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Auto-Owners denies No Fault insurance claim for ‘purely speculative’ reasons

June 17, 2014 by Steven M. Gursten

Car accident victim entitled to unpaid, overdue PIP insurance benefits  (and attorney fees) after Auto Owners  ‘unreasonably refuses’ to pay


Carrot and stick Auto Owners denies No Fault benefits

Michigan is one of the few states without bad faith insurance laws. And as a direct result, thousands of people injured every year in automobile accidents are treated terribly, just trying to get the insurance benefits they paid for.

Insurance companies and  attack dog insurance defense lawyers play games with the lives and livelihoods of people.  People can’t get surgeries they desperately need.  People lose their homes because adjusters demand impossible levels of proof before paying wage loss. No Fault PIP benefits are held just out of reach, like a carrot hanging from a stick in front of the faces of desperate, injured auto accident victims.

Some people get tired of this. They give up.

Insurance companies count on this, and they save tens of millions of dollars every year from people getting frustrated and walking away from overdue insurance claims.

Some people, however, want justice. If the insurance company refuses to pay or jerks them around enough, they hire a lawyer.

Accident victim Sara Rebecca Reese got tired of being jerked around.

And four judges – three appellate judges and one trial judge – agreed with her. That’s why, in Reece v. Auto-Owners Insurance Company, the judges ruled that Ms. Reese should win her lawsuit against Auto-Owners for unpaid and overdue No Fault PIP benefits.

The judges also thumped Auto Owners. They concluded on the record that Auto-Owner’s reasons for denying Ms. Reece’s No Fault insurance claims were “purely speculative” and unsupported by “any evidence.”

And because Auto-Owners had unreasonably refused to pay Ms. Reese’s No Fault medical benefits, the judges determined the auto insurer had to pay Ms. Reese’s attorney  his attorney fees.

Thump. Thump.

The crux of the Reese case is a poignant example of the “game playing” that auto insurance companies engage in everyday in Michigan.  It’s something I see as an insurance lawyer every day. But most people – unless they have the misfortune of actually being involved in a car accident – are blissfully unaware of how bad things are for people to just get the insurance benefits they have already paid for.

The Reece case notes the following fact:

Despite having no evidence to support its position, Auto-Owners stubbornly and steadfastly refused to pay benefits to an auto accident victim whose significant injuries were verified by ample and uncontradicted evidence.

‘Purely speculative’

Ms. Reese suffered multiple injuries as a result of a December 23, 2010, motor-vehicle accident. Because Auto-Owners never paid No Fault benefits, Ms. Reese sued in June 2012.

Auto-Owners insisted Ms. Reese shouldn’t win – and summary disposition shouldn’t be granted in Ms. Reese’s favor – because there might be medical records (that Auto-Owners hadn’t bothered to get, yet) that “could reveal” that Ms. Reese’s injuries weren’t caused by the crash.

The Court of Appeals rejected Auto-Owners’ argument as “purely speculative.”

Not only did the post-car crash medical records substantiate Ms. Reese’s injury claims, the judges noted. But there was “no indication” in Ms. Reese’s medical records that she had sustained her injuries “before the motor-vehicle accident.”

As to Auto-Owners’ strategic – albeit unsuccessful – choice to “take so little investigative action and then later assert a factual dispute as its defense,” the Court of Appeals noted the following:

  • Auto-Owners “did not present any evidence suggesting that plaintiff had a preexisting … injury …”
  • “On appeal,” Auto-Owners “does not even specifically address the evidence it was relying on to show that there was factual uncertainty with regard …” to whether Ms. Reese’s injuries were caused by the accident and, thus, covered by No Fault.
  • Auto-Owners “has not presented sufficient evidence … to meet its burden of justifying the delay in the payment of any [No Fault] benefits due.”

Great lesson for Michigan auto accident attorneys

Hat tip to Ms. Reese’s attorney, Michael J. Swogger of Swogger, Bruce & Millar in Traverse City.  I don’t personally know Michael, but his aggressive legal representation of Ms. Reese is what won the day for his client.

By wisely filing a summary disposition motion when he did – which is exactly the point that our own Tom James from Michigan Auto Law made when he spoke at the last No Fault Institute legal seminar – he quickly secured important and necessary No Fault benefits for Ms. Reese. Aggressive motion practice probably saved her many more months of litigation while her case would have wound its way through the courts.

And Michael won the day.  And his attorney fees to boot.

Well done.

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