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Open season on No Fault claimants after recent Bahri case

October 29, 2014 by Steven M. Gursten

The No Fault World after Bahri v. IDS will allow auto insurers to use ‘fraud exclusion’ to deny No Fault PIP benefits to hundreds of innocent people. When does a mistake become a ‘fraudulent misrepresentation?

This is Michigan not Game of Thrones, Bahri fraud No Fault case
This is Michigan, not “Game of Thrones.”

Did you know that in Michigan, auto accident victims can no longer afford to not be perfect?

Not if they want to collect No Fault benefits, anyways.

I fear that’s the most likely consequence after Bahri v. IDS Property Casualty Insurance Company.

Mistakes – even innocent and innocuous mistakes – can get any accident victim labeled a “fraud.” It already happens all the time at case evaluation, where insurance defense attorneys make all sorts of wild accusations against the people I represent.  It happens with the “hired guns” – the so-called independent medical examiners  that auto insurers and defense lawyers routinely hire to find “nothing wrong” with people and to accuse them of exaggeration and malingering to boot.

Now a mistake can cause you to lose all of your  No Fault insurance benefits and protections if you are ever accused of fraud.

That’s the cautionary tale of Bahri, a recent Michigan Court of Appeals case where a No Fault auto insurance company successfully denied No Fault PIP benefits to an auto accident victim, on the basis that mistakes in her replacement services statements were really “fraudulent representations.” Bahri just gave aggressive defense lawyers and insurance companies a terrible new weapon to use to try to deny the insurance benefits to just about anyone if they can show any mistake, no matter how innocent, and label it as fraud.

Someone forgets a doctor at their deposition?


Someone makes a mistake filling in dates in a wage form, or replacement services form, or an attendant care form?


Someone forgets to mention a doctor they saw eight years before?


The medical assistant is daydreaming, and doesn’t write down the name of the doctor that you tell her about eight years before?


In Bahri v. IDS Property Casualty Insurance Company, the Court of Appeals ruled a “general fraud exclusion” in the No Fault insurer’s policy applied to preclude the auto accident victim from receiving No Fault benefits because:

“Reasonable minds could not differ” that the mistakes she made in her “replacement services” statements were “fraudulent representations for purposes of recovering PIP benefits.”

‘Fatal’ mistakes

The mistakes that cost the auto accident victim in Bahri her No Fault benefits pertained to erroneous dates and seeming inconsistencies.

Of the five months covered by her submitted replacement services statements, approximately three weeks had to be disqualified because they predated the date of her accident.

Significantly, rather than rush to judgment by calling her a fraud, the Court of Appeals could have acknowledged that it was an innocent mistake. Once we remove those three weeks of replacement services from consideration, there was no indication on the record of any problem with those replacement services forms.

It could have just been a mistake.

Instead, the death sentence was rendered.

Additionally, the second instance of the Bahri plaintiff’s so-called “fraud” is the “surveillance evidence” from the auto insurance company, which supposedly “depict plaintiff performing activities inconsistent with her claimed limitations [in the replacement services statements].”

Again, the Court of Appeals would have done well to not rush to judgment by concluding:

The “evidence belies plaintiff’s assertion that she required replacement services, and it directly and specifically contradicts representations made in the replacement services statements.”

For example, maybe the fact that surveillance showed the victim “running several errands” on a particular day refuted the victim’s claim that she needed help with “various household activities, including grocery shopping” on that day.

Or, maybe it was just a really good day and the person was trying to do as much as she could. And now she’s punished for not malingering and exaggerating?

This has always been my problem with judges – many of whom have no personal injury background and who never practiced as attorneys who understood the medicine and the injuries. They often make sweeping interpretations when the medicine is not nearly so black and white. Almost all injuries go through pain cycles, with good days and bad days and good weeks and bad weeks. No injury – no matter how bad it is – is always severely painful and incapacitating.

Maybe this was just a good day, and she was using pain meds.  The surveillance doesn’t tell us anything about how she felt that night or the next day.

Either way, it’s a fact question for a jury to decide at trial – not for judges to decide in the context of a very aggressive summary dismissal motion brought by the insurance company. Especially when the outcome is as drastic as the one sought and obtained in Bahri: The permanent and total future denial of an auto accident victim’s present and future No Fault insurance benefits.

This is Michigan, not the Game of Thrones.

Mistakes have never been so costly – auto accident victims beware of the new No Fault world

In the world where I’ve been practicing law for the last 20 years,  a mistake in an auto accident victim’s replacement services statements might have prompted a need for clarification or when justified, a denial of the mistake-related portions of the accident victim’s No Fault form submission. That makes sense. People are not perfect, and innocent mistakes happen all the time.

If those mistakes are significant enough, or frequent enough, they may  even create a “credibility” issue for a judge or a jury.

But a judge deciding as a matter of law to deny all present and future No Fault insurance benefits – without a trial or even an evidentiary hearing – based on two alleged mistakes in an otherwise legitimate, mistake-free claim?

Bahri is a  tragic sign of very bad things to come. Expect insurance companies to aggressively employ surveillance in defending PIP claims, and expect defense attorneys to scream “fraud!” at the slightest mistake.

The times have changed, and one innocent mistake can cost you.  Auto accident victims, beware.  Tomorrow, I’ll discuss the No Fault “fraud” double standard that I see exists today for auto accident victims and their insurance companies.

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