MICHIGAN NO-FAULT UPDATE: CLAIMS HANDLING AFTER AN IME
Name: RAMIREZ C. HOME-OWNERS INSURANCE COMPANY
Court/Judge: Michigan Court of Appeals, unpublished Per Curiam Opinion of Judge Boonstra, Judge Borrello and Judge Rick
Issued: February 10, 2022
When an insurer has a question regarding whether benefits incurred by an insured are causally related to an accident, it generally will obtain an Independent Medical Examination for a determination. In Ramirez v. Home-Owners Insurance Company, the Michigan Court of Appeals upheld the decision of the Trial Court to award Plaintiff statutory interest and attorney fees pursuant to MCL 500.3148 when benefits were suspended in advance of an Independent Medical Examination and later denied after a second Independent Medical Examination. According to Ramirez, it is unreasonable to pend or suspend benefits citing a question of medical causation / relatedness before an Independent Medical Examination is conducted. Further, once the Independent Medical Examination report is issued, the insurer must process the claim consistent with the opinions of the examiner.
In Ramirez, the Plaintiff was involved in an automobile accident in 2017. Home-Owners paid some of Plaintiff's benefits before suspending same in December 2017 while investigating whether Plaintiff's medical conditions arose out of the accident. Plaintiff attended an Independent Medical Examination in February 2018 and the physician opined that Plaintiff required attendant care and was unable to work. However, the physician did not reach a conclusion regarding whether the Plaintiff's medical conditions were related to the accident. In August 2018, Plaintiff attended a second Independent Medical Examination with a separate physician who opined that Plaintiff's medical conditions were not causally related to the accident. Thereafter Home-Owners stopped providing benefits to Plaintiff. Following a three (3) day Trial, the Jury Plaintiff $55,279.79 in overdue benefits and interest and the Trial Court awarded Plaintiff attorney fees and taxable costs.
MCL 500.3148 provides for an award of reasonable attorney fees and interest when an insurer unreasonably withholds or denies benefits to ensure prompt payments of benefits to or on behalf of the insured. For an award of attorney fees to issue under the No-Fault Act, the benefits at issue must be overdue (not paid within thirty (30) days after the insurer receives reasonable proof of the fact and amount of loss sustained) and payment of benefits must be unreasonably refused or delayed as determined by the trial court. A refusal to pay or denial of benefits is not unreasonable if it is based on, among other questions, factual uncertainty regarding whether the claimed benefits are related to the accident at issue. The determinative factor is whether the initial refusal to pay was unreasonable. Further insurers are entitled to rely upon the medical opinions of their physicians and Independent Medical Examination reports when questions arise regarding causation.
The Ramirez Court upheld the Trial Court's finding that Home-Owners unreasonably suspended and then denied benefits. The Court reasoned that Home-Owners ceased making payments / pended payment of the benefits at issue in December 2017 before it had received a medical opinion supporting a conclusion that the benefits were "unrelated, unnecessary or unreasonable" as outlined in the August 2018 Independent Medical Examination report. The failure to pay benefits from the time of submission of reasonable proof of the fact and amount of same through the date of the August 2018 Independent Medical Examination report was deemed unreasonable because there was no medical opinion questioning the casual relationship between the accident and the benefits incurred prior to that date.