In the unpublished case of Ronnie Fields et al v. Nationwide Mutual Fire Insurance Company et al, (8/17/23) (Docket No. 361959), the Court of Appeals considered whether the trial court properly granted summary disposition to Nationwide based upon Plaintiff’s material misrepresentations and MCL 500.3173a(4).
On September 30, 2019, Mr. Fields was a bicyclist that was struck by a car. He sustained serious injuries including broken bones, lacerations, blunt force trauma and a traumatic brain injury.
Following the accident, Mr. Fields submitted two separate applications for PIP benefits through the Michigan Automobile Insurance Placement Facility (MAIPF). The first application, dated October 4, 2019, reported Mr. Fields injuries and initial treatment. It further reported that he had never had any of the same or similar injuries, had no preexisting medical conditions and had never applied for social security benefits. The second application, dated November 4, 2019, again reported no prior similar injuries, or any other preexisting medical conditions, but it also indicated that Mr. Fields was eligible for social security benefits, which conflicted with the information in the October 4, 2019 application.
Plaintiff ultimately filed a lawsuit in February 2020 including MAIPF as a defendant. MAIPF subsequently assigned the claim to Nationwide which was substituted as a defendant. Nationwide then filed a motion for summary disposition under MCR 2.116(C)(10) alleging that Mr. Fields had submitted false information in support of his claim and was therefore ineligible for benefits pursuant to MCL 500.3173a(4). Nationwide claimed that Mr. Fields had failed to disclose prior medical conditions and injuries that were material to his claim.
Plaintiff responded by saying that Nationwide could not show that he “knowingly” committed fraud. He also argued that the applications were inadmissible hearsay, because the preparer(s) of the applications were unknown and it was questionable as to whether Mr. Fields was involved in preparing the applications.
The trial court granted the motion indicating that there was no genuine issue of material fact that Mr. Fields was aware of what his signature on the applications meant. Plaintiff then filed a motion for reconsideration arguing for the first time that under Haydaw v Farm Bureau Ins Co, 332 Mich App 719; 957 NW2d 858 (2020), statements made during litigation could not be used to show fraud such that his deposition and medical records should not have been admitted as evidence. The trial court denied the motion.
On appeal, Plaintiff argued that (1) under Williamson v AAA of Mich, ___ Mich App ___; ___ NW2d ___ (2022) (Docket No. 357070), any records or deposition testimony obtained after the commencement of litigation cannot be used to show fraud; (2) the two applications for benefits were inadmissible hearsay under MRE 801 and 802; and (3) that Nationwide could not show that Mr. Fields intended to commit fraud.
Regarding Plaintiff’s first argument, based upon fraud, the Court noted that MCL 500.3173a(4) governs fraudulent claims made to the MAIPF and cited Candler v. Farm Bureau Mut Ins Co of Mich, 321 Mich App 772, 779-780; 910 NW2d 666 (2017), for the elements of determining whether a person has committed a fraudulent insurance act. The Court also relied upon Williamson, which extended the holding in Haydaw, 332 Mich App 719, and noted that Fasho v Liberty Mut Ins Co, 333 Mich App 612, 619; 963 NW2d 695 (2020) clarified Haydaw. In Fasho the Court said that the “fraud must have occurred before the commencement of legal proceedings.” (Id. at 619). The Court also said, “[t]his does not mean that a defendant cannot rely on evidence of fraud obtained after litigation commences. It simply means that the evidence must relate to fraud that took place before the proceedings began. [Id. (emphasis added).]
Based upon this case law, the Court agreed with Plaintiff that any of the information from his deposition testimony regarding his eligibility for social security, and conflicting information regarding his medical records, could not be used to show he committed fraud because they were false statements made during discovery. But, the Court noted that his medical records could be used to support Nationwide’s claims of fraud because the information in them was of incidents that occurred before the subject accident.
Regarding Plaintiff’s second argument, based upon hearsay, the Court noted that under MCR 801(d)(2), the applications do not qualify as hearsay because they are admissions by a party opponent. The Court noted that the circumstances surrounding Mr. Field’s decision to sign the October 4, 2019 were somewhat “suspect” and it was possible that Plaintiff was not competent to sign that application. The November 4, 2019 application, on the other hand, was not hearsay because, even though the application had been completed by a third party who could not be located, plaintiff actually signed the document. The Court noted that Plaintiff presented no evidence, other than his blindness, that he did not understand the document he was signing or that he did not know what was contained within what he was signing.
Finally, regarding Plaintiff’s third argument, based upon intent, the Court cited Bakeman v Citizens Ins Co of the Midwest, ___ Mich App ___ (2022) (Docket No. 357195). In that case, the Court held that MCL 500.3173a(4) established the plaintiff’s subjective intent was irrelevant, but rather the key point was whether the plaintiff “knew that false material information had been provided.” Id.; slip op at 4. That case also stood for the proposition that “the law is clear that one who signs an agreement, in the absence of coercion, mistake, or fraud, is presumed to know the nature of the document and to understand its contents, even if he or she has not read the agreement.” Id., quoting Lease Acceptance Corp v Adams, 272 Mich App 209, 221; 724 NW2d 724 (2006) (emphasis added).
Again, the Court found the October 4, 2019, application could not be relied upon, but the November 4, 2019, application could be. The Court noted it was not aware of, nor did Plaintiff present, any case law that discussed whether legal blindness was sufficient to prove that a person did not know or understand the contents of a document they were asked to sign. Plus, under Bakeman, it is presumed that a person understands the contents of a document they sign, even if they have never read it. Finally, Plaintiff never argued that his decision to sign the application was due to coercion, mistake or fraud.
For all of these reasons the Court affirmed the trial court’s ruling granting summary disposition to Nationwide.
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Sarah Nadeau, Editor of The Garan Report Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com