MAIPF REQUIRED TO ASSIGN CLAIM IF THERE IS PROOF OF A DISPUTE BETWEEN INSURERS

Nikki L. Peterson

In a recent, unpublished decision, Lekli v Farm Bureau et al (Unpublished COA No. 350942, 10/27/2022), the Court of Appeals, on remand, reviewed an order from the trial court granting summary disposition to Defendant, MAIPF. Pergjoni Transport had entered into an operating agreement with B&W in which Pergjoni leased a Peterbilt truck to B&W, and insured that truck with both Great American and non-party Hudson Insurance Company. Pergjoni was an independent contractor of B&W. Plaintiff Lekli applied with B&W to be a driver for Pergjoni and became an independent contractor of B&W. Lekli was then injured in a motor vehicle accident while operating the Peterbilt truck and hauling goods from Michigan to Missouri.

Lekli filed an application for PIP benefits from Michigan Automobile Insurance Placement Facility (“MAIPF”) claiming there was a dispute between Farm Bureau and Great American. One week later, Lekli brought a first-party suit against Farm Bureau, his personal no-fault insurer, Great American, an insurer of the truck, Pergjoni and the MAIPF. After receipt of Lekli’s application for benefits, MAIPF initially denied Lekli’s claims stating there was higher identifiable coverage at the time of the accident, and further requested Lekli send proof of the insurer dispute. Lekli conceded he did not supply any of the requested information.

Within 25 days of MAIPF’s request for proof of a dispute, Farm Bureau and Great American both filed their answers to Lekli’s Complaint denying liability for Lekli’s claims. MAIPF received copies of both Farm Bureau and Great American’s Answers.

Great American, Farm Bureau, and MAIPF then filed separate motions for summary disposition. The trial court granted all three motions finding that Great American’s policy excluded coverage under the circumstances of the subject accident, finding that Lekli was an employee of Pergjoni such that the truck’s insurers were highest in priority. Because Great American excluded coverage, however, non-party Hudson was liable for PIP. MAIPF’s motion was granted because there was no longer a dispute as to priority.

On appeal, the Court of Appeals addressed only the granting of MAIPF’s motion. The Court opined that the Legislature did not authorize the MAIPF to establish eligibility criteria for denial or assignment of claims, and that MCL 500.3172(1) established the four scenarios in which a person is entitled to have a claim assigned by the MAIPF. One of those scenarios involves a priority dispute between two or more insurers, such as the one in this case.

The Court further found MAIPF’s argument that there “is applicable and identifiable coverage” with Great American, B&W (Hudson) and Farm Bureau to be contrary to MCL 500.3172(1). Whether there may be applicable and identifiable coverage is not relevant because the MAIPF is required to assign a claim when there is a dispute between two or more insurers or a responsible insurer cannot be identified.

The Court of Appeals also addressed MAIPF’s assertion that because Lekli never provided the requested documents regarding the dispute, it could deny the claim. The Court rejected this argument stating that the MAIPF did not cite any authority that allows it to deny a claim on the basis that an applicant did not provide proof of a dispute. Furthermore, MAIPF had Lekli’s Complaint and the Answers filed by both Farm Bureau and Great American in which they both denied liability within twenty-five days of requesting proof.

The Court concluded that, because both Great American and Farm Bureau denied liability by way of answer to Lekli’s Complaint, MAIPF had proof and notice of the dispute between insurers. Therefore, MAIPF’s obligation to assign Lekli’s claim under the no-fault act was triggered, MAIPF could not deny the claim as “obviously ineligible”, and the claim qualified for assignment to an insurer under MCL 500.3172(1).