Volume XXII, No. 32 December 16, 2010 LAW FAX MICHIGAN LAW – BLUE | INDIANA LAW – RED www.garanlucow.com

Garan Lucow Miller, P.C. 1111 West Long Lake Road, Suite 300 Troy, Michigan 48098 248.641.7600 From the Co-Editors James L. Borin & Simeon R. Orlowski


In Ruffin v Auto Club Insurance Company, an unpublished Court of Appeals’ decision (#292687), plaintiff, a minor, brought suit for payment of medical expenses incurred for treatment at Beaumont Hospital following a motor vehicle accident. Specifically, Plaintiff’s guardian submitted a claim for no-fault benefits to the Assigned Claims Facility and also hired counsel to assist with identifying any applicable policies that might provide coverage. Counsel identified two policies, one of which was issued though Defendant, Auto Club Insurance Association (ACIA), which provided coverage. Following an investigation, ACIA approved the claim for medical expenses and issued a check jointly payable to plaintiff’s counsel and to Beaumont Hospital. Pursuant to a contingency fee agreement, plaintiff’s counsel claimed a right to one-third of the amount paid. The trial court awarded counsel a fee of $15,600 from the payments issued to Beaumont, which represented 52 hours at $300 per hour.

2Quantum meruit is a Latin phrase meaning “what one has earned.” In the context of the instant case, attorney fees were awarded on the basis of the actual time involved.

3“Common fund exception” applies when a prevailing party creates or protects a common fund that benefits himself and others. Nemeth v Abonmarche Dev, Inc, 457 Mich 16, 38 (1998). It is generally applicable in class action suits and shareholder derivative actions.

Section 3148 of the Michigan No Fault Act provides in relevant part: 1) An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue. The attorney’s fee shall be a charge against the insurer in addition to the benefits recovered, if the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.

In reversing the trial court’s grant of attorney fees, the Court of Appeals found that the award was based upon quantum meruit 2 and thus an abuse of discretion. The Court of Appeals distinguished the present case to those in which courts awarded attorney fees based upon MCL 500.3148 or the common-fund exception.3 For example, in the case of Aetna Cas & Surety Co v Starkey, 116 Mich App 640 (1982), the Court ruled that the insured’s counsel was entitled to an attorney fee pursuant to MCL 500.3148(1), on the basis that insurance benefits were overdue, the medical providers had submitted their bills to the insurer, which denied payment, and the medical providers relied upon counsel for payment of their bills. Similarly, in the recent case of Miller v Citizens Ins Co, ____ Mich App____(Docket No. 290522, issued May 13, 2010), the Court of Appeals found that the common fund exception supported awarding an attorney fee to an insured’s counsel where the medical provider relied upon plaintiff’s counsel’s efforts to obtain payment.

Instead, the Court of Appeals found the facts of the present case to be more closely aligned with Garcia v Butterworth Hosp, 226 Mich App 254 (1997), in which the Court found that plaintiff’s counsel’s efforts did not warrant an attorney fee award where plaintiff’s counsel filed suit, never served the complaint and the designated insurer reached an agreement for payment of the claim without the assistance of plaintiff’s counsel. Similar to Garcia, in the instant case, Advomas, a financial advocate, assisted both Beaumont and plaintiff in submitting a claim to the Assigned Claims Facility. Once coverage was found, Advomas wrote to plaintiff’s counsel and advised him that Beaumont did not require his services and would not pay his fee. Advomas continued to deal directly with ACIA and Beaumont submitted its bills directly to ACIA. Suit was eventually filed on behalf of plaintiff, however, same occurred near the time the payment of these bills were approved by Defendant, ACIA. The Court noted that the gravamen of the lawsuit was related to counsel’s claim for fees, and the claim against defendant ACIA was eventually dismissed. Accordingly, based upon these circumstances, the Court of Appeals found that plaintiff’s award of attorney fees was inappropriate.

Ruffin is an unpublished decision and, therefore, while the trial courts may find this decision influential, they are not required to follow its holding. The significance of Ruffin is that it holds that attorney fees awarded pursuant to MCL 500.3148 should not be imposed upon an insurer who 4Mr. Orlowski is a Partner in the Firm’s Troy Office and can be reached at (248)641-7600 or sorlowski@garanlucow.com timely submits payment of medical bills directly to a provider and where the assistance of plaintiff’s counsel played no role in obtaining payment on behalf of the provider and/or plaintiff.



In Jones & Henry Ford Health System (HFHS) v Farmers, an unpublished Court of Appeals decision (Doc. # 293206) issued on 11-23-10, the defendant Farmers appealed a Summary Disposition entered in favor of the intervening plaintiff, HFHS. The Court of Appeals affirmed the decision of the lower court.

The plaintiffs, Victoria Jones and Michael Johnson, were injured in a motor vehicle accident on 5-8-07. They filed their Complaint for no-fault benefits on 4-25-08.

On 2-25-09, HFHS filed a Motion to Intervene as a Plaintiff. HFHS sought to recover a medical bill of $15,316.75 for services provided on 5-9-07 to one of the injured plaintiffs. The trial court granted the Motion to Intervene in an Order dated 3-6-09. HFHS filed its Intervening Complaint on 4-6-09.

On 5-11-09, the defendant Farmers moved for Summary Disposition with respect to HFHS’ Intervening Complaint arguing that the one year back rule contained in 3145(1) barred HFHS from recovering any benefits for expenses incurred more than one year before 4-6-09, the day it filed its Intervening Complaint. In response, HFHS contended that for purposes of the one year back rule, “the action was commenced” when the plaintiffs filed their Complaint on 4-25-08. The trial court denied the defendant’s motion holding that the claim of HFHS is derivative of the claim of the plaintiff who was treated at HFHS. The court said that the HFHS claim relates back to the plaintiff’s claim. Farmers appealed and the Court of Appeals affirmed the trial court.

The court framed the issue: On what date does the one year back rule begin to run with regard to the health care provider – on the date the insured commenced the action or on the date the health care provider filed its Complaint after being permitted to intervene in that same action? The Court of Appeals answered that question in favor of HFHS. The one year back rule began to run on 4-25-08, the date that the plaintiffs commenced their action.

The Firm’s Estates, Probate and Elder Law practice group has published a weblog called the Michigan Probate and Estate Journal, found at http://www.michiganestatejournal.com. Articles are posted on a regular basis by members of the practice group. We encourage you to visit, read, and comment on the postings.