BORGESS MEDICAL CENTER V JUAN RESTO
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STATE OF MICHIGAN
COURT OF APPEALS
BORGESS MEDICAL CENTER,
FOR PUBLICATION
January 9, 2007
9:05 a.m.
Plaintiff-Appellee,
v
No. 270773
Allegan Circuit Court
LC No. 04-0362235-NF
JUAN RESTO,
Defendant,
Official Reported Version
and
SOUTHERN MICHIGAN INSURANCE
COMPANY,
Defendant-Appellant.
Before: O'Connell, P.J., and White and Markey, JJ.
PER CURIAM.
Defendant appeals by right the trial court's judgment awarding plaintiff no-fault benefits,
penalty interest, and attorney fees after granting plaintiff 's motion for summary disposition
pursuant to MCR 2.116(C)(10). Defendant also appeals the trial court's granting of plaintiff 's
motion to compel discovery and the imposition of sanctions. We affirm.
I
Plaintiff brought this action to recover no-fault benefits from defendant, Southern
Michigan Insurance Company, after providing medical treatment to Juan Resto for injuries he
received in a January 23, 2004, automobile accident. According to an Allegan County Sheriff 's
Department accident report, Resto was injured while a passenger in a 1993 GMC van operated
by Tomas Lucas-Diaz and owned by Francisco Lopez, whom defendant insured. The accident
report indicated that Lucas-Diaz was driving the van south on US-131 when he lost control, slid
into the median, and rolled over. The police report records the injuries of persons involved in the
accident on a scale in descending order of severity from K (which apparently stands for "killed"),
to A, B, C, and finally 0 (which apparently indicates no injury). The report indicated that Resto
received level-A injuries in the accident and was transported by ambulance to "Borgess" for
treatment.
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Plaintiff filed its complaint for personal injury protection (PIP) benefits on August 9,
2004, alleging that it provided emergency medical care and inpatient medical care and treatment
to Resto on January 23 and 24, 2004, as well as outpatient services on February 5, 2004, with
Resto incurring charges totaling $12,402. Plaintiff attached to its complaint the affidavit of
Linda Collins, its director of patient financial services, who averred that plaintiff provided
medical services to Resto as stated in the complaint and in attached itemized statements. Collins
also averred that plaintiff "provided a UB-92[1] and itemized statement for the care and treatment
provided to Juan Resto, to [defendant] on April 19, 2004." Plaintiff also alleged in its complaint
that the services it provided to Resto were medically necessary and that the charges for the
services were commercially reasonable.
With respect to its direct claim against defendant, plaintiff alleged that defendant
provided no-fault insurance to Francisco Lopez on the date of the accident and that Resto did not
have no-fault insurance of his own or available to him as a resident relative of another. Plaintiff
further alleged that defendant had unreasonably refused to pay or delayed paying plaintiff nofault benefits. Thus, plaintiff alleged that it was entitled to penalty interest under MCL 500.3142
and attorney fees under MCL 500.3148.
Defendant filed its answer on September 3, 2004, neither admitting nor denying most of
plaintiff 's allegations, professing a lack of present knowledge. But defendant admitted that it
had received plaintiff 's itemized statements of care and treatment provided to Resto and a UB92. Defendant claimed lack of knowledge to either admit or deny that the services plaintiff
provided Resto were medically necessary. Defendant denied as untrue that plaintiff 's charges
were customary and commercially reasonable, but also claimed to lack present knowledge to be
able to either admit or deny whether plaintiff 's claim of $12,402 consisted of "customary charges
for like professional medical services . . . [that] are commercially reasonable." Defendant
admitted that it provided no-fault coverage to Francisco Lopez on the date of the accident and
that it had refused and still refused to pay no-fault benefits. As became apparent during
discovery, the crux of Southern Michigan's defense was that after Resto's release from treatment,
neither plaintiff nor defendant could locate him to verify that he had no other available insurance.
On May 27, 2005, plaintiff moved for summary disposition under MCR 2.116(C)(10).
Plaintiff contended that the facts establishing defendant's liability for the charges incurred in
treating Resto were undisputed: Resto was injured in an automobile accident while a passenger
in a vehicle owned by Lopez and insured by defendant. Plaintiff asserted that it had provided
defendant with its itemized statement, UB-92s, and the affidavit of its financial director attesting
to the fact and the amount of the loss sustained. According to plaintiff, defendant's assertion that
a hypothetical insurer might exist with a higher priority for paying plaintiff 's claim was not a
viable defense, and, therefore, plaintiff was entitled to judgment as matter of law.
Defendant responded by asserting that Resto, and therefore plaintiff, had the burden of
proving that he had no other insurance of his own or available to him as a resident in the home of
1
Apparently a standard medical billing form.
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a relative who had insurance. Defendant asserted "the burden is upon a party claiming no fault
benefits to establish that the orders of priority set forth in MCL 500.3114 have been satisfied."
Defendant also asserted that plaintiff had not met its burden of proof that the charges were
medically necessary and reasonable. Specifically, defendant argued that although defendant's
affidavit had established that its charges were customary, they were not necessarily reasonable.
See Advocacy Org for Patients & Providers v Auto Club Ins Ass'n, 257 Mich App 365; 670
NW2d 569 (2003), aff 'd 472 Mich 91 (2005). Thus, defendant argued that not only should
plaintiff 's motion for summary disposition be denied, defendant should be granted summary
disposition under MCR 2.116(I)(2) instead.
The trial court ruled there was no dispute that defendant insured the vehicle in which
Resto was a passenger when injured. Further, there was no evidence of any other insurance
available to Resto, and the court rejected as unreasonable defendant's argument that plaintiff was
required to prove a negative. The court noted that plaintiff made a reasonable inquiry whether
other insurance was available; therefore, defendant has primary liability for no-fault benefits.
Further, the court noted that defendant could seek reimbursement if another higher-priority
carrier were subsequently identified. The trial court stated that defendant's interpretation of the
no-fault act "doesn't even make sense" and "would defeat the purpose" of the act. Accordingly,
the trial court ruled that plaintiff had met its burden of proof regarding defendant's liability. But
the court found plaintiff 's evidence lacking with respect to whether its charges were reasonable
and reasonably necessary. Nevertheless, the court ruled that plaintiff would be entitled to
interest and penalty interest on whatever charges plaintiff established were reasonable and
reasonably necessary. The court also ruled that plaintiff would be entitled to attorney fees
because defendant could not simply ignore plaintiff 's claim on the basis that another carrier
might be responsible. Consequently, the trial court granted partial summary disposition to
plaintiff and denied defendant's motion for summary disposition pursuant to MCR 2.116(I)(2).
Plaintiff subsequently moved again for summary disposition with additional affidavits
attesting that the services provided to Resto were medically necessary and that the charges were
reasonable. Dr. William J. Behrje averred that all the products and services plaintiff provided
Resto "were not only medically necessary, but they were essential to Mr. Resto's care, recovery,
and rehabilitation for the injuries that he received as a result of his January 23, 2004, motor
vehicle accident." Carol Lindauer, plaintiff 's manager of patient financial services, expanded on
Collins's prior affidavit. Specifically, Lindauer averred that all of plaintiff 's charges were
established after considering its costs, its nominal return, and regional and national comparisons
of similarly situated and sized health-care providers. Lindauer asserted that all of plaintiff 's
charges were reasonable in light of the factors it considered in setting them and that plaintiff
would charge the same amount with or without insurance coverage.
In its brief responding to plaintiff 's second motion for summary disposition, defendant
asserted that, on the basis of Dr. Behrje's affidavit, it no longer disputed that plaintiff 's
"treatment [of] Mr. Resto was reasonably necessary for his care, recovery, and/or rehabilitation
as a result of injuries sustained in the motor vehicle accident . . . ." Defendant only contested the
imposition of penalty interest and attorney fees.
At the hearing on the motion, defendant argued that because plaintiff did not establish
that its charges were reasonably necessary and reasonable until its second motion for summary
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disposition, the charges were not "overdue" until 30 days after that motion. The trial court
disagreed with defendant's interpretation of MCL 500.3142(2) and asked defense counsel what
was deficient about the information plaintiff initially provided to defendant. Defense counsel
could not answer the court's question. The trial court ruled that it would not change its prior
determination that penalty interest would accrue from 30 days after plaintiff provided defendant
with its billing materials. The court observed that defendant had never indicated what it
considered reasonable and necessary, which the court found to be unreasonable. Further, the
court determined that because defendant had required plaintiff to "go though so many hoops,"
plaintiff had incurred "extraordinary and extremely expensive attorney fees." The court also
found that plaintiff had never asked defendant for anything more than that to which it was
entitled. Accordingly, the trial court granted judgment for plaintiff, awarded penalty interest as
previously determined, and ruled that the attorney fees requested by plaintiff 's counsel were both
reasonable and necessary. The trial court entered judgment for plaintiff in the amount of
$12,402, penalty interest of $2,909.04 under MCL 500.3142, interest of $1,029.10 under MCL
600.6013, and attorney fees of $18,687.50 under MCL 500.3148. Defendant appeals by right.
II
We review de novo a trial court's decision to grant or deny summary disposition to
determine if the moving party is entitled to judgment as a matter of law. Maiden v Rozwood, 461
Mich 109, 118; 597 NW2d 817 (1999). Under MCR 2.116(C)(10), the motion tests the factual
support for a claim and must be supported by affidavits, depositions, admissions, or other
documentary evidence. MCR 2.116(G)(3)(b); Maiden, supra at 120. A court properly grants the
motion when the proffered evidence, viewed in the light most favorable to the nonmoving party,
fails to establish any genuine issue of material fact and the moving party is entitled to judgment
as a matter of law. West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003).
Defendant also raises issues of statutory interpretation, which we review de novo.
Amerisure Ins Co v Auto-Owners Ins Co, 262 Mich App 10, 14; 684 NW2d 391 (2004). The
Court's primary task when interpreting a statute is to ascertain and give effect to the intent of the
Legislature. Id.; Niles Twp v Berrien Co Bd of Comm'rs, 261 Mich App 308, 313; 683 NW2d
148 (2004). Our Supreme Court stated principles of statutory construction in Roberts v Mecosta
Co Gen Hosp, 466 Mich 57, 63; 642 NW2d 663 (2002):
An anchoring rule of jurisprudence, and the foremost rule of statutory
construction, is that courts are to effect the intent of the Legislature. To do so,
we begin with an examination of the language of the statute. If the statute's
language is clear and unambiguous, then we assume that the Legislature
intended its plain meaning and the statute is enforced as written. A necessary
corollary of these principles is that a court may read nothing into an
unambiguous statute that is not within the manifest intent of the Legislature as
derived from the words of the statute itself. [Citations omitted.]
In applying these principles, this Court must "consider both the plain meaning of the critical
word or phrase as well as 'its placement and purpose in the statutory scheme.'" Sun Valley Foods
Co v Ward, 460 Mich 230, 237; 596 NW2d 119 (1999), quoting Bailey v United States, 516 US
137, 145; 116 S Ct 501; 133 L Ed 2d 472 (1995). Also, this Court must accord meaning, as far
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as possible, to every phrase, clause, and word in the statute. Sun Valley, supra at 237;
Shinholster v Annapolis Hosp, 471 Mich 540, 549; 685 NW2d 275 (2004). In sum, the fair and
natural import of the terms employed in the statute, in view of the subject matter of the statute,
governs. Van Reken v Darden, Neef & Heitsch, 259 Mich App 454, 457; 674 NW2d 731 (2003).
III
Defendant first argues that the trial court erred by granting plaintiff, rather than it,
summary disposition. Defendant argues that plaintiff, in asserting its no-fault claim, stands in
the shoes of Resto. Further, defendant argues that MCL 500.3114(4) requires Resto to show that
a higher-priority no-fault insurer was unavailable to provide no-fault benefits. In the alternative,
defendant argues that when the trial court denied plaintiff 's first motion, it should have granted
defendant's cross-motion for summary disposition because the motion hearing was the
procedural equivalent of a trial and plaintiff should not have been permitted a "second bite of the
apple." We disagree.
Defendant's main argument rests on its contention that MCL 500.3114 required plaintiff
to establish as a prima facie element of its case that no other no-fault insurance was available to
Resto. Defendant's argument is based on the faulty premise that plaintiff stands in the shoes of
Resto when seeking compensation for "reasonable charges incurred for reasonably necessary
products, services and accommodations for an injured person's care, recovery, or rehabilitation."
MCL 500.3107(1)(a). Defendant cites Lakeland Neurocare Ctrs v State Farm Mut Automobile
Ins Co, 250 Mich App 35; 645 NW2d 59 (2002), for its stands-in-the-shoes premise. But
Lakeland held that a party providing benefits to an injured person entitled to no-fault benefits
may make a direct claim against a no-fault insurer. Id. at 38-41. The Lakeland Court based its
holding on the language of the statutory provisions involved, not on the premise that a healthcare provider stands in the shoes of the person injured in an automobile accident. The Court
reasoned that MCL 500.3112 contemplates the payment of PIP benefits to someone other than
the injured person and that a provider of health-care to a person injured in an automobile
accident is a no-fault "claimant" entitled to seek penalty interest for overdue benefits, MCL
500.3142, and attorney fees for unreasonably denied clams, MCL 500.3148(1). Lakeland, supra
at 39-41. The logical implication of Lakeland is that a health-care provider like plaintiff that has
furnished "reasonably necessary products, services and accommodations for an injured person's
care, recovery, or rehabilitation," MCL 500.3107(1)(a), has an independent cause of action
against a no-fault carrier liable to provide no-fault benefits to the injured person, MCL
500.3105.2
2
We recognize that this Court's recent decision in Hatcher v State Farm Mut Automobile Ins Co,
269 Mich App 596, 599-600; 712 NW2d 744 (2006), could be read to cast doubt on this
conclusion. That case held that a mother did not have an independent cause of action for
attendant care benefits provided to her daughter injured in an automobile accident, citing Geiger
v Detroit Automobile Inter-Ins Exch, 114 Mich App 283, 287-288; 318 NW2d 833 (1982),
overruled in part Cameron v Auto Club Ins Assoc, 476 Mich 55 (2006). Hatcher is
distinguishable from the circumstances in the instant case. The legal issue in Hatcher was
(continued…)
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Defendant argues that plaintiff must prove that no higher-priority no-fault insurer exists
under MCL 500.3114. We find that defendant's interpretation of MCL 500.3114 is contrary to
its plain language. Specifically, defendant relies on subsections 1 and 4 of MCL 500.3114,
which read in pertinent part:
(1) Except as provided in subsections (2), (3), and (5), a personal
protection insurance policy described in section 3101(1) applies to accidental
bodily injury to the person named in the policy, the person's spouse, and a relative
of either domiciled in the same household, if the injury arises from a motor
vehicle accident. . . .
* * *
(4) Except as provided in subsections (1) to (3), a person suffering
accidental bodily injury arising from a motor vehicle accident while an occupant
of a motor vehicle shall claim personal protection insurance benefits from insurers
in the following order of priority:
(a) The insurer of the owner or registrant of the vehicle occupied.
(b) The insurer of the operator of the vehicle occupied.
Defendant argues that plaintiff must disprove, as apart of its prima facie case, that the
general rule stated in subsection 1, as incorporated by subsection 4, does not apply. Subsection 1
states the general rule of priority among no-fault insurers. MCL 500.3114(1); Belcher v Aetna
Cas & Surety Co, 409 Mich 231, 240; 293 NW2d 594 (1980). Thus, "generally an injured
person is required to seek compensation from his own no-fault insurer, regardless of whether that
person's insured vehicle is involved in the accident." Farmers Ins Exch v AAA of Michigan, 256
Mich App 691, 695; 671 NW2d 89 (2003). But MCL 500.3114(4), on which defendant heavily
relies as the starting point of its argument, does not refer to a claimant such as plaintiff. Instead,
subsection 4 plainly refers to, "a person suffering accidental bodily injury arising from a motor
vehicle accident while an occupant of a motor vehicle shall claim personal protection insurance
benefits from insurers in the following order of priority . . . ." Id. (emphasis added). Because
plaintiff is a health-care provider and not a person injured in a motor vehicle accident, MCL
(…continued)
whether the mother timely brought her claim in light of the one-year back rule of MCL
500.3145(1) and the minority tolling provision of MCL 600.5851. Because the Hatcher Court
held that one-year-back rule barred the claim, whether the claim belonged to the mother or her
injured minor daughter was immaterial. Therefore, the Court's conclusion in Hatcher, supra at
600, that MCL 500.3112 "confers a cause of action on the injured party and does not create an
independent cause of action for the party who is legally responsible for the injured party's
expenses" is dicta. Moreover, plaintiff in this case does not base its claim on being legally
responsible for the injured person's expenses, but on having provided "reasonably necessary
products, services and accommodations for an injured person's care, recovery, or rehabilitation,"
MCL 500.3107(1)(a), for which defendant is legally liable.
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500.3114 does not by its plain language require a no-fault claimant like plaintiff to prove priority
among no-fault insurers.
Rather, plaintiff 's entitlement to PIP benefits is determined by MCL 500.3105(1), which
provides that "an insurer is liable to pay benefits for accidental bodily injury arising out of the
ownership, operation, maintenance or use of a motor vehicle as a motor vehicle," as defined in
the no-fault act. See State Farm Mut Automobile Ins Co v Wyant, 154 Mich App 745, 747-748;
398 NW2d 517 (1986), citing Lee v Detroit Automobile Inter-Ins Exch, 412 Mich 505, 512-513;
315 NW2d 413 (1982). Thus, plaintiff may bring an action for "all reasonable charges" when it
has provided "reasonably necessary products, services and accommodations for an injured
person's care, recovery, or rehabilitation." MCL 500.3107(1)(a); see, also, Lakeland, supra at
38-41. Plaintiff 's "right to recover is dependent only on whether the injury arises out of the
ownership, operation, maintenance or use of a motor vehicle as a motor vehicle, as the term
'motor vehicle' is defined in MCL 500.3101(2)(c)[.]" State Farm, supra 747-748; see, also,
MCL 500.3105(1). Nowhere in MCL 500.3114 or anywhere else in the no-fault act has the
Legislature required a health-care provider such as plaintiff to prove that it has submitted its
claim to, or brought suit against, the no-fault insurer having the highest priority to pay its claim.
Principles of statutory construction preclude this Court from reading into an unambiguous statute
that which is not clearly manifested by the words of the statute itself. Roberts, supra at 63.
Moreover, defendant's interpretation of the statute is contrary to the purposes the no-fault
act and inconsistent with settled caselaw. "Michigan's no-fault insurance system aims to provide
victims of automobile-related accidents with assured, adequate, and prompt payment for
economic losses." Miller v Farm Bureau Mut Ins Co, 218 Mich App 221, 225; 553 NW2d 371
(1996). Indeed, the general rule that an injured person must look first to his own insurance
furthers this purpose. Farmers Ins Exch, supra at 695-696. But the well-settled caselaw in this
state holds that an insurer may not delay or deny paying an otherwise proper claim in order to
first litigate a question of priority among insurers because to do so would frustrate the purposes
of the statute.
Here, although defendant did not dispute that it provided coverage for the accident,
defendant denied plaintiff 's claim for no-fault benefits only because another carrier with a higher
priority to pay the claim might exist. Michigan caselaw rejects such a defense as a reason to
delay paying a no-fault claim. See Bach v State Farm Mut Automobile Ins Co, 137 Mich App
128, 132; 357 NW2d 325 (1984) (holding that to delay paying a claim to decide the question of
which of two insurers was legally responsible would defeat the purpose of the statutes imposing
penalty interest and attorney fees), Darnell v Auto-Owners Ins Co, 142 Mich App 1, 12; 369
NW2d 243 (1985) ("Problems of priority among insurers should not cause delay in payment of
benefits to which the claimant is entitled."), and Bloemsma v Auto Club Ins Co, 174 Mich App
692, 697; 436 NW2d 442 (1989) ("A dispute of priority among insurers will not excuse the delay
in making timely payment.").
The no-fault act is intended to provide prompt compensation to persons injured in
automobile accidents without regard to fault. We conclude that subjecting medical providers like
plaintiff to protracted coverage and priority litigation would frustrate the core purpose of the nofault act. See Cannell v Riverside Ins Co, 147 Mich App 699, 706; 383 NW2d 89 (1985),
quoting Kalin v Detroit Automobile Inter-Ins Exch, 112 Mich App 497, 510; 316 NW2d 467
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(1982) ("'A claimant who is clearly entitled to no-fault benefits should not be forced to hire an
attorney merely because the circumstances of his accident create problems of priority among
insurers.'") Here there was no bona fide dispute that Resto was injured in an accident while a
passenger in a motor vehicle whose owner defendant insured with a no-fault policy. Thus, Resto
was entitled to no-fault benefits. Under existing caselaw, defendant may not assert a real priority
dispute as a defense. Certainly, it follows that defendant may not assert a hypothetical priority
dispute as a defense.
We find specious defendant's contention that it was not asserting a priority defense.
Defendant asserted a priority defense by arguing that plaintiff must prove a negative: that no
higher-priority insurer was available to pay plaintiff 's claim. As discussed earlier, the no-fault
act contains no such requirement. The record here is clear. Defendant admitted that the only
reason it refused to pay plaintiff 's no-fault claim was the mere possibility another insurer might
have a higher priority to pay the claim. That another no-fault insurer was not identified does not
change the fact that defendant was asserting the mere possibility of a priority dispute as its sole
defense to paying plaintiff 's claim. Because defendant could not assert a real priority dispute as
a defense, it could not assert the mere possibility of a priority dispute as a defense.
Defendant also misplaces reliance on M Civ JI 35.02, which provides:
In order for the plaintiff to recover no-fault benefits from the defendant,
the plaintiff has the burden of proof on each of the following:
a. *(that at the time of the accident there existed a valid contract of nofault insurance between [name of insured] and defendant)[.]
* * *
Note on Use
*Delete where not an issue. If an issue, the Court should determine what
contractual relationship must be proved under MCL 500.3114, .3115.
This instruction simply does not apply under the circumstances of this case because defendant
admitted that it insured Francisco Lopez, the owner of the accident vehicle.
Defendant's alternative argument also lacks merit. A provider of medical services to a
person injured in an automobile accident that submits a no-fault claim bears the burden of
proving that its charges were both reasonable and reasonably necessary for the injured person's
care, recovery, or rehabilitation. MCL 500.3107(1)(a); MCL 500.3157; Williams v AAA
Michigan, 250 Mich App 249, 258; 646 NW2d 476 (2002). At the initial hearing on plaintiff 's
motion for summary disposition, the trial court ruled that plaintiff had failed to produce evidence
that its charges were reasonable and reasonably necessary for Resto's care, recovery, or
rehabilitation. Defendant argues that, on the basis of this ruling, the trial court should have
granted defendant's cross-motion for summary disposition. But defendant admitted that it did
not investigate whether plaintiff 's charges were necessary or reasonable, and therefore produced
no evidence that plaintiff 's charges were unreasonable or not reasonably necessary.
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Accordingly, defendant failed to show that it was entitled to judgment as matter of law, and the
trial court properly denied defendant's cross-motion for summary disposition.
At the second hearing on plaintiff 's motion, plaintiff produced additional affidavits
attesting that its charges with respect to Resto were both reasonable and reasonably necessary for
Resto's care, recovery, or rehabilitation. Defendant no longer disputed this issue and, as
discussed earlier, failed to present a legally viable defense. Consequently, the trial court
properly granted plaintiff 's motion for summary disposition because, on the basis of the
undisputed facts, plaintiff was entitled to judgment as a matter of law.
IV
Defendant next argues that the trial court clearly erred by awarding penalty interest
pursuant to MCL 500.3142 because payment of the benefit was not "overdue" until 30 days after
plaintiff, at its second motion for summary disposition, supplied an affidavit attesting that the
care plaintiff provided Resto was reasonably necessary. Likewise, defendant contends that the
trial court erred by awarding attorney fees under MCL 500.3148(1) for the same reason.
Defendant cites for this argument by analogy Proudfoot v State Farm Mut Ins Co, 469 Mich 476,
485; 673 NW2d 739 (2003), holding that attorney fees could not be awarded under MCL
500.3148(1) because the benefits were not overdue when the charges had not yet been incurred.
Finally, defendant asserts that the trial court based its award of attorney fees on an unreasonable
hourly rate. We find all these arguments without merit.
We review a trial court's award of penalty interest under MCL 500.3142 for clear error.
Williams, supra at 265. Likewise, we review for clear error a trial court's factual findings
regarding awarding attorney fees under MCL 500.3148. MCR 2.613(C); Attard v Citizens Ins
Co of America, 237 Mich App 311, 316-317; 602 NW2d 633 (1999). "Clear error exists if the
reviewing court is left with a definite and firm conviction that a mistake occurred." Amerisure
Ins Co, supra at 24. If the trial court determines that an award of attorney fees is proper, the
amount of the attorney fees must be reasonable. Wood v Detroit Automobile Inter-Ins Exch, 413
Mich 573, 587-588; 321 NW2d 653 (1982). Appellate review of the trial court's determination is
for an abuse of discretion. Id.
The trial court did not clearly err by awarding plaintiff penalty interest pursuant to MCL
500.3142. Further, the trial court neither clearly erred nor abused its discretion by awarding
plaintiff attorney fees under MCL 500.3148(1).
With respect to penalty interest, MCL 500.3142 provides in relevant part:
(1) Personal protection insurance benefits are payable as loss accrues.
(2) Personal protection insurance benefits are overdue if not paid within
30 days after an insurer receives reasonable proof of the fact and of the amount of
loss sustained. . . .
(3) An overdue payment bears simple interest at the rate of 12% per
annum.
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With respect to attorney fees, MCL 500.3148(1) provides:
An attorney is entitled to a reasonable fee for advising and representing a
claimant in an action for personal or property protection insurance benefits which
are overdue. The attorney's fee shall be a charge against the insurer in addition to
the benefits recovered, if the court finds that the insurer unreasonably refused to
pay the claim or unreasonably delayed in making proper payment.
Before either penalty interest or attorney fees may be awarded to a claimant, PIP benefits
must be overdue. First, to be overdue, allowable expenses must actually have been incurred.
MCL 500.3142(1); Proudfoot, supra at 485. Second, PIP "benefits are overdue if not paid within
30 days after an insurer receives reasonable proof of the fact and of the amount of loss
sustained." MCL 500.3142(2). Before attorney fees may be assessed against an insurer, the trial
court must additionally find "that the insurer unreasonably refused to pay the claim or
unreasonably delayed in making proper payment." MCL 500.3148(1). If benefits are "overdue"
within the meaning of MCL 500.3142(2), "a rebuttable presumption of unreasonable refusal or
undue delay arises." Combs v Commercial Carriers, Inc, 117 Mich App 67, 73; 323 NW2d 596
(1982); see, also, McKelvie v Auto Club Ins Ass'n, 203 Mich App 331, 335; 512 NW2d 74
(1994).
But the element of reasonableness does not apply to the conduct of the insurance
company when awarding penalty interest under MCL 500.3142. The reasonableness of the
insurer's actions or the insurer's good faith in not timely paying benefits is irrelevant. The trial
court must assess penalty interest against a no-fault insurer if the insurer refuses to pay benefits
after receiving reasonable proof of loss and it is later determined to be liable, notwithstanding the
insurer's good faith in not promptly paying the benefits. See Williams, supra at 265, and Davis v
Citizens Ins Co of America, 195 Mich App 323, 328; 489 NW2d 214 (1992). This Court
explained in Univ of Michigan Regents v State Farm Mut Ins Co, 250 Mich App 719, 735; 650
NW2d 129 (2002):
No-fault interest is awarded as a penalty for the insurer's misconduct and
is not intended to compensate the insured for damages. To recover interest, a
plaintiff is not required to prove that the defendant acted arbitrarily or
unreasonably delayed in payment of benefits. Instead, the statute "only requires
that the insured present the insurer with reasonable proof of loss. If the insurer
does not pay the claim within 30 days after receiving this proof, it becomes liable
for interest." [Citations omitted.]
Defendant's argument that a claimant must provide sufficient proof to prevail on a motion
for summary disposition before the statutory 30-day period begins to run is without merit. A
claimant attempting to sue an insurer for no-fault benefits bears the burden of proving that
allowable expenses were both reasonable and necessary. MCL 500.3107(1)(a); SPECT Imaging,
Inc v Allstate Ins Co, 246 Mich App 568, 574-575; 633 NW2d 461 (2001). But obtaining
penalty interest pursuant to MCL 500.3142(2) only requires that a claimant provide an insurer
"reasonable proof of the fact and of the amount of loss sustained." Once a claimant provides
reasonable proof of the fact and amount of the loss, the insurer has a duty to conduct its own
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investigation into the reasonableness and necessity of the charges and ask for what it deems
lacking. Williams, supra at 267.
Defendant never investigated the reasonableness or necessity of plaintiff 's charges.
Instead, defendant relied on its legal defense that a higher-priority no-fault insurer might be
responsible for paying plaintiff 's claim. Defendant acknowledged receipt of plaintiff 's
statements and UB-92s on February 25, March 25, and April 2, 2004. Defendant also received a
copy of the police report regarding the accident and conducted its own investigation on March 17
and May 10, 2004, concerning whether Resto was eligible for PIP benefits. Given this record,
the trial court did not clearly err in finding that benefits were overdue as of May 29, 2004.
Therefore, plaintiff was entitled to penalty interest under MCL 500.3142.
The proof plaintiff provided defendant in this case is similar to that which this Court
determined to be reasonable proof of the fact and amount of the loss in Williams. In that case,
the claimant provided the no-fault insurer a letter and statement from a health-care provider.
Williams, supra at 265-266. This Court held that the claimant had provided the no-fault insurer
reasonable proof of the fact and amount of the loss. Id. at 267.
Even though benefits were overdue, a trial court may not award attorney fees to a
claimant unless "the insurer unreasonably refused to pay the claim or unreasonably delayed in
making proper payment." MCL 500.3148(1). An insurer does not unreasonably refuse to pay or
delay payment of benefits when it does so because of a legitimate question of statutory
construction or constitutional law or a bona fide factual uncertainty. McKelvie, supra at 335;
Liddell v Detroit Automobile Inter-Ins Exch, 102 Mich App 636, 650; 302 NW2d 260 (1981).
But when benefits are overdue within the meaning of MCL 500.3142(2), a rebuttable
presumption of unreasonableness arises and the insurer has the burden to justify its refusal or
delay in paying. McKelvie, supra at 335; Combs, supra at 73.
Defendant never created a bona fide factual dispute that plaintiff 's charges were
unnecessary or unreasonable. Defendant admitted that its sole basis for denying plaintiff 's claim
was that plaintiff had not proved that defendant was the highest-priority insurer under the nofault act. But, under settled case law, a priority dispute among no-fault insurers will not justify
delay in paying a no-fault claim. Darnell, supra at 12; Bach, supra at 132. "A dispute of
priority among insurers will not excuse the delay in making timely payment." Bloemsma, supra
at 697. Thus, "when the only question is which of two insurers will pay, it is unreasonable for an
insurer to refuse payment of benefits." Univ of Michigan Regents, supra at 737. Defendant may
not avoid the application of this principle by claiming that its speculation that a higher-priority
insurer might exist was not a priority dispute. Defendant's denial of no-fault benefits was
unreasonable. The trial court did not clearly err by awarding plaintiff attorney fees under MCL
500.3148(1).
Finally, defendant has failed to establish that the trial court abused its discretion in
determining the amount of attorney fees to award. When a trial court determines that an award
of attorney fees under MCL 500.3148 is appropriate, the court must only award a reasonable fee.
The statute does not define "reasonable" for purposes of awarding attorney fees. In Liddell,
supra at 651-652, this Court adopted the guidelines stated in Crawley v Schick, 48 Mich App
728, 737; 211 NW2d 217 (1973):
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There is no precise formula for computing the reasonableness of an
attorney's fee. However, among the facts to be taken into consideration in
determining the reasonableness of a fee include, but are not limited to, the
following: (1) the professional standing and experience of the attorney; (2) the
skill, time and labor involved; (3) the amount in question and the results achieved;
(4) the difficulty of the case; (5) the expenses incurred; and (6) the nature and
length of the professional relationship with the client.
Likewise, our Supreme Court adopted the Crawley factors for the purpose of determining
reasonable attorney fees under MCL 500.3148 in Wood. The Wood Court observed that although
"a trial court should consider the guidelines of Crawley, it is not limited to those factors in
making its determination." Wood, supra at 588. Furthermore, a trial court need not make
detailed findings regarding each factor the court considers. Id. The trial court's award "will be
upheld unless it appears upon appellate review that the trial court's finding on the
'reasonableness' issue was an abuse of discretion." Id.
Defendant asserts only two reasons the trial court's determination of the amount of
attorney fees was an abuse of discretion. First, defendant argues that no-fault benefits were not
overdue for reasons that we have already discussed and rejected. Second, defendant argues that
the trial court overvalued the hourly rate of plaintiff 's attorneys. Defendant relies on a graph in a
Michigan Bar Journal article, selecting values reported for equity partners below the 25th
percentile, for senior associates probably in the lowest tenth percentile, and for associates at the
very bottom of reported hourly rates. Stiffman, A snapshot of the economic status of attorneys in
Michigan: Excerpts from the 2003 Economics of Law Practice Survey, 82 Mich B J 20
(November 2003). On the other hand, plaintiff submitted to the trial court the more detailed
2003 State Bar of Michigan Economics of Law Practice Survey and argued that the hourly rates
counsel used in this case to calculate attorney fees were commensurate with the rates charged by
attorneys with comparable experience who are engaged in trial practice and who practice in firms
of comparable size. A review of the data on which plaintiff and defendant rely indicates the trial
court determined an hourly rate of compensation within the range of reported hourly rates in the
bar journal survey. Consequently, defendant has failed to establish that the trial court abused its
discretion in establishing the amount of attorney fees to award to plaintiff.
V
Finally, defendant argues that the trial court erred by granting plaintiff 's motion to
compel discovery, ordering sanctions against defendant, and denying defendant's request for
attorney fees because plaintiff 's motion was frivolous. We disagree.
We review for an abuse of discretion a trial court's rulings on a motion to compel
discovery. Cabrera v Ekema, 265 Mich App 402, 406; 695 NW2d 78 (2005). Likewise, we
review for an abuse of discretion a trial court's decision to impose sanctions for discovery
violations. Richardson v Ryder Truck Rental, Inc, 213 Mich App 447, 450; 540 NW2d 696
(1995). An abuse of discretion occurs when the trial court's decision falls outside the range of
principled outcomes. Maldonado v Ford Motor Co, 476 Mich 372, 388; 719 NW2d 809 (2006).
We find that defendant has failed to establish that the trial court abused its discretion by granting
plaintiff 's motion to compel discovery and awarding plaintiff its reasonable attorney fees.
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Michigan's court rules "implement 'an open, broad discovery policy . . . .'" Cabrera,
supra at 406-407, quoting Reed Dairy Farm v Consumers Powers Co, 227 Mich App 614, 616;
576 NW2d 709 (1998). At the hearing on plaintiff 's motion to compel, defendant did not dispute
that it had not timely served answers to plaintiff 's interrogatories. MCR 2.309(B). The trial
court requested an explanation from defense counsel, who responded, "I don't have an answer for
that, your Honor." Regarding plaintiff 's requests for admissions, defendant objected to most of
the requests on the basis of relevancy and defendant's lack of personal knowledge to enable it to
answer. Defendant even initially failed to admit that it insured the owner of the vehicle involved
in the accident. Defendant's responses to plaintiff 's requests for admissions did not comply with
MCR 2.312(B)(2) and (3):
(2) The answer must specifically deny the matter or state in detail the
reasons why the answering party cannot truthfully admit or deny it. A denial
must fairly meet the substance of the request, and when good faith requires that a
party qualify an answer or deny only part of the matter of which an admission is
requested, the party must specify the parts that are admitted and denied.
(3) An answering party may not give lack of information or knowledge as
a reason for failure to admit or deny unless the party states that he or she has
made reasonable inquiry and that the information known or readily obtainable is
insufficient to enable the party to admit or deny.
At the hearing on plaintiff 's motion, the trial court noted that in its prior experience with
defense counsel's law firm, counsel had habitually disregarded the court rules. The trial court
ordered defendant to answer plaintiff 's requests for admissions and interrogatories, without
objection, within 14 days. Further, the trial court awarded plaintiff $1,500 as a reasonable
attorney fee because it found that defendant had provided "absolutely no excuse for why these
[discovery requests] weren't answered in a timely manner and to make plaintiff proceed to file a
motion and set it for hearing." This record fails to demonstrate an abuse of discretion by the trial
court in finding that defendant's violations of the discovery rules were neither justified nor
excused. Accordingly, the trial court did not abuse its discretion by awarding plaintiff its
reasonable attorney fees incurred in bringing the motion. MCR 2.313(A)(5) and (D)(2).
VI
In summary, we find that the trial court properly granted plaintiff 's motion for summary
disposition and denied defendant's cross-motion. A health-care provider that has furnished
"reasonably necessary products, services and accommodations for an injured person's care,
recovery, or rehabilitation," when the injured person is entitled to no-fault benefits, is not
required by the no-fault act to prove as part of its prima facie case against a legally liable no-fault
insurer the absence of another insurer standing in a higher priority than the one against which the
claim is being made. We hold that defendant's interpretation of the statute to the contrary is
inconsistent with the plain language of the no-fault act, contrary to the purpose of the statute, and
conflicts with well-established caselaw. In addition, the failure of one party to establish its
entitlement to summary disposition under MCR 2.116(C)(10) does not thereby entitle the
opposing party to judgment unless, under the undisputed facts, the opposing party is entitled to
judgment as a matter of law.
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We further hold that the trial court did not clearly err in awarding plaintiff penalty
interest under MCL 500.3142, nor did the trial court either clearly err or abuse its discretion by
awarding plaintiff attorney fees under MCL 500.3148(1). Also, defendant has not established
that the trial court abused its discretion in setting the amount of reasonable attorney fees to award
to plaintiff.
Last, defendant has not established that the trial court abused its discretion by granting
plaintiff 's motion to compel discovery and awarding plaintiff its reasonable attorney fees.
We affirm.
/s/ Peter D. O'Connell
/s/ Jane E. Markey
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