Matthew Gedda v State Farm Mutual Automobile Insurance Company, arose out of a rate dispute regarding home health care provided to a catastrophically injured individual, SG who was involved in a motor vehicle accident that occurred in 2011, prior to the 2019 Amendments to the No-Fault Act. By way of background, SG was rendered a quadriplegic who requires 24/7 “high-tech” care and nursing care. Livingston Helping Hands (LHH) provided his care and State Farm paid for this care from the date of the accident up until mid-September 2021 (after the Amendments), at the rates of $29.50 an hour for high tech care and $72.50 an hour for nursing care. SG has a trust, managed by his brother Gedda the trustee, and this trust pays LHH for the care provided and is reimbursed by State Farm.
Gedda sued State Farm in February of 2022 after payments stopped, seeking back and future payment of LHH’s invoices, 12% penalty interest and attorney fees. He also requested injunctive relief requiring State Farm to fully and timely pay SG’s in-home care at its pre-amendment rates while the case proceeded through litigation. In response, State Farm reduced its rates for reimbursement, to $16.89 an hour for high tech care and $41.50 an hour for nursing care. In March of 2022, Gedda moved for a preliminary injunction compelling State Farm to pay for SG’s care at the pre-amendment rates pending the outcome of the litigation.
The trial court dispensed with oral argument under MCR 2.119(E)(3), and granted the motion finding that all four factors for granting an injunction were supported by Gedda’s argument. The trial court also found that the newly amended no-fault fee schedule was unconstitutional. State Farm moved for reconsideration focusing on the unconstitutional fee schedule issue. The trial court denied reconsideration, concluding that the parties had addressed the constitutionality of the fee schedules by referencing the circuit court decision in Andary v USAA Casualty Ins Co, ___Mich___;___NW2d___(2022)(
While State Farm’s appeal was pending, the Andary Court determined that MCL 500.3157(7) and (10) do not apply retroactively to alter the PIP benefits of those injured before the effective date of the amended statute.
On appeal, Gedda argued the Andary Court’s decision rendered State Farm’s appeal moot. The Court of Appeals disagreed noting the merits of Gedda’s underlying claim were only one aspect of the analysis to determine whether or not the trial court abused its discretion. The Court further found that Gedda’s reliance upon his successful motion for partial summary disposition, regarding the fee schedule and Andary, was not within the trial court record at the time the appeal was filed and no party moved to expand the record.
The Court of Appeals next found no abuse of discretion in the trial court’s decision to forego oral argument noting State Farm failed to challenge this decision below so the issue was not preserved. Addressing the issue anyway, the Court found that deciding to grant a preliminary injunction based upon the parties’ briefs is permissible under both MCR 2.119 (E)(3) and MCR 3.310(A)(1) when read together. Further, because State Farm had a chance to address all issues in its brief and motion for reconsideration, it was not prejudiced.
The Court found the preliminary injunction did not provide Gedda “complete relief” because State Farm only had to process and pay SG’s in-home care invoices from July 2, 2021 until ordered otherwise by the Court. The trial court did not award the 12% penalty interest or attorney fees, which Gedda also sought, nor did it order State Farm to pay for all future services.
Next, the Court addressed the four factors supporting the issuance of a preliminary injunction as set forth in Sandstone Creek Solar, LLC, 335 Mich App 683; 967 NW2d 890 (2021), finding all four factors favor Gedda. First, the Court found SG faced irreparable harm to his health and safety because LHH could no longer provide SG’s essential care without the pre-amendment rates and no other company was available. Second, the Court found that the potential harm to SG’s physical and mental health outweighed any potential economic harm to State Farm by the entry of the injunction. Third, the Court found the public has an interest in individuals receiving the insurance coverage for which they contracted and paid. Fourth, pursuant to Andary, Gedda was likely to prevail on the merits.
Finally, the Court determined the trial court’s decision that the fee schedule was unconstitutional did not violate State Farm’s due process rights. The Court noted that State Farm relied upon several opinions and orders, including the Andary trial court opinion, to support their arguments against the preliminary injunction and thus the trial court’s decision to address the constitutionality of the fee schedule was not without prompting by the parties. Moreover, State Farm failed to address the constitutionality of the fee schedule in its motion for reconsideration, which would have been the opportunity to be heard on the fee schedule issue and for additional briefing.
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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