In a Michigan no-fault case, the Michigan Court of Appeals ruled in favor of a hospital, imposing no-fault penalty interest against a car insurance company when it unreasonably refused to pay a hospital bill.
The case, Bronson Health Care Group v. Titan Insurance, docket no. 324847 (3/15/16), involved a woman injured in a car accident on May 9, 2013. Following the accident, she went to Bronson Hospital for treatment and incurred a $51,596.13 bill. Because the patient did not have auto insurance of her own or in her household, and the car she was a passenger in was uninsured, Bronson submitted an Application for No-Fault benefits to the Michigan Assigned Claims Plan (MACP).
Under the Michigan no-fault law, the MACP processes the application and assigns a Michigan car insurance company to pay the claim. In this situation, Titan Insurance was assigned to handle and pay the claim, which included the Bronson Hospital bill. Once Titan Insurance received reasonable proof of the bill and the fact it was related to the accident, it has 30 days to make payment. If payment is not made within 30 days, it is subject to the payment of no-fault interest.
However, instead of accepting responsibility and paying the hospital bill when it received proof of the patient’s hospital stay and the amount of the bill, Titan Insurance denied payment, claiming there was contradictory information in the MACP applications the patient filed. Titan wanted to first absolutely confirm there was no other insurance before paying the hospital bill. Titan Insurance finally did pay the hospital bill, but not until a year after it originally received the bill and a lawsuit was filed by Bronson Hospital against Titan Insurance for payment of its bill.
In a unanimous decision, the Michigan Court of Appeals held Titan Insurance had reasonable proof of the medical bills and the amount of the bill. Therefore it had 30 days to make payment. Because it did not make payment within 30 days, it was subject to the payment of no-fault penalty interest under MCL 500.3142(3). The interest rate is 12% per year.
The court went on to say that Titan Insurance was reading a requirement into the law that was not there, that “penalty interest is not available until more than 30 days after an assigned carrier confirms for itself and on its own timeline a claimant’s eligibility for benefits.” The court also held that attorney fees and costs were also available to Bronson Hospital under MCL 600.2591 because Titan Insurance’s defense was frivolous.