False statements submitted during discovery after a lawsuit for no-fault benefits has been filed may be statements offered in support of a claim to the assigned insurer or the Michigan Automobile Insurance Placement Facility, or MAIPF, the Michigan Supreme Court has held.
“This case presents an issue of first impression: whether MCL 500.3173a(4) applies to misrepresentations made during discovery in the course of litigation,” Justice Elizabeth M. Welch wrote. “The Court of Appeals’ opinion [] established a categorical rule that MCL 500.3173a(4) applies to prelitigation statements only. We find this rule to be overly broad and therefore reverse and remand for further proceedings.”
The unanimous decision is Williamson v. AAA of Michigan ( MiLW 06-108092 , 12 pages).
Interrogatory answers raise questions
Charles Williamson suffered injuries when he was a pedestrian struck by a car. He applied for no-fault personal protection insurance, or PIP, benefits through the Michigan Automobile Insurance Placement Facility, or MAIPF.
The Michigan Assigned Claims Plan, or MACP, operated by the MAIPF, assigned Williamson’s claim to insurer AAA of Michigan.
AAA refused to pay PIP benefits to Williamson, who filed suit for breach of contract and declaratory relief. Williamson passed away on Oct. 23, 2019, in an unrelated accident and his daughters, as the personal representatives of his estate, pursued the lawsuit.
During discovery, the estate submitted answers to AAA’s interrogatories on Feb. 10, 2020 as to whether it was claiming any loss of services no-fault benefits and/or benefits for attendant care or nursing services.
The estate answered in the affirmative and attached replacement service and attendant care forms identifying Lirrice Brown as the service provider including forms for services rendered in November and December 2019, after Williamson passed away.
One of his daughters signed the interrogatory answers on behalf of the estate, acknowledging that she believed them to be true to the best of her knowledge, information and belief.
AAA then moved for summary disposition, arguing that the estate knowingly presented material misrepresentations in support of its claim for no-fault benefits by submitting reimbursement forms for replacement services and attendant care rendered after Williamson passed away.
As a result, the estate was completely barred from recovering no-fault benefits under MCL 500.3173a(4) and 2017’s Candler v. Farm Bureau Mu. Ins. Co. of Michigan decision, the insurer argued.
But the estate said the forms AAA relied upon for dismissal were predated forms completed before Williamson’s death that the estate’s counsel had to produce during discovery and that false statements made during discovery do not allow an insurer to avoid coverage.
The Wayne County Circuit Court granted AAA’s motion for summary disposition. The estate appealed.
Prior proceedings
The Court of Appeals reversed in a 2022 published decision .
“False statements submitted during discovery, after an action for recovery has been filed, are not statements offered in support of a claim to the MAIPF or the assigned insurer,” Judge Kristina Robinson Garrett, joined by Judges Douglas B. Shapiro and Michelle M. Rick, explained. “The no-fault act recognizes a distinction between the prelitigation insurance claims process and the initiation of litigation through an action for recovery.”
After an action for recovery has been filed, false statements submitted during discovery are not statements offered in support of a claim to the MAIPF or the assigned insurer, the judge said.
“Had the legislature intended for MCL 500.3173a(4) to apply to statements made during litigation, the legislature would have drafted the statute differently to apply, for example, to statements offered ‘in support of an action for recovery,’” she said. “Because the legislature did not do so, we give ‘claim’ its intended meaning.”
This conclusion was reinforced when considering the entirety of MCL 500.3173a, which concerns a claimant’s eligibility for PIP benefits and the denial of benefits revealing that the legislature intended for the statute to apply to the prelitigation claims process, not to evidence submitted for the first time during litigation, Garrett said.
“Here, the attendant care and replacement service forms were not submitted in support of Williamson’s claim for no-fault benefits that he submitted to the MAIPF or to AAA,” she noted. “Rather, the forms were disclosed during discovery after the claim was submitted to the MAIPF, assigned to AAA, denied by AAA, and litigation had ensued. MCL 500.3173a(4) asks whether the allegedly false statement was ‘part of or in support of a claim to the [MAIPF], or to an insurer to which the claim is assigned under the assigned claims plan.’ But a false statement made in a filing submitted during discovery is not a statement made to the MAIPF or to an assigned insurer. Rather, a false statement made during discovery is made to the court.”
AAA filed an application for leave to appeal, which the Michigan Supreme Court granted. The justices directed the parties to address “whether MCL 500.3173a(4), the statutory provision governing fraudulent insurance acts in the filing of a claim for no-fault benefits, applies to misrepresentations offered during discovery.”
Reversed and remanded
Welch said the Court of Appeals erred when it held that held that “only prelitigation statements can constitute statements in support of a claim under MCL 500.3173a(4).”
A statement must be “part of or in support of a claim to the [MAIPF], or to an insurer to which the claim is assigned under the assigned claims plan, for payment or another benefit” to be a fraudulent insurance act under the statute.
“Claim” is not defined in no-fault act and the court has not defined it in the context of MCL 500.3173a . However, caselaw provided guidance, Welch said.
For example, the high court held in Covenant Med Ctr, Inc v. State Farm Mut Auto Ins Co that “[t]he relevant dictionary definitions of ‘claim’ include ‘a demand for something due or believed to be due’ and ‘a right to something.’”
The court also ruled in Griffin v. Trumbull Ins Co that “a claim for benefits is simply a demand to an insurer by its insured or a third party for payments that are believed to be due after a motor vehicle accident.”
Thus, “claim” refers generally to a claimant’s demand for coverage under the MACP for bodily injury suffered in a motor vehicle accident in the context of MCL 500.3173a.
Applying these definitions to the case at bar, it follows that the Estate’s interrogatory answers which indicated that the Estate sought no-fault benefits for services rendered after Williamson passed away were in support of a demand for coverage under the MACP based on bodily injury sustained in a motor vehicle accident,” Welch wrote. “There is no other conceivable reason why the Estate would have supplied the answers it did.”
Noting that many plaintiffs in no fault cases seek continuing care benefits during litigation against an insurer, the justice said the appellate court’s “overbroad rule suggests that once litigation commences, MCL 500.3173a(4) would no longer penalize fraudulent statements aimed at obtaining benefits sought while litigation is ongoing. Nothing in the statute suggests that the Legislature desired such a result.”
The justices reversed and remanded to the Court of Appeals to address the remaining unresolved issues, including the plaintiff’s alternative arguments “that AAA failed to satisfy the intent and materiality prongs for a fraudulent insurance act under MCL 500.3173a(4), or that AAA failed to plead the affirmative defense of fraud with sufficient particularity.”
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