Michigan Court of Appeals; Docket #357070; Published
Judges Shapiro, Rich, and Garrett; Authored
Official Michigan Reporter Citation: Forthcoming; Link to Opinion
Fraudulent Insurance Acts [§3173a]
Persons Disqualified from Receiving Benefits Through the Assigned Claims Facility [§3173]
In this unanimous, published decision authored by Judge Garrett, the Court of Appeals reversed the trial court’s summary disposition order dismissing Plaintiff Estate of Charles Williamson’s first-party action against Defendant AAA of Michigan (“AAA”). The Court of Appeals held that AAA could not deny a claim assigned to it by the Michigan Automobile Insurance Placement Facility (MAIPF) based on fraudulent statement offered during litigation, because the term ‘fraudulent insurance act’ in MCL 500.3173a “applies only to statements offered during the prelitigation insurance claims process and not to those offered during litigation.” The specific fraudulent statement(s) at issue were actually replacement service and attendant care forms produced in response to a AAA discovery request. The Court held that these forms were not ‘claims’ for no-fault PIP benefits, as that term is understood in MCL 500.3173a. Rather, the ‘claim’ for purposes of MCL 500.3173a was only Williamson’s initial demand for PIP coverage.
Charles Williamson was injured in a motor vehicle accident in 2018, after which he applied to the MAIPF for no-fault PIP benefits. The MAIPF assigned his claim to AAA, but AAA refused to pay his benefits, prompting Williamson to file suit. While his suit was pending, Williamson died as a result of an unrelated accident in 2019. His daughters were appointed as personal representatives of his estate and acquired letters of authority to proceed with his lawsuit against AAA, but during discovery, AAA alleged that they submitted fraudulent replacement services and attendant care forms in response to its interrogatories. AAA thus moved for summary disposition, arguing that the Estate had committed a “fraudulent insurance act” in support of a claim for PIP benefits under MCL 500.3173a(4), and was therefore ineligible from benefits altogether. The trial court agreed, granting AAA’s motion.
The Court of Appeals reversed the trial court’s summary disposition order, holding that the replacement services and attendant care forms were not “claims,” as that term is understood in MCL 500.3173a. Rather, “claim” is to be defined for purposes of MCL 500.3173a as only the initial demand for PIP coverage. The replacement services and attendant care forms submitted by the Estate were mere responses to discovery requests, and under Haydaw v Farm Bureau Ins Co, 332 Mich App 719 (2020), a fraudulent statement made after litigation has ensued cannot form the basis of a wholesale denial of PIP coverage.
“As previously noted, MCL 500.3173a(4) exclusively uses the word ‘claim’ to describe a fraudulent insurance act that bars an individual from receiving PIP benefits through the MACP. Here, the Estate argues that its submission of inaccurate service forms during discovery was not ‘in support of a claim to the [MAIPF], or to an insurer to which the claim is assigned under the assigned claims plan.’ MCL 500.3173a(4). We agree. False statements submitted during discovery, after an action for recovery has been filed, are not statements offered in support of a claim to the MAIPF or the assigned insurer. The no-fault act recognizes a distinction between the prelitigation insurance claims process and the initiation of litigation through an action for recovery. Had the Legislature intended for MCL 500.3173a(4) to apply to statements made during litigation, the Legislature would have drafted the statute differently to apply, for example, to statements offered “in support of an action for recovery.” Because the Legislature did not do so, we give ‘claim’ its intended meaning.
. . .
Just like in Haydaw, we hold that the fraudulent insurance act provision in MCL 500.3173a does not apply to statements made after litigation has ensued. We recognize, as AAA argues, that Haydaw involved a fraud provision in a no-fault insurance policy, whereas this case involves a claim assigned to an insurer under the MACP and is governed exclusively by statute. Nevertheless, much of the rationale from Haydaw is persuasive to the circumstances before us, and most importantly, applying Haydaw’s holding in this context is consistent with the plain language of MCL 500.3173a(4).
Here, the attendant care and replacement service forms were not submitted in support of Williamson’s claim for no-fault benefits that he submitted to the MAIPF or to AAA. Rather, the forms were disclosed during discovery—after the claim was submitted to the MAIPF, assigned to AAA, denied by AAA, and litigation had ensued. MCL 500.3173a(4) asks whether the allegedly false statement was ‘part of or in support of a claim to the [MAIPF], or to an insurer to which the claim is assigned under the assigned claims plan.’ But a false statement made in a filing submitted during discovery is not a statement made to the MAIPF or to an assigned insurer. Rather, a false statement made during discovery is made to the court. See Haydaw, 332 Mich App at 728 (‘[A]n insured’s statements during discovery are made with the intention that the trier of fact, not the insurer, will act on them.’). That is why the court rules authorize courts to sanction discovery violations under specific circumstances. See MCR 2.313. Thus, an insurer may have recourse for a false statement made during discovery, but it is not dismissal of the claim under MCL 500.3173a.”