November 02, 2017
In a recent 2-1 opinion marked for publication, Candler and Pain Center USA, PLLC, v Farm Bureau Mutual Insurance Company of Michigan, (Docket No. 332998, issued October 24, 2017), the Michigan Court of Appeals interpreted the “fraud” provision contained in MCL 500.3173a(2) which is applicable to claimants who seek benefits through the Michigan Automobile Insurance Placement Facility (MAIPF). The Court of Appeals majority held that a fraudulent insurance act was committed when attendant care and replacement services forms with forged signatures and false information were submitted in support of a claim to the MAIPF (ie. the assignee insurer Farm Bureau), and therefore the entire claim for PIP benefits was ineligible for payment.
Plaintiff Candler sought to recover PIP benefits from Farm Bureau, the assignee insurer, and Farm Bureau paid a substantial sum for medical expenses incurred. Candler also sought attendant care and replacement services, however, and submitted a claim for replacement services for the months of August, September and October of 2015 that contained a forged signature. His brother (who was also his service provider) testified unequivocally that he did not provide the claimed services on those dates, and it was not his signature on the forms. Plaintiff attempted to excuse his admitted forgery by claiming that he was not capable of knowingly making a false statement due to the brain injury he suffered in the subject accident.
The Court of Appeals found no genuine issue of material fact that Candler had committed a fraudulent insurance act in his claim to Farm Bureau, and that Farm Bureau was acting for the MAIPF as the assignee insurer, so that Candler had committed a fraudulent insurance act by submitting a claim to the MAIPF. The Court further found no question that Candler would have known that he was forging his brother’s signature, even if he suffered a brain injury.
Notably, the Court did not specifically address Farm Bureau’s argument that a fraudulent insurance act was also committed by the care provider where he sought payment for attendant care for twenty-four (24 hours) while he was still working 8 hours a day and sleeping at least 5 hours a night at a different home. Farm Bureau argued that “a person” can mean literally any person, not just the plaintiff or claimant himself.
Having determined that a fraudulent insurance act was committed by Candler (the claimant), the Court of Appeals then determined that there was no requirement in the statute about who must receive the fraudulent information. Candler argued that the information must be received by the MAIPF itself, in the application stage of an assigned claim. The Court of Appeals majority disagreed with this argument finding that Farm Bureau, as the assignee insurer, was acting for the MAIPF in servicing Candler’s claim and thus, Candler’s fraudulent statements were made to the MAIPF in furtherance of Candler’s claim for payment from Farm Bureau.
Finally, the Court of Appeals majority held that once a fraudulent insurance act is committed then the entire claim is ineligible for payment, not just the portion of the claim to which the fraudulent insurance act related. In other words, false claims made in support of a claim for attendant care benefits or replacement services equate to false claims made in support of the entire PIP claim.
The dissenting opinion disagreed with the majority’s interpretation of MCL 500.3173a(2), believing that provision should be read to address only claims submitted directly to the MAIPF, not claims submitted to an assignee insurer. In other words, only where a fraudulent insurance act is committed in support of a claim for PIP benefits made directly to the MAIPF may the claim be deemed ineligible for payment. Following the dissent’s analysis, it would seem that only the MAIPF itself could bar a claim where a fraudulent insurance act had been committed, but an assignee insurer could not, leaving assignee insurers without redress against fraud.
NOTE: Garan Lucow Miller, P.C. attorneys Christopher Jennings and Sarah Nadeau represented Farm Bureau in the trial court and appellate court proceedings, respectively.
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