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Wyoming Chiropractic Health Clinic, PC v Falls Lake Ins Co (COA – UNP 12/22/2022; RB #4518)   


Michigan Court of Appeals; Docket #359370; Unpublished  
Judges Hood, Swartzle, and Redford; Per Curiam 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Not Applicable

Cancellation and Rescission of Insurance Policies

In this unanimous, unpublished, per curiam decision, the Court of Appeals affirmed the trial court’s denial of Defendant Falls Lake Insurance Company’s (“Falls Lake”) motion for summary disposition, in which Falls Lake sought to dismiss Plaintiff Wyoming Chiropractic Health Clinic, PC’s (“Wyoming”) action for unpaid no-fault PIP benefits against it.  The Court of Appeals held that a question of fact existed as to whether Betty Austin—Falls Lake’s insured/Wyoming’s patient—committed actionable fraud when she provided inaccurate answers on her application for no-fault coverage with Falls Lake, such as would allow Falls Lake to rescind her policy and deny Wyoming’s claims thereunder.

Betty Austin was injured in a motor vehicle accident , and received treatment for her injuries from Wyoming.  Wyoming sought PIP benefits related to its treatment to Austin from Falls Lake, Austin’s no-fault insurer, but Falls Lake denied Wyoming’s claims, asserting that Austin made material misrepresentations on her original application for coverage and that Falls Lake was therefore entitled to rescind the policy for fraud.  Specifically, Falls Lake alleged that Austin misrepresented the number of people who lived at her residence, the number of vehicles at her residence, and her driving history.  Falls Lake moved for summary disposition based on these misrepresentations in Wyoming’s resultant action against it, but the trial court denied Falls Lake’s motion.

The Court of Appeals affirmed the trial court’s denial of Falls Lake’s motion for summary disposition, holding that a question of fact existed as to whether Austin had committed actionable fraud, such as would entitle Falls Lake to rescind her policy.  The Court noted that, in order to establish such fraud, Falls Lake has the burden of establishing the following five facts:

‘(1) [plaintiff] made a material misrepresentation; (2) it was false; (3) when [plaintiff] made it, [she] knew it was false, or else made it recklessly, without any knowledge of its truth, and as a positive assertion; (4) [she] made it with the intention that it should be acted on by [defendant]; (5) [defendant] acted in reliance on it; and (6) [defendant] thereby suffered injury.’ 

In this case, Falls Lake failed to present any evidence that Austin made the misrepresentations with the intent that Falls Lake act on them.  Furthermore, the Court found a question of fact as to whether Austin’s misrepresentations were material and whether Falls Lake suffered an injury therefrom.  The only evidence Falls Lake submitted in that regard was a one-word email response, “No,” to the question, “would you have written the policy knowing of the unlisted vehicles?”  That response, alone, was not sufficient to establish that Falls Lake would not have offered Austin coverage at the same premium had it known that her husband also had two vehicles, that her son lived with her, and that she had a previously suspended license.

“Ordinarily, defendant stating that it would not have issued the policy given its underwriting guidelines would amount to a demonstration of injury since the actual risk of providing the insurance was not fully contemplated. See id. The evidence that was submitted by defendant, however, does not substantiate that it would not have offered Austin a policy, at that premium, if it had known that her son was living with her, or that her husband owned other uninsured vehicles, or that her license was suspended. Simply put, defendant’s underwriting employee emailing ‘no’ in response to an email that asked ‘would you have written the policy knowing of the unlisted vehicles’ does not substantiate what defendant’s underwriting guidelines are and whether the misrepresentations were material, even if that employee would not have written the policy. Furthermore, defendant has not offered anything to confirm that Austin did know, or should have known, that her license had previously been suspended and, thus, misrepresented that her license was in good standing during her insurance application. 

This is not to state that defendant cannot succeed on a defense of rescission in a subsequent motion for summary disposition under MCR 2.116(C)(10) or at trial. It seems clear that Austin made misrepresentations in her application for insurance from defendant, but defendant has not yet substantiated that those misrepresentations were material or that Austin knew or should have known about her license being suspended.” 

Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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