Michigan Court Of Appeals calls auto insurer’s argument ‘devoid of arguable legal merit,’ and ‘frivolous’ in Bronson Health Care Group v. Titan
Maybe Titan Insurance has been listening to a little too much Don Williams and Eric Clapton. Because just as those musical giants enjoyed “Living on Tulsa Time,” the auto insurer seems to think it’s “Living on Titan Time.” At least when it comes to paying No Fault benefits to auto accident victims under the Michigan Assigned Claims Plan (MACP).
Thankfully, Titan’s strategy hit nothing but sour notes with the Michigan Court of Appeals.
In Bronson Health Care Group, Inc., v. Titan Insurance Company, the Court of Appeals ruled that auto insurance companies like Titan must pay No Fault benefits on an assigned claim from the MACP when the Michigan No Fault law says it must pay – not when the auto insurer feels like paying.
The Michigan Assigned Claims Plan (MACP) is the program that ensures Michigan No Fault auto insurance benefits will be provided to uninsured auto accident victims, provided those uninsured drivers were not the owner/operator of the car involved in the crash.
Significantly, in response to Titan’s argument in Bronson Health Care that it had 30 days to pay from when its investigation was concluded – rather than 30 days from receipt of “reasonable proof” that No Fault benefits are due, as required by the No Fault Law – the unanimous Court of Appeals panel concluded:
“Titan’s argument … was devoid of arguable legal merit because it was contrary to ‘basic, longstanding, and unmistakably evident precedent.’ … Accordingly, Titan’s defense … was frivolous …”
Consequently, because Titan chose to pay based on its own timeline, rather than the timeline set forth in the, ahem, Michigan No Fault law, the court ruled Titan will have to pay penalty interest and likely attorney fees and costs.
For auto No Fault lawyers, this is a great and important ruling.
Not only does it vindicate the rights of the auto accident victim whom Titan was mistreating. But it also serves as a compelling reminder to auto insurance companies that they’re not above the law. And that it may cost them dearly should they choose to ignore that reality.
‘Living on Titan time’
Amber French, an uninsured passenger, was seriously injured in a Michigan auto accident. She received medical care from Bronson Health Care.
To collect payment for the medical services it provided, Bronson filed an application with the MACP and the claim, after it was vetted to determine Ms. French’s eligibility for auto No Fault insurance benefits, was assigned to Titan Insurance.
At that point, under the No Fault Law, Titan had 30 days to pay benefits, i.e., reimburse Bronson for the costs it incurred in providing medical care to Ms. French. (See MCL 500.3145(2))
But Titan didn’t pay within the 30-day period prescribed by the No Fault Law. Instead, Titan decided to pay within its own 30-day period – i.e., “within 30 days of [the auto insurer’s] investigation confirming French’s eligibility for benefits” – which turned out to be 11 months later.
Penalty interest, attorney fees and costs
Bronson filed a lawsuit against Titan, requesting that the auto insurer be required to pay penalty interest for the overdue No Fault benefits that Titan had waited 11 months to pay. Bronson relied on the No Fault provision for penalty interest on overdue benefits:
“Personal protection insurance benefits [i.e., No Fault PIP benefits] are payable as loss accrues. … 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. … An overdue payment bears simple interest at the rate of 12% per annum.” (MCL 500.3142(1), (2) and (3))
The Court of Appeals agreed:
“Michigan courts have repeatedly construed MCL 500.3142(2) in accordance with its plain language (requiring ‘reasonable proof of the fact and of the amount of loss sustained’) and have not allowed an assigned insurer additional time beyond the statutory 30 days to conduct its own investigation regarding the eligibility of the claimant to receive benefits.”
The appellate judges also said the following about the trial judge, who had sided with Titan:
“[T]he trial court improperly read a requirement into the statute: that penalty interest was 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.”
On the issue of making Titan pay Bronson’s attorney fees and litigation costs under the “frivolous defense” statute, the Court of Appeals sent the case back to the trial court “for a determination of the appropriate sanctions.”
Titan’s argument about paying “within 30 days of its own investigation confirming French’s eligibility for benefits,” rather than within the 30-day period specified by the No Fault Law was “frivolous,” the judges ruled, because it was “devoid of arguable legal merit …”
Under MCL 600.2591(1), the “frivolous defense” statute, “if a court finds that a civil … defense to a civil action was frivolous,” the court can make the party who filed the frivolous defense pay “reasonable attorney fees” and “court costs” incurred by the other party.