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Plaintiff Wins Out In No-Fault Fraud Case

Michigan Assigned Claims Plan Wins Fraud Case in Michigan No-Fault Accident

The Michigan Court of Appeals issued a decision that affects individuals involved in a Michigan car accident that are receiving benefits through the Michigan Assigned Claims, now known as the Michigan Automobile Insurance Placement Facility (MAIPF). The Court ruled that based upon the language of MCL 500.3173(a)(2), a person who submits knowingly false and material statements used to obtain no-fault benefits is precluded from recovering all benefits for the claim.

In Candler v. Farm Bureau Mutual Ins. Co. of Michigan, (docket no. 332998, published 10/24/17), the plaintiff was hit by a hit-and-run driver. Because he was uninsured at the time of the car accident, and no other car insurance could be established, he made a claim for PIP benefits through the Michigan Assigned Claims Plan (MACP). The Plan assigned Farm Bureau Insurance to handle the claim.

Over the next year, Farm Bureau paid out various no-fault PIP benefits to the plaintiff, including attendant care and replacement services. Among the documentation turned into Farm Bureau by the plaintiff were replacement service calendars for certain months in 2015. The calendars were signed by the plaintiff’s brother, showing that he did the household chores for his brother due to his brother’s car accident injuries. However, it was learned that the plaintiff’s brother did not do the replacement services during those months. Instead, the plaintiff had forged his brother’s name to those calendars.

Not a Unanimous Decision

Defendant Farm Bureau then filed a motion to dismiss not just the replacement service claim, but the entire no-fault claim for all benefits. The trial court denied Farm Bureau’s motion, but on appeal the Court of Appeals in a 2-1 decision ruled in favor of Farm Bureau and dismissed the entire case.

The reaching its decision, the majority analyzed the language of MCL 500.3173(a), which states when a Michigan no-fault claim is submitted to the Michigan Assigned Claims Plan, “a claim that contains or is supported by a fraudulent insurance act as described in this subjection is ineligible for payment or benefits under the assigned claims plan.”

Farm Bureau argued that because the plaintiff submitted replacement service calendars that were forged, he committed fraud under the statute and the entire PIP no-fault claim should have been dismissed. However, the plaintiff argued the statute requires that the fraudulent be submitted to the MAIPF. Because in this case the forged replacement service calendars were submitted to Farm Bureau Insurance, the servicing insurer, and not the MAIPF, the statute was not violated and the plaintiff’s PIP claim should not be dismissed.

The majority agreed with Farm Bureau’s point of view. Even though the statute does require that the false statement be presented “as part of or in support of a claim to the MAIPF,” the MAIPF was involved because it ultimately assigned the claim to Farm Bureau and was part of the no-fault process. Therefore, the plaintiff’s claim for no-fault benefit is a claim to the MAIPF, not to Farm Bureau. Because there was a fraudulent act committed by the plaintiff that violated MCL 500.3173, Farm Bureau was entitled to dismissal.

The dissenting judge took the side of the plaintiff. The judge said the majority took the mistaken view MCL 500.3173 requires the withholding of benefits whenever a false statement is presented to a servicing insurer simply because an initial claim was presented to the MAIPF. But the statute does not say this. The statute only says that false statements made as part of or in support of a claim must be presented to the MAIPF before a person may be found ineligible for PIP benefits. The statute does not say that false statements made to assigned member insurers, like Farm Bureau, was a basis for denial of benefits. Because no false statement was made to the MAIPF, the plaintiff’s claim should not have been dismissed.

Was This Ruled Correctly?

This is interesting case because this decision turns on one’s analysis of statutory construction. Judges always like to say they are enforcing the law as written, But here we have two judges that frankly read the statute the way they want to see it, not the way it is written. It is result oriented in the worst sense.

The statute specifically says the fraudulent documentation must be submitted to the MAIPF for a case to be dismissed under MCL 500.3173(a). In this case, the fraudulent documentation was not submitted to the MAIPF, but instead to Farm Bureau Insurance. While this may sound like splitting hairs, it is vitally important.

The dissenting judge in my opinion correctly interpreted the statute as it was written. The plaintiff’s claim should not have been dismissed. Because of the majority’s ruling, all the doctors who treated the plaintiff will not be able to get their medical bills paid by the auto carrier. This despite the fact the plaintiff’s fraudulent act was merely about who actually did his household chores, and had nothing to do with his medical treatment.