RICHARD DUCKWORTH V CONTINENTAL NATL INDEMNITY COAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
September 8, 2005
Wayne Circuit Court
LC No. 03-305538-NI
CONTINENTAL NATIONAL INDEMNITY
Official Reported Version
Before: Saad, P.J., and Hoekstra and Markey, JJ.
In this action under Michigan's no-fault insurance act, MCL 500.3101 et seq., plaintiff,
Richard Duckworth, appeals an order that granted summary disposition for defendant,
Continental National Indemnity Company (CNI). We affirm.
I. Facts and Procedural History
On May 25, 2001, plaintiff, a Canadian citizen, sustained injuries in Canada in an
accident involving a semitrailer.1 Plaintiff received medical treatment and the Ontario Health
Insurance Plan (OHIP), Ontario's public health insurance program, covered his medical
expenses. On February 20, 2003, plaintiff filed this action to recover personal protection
insurance benefits from CNI, the insurer of the semitrailer. The uncoordinated insurance policy
for the vehicle included Michigan no-fault personal protection insurance coverage, and plaintiff
acknowledges that CNI paid some benefits under the contract, including those medical expenses
CNI is an Ohio corporation licensed to do business in Michigan. Before the accident, CNI
issued an insurance policy to cover the semitrailer, which was owned by Rodriguez Expedited
Freight Service, Inc.
that were not covered by OHIP. Here, plaintiff seeks $82,427.38 in reimbursement benefits for
his medical care and treatment expenses covered by OHIP.
The trial court ultimately granted partial summary disposition to CNI under MCR
2.116(C)(10).2 The court concluded that plaintiff did not "incur" the medical expenses under
MCL 500.3107(1)(a) because his medical care was free of cost under OHIP, plaintiff was never
billed for the medical services, and because, under Canadian law, plaintiff cannot be held liable
for the costs.3
This Court reviews "de novo a trial court's decision on a motion for summary
disposition." Tipton v William Beaumont Hosp, 266 Mich App 27, 32; 697 NW2d 552 (2005).
"Summary disposition under MCR 2.116(C)(10) is appropriate when there is no genuine issue
with respect to any material fact and the moving party is entitled to judgment as a matter of law."
Id. This case also presents an issue of statutory interpretation, which this Court reviews de novo.
Echelon Homes, LLC v Carter Lumber Co, 472 Mich 192, 196; 694 NW2d 544 (2005).4
As noted, the trial court granted summary disposition for defendant because it ruled, as a
matter or law, that the medical expenses covered by OHIP were not "incurred" expenses that
would entitle plaintiff to personal protection insurance (PIP) benefits under MCL 500.3107. The
relevant portion of that statute provides:
The trial court dismissed plaintiff 's remaining claims on February 7, 2005.
The trial court ruled that plaintiff, not OHIP, paid for expenses related to podiatrist services and
that the expenses do not fall under its ruling regarding CNI's lack of liability for the remainder of
the medical costs. Neither party challenges this portion of the trial court's ruling and we need
not address it on appeal.
As the Echelon Court further explained:
In reviewing questions of statutory construction, our purpose is to discern
and give effect to the Legislature's intent. People v Morey, 461 Mich 325, 329330; 603 NW2d 250 (1999). "We begin by examining the plain language of the
statute; where that language is unambiguous, we presume that the Legislature
intended the meaning clearly expressed—no further judicial construction is
required or permitted, and the statute must be enforced as written." Id. at 330.
"We must give the words of a statute their plain and ordinary meaning . . . ." Id.
The plain and ordinary meaning of words can be ascertained by looking at
dictionary definitions. Koontz v Ameritech Services, Inc, 466 Mich 304, 312; 645
NW2d 34 (2002). [Echelon, supra at 196.]
(1) Except as provided in subsection (2), personal protection insurance
benefits are payable for the following:
(a) Allowable expenses consisting of all reasonable charges incurred for
reasonably necessary products, services and accommodations for an injured
person's care, recovery, or rehabilitation. . . . [Emphasis added.]
To support his claim that OHIP-covered expenses are "incurred," plaintiff relies primarily
on Clute v Gen Accident Assurance Co of Canada, 179 Mich App 527; 446 NW2d 839 (1989),
the only published Michigan case to address OHIP payments and the no-fault act. However, as
plaintiff recognizes, Clute construed MCL 500.3109(1) of the no-fault act, not § 3107.6 The
Clute Court considered whether a setoff provision in a no-fault policy permitted a setoff of
benefits received from a foreign government to PIP benefits that would otherwise be payable.
Clute did not address the plaintiff 's entitlement to the benefits under §3107(1)(a). Here,
defendant does not seek a setoff of benefits paid by OHIP and no policy provision regarding
setoff is at issue.
Moreover, the Court's holding in Clute is narrow and cannot be reasonably broadened to
cover § 3107(1)(a). In denying setoff, the Court in Clute interpreted specific language in §
3109(1) that refers to setoff for benefits "required to be provided under the laws of any state or
the federal government." Here, the issue is not whether "the federal government" might also
include the Canadian government. Rather, the question is whether a plaintiff "incurs" medical
expenses when the medical expenses are covered directly by a foreign health insurance plan.
Our Supreme Court has held that § 3107(1)(a) requires that, to recover PIP benefits, "'1) the
charge must be reasonable, 2) the expense must be reasonably necessary, and 3) the expense
must be incurred.'" Griffith ex rel Griffith v State Farm Mut Auto Ins Co, 472 Mich 521, 532 n 8,
697 NW2d 895 (2005), quoting Manley v Detroit Automobile Inter-Ins Exch, 425 Mich 140, 169;
388 NW2d 216 (1986) (Boyle, J., concurring in part and dissenting in part). In addition, "an
'allowable expense' must be 'for' one of the following: (1) an injured person's care, (2) his
recovery, or (3) his rehabilitation." Griffith, supra at 532 n 8. Here, CNI does not dispute the
nature of the medical expenses or whether they were reasonable or reasonably necessary. The
sole issue on appeal is whether those expenses were "incurred" under § 3107(1)(a).
MCL 500.3109(1) states, "[B]enefits provided or required to be provided under the laws of any
state or the federal government shall be subtracted from the personal protection insurance
benefits otherwise payable for the injury." (Emphasis added.) In Clute, the trial court ruled that
the defendant was not entitled to offset the amount of PIP benefits by the benefits Ms. Clute
received from OHIP or benefits she received from her Canadian Indian tribe. Id. at 532. The
Court of Appeals agreed and declined to read the statute "so broadly as to permit a setoff of
benefits received from a foreign government." Id. at 533.
Plaintiff also relies on Shanafelt v Allstate Ins Co, 217 Mich App 625; 552 NW2d 671
(1996), which addressed the meaning of "incurred" under §3107(1)(a). In Shanafelt, this Court
concluded that the ordinary meaning of incur is "to become liable for," and that:
Obviously, plaintiff became liable for her medical expenses when she
accepted medical treatment. The fact that plaintiff had contracted with a health
insurance company to compensate her for her medical expenses, or to pay directly
the health care provider on her behalf, does not alter the fact that she was
obligated to pay those expenses. Therefore, one may not reasonably maintain that
plaintiff did not incur expenses. Thus, defendant has presented no argument
suggesting that plaintiff 's expenses were not allowable expenses as that term is
used in MCL 500.3107(1)(a) . . . . [Id. at 638.]
Plaintiff contends that, under Shanafelt, he "incurred" the medical expenses when he "accepted
medical treatment." In other words, under plaintiff 's reasoning, §3107(1)(a) was triggered when
he was hospitalized, tested, evaluated, and treated for his injuries. As defendant points out,
however, our Courts have further considered the definition of "incurred" since this Court issued
the Shanafelt opinion. In Bombalski v Auto Club Ins Ass'n, 247 Mich App 536; 637 NW2d 251
(2001), this Court clarified that to incur or to become liable means "'[r]esponsible or answerable
in law; legally obligated.'" Id. at 543, quoting Black's Law Dictionary (7th ed). Accordingly,
the question here is whether plaintiff was ever legally responsible for the disputed medical
expenses. We hold that, as a factual and legal matter, plaintiff did not "incur" the medical
expenses at issue here.
The trial court's ruling is supported by substantial evidence that plaintiff never incurred
medical expenses. In his deposition, plaintiff testified that (1) the medical care providers and
OHIP do not bill for the disputed medical services and did not bill him for the disputed medical
expenses, (2) care for physical injuries is automatically covered by OHIP, (3) he does not think
he is legally liable for any of the expenses for his medical care in this case, and (4) he never paid
a premium for OHIP coverage.
OHIP is provincially administered health care coverage controlled and subsidized by the
Canadian government. And, under the Health Insurance Act (Act), RSO 1990, ch H6, and RRO
1990, Reg 552, health care coverage is essentially universal to all Ontario residents. Act, §§ 1011. Significantly, and dispositive of the issue before us, by law, residents covered by OHIP are
entitled to all medically necessary hospital services "without charge," including the very medical
services in dispute in this case. Reg 552, § 9. Further, the Act and the regulations provide that,
as with plaintiff 's experience, patients with OHIP do not bear any up-front cost for medical care.
Indeed, for the medical services at issue in this case, physicians are prohibited from billing their
patients directly. Act, § 15.1(3)(b). Thus, unlike those with private health insurance coverage,
OHIP patients do not purchase partial or full coverage to reduce or eliminate their liability for
medical expenses. Rather, medical care is free of charge and the use of private health insurance
is unnecessary and is generally prohibited. Act, § 14.7 Further, as plaintiff 's counsel conceded
at oral argument, OHIP does not pay hospital medical expenses for individual patients.8 Rather,
the government makes periodic block payments to Ontario hospitals, regardless of whether a
specific patient, such as plaintiff, is undergoing treatment there. Moreover, payment by OHIP
for services "constitutes payment in full of the account." Act, §§ 15(2)(b), (3); 15.1(3)(b), (c).
Plaintiff contends that his medical expenses were incurred under § 3107(1)(a) because,
despite the above facts and legislative provisions, an OHIP patient may be liable for medical
expenses in certain circumstances. However, here, none of those circumstances applies here—
all the disputed medical services were provided without charge to plaintiff.9 Furthermore, to the
extent that plaintiff equates OHIP to a "traditional" health insurance policy in an attempt to show
that Ontario residents first incur their medical expenses and OHIP later covers them, his
reasoning is unpersuasive. A patient purchases private health insurance to cover potential costs
of medical care, for which the patient would otherwise be obligated to pay. OHIP is a
government-created system of providing health care without charge to the injured party in
virtually every personal injury situation. Indeed, pursuant to the Act and the regulations and in
light of OHIP's administration and funding, OHIP provides Ontario citizens free medical care for
precisely the injuries plaintiff suffered in this case, leaving the "insured" no initial or subsequent
liability for any costs associated with those services.
Plaintiff bore no legal responsibility for the disputed costs of his medical care and,
accordingly, did not "incur" the medical expenses reimbursable under the no-fault act.
We need not address the recent decision of the Supreme Court of Canada that a similar
prohibition on private health care insurance in Quebec is unconstitutional. Chaoulli v Quebec
(Attorney General),  1 SCR 791; 2005 SCC 35.
Indeed, on the record, plaintiff 's counsel simply asserted that, despite the fact that plaintiff 's
medical expenses were fully covered under OHIP, he should be entitled to "double dip."
We also reject plaintiff 's argument that OHIP may file a subrogation claim under § 30(1) of the
Act and that OHIP notified plaintiff in this case of a subrogation interest. According to plaintiff,
§ 30(1) suggests that, because a plaintiff may be required to repay costs covered by OHIP, he is
"legally liable" for the medical expenses even after OHIP pays for services. We agree with
defendant that this argument is unpersuasive because subrogation is only permitted when an
OHIP insured is injured by a negligent or wrongful act of a third person. Defendant is correct
that, notwithstanding OHIP's notification of a subrogation interest, § 30(1) does not apply here
because this is not an action for damages against a negligent third party, but is merely an action
for first party no-fault benefits.
Accordingly, the trial court correctly granted partial summary disposition to CNI because
plaintiff is not entitled to personal protection insurance benefits under the facts of this case.
/s/ Henry William Saad
/s/ Joel P. Hoekstra
/s/ Jane E. Markey