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September 03, 2020
Recently, the Michigan Court of Appeals issued a lengthy, twenty-four page unpublished decision in Loiola v Citizens Insurance Company of America, et. al. Loiola was involved in a hit-and-run motor vehicle accident in January 2010 and, undisputedly, suffered a traumatic brain injury. Loiola’s claim was assigned to Citizens Insurance Company under the Michigan Assigned Claims Plan. Following the accident, Citizens paid No-Fault benefits from 2010 until 2013, when it began investigating Loiola’s claim. In 2013, Loiola began living in an assisted living facility called Special Tree. In 2014, he moved from Special Tree to another facility called “Progressions” where he lived more independently. In November 2015, Loiola moved into a “semi-independent living facility” called NeuroRestorative.
The charges at NeuroRestorative consisted of two categories: (1) per diem charges, relating to things like food and room and board, and (2) professional services and therapies rendered at NeuroRestorative. For some time while Loiola was at NeuroRestorative, Citizens paid for specific therapies, but never paid the per diem charges, and it later stopped paying for any of NeuroRestorative’s services. Citizens refusal to pay was based on: (1) several IMEs which showed that long-term, semi-independent living at NeuroRestorative was not reasonable and necessary for someone with Loiola’s injuries; (2) Loiola’s ongoing complaints of anxiety, depression, and cognitive difficulties existed prior to the accident, and Loiola was exaggerating his post-accident symptoms as evidenced by validity testing during neuropsychological examinations; (3) a number of charges by NeuroRestorative, including a food stipend and wages paid to Loiola, were not compensable under the No-Fault Act; and (4) Loiola was disqualified from receiving PIP benefits through Citizens as the assigned insurer under the Michigan Assigned Claims Plan (MACP) pursuant to MCL 500.3173a(2), because he had made false statements in support of a claim for benefits under the MACP.
At trial, Loiola sought a total of $383,255.21 in benefits, which included (1) NeuroRestorative’s bills, (2) charges for a “case manager,” (3) charges by Fried for acting as Loiola’s guardian, and (4) the outstanding balance on a partially unpaid bill for a neuropsychological examination. Citizens had filed a Motion for Summary Disposition on the charges that Citizens contended were not compensable as a matter of law under MCL 500.3105(1) and MCL 500.3107(1)(a), which the trial court denied. Citizens also requested a special jury instruction on the issues of allowable expenses and fraudulent insurance acts under MCL 500.3173a(2), both of which the trial court denied. The jury ultimately returned a verdict of $353,438.79 against Citizens, and the trial court awarded Loiola penalty attorney fees under MCL 500.3138. Citizens appealed both the verdict and the attorney fee award.
The Court of Appeals first considered whether certain charges by NeuroRestorative were compensable under MCL 500.3105(1) and MCL 500.3107(1)(a). Specifically, the Court considered the compensability of: (1) a food stipend, (2) wages paid to Loiola by NeuroRestorative, (3) a personal trainer, (4) nonmedical transportation, and (5) room and board, including amenities such as utilities and cable.
Guiding the Court of Appeals in assessing the compensability of the aforementioned charges under MCL 500.3105(1) and MCL 500.3107(1)(a) were two Michigan Supreme Court decisions: Griffith ex rel Griffith v State Farm Mut Auto Ins Co, 472 Mich 521; 697 NW2d 895 (2005), which held, relevant to Loiola, that PIP benefits for “ordinary” items like food or housing are not categorically non-compensable; and Admire v Auto-Owners Ins Co, 494 Mich 10; 831 NW2d 849 (2013), which held that when there is a “special accommodation” or “modification” to an otherwise ordinary item, the expense may be fully compensable if it is an “integrated” product or accommodation, and only partially compensable if it is a “combined” product or accommodation.
Food Stipend Loiola was given a $75 weekly food stipend by NeuroRestorative. The food stipend was part of NeuroRestorative’s “per diem” charge. The Court held the food stipend was not compensable because food costs are an ordinary expense, the charge for any assistance given to Loiola while shopping could be separated from the actual cost of food, and unlike food provided by a hospital Loiola had considerable freedom to choose whatever food he wanted to purchase and eat. The Court found these charges were not compensable and it was error for the trial court to submit these charges to the jury.
Personal Trainer Loiola sought payment for a personal trainer billed at $145 per hour. The personal trainer was not part of NeuroRestorative’s per diem. The Court noted that a personal trainer may be an allowable expense under the No-Fault insurance act, but in this case Loiola needed exercise both before and after the accident, and there was no evidence offered to establish how Loiola’s basic fitness needs changed as a result of the accident. Basic exercise was not “new in its essential character” and was not necessary for Loiola’s recovery or rehabilitation for injuries suffered in the accident. Therefore, the charges were not compensable.
Wages Loiola sought to recover wages paid to him by NeuroRestorative during “prevocational rehabilitation.” These charges were also included as part of the per diem NeuroRestorative charged Citizens. The Court noted that employment is the goal of rehabilitation; employment is not itself rehabilitation. It held that even if the wages paid to Loiola were considered part of the “per diem” charged to Citizens, they were “combined” in nature, not “integrated.” That is, the wages were easily identifiable and easily separated conceptually from the other costs for NeuroRestorative’s vocational rehabilitation, and therefore, not compensable under the No-Fault Act.
Nonmedical Transportation While at NeuroRestorative, Loiola received transportation services for both medical purposes and nonmedical purposes, such as visiting his mother and other personal activities. Transportation as a whole was included in the per diem charges by NeuroRestorative. The Court noted that nowhere in the trial record were specific instances of nonmedical transportation distinguished from the instances of medical transportation so a jury could not identify which costs included in the per diem were for allowable expenses, and which were for the ordinary, everyday expense of nonmedical transportation. Therefore, the Court deemed this to be an “integrated” product or service properly submitted to the jury for consideration.
Housing Expenses The Court found that, in the case of Loiola’s post-accident housing, the essential character of his post-accident living requirements was supervised, semi-independent housing, which is wholly different than independent living. Therefore, the essential character of NeuroRestorative’s service was that of supervised, semi-independent living, rather than run-of-the-mill housing such that Loiola had no choice but to live in one of NeuroRestorative’s apartments, and like a claimant in the hospital, had no choice but to avail himself of the housing amenities such as utilities and cable. The Court of Appeals held that the trial court did not err by denying summary disposition and JNOV on these issues.
Citizens also appealed the trial court’s denial of its requested special jury instructions relating to (1) everyday expenses such as food, and room and board, and (2) vocational rehabilitation, both of which the trial court denied. The Court of Appeals held that the first jury instruction was not appropriate, but that the second, regarding whether the specific vocational rehabilitation was aimed at restoring an injured person to the working condition he was in before sustaining his injuries, should have been given to the jury.
Citizens also requested a jury instruction on fraudulent insurance acts under MCL 500.3173a(2). During litigation and at trial, there was evidence that Loiola was not truthful with doctors about his pre-accident substance abuse and mental health problems and his academic records. The Court held that information regarding Loiola’s prior substance abuse, mental health problems, and academic record was clearly material to establishing a “baseline” for purposes of investigation Loiola’s injuries and need for treatment. Therefore, the Court ruled, Citizens presented sufficient evidence at trial of fraudulent insurance acts committed by Loiola, and it was an abuse of discretion by the trial court to deny Citizens’ request for a jury instruction on MCL 500.3173a(2).
Finally, Citizens appealed the award of penalty attorney fees under MCL 500.3148(1). The Court of Appeals held that there was at least a legitimate question of statutory construction based on the trial court’s submission of the food stipend and wages that NeuroRestorative paid to Loiola and whether the various charges comprising the per diem charges could be separated. The Court also found numerous factual uncertainties related to conflicting medical opinions and noted the mere fact the jury had ruled in Loiola’s favor was not dispositive of the question of whether Citizens’ initial refusal to pay was unreasonable. On these issues, the trial court had erred as a matter of law by awarding attorney fees and the award was therefore vacated.
The Court vacated the jury’s verdict, as well as the award of attorney fees, and remanded the matter back for a new trial.