MCL 500.3116 provides a statutory framework for No-Fault insurers to seek reimbursement for PIP benefits paid to a claimant, from a claimant who has recovered on a tort claim. The purpose of this provision for reimbursement by insurers is to prevent a claimant from double recovery of economic losses. However, the Court of Appeals previously held, in Citizens Ins Co v Pezzani & Reid Equip Co, Inc (On Remand), 202 Mich App 278, 507 NW2d 833 (1993), that MCL 500.3116 also precluded reimbursement or recovery actions by insureds against non-motorist tortfeasors in circumstances not listed in MCL 500.3116(2).
In Sharon Call v L & KJ Enterprises, LLC, __ Mich App __ (2025), the Michigan Court of Appeals addressed whether MCL 500.3116(2) precluded an insurer’s subrogation claim against a nonmotorist tortfeasor. The Call Court did not agree with the Pezzani decision, but felt bound to follow it. As a result, the Call Court called for a special panel to determine whether Pezzani was incorrectly decided and whether MCL 500.3116(2) of the Michigan No-Fault Act precluded a No-Fault insurer from pursuing a reimbursement claim against a non-motorist tortfeasor if the circumstances did not involve those expressly enumerated in MCL 500.3116(2).
Deborah Dale drove her vehicle to Family Tire for a tire rotation and other services. When she left with her car, about one mile from Family Tire, one of her tires came off the vehicle and struck the vehicle being operated by the Calls, causing the Calls to sustain injuries.
The Calls claimed PIP benefits from their no-fault insurer, Frankenmuth Insurance Company, who paid benefits on their behalf. The Calls also filed a negligence action against Family Tire, and Frankenmuth intervened, as the Calls’ subrogee, to recover damages from Family Tire equal to what they had paid in PIP benefits for the Calls.
Family Tire moved for summary disposition under MCR 2.116(C)(8) against Frankenmuth, relying upon Pezzani’s holding that subrogation under MCL 500.3116 was limited to tort claims involving out-of-state accidents, accidents involving uninsured vehicles, and intentionally caused harm to persons or property – none of which were present in the Call claim. Frankenmuth opposed the motion arguing that the statute applies only to an insurer’s ability to recoup benefits from its insured and did not apply to an insurer’s right to recover from a nonmotorist tortfeasor.
Limited by Pezzani, the trial court granted Family Tire’s motion.
In overturning Pezzani, the Court of Appeals’ special panel looked at MCL 500.3116 in whole and in conjunction with MCL 500.3146, which provides a limitations period for an insurer’s action seeking recovery/indemnification under MCL 500.3116. The panel also considered Citizens Ins Co of America v Tuttle, 411 Mich 536, 545 (1981), in which the Supreme Court recognized that an insurer’s right of subtraction or reimbursement under section 3116 pertains to its insured’s tort recovery. Noting that the language in both MCL 500.3116 and MCL 500.3146 expressly address the insurer’s recovery rights against a claimant, such as the Calls, the panel found both the language and the intent of the statutory provisions not to extend to an insurer’s recovery rights against a non-motorist tortfeasor, such as Family Tire. The panel concluded that section 3116 applies to an insurer’s right of reimbursement from a claimant and does not apply to an insurer’s tort recovery, as a subrogree, against a nonmotorist tortfeasor. The panel found that the Court in Pezzani did not provide any statutory analysis or explanation for its holding as to non-motorist tortfeasors. As a result, the panel concluded that the Call Court properly concluded that section 3116 is inapplicable in Call because Frankenmuth does not seek reimbursement of benefits from the Calls. Rather, as the Calls’ subrogree, Frankenmuth seeks to recover from Family Tire damages under a negligence theory, and the amount of Frankenmuth’s damages is the amount of PIP benefits it paid to the Calls because of the Family Tire’ alleged negligence. Section 3116 does not preclude Frankenmuth’s claim. The panel overruled Pezzani, and reversed the trial court’s order granting summary disposition for Family Tire.
