Michigan Case: Bahri v. IDS Property Casualty Ins. - Lee Steinberg Law Firm

I'll Be Right There

Request Free Consultation

Bahri v. IDS Property Casualty Ins. Company

Fraud and Material Misrepresentation in a No-Fault PIP Claim

The Michigan No-Fault law was set up so injured individuals could receive prompt payments, such as lost wages and the payment of medical bills, following a car accident. For many decades, this system worked. People injured people in a car wreck did not have to wait years to receive benefits, such as the payment of lost wages like they did in a traditional tort lawsuit.  

But as the popularity of PIP claims grew, insurance carrier became more and more aggressive in defending Michigan no-fault cases. Insurance companies do not like paying out money. In Michigan, one of the main defenses they assert is that the plaintiff committed fraud during the pendency of a case. Because all insurance policies come with an antifraud provision that allows them to void a policy when a material misrepresentation by a policyholder or named insured is made, insurance companies use these provisions to dismiss cases and avoid paying benefits.

An example of this occurred in Bahri v. IDS Prop Cas. Ins. Co., 308 Mich App 420;864 N.W.2d 609. The Bahri ruling gave insurance carriers a sledgehammer to crush otherwise valid no-fault cases. 

Facts of the Case:

The plaintiff was a policyholder of the defendant, IDS Property Casualty Insurance, when she was injured in a car accident. Following the crash, she made a claim for Michigan PIP benefits from her auto insurance carrier. One of these benefits was for replacement services, which allows friends and family members to receive up to $20 per day for the household chores they complete on behalf of the injured person. 

The plaintiff submitted statements supporting her claim for replacement services, but surveillance video for the relevant time period revealed that the plaintiff was able to drive, run errands, bend, and lift. Further, to substantiate her claim for replacement services, the plaintiff presented a statement indicating that services were provided from October 1, 2011 to February 29, 2012. However, the car accident occurred on October 20, 2011. Therefore, the defendant argued the replacement service documents plaintiff presented to defendant were false and sought recoupment for services that were performed over the 19 days preceding the accident.

The no-fault insurance policy contained a general fraud exclusion, which provided: “We do not provide coverage for any insured who has made fraudulent statements or engaged in fraudulent conduct in connection with any accident or loss for which coverage is sought under this policy.”

The defendant insurance company filed a motion to dismiss the entirety of plaintiff’s no-fault claim, seeking to void coverage as a result of the plaintiff’s replacement service claim. The trial court dismissed the claim based on the fraud exclusion. The plaintiff appealed.


On appeal, the Court held that the plain language of the fraud exclusion barred the plaintiff from recovering benefits.

The Court went on to rule that to void a policy because the insured has willfully misrepresented a material fact, an insurer must show that (1) the misrepresentation was material, (2) that it was false, (3) that the insured knew that it was false at the time it was made or that it was made recklessly, without any knowledge of its truth, and (4) that the insured made the material misrepresentation with the intention that the insurer would act upon it. A statement is material if it is reasonably relevant to the insurer’s investigation of a claim. Bahri, 308 Mich App at 424-425. 

The Court held that the plaintiff presented fraudulent statements to substantiate her claim for replacement services. She sought reimbursement for services that were performed before the accident, and surveillance videos revealed that she was physically able to perform chores for which she sought assistance.

The Court concluded that the defendant was entitled to summary disposition because “[r]easonable minds could not differ in light of this clear evidence that plaintiff made fraudulent representations for purposes of recovering PIP benefits.” Id. at 426.

Result of the Case:

The Bahri ruling emboldened defendant insurance carriers such as Progressive, Allstate and State Farm to file countless motions alleging fraud on the part of the claimants to prevent the payment of no-fault benefits. Many trial judges ruled in favor of the defendant carriers, even when the allegations of fraud were flimsy at best.

Bahri motions became a way for insurance companies to not only dismiss parts of a no-fault claim. Instead, they became the easiest way to get rid of the entire case, even medical bills from providers who had nothing to do with the alleged fraud.   The effects of the Bahri ruling were mitigated in the Michigan Court of Appeals holding in Williams v. Farm Bureau, ___ Mich App ____ (2021) (Docket No. 349903). However, the decision is a very important weapon in insurance carriers’ toolbox.