‘Alighting’ ends with both feet on the ground, MSC says

A plaintiff can’t collect personal protection benefits from her no-fault insurer for an injury she suffered from a slip-and-fall while getting out of her car, the Michigan Supreme Court ruled on Thursday. The court reversed a jury verdict in the plaintiff’s favor.

The decision in Frazier v. Allstate Insurance Co. puts a limitation on just how far the phrase “arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle” can be interpreted. Mona Lisa Frazier sued her auto insurer for first-party benefits to cover treatment of an injury she suffered when she stepped on a patch of ice while closing her car door after exiting the vehicle.

At issue was whether she suffered the injury while “alighting” (also known as “exiting”) the vehicle. Signed by the four Republican justices only, the memorandum opinion states that Frazier wasn’t alighting the vehicle when she fell because she had essentially completed the process of exiting the car when both feet were on the ground.

Moreover, that the injury must be sustained “while” alighting indicates that “alighting” does not occur in a single moment but occurs as the result of a process. The process begins when a person initiates the descent from a vehicle and is completed when an individual has effectively “descend[ed] from a vehicle” and has “come to rest”—when one has successfully transferred full control of one’s movement from reliance upon the vehicle to one’s body. This is typically accomplished when “both feet are planted firmly on the ground.” [citiation removed]

Based on the foregoing analysis, plaintiff is not entitled to benefits under the no–fault act because her injury did not arise out of the use of a parked vehicle under MCL 500.3106(1). Plaintiff was injured when she slipped and fell on a patch of ice while closing the passenger door of her vehicle. Plaintiff had placed a few personal items in the passenger compartment via the passenger door, stood up, and stepped out of the way of the door when she closed the door and fell. Insofar as she was in contact with the door of the vehicle at the time of her injury, she was clearly in contact with the vehicle itself, not with “equipment” mounted thereon. Therefore, her injury was not “a direct result of physical contact with equipment permanently mounted on the vehicle . . . .” MCL 500.3106(1)(b). Further, before her injury, plaintiff had been standing with both feet planted firmly on the ground outside of the vehicle; she was entirely in control of her body’s movement, and she was in no way reliant upon the vehicle itself. Therefore, she was not in the process of “alighting from” the vehicle. MCL 500.3106(1)(c). At the time of her injury, plaintiff had already alighted.

Justice Marilyn Kelly, joined by Justice Michael F. Cavanagh, dissented, stating that she would have denied leave to hear the case because a reasonable juror could have concluded that Frazier was alighting the vehicle when she fell. Justice Diane M. Hathaway wrote a separate dissent, arguing that the Supreme Court shouldn’t “take any further action in this unique, fact-specific case that should have no precedential value.

Medical provider owes no fee to plaintiff attorney, MSC says

In May, the Michigan Court of Appeals decision in Miller v. Citizens Insurance allowed a first-party plaintiff’s attorney to collect a fee from a medical provider who received payment from an insurer because of the first-party action.

The court reasoned that without the first-party action, the provider might have only received payment from Medicaid, which would have been much less than the amount it received.

On Friday, November 4, the Michigan Supreme Court reversed the decision in an order:

Plaintiff’s reliance on MCL 500.3112 is unavailing because that provision, which permits equitable apportionment of personal protection insurance benefits among payees, does not encompass an award of attorney fees to an insured’s counsel.  However, the Court of Appeals’ reliance on the common-fund exception to the American rule was erroneous because no common fund was created.

Of concern to this Court is that the circuit court’s order, and the Court of Appeals’ affirmance, could be mistakenly interpreted as extinguishing the DMC’s contractual right to payment for its services.  We wish to make clear that this is not the case.  No-fault benefits are “payable to or for the benefit of an injured person . . . .”  MCL 500.3112.  In this case, through settlement, the benefits were paid to plaintiff, and her attorney asserted an attorney’s charging lien over the settlement proceeds.  Thus, the effect of this was only to settle claims as between  the insurer, plaintiff, and her attorney.  The circuit court’s order of dismissal pursuant to the settlement agreement did not have the effect of extinguishing the DMC’s right to collect the remainder of its bill from plaintiff.  Such a result could not have been achieved without an explicit waiver, or at least unequivocal acquiescence, by the DMC, which was not obtained.

PIP compromise bill might be on the way

Yesterday, State Rep. Pete Lund, R-Shelby Township, introduced a bill that is far less Draconian than the no-fault reform bills introduced in the Senate last March. Because the bill represents more compromise, it may have a far better chance of making its way to Gov. Snyder’s desk.

The bill, HB 4936, like Senate Bill 293, allows insurance buyers to purchase less-than-lifetime personal injury protection. But SB 293 allows coverage as low as $50,000, which critics have aptly noted doesn’t go very far in treating catastrophic injuries. The house version’s lower limit is $250,000, which the Insurance Institute of Michigan has said is enough to cover nearly 99 percent of all no-fault claims, and is five times more than than in New York, the state with the next-highest minimum behind Michigan’s lifetime coverage.

Lund’s bill would also cap PIP coverage at $5 million, which is causing alarm among lawyers who strongly argue that the unlimited lifetime PIP coverage is the cornerstone of Michigan’s no-fault system. But insurance industry leaders have for years been saying that lifetime benefits are crippling Michigan’s no-fault system, and create such a big and unpredictable weight on the system that no-fault is unsustainable.

The house bill includes other compromises, requiring a give-and-take among the bar, insurance carriers and health care providers. Like SB 294, it would set a fee schedule for providers identical to workers’ compensation. Currently, the fees paid by some no-fault insurers are astronomically higher (as much as tenfold) than workers’ compensation — the second most generous fee schedule in the state, richer than Blue Cross and Medicare.

It would also eliminate some of the dread over what could happen if the now-conservative Michigan Supreme Court finds the right case to overturn McCormick v. Carrier, and return to a serious impairment threshold identical, or more stringent, than Kreiner v. Fischer.

Be sure to read Monday’s Michigan Lawyers Weekly for full coverage of the proposed reforms.

Plaintiff must show experimental medical procedure is effective in no-fault action

In the second-to-last Michigan Supreme Court decision of the term, the court has found that a first party no-fault plaintiff must show verifiable and objective medical evidence that an experimental procedure is effective in order to prevail.

In Krohn v. Home-Owners Insurance Co., the plaintiff went to Portugal for experimental spinal surgery after suffering catastrophic injuries in an auto accident . The surgery wasn’t FDA approved and wasn’t available in the U.S. He was warned by his doctor that the surgery was dangerous, experimental and likely wouldn’t be covered by insurance.

The no-fault insurer told the plaintiff it wouldn’t pay for the surgery, but would pay for tests to see if he was a candidate and therapy sessions after. After having the surgery, he sued the no-fault insurer for the cost of the surgery.

After the surgery, the plaintiff reported some improvement in his condition. The majority, in an opinion written by Justice Brian Zahra, said experimental procedures aren’t all excluded by coverage, but more is required than the plaintiff’s perceptions that it worked/will work.

We reject defendant’s position and conclude that experimental treatments are not necessarily barred from being compensable under the no-fault act. The ultimate question whether the surgical procedure at issue here is a covered expense under the no-fault act does not turn on its status as experimental. Rather, like all claims for allowable expenses, the question turns on whether the procedure was reasonably necessary for plaintiff’s care, recovery, or rehabilitation.

Zahra wrote that the test for whether something is “reasonably necessary” must be an objective standard. Specifically, in footnote 47, the majority approved of the Court of Appeals’ assertion that using hindsight evidence, i.e. “it worked” “is inconsistent with making an objective determination of whether medical treatment was ‘reasonably necessary.’”

Zahra defined the experimental procedure test as follows:

Thus, a service, product, or accommodation must be (1) objectively reasonable and (2) necessary for an insured’s care, recovery, or rehabilitation. If, as in this case, the service under consideration is an experimental surgical procedure, the insured must present evidence that the surgery may result in care, recovery, or rehabilitation. In other words, there must be evidence that the surgery is efficacious. Further, because a surgery involves the exercise of medical judgment, the efficacy determination must be based on objective and verifiable medical evidence. Experimental surgical procedures lacking objective and verifiable medical evidence of their efficacy cannot be “reasonably necessary” simply because it cannot be shown to effect the insured’s care, recovery, or rehabilitation. …

If a surgical procedure is experimental, an insured cannot establish its reasonable necessity under MCL 500.3107 unless expert testimony indicates that the surgery presents a reasonable chance that it will be efficacious in the injured person’s care, recovery, or rehabilitation.

MCL 500.3107(1)(a) does not require that medical treatment be shown to have gained general acceptance within the medical community. Rather, an insured must present objective and verifiable medical evidence that medical treatment is efficacious in an injured person’s care, recovery, or rehabilitation. If there is objective and verifiable evidence that an experimental surgical procedure is efficacious, the finder of fact can begin to make an informed decision in regard to whether the treatment was reasonably necessary by considering whatever factors were relevant in that case, which may include but are not limited to the severity and chronicity of the condition, the outcomes of any previous treatments, the likelihood that alternative treatments would be efficacious, a personal physician’s recommendation in conjunction with the a patient’s preference, and both the short-term and long-term risks and benefits. Absent objective evidence to establish that the experimental surgical procedure is at least efficacious, there would not exist a material question of fact about whether the medical treatment was reasonably necessary to the care recovery or rehabilitation of an insured.

In a dissent, Justice Diane Hathaway accused the majority of adding to the statute:

The majority holds that in order for an expense related to an experimental surgical procedure to be “reasonably necessary,” a court must first determine as a matter of law that there is “objective and verifiable medical evidence establishing that [the experimental surgical procedure] is efficacious.” Further, the majority holds that plaintiff did not meet the “objective and verifiable medical evidence” standard because Dr. Lima’s research “was unsupported by any controlled studies, it was not subject to  peer review, and the medical evidence was not debated in scholarly publications.” Thus, the majority’s new standards add language to the statute that is simply not there.

She also disputed the majority’s result under its own holding, stating that 40 of the 110 people who have had the surgery came from the doctor whose opinion the majority relied upon to dispute the “efficaciousness” of the procedure, the ironically named Dr. Hinderer.

Only one opinion left.

MSC denies rehearing of U-M v Titan, says no error using ‘insanity’ and ‘incompentency’ interchangeably

The Michigan Supreme Court has denied a motion for reconsideration in Regents of University of Michigan v Titan Insurance Co., one of the decisions released at the end of its 2009-2010 term.

The court ruled in Regents that University of Michigan Hospital, as a state entity, was not bound by the No-Fault Act’s one-year back rule under a statute that says that state claims for medical bills have no statute of limitations.

According to Titan’s attorney, Mark D. Sowle of Anselmi & Mierzejewski P.C., the decision created a problem that may not have been intended: in ruling as it did, the court overturned its own decision in Cameron v Auto Club Ins. Cameron held a minority/insanity tolling statute didn’t apply to the one-year back rule.

But the majority continuously used the terms “insanity” and “incompetency” interchangeably, which could open the door for a whole new class of plaintiffs to avoid the one-year back rule.

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Sowle explained the scenario in August:

“Let’s say I was in a car accident 10 years ago and I claim I had a head injury, and therefore, I’m covered under the insanity provision,” he said. “Under this decision, I can theoretically file suit against my no-fault carrier and say, ‘Hey, you underpaid me for attendant care $1 an hour for the last 10 years.’ All of the sudden, I have a million-dollar lawsuit and I’m not bound by any statute of limitations. That’s the real danger here.”

Sowle filed a motion of reconsideration, which is still pending in the Michigan Supreme Court. His biggest concern, he said, was the Court using the term “incompetent” 15 times in place of the term “insane.”

“When you look at the dictionary definition of ‘incompetent,’ it’s a whole lot broader than the dictionary definition of ‘insane,’” he said. “On top of that, the statute defines the word ‘insane.’ It doesn’t define ‘incompetent.’”

Chief Justice Marilyn Kelly explained why she decided against reconsidering the case on the “incompetency/insanity” issue:

I write also to address our opinion’s use of the word “incompetent” rather than “insane” in discussing MCL 600.5851(1). This was not improper nor was it intended to expand the scope of MCL 600.5851(1). Indeed, I would not hesitate to vote to grant rehearing if I thought there was a need for clarification on this point. However,  there are several reasons why the opinion’s use of “incompetent” in place of “insane” is not a basis for granting rehearing. First, the legally recognized definition of “incompetent” is consistent with the statutory definition of “insane” in MCL 600.5851(2). Both terms contemplate persons who are unable to comprehend their legal rights. Second, there is nothing novel about using these terms interchangeably. The United States Supreme Court and numerous other courts, have done so for years.

Finally, it is pure speculation to predict the economic consequences of our decision. Defendant claims that it will inevitably lead to higher insurance premiums for Michigan drivers. No one is omniscient regarding when or why insurance companies choose to raise or lower premiums. However, the practical effects of our decisions generally do not dictate this Court’s reading of statutory language. This is a point with which at least one dissenting justice agrees.

One of those dissenting justices is Maura Corrigan:

In overruling Cameron v Auto Club Insurance Association, 476 Mich 55 (2006), the majority inaccurately described the class of individuals protected by the tolling provision in MCL 600.5851(1). The statute protects a person who “is under 18 years of age or insane at the time the claim accrues.” The majority distorted this clear language by repeatedly using the term “incompetent” interchangeably with  insane.” Whereas “insane” is statutorily defined as “a condition of mental derangement” that prevents a person from comprehending his rights, the term “incompetent” includes persons who are not properly qualified, capable, or legally fit to make a decision. MCL 600.5851(2);
Websters II New College Dictionary (2005). Thus, the term incompetent” has a potentially far broader reach than “insane,” thereby expanding the class of protected persons beyond those suffering from insanity.

The practical ramifications of the majority’s error in overruling Cameron include potentially higher premiums for all Michigan motorists who must by law purchase nofault automobile insurance. Defendant has documented that from 1978 through 2009, the Michigan Catastrophic Claims Association received a total of 24,533 claims, nearly half of which involved a brain injury, the type of injury most likely to trigger the tolling provision in MCL 600.5851. By expanding that provision beyond the reach of its plain language, the majority permits a new universe of claims for accidents that occurred decades ago, claims that will ultimately be paid by the public through increased premiums.

Justice Robert P. Young, Jr. echoed Corrigan’s dissent as well as Justice Stephen J. Markman’s dissent from the original Regents decision:

And so, in this case, on an issue of the majority’s own creation—an issue not even related to the case at hand—the majority has inexplicably attempted to rewrite MCL 600.5851(1) by broadening the class of individuals covered from those who are insane to those who are merely incompetent. There is perhaps no clearer example than this case of
this majority’s demonstrated indifference to the actual words of a statute and the legislative process that considers, debates,  compromises, and ultimately selects those words. Neither the author of the majority’s opinion nor the justices who today sanction that opinion by denying rehearing deign to explain why it is appropriate for this Court to substitute a new protected category of persons for the one the Legislature actually chose. Once again in Michigan, judicial preferences trump legislative ones.

COA deals double whammy to no-fault insurers

The Michigan Court of Appeals, in a pair of split decisions, has complicated matters for two of the state’s no-fault insurers.

In both, the majorities employed strict statutory construction. The resulting rulings are undoubtably causing insurance defense lawyers to reach for the antacid tablets.

In Ward v. Titan Insurance Co., a bar employed a bouncer “off the books.” When the bouncer was hurt in a traffic accident, he filed for no-fault work-loss benefits.

Apparently there was a lot of hemming and hawing when it came time for the bar to produce, as required by MCL 500.3158(1), a sworn statement of the bouncer’s earnings.

The trial court ruled that if the bar could not, or would not, furnish the statement, the bouncer could not press his claim.

“Wrong,” said COA Judge Richard Bandstra, joined by Judge Deborah Servitto.

Nowhere do the statutes suggest that MCL 500.3158(1) is the only manner in which a wage loss claim may be proved or that MCL 500.3107(1)(b)’s right to a wage loss claim hinges on compliance with MCL 500.3158(1).

Bandstra acknowledged dissenting Judge Jane Markey’s suggestion that the arrangement between the bar and the bouncer was likely a scheme to avoid paying federal and state taxes.

As the dissent contends, under the facts and circumstances of this case, penalizing an employee for an employer’s failure to produce a sworn statement might be appropriate. However, imposing such a penalty would be a public policy decision for the Legislature, not the court. …

We are not free to read something into the statute that doesn’t exist, no matter how egregious the facts may be.

Markey retorted:

I find the majority’s crafting a loophole for an employer and his complicit employee who cannot or will not provide the requisite documentation because they are flouting federal and state tax laws contrary to the plain language, intent, and spirit of the no-fault act.

It is legislating from the bench and creating public policy where that function resides with the Legislature.

Moreover, under the facts of this case, I can find no injustice to plaintiff. Indeed, both the law and the equities of this fact scenario to me lie with Titan Insurance, the personal protection insurer.

Here’s a full summary of Ward.

Over at the offices of Progressive Michigan Insurance, everyone is probably running around like their hair is on fire after reading the COA’s decision in Progressive Michigan Ins. Co. v. Smith.

Smith didn’t have a driver’s license because there were too many points on his record. He bought a truck and added his friend, Harris, to the title. Harris obtained insurance from Progressive and listed Smith as an excluded driver. Smith paid for the policy.

Smith drove the truck, crossed the centerline and hit another car. The injured parties sued Smith, who defaulted. At that point, they sued Progressive, which defended on the basis that Smith was an excluded driver.

MCL 500.3009(2) specifies the exact language that must be used in an excluded driver notice:

If authorized by the insured, automobile liability or motor vehicle liability coverage may be excluded when a vehicle is operated by a named person. Such exclusion shall not be valid unless the following notice is on the face of the policy or the declaration page or certificate of the policy and on the certificate of insurance:
Warning — when a named excluded person operates a vehicle all liability coverage is void — no one is insured. Owners of the vehicle and others legally responsible for the acts of the named excluded person remain fully personally liable.

Let’s focus on that last word, “liable.”

Progressive’s notice substituted the word “responsible” for “liable.”

That’s good enough, the trial court said, and granted Progressive summary disposition.

“Wrong,” said Bandstra, this time joined by Judge Christopher Murray.

The Legislature did not merely set forth the substance of the required warning. Instead, the statute mandates use of “the following notice,” which notice is provided verbatim for insurers to use. Further, the Legislature did not merely state that this notice is required, without specifying the effect of noncompliance. If the required warning notice is not provided, the named person exclusion “shall not be valid.”

The statute could not be clearer. In this case, the warning notice does not appear, as required, on the certificate of insurance. Accordingly, the mandate of the statute is clear: the named driver exclusion “shall not be valid.”

Markey, in her dissent, suggested there are times when the law should bend a little.

It is not our job to modify, amend, or read into a statute something that is not there; such legislating from the bench is simply improper. Legislating belongs to the Legislature.

Nonetheless, on rare occasion there may arise a situation where following this philosophy with myopic rigidity effects not only a complete thwarting of the Legislature’s intent but also a profoundly unfair and inequitable result. …

The choice of “liable” versus “responsible” does not in any way frustrate the Legislature’s intent to ensure that strong warning be provided as to the import of an excluded driver provision.

Murray, in his concurring opinion, said he didn’t like the result but the statute is unambiguous.

Both the majority opinion and Judge Markey’s dissent, though coming to opposite conclusions, are thoughtful and well-written. …

[I]n my view our judicial duty is to enforce that indisputably unambiguous statute as written, and we cannot under Michigan law make exceptions to that rule. …

The essence of the dissent is that although our judicial duty is to almost always apply the statute’s unambiguous words to the facts presented, “on rare occasion[s]” like this case, “where following this philosophy with myopic rigidity effects not only a complete thwarting of the Legislature’s intent but also a profoundly unfair and inequitable result,” we should disregard that judicial duty.

With all due respect … I do not believe we can apply this rationale, which is essentially the “absurd result” doctrine of statutory construction, to this case.

Here’s a full summary of Smith.

MCOC targets ‘lawsuit abuse’

“Lawsuit Abuse” is among the Michigan Chamber of Commerce’s top legislative priorities for the Michigan Legislature’s 2009-2010 session.

Here’s what chamber members advocate:

  • Protecting current Michigan laws pertaining to general tort, medical liability, consumer protection and products liability, including Michigan’s FDA [Food and Drug Administration] Defense law.
  • Supporting reforms, such as limitation on attorney fees and loser pay, which ensure Michigan’s civil justice system is fair and balanced.
  • Preserving Michigan’s No-Fault automobile insurance system while allowing for competition, flexibility and choice in the marketplace and opposing attempts to reduce the tort liability threshold or increase the benefit or coverage thresholds.
  • Maintaining the right to enter into pre-dispute agreements requiring arbitration.

The Chamber’s rationale for these priorities seems to be that its members are happy with the current state of affairs.

The general, medical and products liability reforms that were enacted by the Legislature in the 1980s and 1990s have been effective in bringing reliability and balance to our legal system by curtailing lawsuit abuse, helping to retain practicing physicians in Michigan, and focusing court and financial resources on legitimate cases. Given Michigan’s reputation as a leader in the national legal reform movement, Michigan cannot afford to turn back the clock and should instead proactively work to strengthen and improve the state’s civil justice system. For similar reasons, the Michigan Chamber is opposed to any legislative attempts to erode the tort thresholds under Michigan’s No-Fault insurance system. Furthermore, parties should be free to agree in advance to a prompt, efficient and fair dispute resolution process outside of the court system.

The no-fault act’s “serious impairment” threshold is the issue making the Chamber most nervous. This issue will first play out, not in the Legislature, but in the Michigan Supreme Court, where the Chamber’s influence has waned with the departure of former Justice Clifford Taylor and the election of Justice Diane Hathaway.

Tort recovery under the no-fault act is available when traffic accident injuries constitute a “serious impairment of body function.” The current operating definition of this phrase was supplied by Taylor, joined by Justices Maura Corrigan, Robert Young and Stephen Markman, in Kreiner v. Fischer. Justice Michael Cavanagh dissented, joined by Justices Elizabeth Weaver and Marilyn Kelly.

With Hathaway now on the court, a judicial revisiting of the issue is likely. Also likely is a less strident formulation of what it means to have a “serious impairment of body function.”

With the change in the MSC’s makeup, the Chamber is going to have a much more difficult time getting a majority to embrace it’s point of view on the no-fault act.

That’s why it’s more important than ever, as far as the Chamber is concerned, to have a handle on things in the Legislature, which is where the Chamber would seek a remedy for any judicial tinkering with the no-fault act.

A complete list of the Chamber’s legislative priorities is available here.