Kevin Gary was involved in a collision on January 4, 2019, in which he claimed to have sustained a closed head injury resulting in cognitive and memory impairments. No PIP insurance was available through the involved vehicle or Mr. Gary himself so, with the help of counsel, he submitted an application to the Michigan Automobile Insurance Placement Facility for first-party PIP benefits.
The completed application provided conflicting information relative to Mr. Gary’s employment at the time of the collision. When asked if he was employed on the date of loss, Mr. Gary selected “no” and “unknown” from the available responses and then went on to provide information regarding his employment. Specifically, Mr. Gary indicated that he was employed as a roofer by K&G Construction and had been from September 2014 to the date of the accident.
Farmers was ultimately assigned Mr. Gary’s claim and suit was filed on his behalf seeking PIP benefits including wage loss and household replacement services. During litigation, Mr. Gary provided deposition testimony that he had been an event photographer and sold music online for years prior to the collision and that he had been unable to continue these occupations due to his injuries. He denied that he had ever been employed by K&G Construction.
Farmers filed a dispositive motion arguing that Plaintiff committed a fraudulent insurance act and was not entitled to PIP benefits under MCL 500.3173a(4). The evidence presented in support of the motion included Mr. Gary’s application for benefits, his deposition testimony, and replacement services forms submitted by his father claiming that he had provided Plaintiff with assistance prior to the date of the accident. Plaintiff argued that Mr. Gary’s inconsistent statements regarding his employment history were due to the traumatic brain injury and resulting memory issues he had sustained in the collision and were not knowing misrepresentations. The trial court held that Mr. Gary had committed fraudulent insurance acts by knowingly misrepresenting his employment information and had failed to provide evidence that his memory conditions were the cause of these misrepresentations. In response, Plaintiff filed a motion for reconsideration that included medical records reflecting that he had sustained a closed head injury in the accident, that he had reported memory issues since, and that he’d undergone testing revealing that he had a significantly lower than average working memory. The motion for reconsideration was denied.
In Kevin Gary v Farmers Ins Exch, ___ Mich App ___; ___ NW2d ___ (2023) (Docket No. 361880), the Court of Appeals determined that the trial court erred in dismissing Plaintiff’s claims because the statements Farmers alleged were misrepresentations were made during discovery. The Court looked at the elements of a “fraudulent insurance act” under 3173a: (1) statement made (2) as part of or in support of a claim for no-fault benefits (3) submitted to the MAIPF (4) made knowingly (5) and in regard to a material fact. The Court focused on the second factor. Relying upon Williamson v AAA of Mich, ___ Mich App ___; ___NW2d ___ (2022) (Docket No. 357070), the Court noted that in order for a statement to be made in support of a claim for no-fault benefits, it had to be made prior to litigation. The only “statements” made pre-litigation in Mr. Gary’s case were those on his application for benefits and in his replacement services affidavits. Accordingly, the statements made during his deposition were discounted and should not have been considered in the trial court’s determination of whether he had committed a fraudulent insurance act.
The Court then turned to the fourth element, whether the statement was knowingly made. In so doing, the Court, followed its ruling in Bakeman v Citizens Ins Co of the Midwest, ___ Mich App___; ___NW2d___ (2022) (Docket No. 357195), and because Plaintiff did not raise an argument relative to his subjective intent to defraud, focused on Plaintiff’s knowledge that he made a false statement. (Notably, Judge Shapiro wrote a concurrence strongly disagreeing with the Bakeman decision). The Court found that the contradictory responses on the application for benefits were explained by the medical records reflecting that Plaintiff had sustained a traumatic brain injury in the collision that had caused cognitive impairments and memory issues. Ultimately, it found that these impairments made the application confusing for him to complete and caused him to have difficulty recalling his employment history such that Plaintiff may not have known that he made false statements.
In considering the replacement services affidavits, the Court noted that there were two forms at issue: one which indicated that Plaintiff had received services beginning on the date of the accident and another handwritten form that was difficult to read and could have said Jan 2019 or Jun 2019. The Court also noted that Plaintiff testified that his father completed the forms and that he did not review them before they were submitted. Accordingly, the Court determined that there was a question of fact as to whether they constituted knowing misrepresentations made by Plaintiff.
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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