February 02, 2011
In the recent unpublished decision of Allstate v Great Lakes, Docket No. 285883, the Court of Appeals affirmed in part and reversed in part the trial court’s order Granting Partial Summary Disposition for Allstate, which required that Great Lakes reimburse Allstate for PIP benefits which Allstate had paid, but which rejected Allstate’s request for loss adjustment costs and attorney fees. Hassan Sareini was injured in a motor vehicle accident while he was a passenger in his father’s car. Prior to the accident, Mr. Sareini’s father had attempted to buy automobile insurance GARAN LUCOW MILLER, P.C. ANN ARBOR • DETROIT • GRAND BLANC • GRAND RAPIDS • LANSING • MARQUETTE • PORT HURON • TRAVERSE CITY • TROY MERRIVILLE, INDIANA through Great Lakes, but his check for the initial premium payment was denied for insufficient funds. Therefore, Great Lakes voided the policy. Mr. Sareini claimed personal protection insurance benefits through the Michigan Assigned Claims Facility which assigned the claim to Allstate. Allstate paid benefits of approximately $800,000 and incurred adjustment costs which it sought from the Defendant, Great Lakes. The trial court found that Allstate was entitled to reimbursement for benefits paid, but not for loss adjustment costs or attorney feees. In determining whether Allstate was entitled to reimbursement of all PIP benefits paid to or on behalf of Mr. Sareini, the court first noted that pursuant to MCL 500.3172, in order to trigger eligibility for assigned claim benefits, the injured individual must meet at least one of the four statutory conditions:
(1) No Personal Protection Insurance is applicable to the individual’s injury; (2) No Personal Protection Insurance can be identified; (3) Two or more insurers are disputing their obligations to provide coverage; or (4) The insurer responsible for the loss is insolvent. Once the Assigned Claims Facility makes the individual determination of eligibility for benefits, pursuant to MCL 500.3173a, the claim is then assigned. In this case, that assignment was made to Allstate. Then, pursuant to MCL 500.3175(1), Allstate, as the insurer to whom the claim was assigned, was responsible to make prompt payment of the loss in accordance with the Act. Further, pursuant to MCL 500.3175(2), Allstate was required to “preserve and enforce rights to indemnity or reimbursement against third parties and account to the Assigned Claims Facility”. Great Lakes argued on appeal that Allstate knew or should have known that Great Lakes had acknowledged coverage before the date that Allstate received Sareini’s assigned claim, yet Allstate failed to deny the claim. Great Lakes proceeded to argue that because none of the statutory conditions for eligibility were triggered, Allstate’s failure to deny the claim precludes Allstate from obtaining reimbursement from Great Lakes.
The Court of Appeals rejected Great Lakes’ assertion that Allstate could have or must have denied the claim even assuming Allstate knew that Sareini had not met any of the four statutory conditions of an assigned claim. The Court of Appeals noted that there is no statutory authority allowing Allstate to deny a claim assigned by the ACF. The Court of Appeals further held that Allstate knew that Great Lakes had issued a policy that might provide personal protection insurance benefits, but Allstate also knew that Great Lakes had not clearly accepted responsibility for paying those benefits. Therefore, at the time Allstate received the claim, no insurance covering Sareini had been identified, so Sareini was eligible for assigned claim benefits. In deciding the cross-appeal filed by Allstate for reimbursement for loss adjustment costs and attorney fees, the Court of Appeals cited Spectrum Health v Grahl, 270 Mich App 248 (2006), wherein the court cited MCL 500.3172(1), noting that the statutory language did not specify GARAN LUCOW MILLER, P.C. ANN ARBOR • DETROIT • GRAND BLANC • GRAND RAPIDS • LANSING • MARQUETTE • PORT HURON • TRAVERSE CITY • TROY MERRIVILLE, INDIANA whether the right to reimbursement includes a right to recover costs, attorney fees, and interest. The court additionally noted, that in contrast to MCL 500.3172(1), MCL 500.3172(3)(f), specifically includes a right to recover costs, attorney fees, and interest. Thus, when seeking benefits through the ACF under 3172, costs, attorney fees and interest are only available under 3172(3)(f). In the Spectrum case, the court held that MCL 500.3172(3)(f) was not applicable when “the Assigned Claims Facility assigned the insured’s claim to an insurer because the insured claimed that no personal protection insurance applied to her injury and not because of a dispute between two or more automobile insurers concerning their obligation to provide coverage or the equitable distribution of the loss.” Spectrum, 270 Mich App at 249.
Therefore, in the present case,the Court of Appeals held that at the time of the assignment to the ACF, both Allstate and the Assigned Claims Facility were unable to identify any other source of personal protection insurance coverages applicable to cover Mr. Sareini. Therefore, as in Spectrum, MCL 500.3172(3)(f) was inapplicable and Allstate could not collect costs, attorney fees and interest.
At oral argument, the parties addressed Administrative Rule 11.105 promulgated by the Secretary of State in 1989. Spectrum Health v Grahl did not address R11.105 and focused exclusively on 3172(3)(f).
R11.105 provides: The assigned claims facility or the servicing insurer to which the claim is assigned is entitled to reimbursement for the personal protection insurance benefits which are provided and the appropriate loss adjustment costs which are incurred from an insurer who is obligated to provide the personal protection insurance benefits under a policy of insurance, but who fails to pay such benefits. (Emphasis added). R11.105 provides a specific right to the servicing insurer distinct from 3172(3)(f) to recover “appropriate loss adjustment costs.” Therefore, Allstate is entitled to reimbursement of loss adjustment costs pursuant to R11.105, but not attorney fees because attorney fees are not specifically addressed in R11.105.
Upcoming Seminars ANNUAL TROY BREAKFAST SEMINAR Thursday, September 23, 2010 at the Troy Marriott. Agenda to follow at a later date.
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RACE AND REMEMBER Garan Lucow Miller, P.C. is sponsoring a new event that will take place in downtown Detroit, specifically a 5k run (approximately 3 miles) and walk (2 miles with 1 mile option), called Hospice of Michigan’s 2010 Race and Remember. This event will take place on Saturday, June 12th, 2010, along the beautiful Detroit Riverfront starting at Rivard Plaza, next door to our Detroit office. The event honors loved ones who have received hospice care and to raise money for Hospice of Michigan’s Open Access Program. If you would like to participate either by running or walking in this event, you may register online at http://www.active.com/donate/raceandremember/garan Garan Lucow Miller’s team name is “GARAN’S GAZELLES”. Please resister as a team member.
Once registered, please contact Eileen Carty at ecarty@garanlucow.com, as Garan Lucow Miller, will provide parking/refreshments to all participants.
The 3rd Annual Cherry- Roubaix Race, sponsored by Garan Lucow Miller, P.C., will be held on Saturday and Sunday, August 28th and 29th, 2010, through the historic streets in the heart of Traverse City.
Mark your calendars to join us at this exciting event. If you have any questions or would like additional information on this race, please go to www.cherry-roubaix.com or contact Peter Worden, in our Traverse City office at: (231) 941-1611.
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SAVE THE DATE Event: Garan Lucow Miller’s Annual Golf Outing Date: Tuesday, August 24, 2010 Venue: Forest Akers West Golf Course on the campus of MSU Banquet dinner to be on campus at the University Club
Garan Lucow Miller, P.C., a full-service law firm since 1948, providing quality representation to a national clientele from the Great Lakes Region, is pleased to announce that it has opened an office in Merrillville, Indiana, to further facilitate your claim and litigation needs in Indiana and Illinois.
Garan Lucow Miller, P.C. 8401 Virginia Street Merrillville, Indiana 46410 Phone: 219.756.7901 Fax: 219.756.7902 Toll Free: 877.804.2801