130-year-old ‘mend the hold’ doctrine can stop auto insurers from changing tune on why they denied PIP benefits after a car accident
If you’re an attorney, and you’ve ever represented a person in Michigan in a No Fault lawsuit after their own insurance company denied No Fault benefits and cut them off, then I bet this scenario sounds familiar.
Hopefully, my proposed solution will sound familiar, too (at least from your law school days).
Your client was injured in a car accident. After a few months, he or she gets a letter from the auto insurance company paying No Fault PIP benefits informing him that his No Fault claim is denied and/or his benefits are discontinued, i.e., “cut-off.” In the “cut-off” letter, your client’s auto insurer gives a stated justification for denying/cutting-off PIP benefits to your client.
So your client hires a lawyer, and that’s where you come into the picture. But then, when you as the attorney file a No Fault lawsuit and sue the insurance company for your client’s unpaid and overdue No Fault benefits, the lawyer for the insurance company packs its answer, not with the justifications from the “cut-off” letter, but with a ton of new defenses and affirmative defenses.
Or how about this one? The so-called independent medical examination (IME) by an insurance company doctor that was the basis of the cut-off becomes completely discredited and the insurer’s defense attorney then entirely changes the reasons for the cut-off, even if it’s after case evaluation.
So what do you do to protect by your client and shut down the auto insurer’s game-playing?
The solution lies in the ‘mend the hold’ doctrine
The “mend the hold” doctrine bars an insurance company from changing – after a lawsuit has been filed – its pre-litigation tune about why it denied your client’s claim for No Fault PIP benefits.
Here’s what the U.S. Supreme Court said about the “mend the hold” doctrine (back in 1877):
“Where a party gives a reason for his conduct and decision touching any thing involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration. He is not permitted thus to mend his hold. He is estopped from doing it by a settled principle of law.” (Ohio & Mississippi Railway Company v. McCarthy, 96 U.S. 258, 267, 268, 24 L.Ed. 693 (1877))
That’s great stuff. Unfortunately, way too many personal injury lawyers who learned this doctrine in law school have long forgotten it. But it should be front and center in any motion to estop an auto insurance company from changing its tune, once the original reason for a denial or cut-off of a PIP claim has been discredited.
And there’s also plenty of support for the “mend the hold” doctrine from Michigan courts that both myself and other attorneys in this office have used in these cases to stop insurance company bad behavior:
- In C.E. Tackels, Inc., v. Fantin, 341 Mich. 119, 67 N.W.2d 71 (1954), the Michigan Supreme Court cited with approval the U.S. Supreme Court’s statement in Ohio & Mississippi Railway Company v. McCarthy.
- “This court has many times held, and it must be accepted as the settled law of this state, that, when a loss under an insurance policy has occurred and payment refused for reasons stated, good faith requires that the company shall fully apprise the insured of all the defenses it intends to rely upon, and its failure to do so is, in legal effect, a waiver, and estops it from maintaining any defenses to an action on the policy other than those of which it has thus given notice.” (Smith v Grange Mutual Fire Insurance Company of Michigan, 234 Mich 119, 122-123; 208 NW 145 (1926).)
- “Generally, once an insurance company has denied coverage to an insured and stated its defenses, the insurance company has waived or is estopped from raising new defenses.” (Kirschner v. Process Design Associates, Inc., et al., 459 Mich. 587, 592 N.W.2d 707 (1999))
- “Generally, once an insurance company has denied coverage to its insured and stated its defenses, the insurer has waived or is estopped from raising new defenses.” (Michigan Township Participating Plan v. Federal Insurance Co., 233 Mich.App. 422, 435–436, 592 N.W.2d 760,767 (1999))
- “As a general rule, once an insurance company has denied coverage to an insured and stated its defenses, the company has waived or is estopped from raising new defenses.” (Lee v Evergreen Regency Cooperative, 151 Mich.App 281, 285; 390 NW2d 183 (1986))
With ample support from the U.S. Supreme Court, the Michigan Supreme Court and the Michigan Court of Appeals, the “mend the hold” doctrine can help Michigan’s auto accident attorneys to better protect their clients, and stop another harmful tactic from the auto insurance industry’s Delay, Deny, Defend bag of “dirty tricks.”
In most states, lawyers can combine the mend the hold doctrine with a bad faith lawsuit, or an action under the state’s consumer protection act or a punitive damages claim. We’re not there yet in Michigan, and based upon our state legislature and Michigan Supreme Court, we probably never will. But this time-honored doctrine in our law – one that really boils down to fairness – can help give your client at least a fair shake when the claims adjuster is looking for reasons to cut him off from PIP benefits your client desperately needs.
Related information:
What does it take to cut off a cut off IME doctor?
