May 16, 2011
Where an automobile accident victim is so injured as to require the appointment of a conservator to manage his or her financial affairs, are all of the conservator’s fees covered by no-fault insurance’s PIP coverage, regardless of the nature of the particular service performed by the conservator? In May/Carroll v Auto Club Ins Assoc, __ Mich App __ (No. 292649, April 26, 2011), the Court of Appeals answered this question in favor of the claimant. According to the court’s published (and therefore binding) opinion, if the need for the conservatorship itself is caused by the accident-injuries, it follows that any services performed by the conservator are for the “care” of the injured person and thus are covered as “allowable expenses” under MCL 500.3107(1)(a).
Edward Carroll was seriously and permanently disabled in an automobile accident in 1982. For the next 26 years, Mr. Carroll’s wife took care of Edward, compensated by their insurer, ACIA, at a rate of $7,000 to $8,500 per month for her 24-hour per day attendant care services (slip opinion, p 1). Mrs. Carroll also managed the family’s financial affairs. When Mrs. Carroll passed away in 2008, a conservator, Alan May, was appointed to manage Edward’s financial affairs. When May presented his first accounting to the probate court and sought approval of approximately $7,000 in fees for his services, he claimed that ACIA was responsible for payment of his bill.
ACIA responded to the petition and, relying on Griffith v State Farm Mut Auto Ins Co, 472 Mich 521 (2005), contended that most of May’s services were not covered. Since it was undisputed that Carroll’s need for a conservator was directly caused by the injuries he sustained in a motor vehicle accident, ACIA conceded that any expenses incurred to initiate the conservatorship would be covered; but the vast amount of the services thereafter rendered by the conservator, ACIA maintained, were not for the “care, recovery, or rehabilitation” of the injured person but, rather, were for the protection and management of Carroll’s finances and assets.
The probate court agreed with ACIA, and held that only $99.00 of May’s fees were payable by the no-fault insurer; the balance was payable directly by the ward’s estate since the conservator’s services were not for Carroll’s “care,” as that statutory term was construed by the Supreme Court in Griffith.
In the conservator’s ensuing appeal, the arguments focused on whether the issue was controlled by Heinz v Auto Club Ins Assoc, 214 Mich App 195 (1995). That case involved the services of a guardian, whose appointment was necessitated due to the ward’s debilitating injuries suffered in an automobile accident. The insurer in Heinz broadly contended that no-fault PIP coverage is limited to medical and related expenses and thus did not extend to guardianship fees. The Heinz court rejected this proposition, and in sweeping language that gratuitously included conservator fees, held as follows:
In short, §3107(1)(a) provides for the payment of expenses incurred for the reasonably necessary services for an injured person’s care. It is clear to us that if a person is so seriously injured in an automobile accident that it is necessary to appoint a guardian and conservator for that person, the services performed by the guardian and conservator are reasonably necessary to provide for the person’s care. Therefore, they are allowable expenses under §3107.
Heinz, 214 Mich App at 198.
Fully relying on this passage, the conservator in May/Carroll argued that, since his appointment was necessitated by Carroll’s accident-injuries, it followed that all his services were covered as “allowable expenses” for the injured person’s “care, recovery or rehabilitation.” These services (charged at an hourly professional rate) included such tasks as paying Carroll’s bills, finding a renter or buyer for his residence, trying to sell Carroll’s car, and managing his bank accounts. In short, May contended, once it was shown that the conservatorship itself was accident-related, all the services performed by the conservator should be deemed for the “care” of the injured person.
ACIA’s position was that services performed for the protection and management of a person’s financial and property assets are not equivalent to services performed for the “care, recovery or rehabilitation” of the injured person. While the holding in Heinz might well apply to the services of a guardian (where, as a matter of statute, the principal role of a guardian is to provide for the “continuing care and supervision of the incapacitated individual” — MCL 700.5306, quoted in the May/Carroll, slip opinion, p 4), a conservator’s services are undertaken not to care for the injured person himself but to manage and protect his business affairs, property and finances.
Accordingly, ACIA argued, most of these services are more properly categorized as replacement services, which are compensable only to a limited extent under the No-Fault Act, §3107(1)(c) (covering expenses “reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he or she had not been injured, an injured person would have performed …”). ACIA maintained that Carroll, if healthy, would have managed his own bank accounts, bill payments and other financial affairs. The expense of having to compensate another person for doing so, due to his own incapacity, could thus be compensable under the very limited terms of §3107(1)(c) (up to $20 per day, and limited to the first 3 years post-accident), but in no event should such services come within §3107(1)(a)’s unlimited coverage of “allowable expenses … for an injured person’s care, recovery or rehabilitation.”
The Court of Appeals rejected ACIA’s arguments and reversed the probate court. Relying on Heinz, the court concluded “that there is little basis for distinguishing the ‘care’ provided by a guardian from that provided by a conservator.” Slip opinion, p 4. The rationale offered by the court for this conclusion seemed only to highlight ACIA’s replacement services argument: “Similar to a guardianship, the conservatorship was necessary as part of Carroll’s ‘care’, because he could no longer manage his own affairs as a result of a closed head injury.” Slip opinion, p 5.
The court, however, also rejected ACIA’s contention that the conservator’s services were more properly aligned with “ordinary and necessary” replacement services than with treatment or care of an injured person. The court first observed that, in its opinion, such services are not “ordinary”: “[T]he services provided [by the conservator/fiduciary] transcend ‘ordinary’ services akin to cooking, cleaning or doing yard work and thus are not replacement services within the meaning of MCL 500.3107(1)(c). Instead, we conclude that the services are extraordinary professional services related to Carroll’s care.” Slip opinion, p 5.
The court also rejected ACIA’s contention that Griffith v State Farm Mut Auto Ins Co foreclosed such a broad construction of “care,” since it confines the term to products and services relating directly to the person’s accident-injuries. To reject this contention, the court equated the services of a conservator to those of a nurse-aid:
The conservator’s services here are more akin to attendant care provided by a nursing assistant who handles an injured person’s intimate hygiene needs; although the injured person would normally have handled those needs on his or her own, as a result of the injury he or she is no longer able to do so. Because expenses incurred to have someone perform those hygiene services are reasonably incurred for the injured person’s care, recovery, or rehabilitation, the nursing assistant’s services are compensable under MCL 500.3107(1)(a). … Similarly, because the need for the conservator was causally connected to Carroll’s injury and the expense is reasonably necessary for his “care,” it too is compensable under MCL 500.3107(1)(a). Accordingly, Griffith does not bar recovery of the conservator’s fee.
Slip opinion, p 7.
The Court of Appeals held, therefore, that the full amount of the conservator’s fee was covered by no-fault insurance as an “allowable expense” under §3107(1)(a). Importantly, the court’s analysis appears not to permit the insurer to differentiate between those services that might appear more closely related to the ward’s incapacity (e.g., arranging financing for transition into a nursing home) from those having no direct connection to his injuries (e.g., paying utility bills, purchasing or canceling auto insurance). Rather, once it is established that the conservatorship itself was reasonably necessitated by the person’s accident-injuries, the fees for all the ensuing services performed by the appointed conservator are covered as “allowable expenses” under no-fault automobile insurance.
It is anticipated that ACIA will seek Supreme Court review of this opinion.
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