The Warren Chiropractic case

The Michigan Court of Appeals released an unpublished opinion on November 8, 2012, in the case of Warren Chiropractic and Rehab Clinic, P.C. v Homeowners Insurance Company (#303919), a case which had originated in the Wayne County Circuit Court.

Warren Chiropractic was a provider suit for no-fault benefits. This is the first Court of Appeals case which has addressed the new requirements under the “scope of practice” section that was discussed in an earlier edition of this publication (Volume XXIII, Number 28, October 19, 2011). Recall that the conclusion that we discussed in that article was that a new amendment to the No-fault Act had legislatively overturned the long-standing Hofmann rule, and that (after the amendment) a service must be within the defined scope of chiropractic under §16401 of the Public Health Code, as that section existed in January 2009, to be reimburseable by a no-fault carrier.

The trial court in the Warren Chiropractic case had granted summary disposition in its entirety to the defendant insurer, thus applying the January 2010 amendments to the Scope of Practice Act and to §3107(b) of the No-Fault Act. (Recall that these were tandem amendments.) The plaintiff’s first assignment of error was that the circuit court had improperly applied the amended statute retroactively to cover chiropractic services that had been provided before January 5, 2010, the effective date of the amendments.

The Court of Appeals agreed with that position and ordered that the case be remanded on that issue. The rule in Michigan is that a statutory amendment is prospective in application absent a clear contrary intention by the Legislature. There was no such intent evident in this case.

The defendant argued that the rule that had previously been applied under the Hofmann case would have led to the same result at any rate. The Court of Appeals disagreed, finding that that issue required evidentiary findings by the trial court and thus was to be remanded for that purpose.

What the Court of Appeals apparently did not appreciate is the fact that the Hofmann analysis is now irrelevant to the issue. On remand, the Wayne Circuit will have to determine whether these services are within the scope of the January 2009 version of the scope of practice statute.

The plaintiff, in what can only be regarded as the legal equivalent of a “Hail Mary” pass, also argued that §3107b(b) of the Michigan No-Fault Act must be read to incorporate the amended scope of practice under MCL 333.16401. The court rejected that argument out of hand. The language of that provision specifies that only those services which were within the scope of chiropractic practice as of January 2009 are required to be covered under a no-fault policy.

This was not a situation in which the legislature had overlooked one section of the statute when amending another. The amendment to §3107b was passed at the same time and was tie-barred to the amendment of §16401 of the Public Health Code.

The plaintiff asserted that the former language of the section “no longer exists” and therefore cannot be applied, but the court rejected that argument as well. It is true, of course, that the Michigan Compiled Laws have replaced the old language with the new language and that the old language is no longer found within the compilation. The Public Acts, though, and not the compilation, are primary law. Attorneys and claims personnel will have to resort to other sources of the text of §16401 as it existed in January 2009.

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CONVERSE v ACIA

CONTRIBUTOR – CHANEL R. SHAMOUN

In the case of Converse v ACIA, the Michigan Supreme Court made some significant rulings on many issues related to the no fault act and attempts by the plaintiff’s bar to create new damages and to extend the one year back rule.  First, the Court confirmed the rule that a claimant cannot maintain a negligence cause of action against a no fault carrier based solely on an alleged wrongful denial of no fault benefits. Then the court reaffirmed that claims of fraud and silent fraud are very difficult to pursue. The Court also affirmed its rulings related to the one year back rule and not allowing tolling.  Lastly, the Court allowed a very limited claim to be brought for damages under the Michigan Consumer Protection Act.

In this case, the plaintiff, Barbara Converse, brought claims for no-fault benefits on behalf of her incapacitated daughter.  The plaintiff tried to claim damages going back to 1992.  The trial court granted ACIA’s motion for partial summary disposition in relation to some of plaintiff’s claims. The plaintiff appealed the trial court’s decision to the Court of Appeals. The Court of Appeals affirmed the decisions of the trial court. However, on October 26, 2012, the Supreme Court reversed in part the lower court’s decision regarding plaintiff’s Michigan Consumer Protection Act claims, allowing the claims to go back to 1992, but only up to March 28, 2001.

In the Plaintiff’s negligence claim, she alleged that ACIA failed to inform and disclose benefits that were available to her under the insurance contract. The argument was that if she would have been told what her benefits were, she would have made a timely claim for benefits.  Because the Plaintiff was not alleging that ACIA breached a duty that was separate and distinct from the insurance contract, the Court properly dismissed the claim and found it to be nothing more than a breach of contract claim. The significance of this ruling cannot be overstated.  It is often alleged that a duty should rest with an insurance carrier to advise the insured of the nature of benefits provided under the policy.  This very argument runs counter to the legal principle that an insured is obligated to read and understand the policy of insurance he has purchased.  This ruling confirms the long held principle that a carrier has no obligation to advise an insured of the nature of the benefits allowed under the policy.  When a plaintiff tries to claim that the reason he did not make a timely claim for benefits was the failure of the insurance company to advise him that he had a right to make a claim, this case clearly upholds the principle that such a claim cannot be used to get around the no fault act’s time limits on when a claim must be made.

The Plaintiff also brought claims of fraud and silent fraud, again the theory being that the carrier should not be able to hide behind the one year back rule if it fraudulently mislead the insured to not bring his claim in a timely fashion.  The Court found that in order to prove such claims, the plaintiff has to show many things:  First, an untrue statement related to the ability to claim benefits; Second, that the statement was made with knowledge that it was not true;  Third, the insured must show that they relied upon the misrepresentations.  Lastly and most importantly, the Court held there can be no fraud where the person has the means to determine that a representation is not true.  In the Converse case, the plaintiff complained to the insurance commissioner three different times about ACIA and the insurance commissioner told her to “seek out a lawyer” i.e. putting her on notice to determine if a representation was true or not.  In addition, the plaintiff was in touch with lawyers throughout the years regarding services to be provided to her daughter. The alleged representations made by ACIA also did not involve information that was exclusive to the policy or to ACIA, but rather was information under the No-Fault Act which is available to everyone. Due to the fact that the Plaintiff was knowledgeable, had consulted attorneys, had spoken to the insurance commissioner, and essentially had available to her the means to determine whether a representation was true or not, the Court properly dismissed her fraud and silent fraud claims.

Next, the Plaintiff claimed that the decision to apply the one year back rule to her breach of contract claim was improper. It was not. Plaintiff attempted to toll the one year back rule by invoking the disability savings provision. This provision says that a person shall have 1 year after the disability is removed through death or otherwise to bring a claim, which works as an EXCEPTION to the statute of limitations, not a tolling feature. So, for example, if a plaintiff was disabled, and the statute of limitations to bring forth a negligence claim had expired, a disabled person, having overcome his disability, would be allowed 1 year from the date of having overcome his disability to bring forth a claim, even though the statute of limitations had technically already expired.  The Court again confirmed that this statute was simply not applicable to claims for no fault benefits.

Lastly, the Court did provide a bit of relief to the plaintiff on a claim for damages under the Michigan Consumer Protection Act (MCPA). This act provides damages for certain specified unconscionable practices which can include both economic and non-economic damages as well as attorney fees.  The act has many provisions which could cause one to argue that there was no ability to use this law in the context of a no fault claim.  In fact, as of March 28, 2001, the legislature amended the MCPA to clearly state it no longer applies to insurance companies, rendering any cause of action for claims accruing after March 28, 2001, unsustainable. The Court did open the door a little bit and indicated that a right might exist for claims that were made before March 28, 2001.  However, you can only bring this claim IF it was brought no more than 6 years after the occurrence OR no more than 1 year after the last payment was made in conjunction with the occurrence, whichever period of time is later.  So, in the Converse case, the last payment that was made that was the subject of the action was at the time of filing, which allowed the plaintiff to recover damages resulting from the methods, acts, or practices violative of the MCPA from the time of the first “inaccurate payment,” alleged to be on July 29, 1992, and up to the effective date of March 28, 2001. So the good news is, for any claims that did not start until after March 28, 2001, there is no claim for damages under the MCPA.  If you have a claim from before March 28, 2001, the bad news is the MCPA may be applicable if the law suit is brought within 1 year of the last payment and can go as far back as when the alleged wrongful payments began.

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REGISTER NOW – 2012 WINDY CITY SEMINAR

2012 Windy City Seminar

November 29, 2012

Chicago Marriott Shcaumburg

50 North Martingale Road | Shcaumburg, Illinois 60173

To register contact: Eileen Carty – ecarty@garanlucow.com

The Agenda for the Windy City Seminar is as follows:

8:30 – 8:55 A.M. CONTINENTAL BREAKFAST / REGISTRATION

8:55 – 9:00 A.M. WELCOME AND INTRODUCTION

Speaker: DAVID A. COUCH

9:00 – 10:00 A.M. ILLINOIS AND INDIANA UPDATES

Speaker: GREGORY M. BOKOTA

10:00 – 10:30 A.M. MICHIGAN LAW UPDATES

Speaker: DAVID A. COUCH

10:30 – 10:45 A.M. BREAK

10:45 – 11:15 A.M. MICHIGAN LAW UPDATES-CONTINUED

Speaker: DAVID A. COUCH

11:15 – 12:30 P.M. DEPOSITION BOOT CAMP

Speaker: JOHN W. WHITMAN

12:30 – 1:00 P.M. PANEL DISCUSSION ON DEPOSITION STRATEGIES & TIPS FOR TESTIFYING  EFFECTIVELY

Speaker: JOHN W. WHITMAN

1:00 – 1:15 P.M. QUESTION AND ANSWER SESSION

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