Michigan Court of Appeals; Docket #354004; Unpublished
Judges Stephens, Sawyer, and Servitto; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Requirement That Benefits Were Unreasonably Delayed or Denied [§3148(1)]
Case Evaluation – Accept/Reject in PIP Cases
In this unanimous unpublished per curiam decision, the Court of Appeals reversed the trial court’s decision to not award 500.3148 attorney fees to Plaintiff Emmanuel Mosley following a jury trial in his first-party action against Defendant Integon National Insurance Company (“Integon”), but affirmed the trial court’s award of case evaluation sanctions against Mosley. Even though Mosley prevailed on only a fraction of his claim for unpaid no-fault PIP benefits at trial, the Court of Appeals held that he was still entitled to attorney fees under MCL 500.3148 for the portion of the claim he did prevail on. With respect to the trial court’s award of case evaluation sanctions, the Court of Appeals held that the trial court did not err in awarding said sanctions even though Integon paid a $61,000 Medicare lien the day before trial, which Mosley argued unfairly reduced the amount of damages he could be awarded and effectively “ensured that [Integon] would be awarded case evaluation sanctions.” While the Court of Appeals acknowledged an appeal to Mosley’s argument, it noted that this was not the case to consider the utility of imposing a rule to prevent insurers from such legal maneuvering, because the Medicaid lien amount was not actually submitted to the case evaluation panel, nor was it included in the case evaluation panel’s award.
Mosley was injured in a motor vehicle collision and sought payment of certain collision-related medical expenses from Integon. Integon disputed the amount it was obligated to pay, prompting Mosley to file the underlying first-party action seeking more than $137,000 in what he claimed were unpaid mileage and prescription expenses, replacement services benefits, attendant care expenses, and wage loss benefits to which he was entitled. The parties underwent case evaluation, which resulted in an award of $50,000, which both parties rejected. The case proceeded to trial, the day before which Integon paid a $61,000 Medicare lien, and Mosley was ultimately awarded $27,806.24. Because this figure was nearly half the case evaluation award, the trial court awarded case evaluation sanctions against Mosley. The trial court also declined to award Mosley attorney fees under MCL 500.3148, finding that Integon’s initial refusal to pay Mosley’s PIP benefits was not unreasonable.
The Court of Appeals reversed the trial court’s ruling that Mosley was not entitled to attorney fees for the portion of his claim that he prevailed on at trial. In finding that Integon’s intitial refusal to pay Mosley’s PIP benefits was not unreasonable, the trial court agreed with Integon’s argument that, because Mosley’s “demand at case evaluation for more than $124,000 in attendant care payments, covering a nine-month period, was at odds with medical testimony that [Mosley] only required three-and-one-half months of attendant care,” his claim “justified additional investigation,” i.e. delayed payment. The Court of Appeals noted, however, that even if there is a reasonable dispute as to some portion of the claim, any portion not in dispute must be paid within 30 days of receipt of reasonable proof of loss. reaso In Moore v Secura Ins, 482 Mich 507 (2008), the Supreme Court stated that “ ‘the claimant shoulders the initial burden to supply reasonable proof of her entire claim, or reasonable proof for some portion thereof,’ ” and then “went on to conclude that a claimant would be entitled to attorney fees for the portion of the claim that was overdue.” Thus, even though Mosley did not prevail on all or even most of his claim, he was entitled to attorney fees for any portion of the amount he did prevail on, which was comprised of unpaid and overdue benefits, and for which he submitted reasonable proof of loss.
“Thus, under Moore, it would seem that plaintiff is entitled to an attorney fee award for any attendant care and replacement services benefits that the trial court awarded at trial and for which defendant could have determined, at the time of the case evaluation, were, in fact, due and owing and not paid within 30 days. In short, the trial court’s conclusions that plaintiff was entitled to interest from the date of case evaluation on the amounts awarded at trial because defendant was at that time aware of the outstanding claim is at odds with its later conclusion that the payment was not overdue and the delay in payment was not unreasonable. Accordingly, we reverse the trial court’s denial of attorney fees and remand the matter to the trial court for reconsideration of the issue consistent with this opinion.”
The Court of Appeals rejected Mosley’s argument regarding case evaluation sanctions, however. Mosley argued that the trial court erred in awarding case evaluation sanctions in favor of Integon because Integon paid a $61,000 Medicare lien the day before trial, effectively ensuring that Mosley’s award at trial would not be large enough to avoid the imposition of case evaluation sanctions against him. The Court noted that “there is an appeal to the argument that a defendant should not be able to engage in a maneuver to receive case evaluation sanctions by paying a portion of the claim after the case evaluation award is made and before trial begins,” but that “the facts would not support the application of such a rule in this case.” That is because, in this case, the Medicare lien was not actually submitted to the case evaluation panel, nor was it clear if Mosley even included a claim for the Medicare lien amount in his complaint. Moreover, the Court noted that the plain language of the court rule regarding case evaluation sanctions simply “does not . . . provide for an adjustment for the pretrial payment of a portion of the claim.”
“First, it is not at clear to us whether plaintiff had included a claim for the amount of the Medicaid lien in the complaint; plaintiff plead the claim in very general terms. More to the point, it does seem clear that the Medicaid lien amount was never submitted to the case evaluation panel . . .
It is worth noting that these figures are exactly the same as appears the parties’ joint final pretrial order, with the exception that, under plaintiff’s claims, that document also now includes a line for ‘potential Medicaid lien.’ It is clear that the Medicaid lien was never included in the case evaluation award and, therefore, there would be no basis for including it in the verdict in determining case evaluation sanctions.
Second, the language of the court rule itself does not support an argument that the verdict may be adjusted for amounts paid before trial . . .
This subrule does not, however, provide for an adjustment for the pretrial payment of a portion of the claim. As we said at the outset of the analysis of this issue, there is an appeal to the argument that a defendant should not be able to engage in a maneuver to receive case evaluations sanctions by paying a portion of the claim after the case evaluation award is made and before trial begins. But, for the reasons stated above, the facts would not support the application of such a rule in this case. Moreover, it would be for our Supreme Court to create such a rule, not for this Court to read such a rule into MCR 2.403(O).”
The Court of Appeals thus remanded the case back to the trial court for determination of appropriate attorney fees and to “then address whether the verdict should be adjusted for purposes of case evaluation sanctions by adding the amount of the attorney fee award,” noting in a footnote, however, that “[t]he trial court need not address this question if the amount of the attorney fee award would not be sufficient, if added to the verdict, to change the determination that defendant is entitled to case evaluation sanctions.”