McCune v Allstate Ins Co (COA – UNP 1/8/2019; RB #3833)


Michigan Court of Appeals; Docket # 340476; Unpublished
Judges Murray, Shapiro, and Riordan; per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion; Link to Concurrence 

Obligation of the Assigned Claims Facility to Make an Initial Determination of Claimant’s Eligibility

Actual fraud

In this unanimous unpublished per curiam opinion, the Court of Appeals affirmed summary disposition for Defendant Allstate Insurance Company (“Allstate”) on the basis that there was irrefutable evidence that Plaintiff Emmanuel McCune (“McCune”) had made false and material statements on his application for benefits with the Michigan Automobile Insurance Placement Facility (“MAIPF”).

McCune was hit by a motor vehicle while he was riding his bicycle. The driver of the vehicle was never identified, and McCune filed an application for PIP benefits with MAIPF. On the application, McCune indicated that he was knocked unconscious by the accident and he indicated that he had not suffered a serious injury prior to the accident. The Michigan Assigned Claims Plan (“MACP”) assigned McCune’s case to Allstate and Allstate refused to pay the benefits. McCune brought an action against Allstate to recover benefits and Allstate alleged fraud by McCune. Allstate pointed to the testimony of EMS workers, State of Michigan crash reports, and McCune’s caregiver to show that McCune was not knocked unconscious at the scene of the accident. Also, Allstate pointed to a 2014 bus accident McCune was involved in further demonstrating his fraud. The trial court agreed and granted summary disposition for Allstate because McCune had unquestionably committed fraud.

The Court of Appeals upheld the trial court’s grant of summary disposition because it also found that McCune had unquestionably committed fraud. The Court cited to Candler v Farm Bureau Mut Ins Co of Mich, 321 Mich App 772, 777; 910 NW2d 666 (2017) and explained that there are five elements of fraud for a MAIPF claim:

“(1) the person presents or causes to be presented an oral or written statement, (2) the statement is part of or in support of a claim for no-fault benefits, and (3) the claim for benefits was submitted to the MAIPF. Further, (4) the person must have known that the statement contained false information, and (5) the statement concerned a fact or thing material to the claim.”

McCune argued that fraud in a MAIPF fraud claim required intent because MCL 500.3173a provided the statutory basis for denial based on fraud and it referenced MCL 500.4503, which does require intent for fraud. The Court rejected this analysis arguing that the only elements required for fraud were those listed in MCL 500.3173a and any reference to MCL 500.4503 did not add a requirement of intent.[1] The Court then explained that McCune knowingly misrepresented the circumstances of the accident. The testimony of EMS workers, the crash report, and McCune’s caregiver all indicated that McCune was not knocked unconscious and walked home after the accident where he received medical treatment. McCune argued that this was immaterial because it involved the location of treatment and not the injuries. The Court disagreed and explained that his misstatement related to the severity of the accident, not just the location of treatment. The Court then found that McCune knowing omitted his 2014 bus accident. McCune had filed for Social Security benefits related to the bus accident and the Court found that his omission was knowing and material. The Court found this to be material because McCune allegedly suffered similarly injuries in the 2014 bus accident to the injuries for which he was seeking benefits. The Court rejected McCune’s argument that this was a simple mistake. Thus, the Court found that McCune committed fraud and he was barred from recovery of benefits from Allstate.

“Because we have concluded that plaintiff’s misrepresentations regarding the circumstances of the accident and his preexisting injuries constitute fraudulent insurance acts, and no reasonable jury could conclude otherwise, we need not address the trial court’s conclusions with regard to plaintiff’s address or the disabilities he allegedly suffered as a result of the November 2015 accident. Plaintiff is ineligible for benefits under MCL 500.3173a, and the trial court properly granted summary disposition. Affirmed.”

The Court thus upheld the trial court’s grant of summary disposition for Allstate.

Concurrence by Judge Riordan:
Judge Riordan concurred in the result but disagreed with the majority’s interpretation of fraud. Judge Riordan argued that intent was required for fraud in a MAIPF claim because MCL 500.3173a references MCL 500.4503, which does require intent for fraud and both statutes deal with the issue of fraud. Judge Riordan also explained that fraud has traditionally required intent and the language of 500.3173a, which requires the fraudster to “knowingly” make a false statement, does not change that requirement (even without the reference to MCL 500.4503

Judge Riordan also argued that McCune’s alleged false statements regarding the circumstances of the accident were immaterial and failed to show an intent to defraud. McCune’s statement that he was knocked unconscious could have been confusion following a traumatic event and was of very little significance to his injuries. Judge Riordan argued that the fraud provision was designed to find real fraud and not to create a “gotcha” incentive for insurers to deny coverage based on innocent mistakes.

Ultimately, Judge Riordan agreed with the majority that McCune did commit fraud regarding the 2014 bus accident and so he concurred with the result. 

[1] Judge Riordan disagreed with this assessment of fraud and did not join the opinion largely do to this interpretation.