person was the named insured, the spouse of the namedinsured, or a relative domiciled in the same household as

the named insured. 3 In addition, while UM benefits are notrequired by state law, id., the insurance contract provided thata person was entitled to UM benefits to the same extent thata person was entitled to PIP benefits.

3 The insurance contract provided that defendant Pioneer

is liable for PIP benefits for a “named insured” or

“family member” of a named insured. The insurance

contract defined “family member” as a “resident of the

same household” who is related to the named insured

by “blood, marriage or adoption.” Thus, it appears that

the term “family member” was essentially equivalent to

“a relative ... domiciled in the same household” as the

named insured.

The policy provided that plaintiff's then-fiancé was the“named insured.” Plaintiff was not a spouse of her then-fiancé, nor was plaintiff related to her then-fiancé by blood,marriage, or adoption. Therefore, plaintiff was not entitled toPIP or UM benefits under the plain terms of the insurancecontract, and defendant Pioneer was not obligated to pay thesebenefits to plaintiff. The trial court correctly reached thisresult.

Plaintiff contends that documentary exhibits presented tothe trial court established a question of fact with respect

to whether she was a named insured. 4 However, plaintiffprovides no support for her contention that documents createdafter an accident that do not purport to specifically andretroactively alter the insurance policy by adding a named

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insured can somehow confer “named insured” status incontradiction of the plain language of the insurance contract.In fact, governing case law suggests the opposite: whethera person is a “named insured” is determined entirely byreference to the insurance contract. Harwood, 211 Mich.Appat 252–254. We therefore conclude that the trial courtcorrectly granted defendant Pioneer's motion for summarydisposition.

4 For example, a “cancellation request/policy release”

form lists “John Heist & Jackie Visner” in the box labeled

“insured name and address.”

*5 Plaintiff lastly argues that defendant Pioneer should beprohibited from terminating PIP benefits under the doctrineof equitable estoppel. Plaintiff asserts that she detrimentallyrelied on defendant Pioneer's payments in not providingnotice to the ACF within one year of the incident.

We first note that this issue was not raised below, so it is notpreserved for appellate review. See Walters v. Nadell, 481Mich. 377, 387; 751 NW2d 431 (2008). In any event, thisCourt has previously held under a materially similar factualscenario that an estoppel argument is meritless if the claimanthad access to the same set of facts as the insurer. Sisk–Rathburn v. Farm Bureau Gen Ins Co, 279 Mich.App 425,428–430; 760 NW2d 878 (2008). Plaintiff has not claimedthat she did not have access to the insurance policy thatprovided the means to determine that she was not a “namedinsured.” Because plaintiff had the same access to the relevantfacts as defendant Pioneer, the estoppel argument fails. Id.

Affirmed.

All Citations

Not Reported in N.W.2d, 2012 WL 6097315

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