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My Detroit Legal News Rebuttal: Why Michigan Auto Insurance Companies Can Now (Legally) Lie to People

June 30, 2009 by Steven M. Gursten

Michigan Lawyers Weekly, The Oakland Press and the Detroit Legal News recently published my letter on Johnson v. Wausau Insurance Co., a case about an insurance company adjuster who lied to save money from paying attendant care insurance benefits to the caregivers of a 10-month-old girl with a severe traumatic brain injury from a car accident — and got away with it. Well, my letter has sparked a little debate, mainly from an attorney Daniel J. Bernard. Mr. Bernard disagreed with my opinion of the case, which now allows insurance adjusters to legally lie to their customers in order to avoid paying no-fault insurance benefits. As an attendant care attorney in Michigan, I thought it was one of the most disturbing cases I’ve ever read. I feel so strongly about the horrible public policy this case creates for Michigan residents, that I wanted to respond to Mr. Bernard. My rebuttal was printed Monday on the front page of the Detroit Legal News as follows. Please click on the title to see the story in its newspaper form.

Why Johnson v. Wausau Encourages Adjusters to Lie, Threatening Thousands of Michigan Residents

By Steven M. Gursten

I read with interest Daniel Bernard’s recent Local Voice column in The Detroit Legal News. Mr. Bernard writes that my own previous letter about the Johnson v. Wausau Michigan Court of Appeals decision [Docket No. 281624], is factually incorrect, and moreover that I fail to “advance the discourse over how to improve our legal system.” I welcome this opportunity to respond, and to hopefully advance the discourse about this important case, because the rights of thousands of Michigan residents are immediately and dangerously affected by this decision.

Again, if we accept the plaintiff’s version of the facts as true in Johnson, an insurance company lied to save money from paying attendant care insurance benefits to the caregivers of a 10-month-old girl with catastrophic traumatic brain injuries from a car accident for 16 years. Instead, she was only allotted $20 per day in household replacement services.

That the claims adjuster did lie in the case is beyond dispute. The case stated: “…when plaintiff… inquired as to whether she was entitled to additional benefits, defendant told her that no additional benefits were available to her.” And the insurance adjuster “admitted he never advised… plaintiff that (she) was entitled to attendant care benefits…”

However, Mr. Bernard would put the onus on the injured — and in the case of Johnson, the catastrophically injured — to determine their legal rights to attendant care insurance benefits; claiming that to do otherwise is to “jettison any concept of personal responsibility.” I respectfully disagree.

How exactly would Mr. Bernard have had the plaintiff in Johnson exercise personal responsibility to learn of their legal rights? Mr. Bernard starts off his letter by stating that “I do not generally practice personal injury law, nor do I claim to be an expert on no-fault insurance…” Sadly, this lack of familiarity with our no-fault law shows through in the rest of his letter, and fatally undermines his arguments.

How exactly should the plaintiff in Johnson have exercised personal responsibility to learn about her legal right to attendant care, as Mr. Bernard demands?

Could she ask her insurance company? She tried that. The plaintiff in Johnson asked her adjuster. She questioned her adjuster on multiple occasions, directly and repeatedly, and the adjuster lied to her. The adjuster denied that there was any other type of benefit that she — and the catastrophically brain-damaged infant child that she was caring for — was entitled. This created devastating financial hardship during the 16 years that this child required attendant care, both for the completely innocent brain injured child and for her caregivers.

Could the plaintiff check her auto insurance policy? No, Mr. Bernard, she could not. I have read nearly every automobile insurance policy in Michigan at one time or another. These are long, complicated, difficult contracts to read and understand. And quite frankly, they are not written for the average person to understand. More specifically, however, almost none of the insurance policies in Michigan mention attendant care or similar nursing care services today. And I would wager that not a single insurance policy in Michigan specifically mentioned attendant care or nursing type services in their policies at the time this motor vehicle accident occurred or for years afterward. Therefore, the plaintiff in Johnson would not have known about this benefit by checking her insurance policy.

Could she check the law, perhaps even read the entire Michigan No-Fault Act? Let us now fictionally presume that the plaintiff in Johnson did have two years of law school training, can perform legal research, and looks through the entire Michigan No-Fault Act. She still would learn nothing about attendant care, because the words “attendant care” are not in the Act. She would not find anything that would suggest or resemble the attendant care benefits that she had repeatedly asked her adjuster about, on a first, second, third or more reading of the Act. Attendant care is never specifically mentioned. Instead, attendant care — or nursing services that require an “attendant” to provide “care” because of the extent and severity of injuries — is something that is derived by digging deeper and understanding the meaning of MCL 500.3107(1)(a), which states only that Personal Injury Protection (PIP) benefits are payable for “all reasonable charges incurred for reasonably necessary products, services and accommodations used for a person’s care, recovery or rehabilitation.” Throughout the years, and through much litigation about the exact meaning of the wording of the statute, attendant care has developed and evolved. No, Mr. Bernard, she would not have learned about attendant care by reading the statute.

Could she ask a lawyer? This is, after all, what the Court in Johnson suggested she do, and as a result has now essentially destroyed any possible claim for fraud that can be made. Nor, by the way, am I alone in this assessment. James L. Borin, a pre-eminent authority on no-fault and widely respected defense insurance lawyer, openly wondered the same after his own reading of Johnson in a LawFax publication that goes out thousands of insurance adjusters and defense lawyers throughout Michigan: “Since a person, presumably, always has the ability to consult with a lawyer, can a plaintiff ever establish a claim for fraud???”

The problem, Mr. Bernard, with asking a lawyer is that very few lawyers know anything about attendant care. Very few lawyers from other areas and specialties of law know anything about no-fault benefits or attendant care. Even within the sub-specialized field of personal injury law, most lawyers know nothing about this important benefit. Ask any lawyer who frequently handles no-fault cases how often we go to court for a case evaluation hearing on a catastrophic attendant care case and have to spend the beginning of our presentation educating the case evaluation panel on what attendant care is, and the differences between no-fault replacement services and attendant care benefits. So Mr. Bernard, even if the plaintiff in Johnson had picked up the phone and scheduled and paid for a meeting with a lawyer for legal advice, the chances are very good she never would have learned about this important benefit to which everyone agrees the plaintiff was entitled.

And this is where your whole argument calling for more “personal responsibility” runs smack into a wall. The whole idea of forcing someone to have to pay money to hire a lawyer in the first place, to essentially find out if their own insurance company is telling them the truth about anything and everything, as the Court in Johnson said the plaintiff should have done, is a toxic and absurd idea. As I said before, I can’t think of a reason the Court would protect insurance companies with such unclean hands, or punish those who are obviously in a vulnerable and unequal position by presuming they should know all of their legal rights — especially when these people have undergone horrible personal injuries that require attendant care to begin with. Why are we putting this burden on the plaintiff and requiring that people now assume that our own insurance company will lie to us, and then have to pay more money to hire a lawyer to check the veracity of everything our own claims adjuster tell us?

In addition, there are no “long-standing” principles of Michigan law at issue here, as Mr. Bernard stated. In fact, quite the opposite is true. The “one-year back rule” that Mr. Bernard wrote about didn’t even exist in its present form until 2005, some 22 years after the tragic car accident in Johnson had occurred. This “long-standing” principle of Michigan law was judicially created in 2005, in a case called Devillers v. Auto Club, when a narrow, one-justice Republican majority (that has itself been accused many times of judicial activism for political purposes) overturned almost 20 years of Michigan law; saying for the first time ever, that there was now only one year to file for benefits after a car accident — with no exceptions and no tolling. Devillers held that the one-year-back statute of limitations that prohibits recovery of Michigan PIP benefits for any portion of a loss incurred more than one year before commencement of a lawsuit filed by a Michigan attorney, is not subject to judicial tolling, overruling what was long-standing law in this state under Lewis v. DAIIE. It is utter nonsense to say, 22 years before the fact, that the claim in Johnson was time-barred. No, Mr. Bernard, the claim in Johnson should not have been so summarily executed under the one-year back rule as you wrote in your letter.

Mr. Bernard is right that we should have a dialogue about this important issue. I believe no recent case affects the rights of more Michigan residents than Johnson v. Wausau. I believe the public policy implications of this decision could not be worse, and I believe that the shield and immunity the case now gives insurance adjusters to lie and defraud their own policyholders is disastrous to protecting the public. I most certainly welcome dialogue on how we can protect innocent people and prevent insurance company adjusters from taking unfair advantage of them. This is why I wrote my open letter to begin with.

There must be a better solution than simply imposing a “caveat emptor” requirement on our law for any injured Michigan resident, which is really the “personal responsibility” that Mr. Bernard demands as the solution. However, before Mr. Bernard writes that I am “wrong on the facts,” I would suggest he learn more about the subject upon which he writes.

Steven M. Gursten is recognized as one of the nation’s top experts in serious car and truck accident injury cases and automobile insurance no-fault litigation. He is head of Michigan Auto Law, which specializes in insurance benefits and car accidents throughout Michigan. Steve has received the largest jury verdict for an automobile accident case in Michigan in four of the past seven years, including in 2008, according to Michigan Lawyers Weekly. Visit our law firm quick facts for more information.

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2 Replies to “My Detroit Legal News Rebuttal: Why Michigan Auto Insurance Companies Can Now (Legally) Lie to People”

  1. I read your criticisms the above case, and you’re correct about the effect of the decision. However, you may be placing the blame in the wrong place. The Johnson court, after all, was merely following the “precedent” of Cooper v. Auto Club, which correctly held that an action for fraud is not subject to the one year back rule. Unfortunately, however, the Cooper court went on to elaborate in the “Cautionary notes” part of the opinion to effectively negate the principal ruling. Without saying so, the court in effect abrogated the time-honored rule that negligence is not a defense to fraud, the principle being that one who intentionally defrauds someone cannot escape liability by claiming that his victim was a fool. You can find cases on this.

    The Supreme Court did this by citing cases that held that an insured is charged with knowledge of the insurance policy, and the like. So you have to blame the supreme Court, not the Appeals, who were only doing their duty to follow precedent. Almost. The “Cautionary” segment of the Supreme Court opinion was dictum, and therefore was actually not binding precedent. The trouble with that, of course, is that the Supreme court is the 900 pound gorilla, and rarely – maybe never – do lower courts have the temerity to say that the Supremes are wrong and rule the other way. ( I did it once.)

    So the point I’m making is that to successfully attack a bad result you have to identify its source, which here is the cited portion of the Cooper case.

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