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Volume XXVI, No. 27, November 25, 2014
From the Law Offices of Garan Lucow Miller, P.C.
From the Editor: Sarah Nadeau
COURT OF APPEALS CONFIRMS ASSIGNED CLAIMS INSURER’S RIGHT
TO FULL REIMBURSEMENT FROM PRIORITY INSURER
By Daniel S. Saylor
When circumstances prompt a motor vehicle accident victim to submit his or her claim for no-fault personal injury benefits to the Michigan Assigned Claims Plan, MCL 500.3171, et seq., the insurer receiving the assignment is obligated to process the claim promptly and pay benefits as warranted. When another insurer is identified as having coverage responsibility for the loss, the established procedure is that, while benefits will continue to be paid by the MACP-assigned insurer, it is then entitled “to reimbursement from the defaulting insurers to the extent of their financial responsibility.” MCL 500.3172(1); Spencer v Citizens Ins Co, 239 Mich App 291, 304-308 (2000).
The question unresolved until now is whether the “defaulting insurer” can defend the reimbursement claim on grounds that benefits were overpaid by the MACP insurer, or indeed, should not have been paid at all. According to the Court of Appeals in a newly published opinion in Williams v Enjoi Transportation Solutions, __ Mich App __ (No. 312872, October 9, 2014), the answer is “no.” In a claim for reimbursement against an insurer providing coverage for a loss, the MACP-assigned insurer is entitled to repayment in full, regardless of “whether [the injured claimant] truly was entitled to benefits.” Id., slip op, at 4.
The claim arose when Jake Williams, Jr., confined to a motorized “scooter” wheelchair, was being transported to his regular dialysis appointment in an Enjoi Transportation van. Williams remained on his scooter during the ride in the van, but whether the scooter was properly secured in the back of the van was a disputed fact: Williams claimed that the scooter never was secured, and that the driver kept “hitting corners” on the freeway, causing Williams to fall from the scooter and sustain injuries. The driver, on the other hand, insisted that he had properly secured the scooter and that Williams could have fallen as he did only if he purposefully unlatched himself and intentionally tried to hurt himself. There was thus a genuine dispute as to whether the claim involved “accidental bodily injury arising out of the … use of a motor vehicle as a motor vehicle,” MCL 500.3105(1), so as to trigger entitlement to no-fault PIP benefits.
Williams submitted his claim for no-fault benefits to the Assigned Claims Plan on the basis that he had no insurance of his own and apparently “no applicable insurance [could] be identified.” MCL 500.3172(1). The claim was assigned to Farm Bureau Insurance Company. The opinion does not disclose whether Farm Bureau disputed the validity of the claim to any degree. Benefits eventually were paid, however, upon which Farm Bureau filed an action for reimbursement, first against Enjoi Transportation (apparently on the mistaken premise that Enjoi was uninsured), then against American Guarantee and Liability Insurance Company, Enjoi’s insurer.
It was undisputed that American Guarantee was the insurer first in priority for covering the loss, and there was no dispute over the timeliness of Farm Bureau’s claim. Under the statute, therefore, American Guarantee was obligated to reimburse the assigned insurer “to the extent of [American Guarantee’s] financial responsibility.” MCL 500.3172(1). Relying on the uncertain circumstances in which the claimant fell from the scooter, American Guarantee disputed “whether Williams’ injuries actually arose out of a motor vehicle accident and regarding whether the injury was accidental.” Slip op, at 3. Affirming summary disposition in favor of Farm Bureau, the Court of Appeals held that such concerns were no longer relevant.
Since the assigned claims insurer’s entitlement to “reimbursement” is granted by statute, the Court of Appeals said, it is not premised on “subrogation” theory, in which the right to recover from the defendant insurer would be the same as that which the injured claimant himself would have possessed. Instead, “[b]ased upon the plain meaning of ‘reimburse,’ an assigned claims insurer … is entitled to repayment for the expense or loss incurred, not subject to other limitations that may apply to a direct suit from the claimant.” Slip op, at 4.
The right of recovery, in other words, is defined not by the scope of the claim the injured party could assert, but by the express terms of the statute. In this regard, American Guarantee apparently argued that the statute itself limited its liability, relying on the provision’s last phrase: “[The assigned claims insurer] is entitled to reimbursement from the defaulting insurers to the extent of their financial responsibility.” Slip op, at 4 (quoting §3172(1)) (emphasis added). The Court of Appeals rejected this argument in a one sentence response: “Here, American Guarantee’s ‘financial responsibility’ is necessarily tied to the manner in which Farm Bureau, as the initial adjusting insurer, adjusted the claim.” Id.
The Court’s ultimate holding is clear, even if its analysis is less so. Once it was determined that American Guarantee provided applicable coverage for the loss, its obligation to reimburse the assigned insurer’s benefit payments in full was fixed. “The strength of Williams’s underlying claim for no-fault benefits was no longer at issue.” Slip op, at 5. As the assigned insurer, Farm Bureau was obligated by statute to adjust the claim. Having done so, Farm Bureau became “entitled to be reimbursed for the amounts paid, even assuming that a genuine issue of material fact existed regarding whether Williams truly was entitled to benefits.” Id., at 4.
An application for leave to appeal the decision to the Michigan Supreme Court reportedly has been filed.
Welcome to Garan Lucow Miller….Courtney Krause
We are pleased to announce that Courtney Krause has joined
Garan Lucow Miller, P.C., in our Troy Office.
Courtney has been in the practice of law since 2006 and will be working on the Real Estate and Bankruptcy Teams.
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