Attorneys’ fees, authorization, charge against insurer, allowance to insurer; offset against benefits; judgment against claimant
This no-fault statute sets the requirements for when attorney fees will be awarded in a lawsuit for outstanding no-fault benefits that have not been paid by an insurance company. This law, with MCL 500.3142 regarding payment of penalty interest, is generally used by lawyers hired by people who have brought a lawsuit against their own insurance company for refusing to pay no-fault (PIP) benefits, or improperly denying payment of no-fault benefits.
Its intended scope is to prevent insurance companies in Michigan from constantly denying all no-fault claims, since a lawyer’s hourly attorney fees for prevailing in a no- fault lawsuit does not have to be commensurate with the amount outstanding in the lawsuit. This statute can, however, also be used by defense lawyers representing an insurance company if the first-party lawsuit is found to be frivolous.
In practice, as lawyer attorney fees and penalty interest are only awarded as the result of a trial judgment or verdict, these sanctions are rarely awarded. Insurance companies in Michigan that wrongfully refuse to pay no-fault benefits will often agree to pay the full outstanding claims on the eve of trial.
Most people who have been forced to hire a lawyer and sue their own insurance company will accept that proffer of settlement. This is because the costs they will have to pay to continue to take the case all the way to a verdict when the insurance company is willing to pay, often means bad or dilatory claims handling by insurance companies in Michigan are not punished — as the legislature intended. Without bad faith or punitive damages, egregious conduct by insurance companies to people who have just claims frequently goes unpunished.
A lawyer’s fee for advising and representing a client is awarded if the court finds the insurance company unreasonably refused to pay the claim or unreasonably delayed in making proper payment.
On the other hand, a lawyer’s fee will be awarded to the lawyer representing the defendant insurance company if the insured’s claim for no-fault insurance benefits was in some respect fraudulent or so excessive as to have no foundation behind it.
Whether the action by the insurance company is “unreasonable” is determined by either the judge or jury depending on whether a bench or jury trial is requested. A refusal to pay by an insurance company or a delay in payment is not unreasonable if it is due to bona fide uncertainty about the facts. However, when the only question is which one of two possible insurance companies should pay benefits, it is unreasonable for an insurer to refuse payment.
The attorneys of Michigan Auto Law have been specializing in auto no-fault litigation for more than 50 years. If you have been injured in a car, truck or motorcycle accident in Michigan and are confused about your no-fault insurance rights, please call one of our expert lawyers for a free case evaluation at (800) 777-0028 or fill out our consultation form. There is absolutely no fee or obligation.
We are here to help you.