LaMothe v. Auto Club Insurance

McDonald, J.

(concurring in part and dissenting in part). I agree with the majority’s holding that plaintiff’s allegations of fraud were insufficient to state a claim. However, I strongly disagree with the majority’s decision to affirm the dismissal of plaintiff’s complaint by way of summary disposition pursuant to MCR 2.116(C)(8) and (10).

*587Summary disposition is reviewed de novo because this Court must review the record to determine whether the moving party was entitled to judgment as a matter of law. Stehlik v Johnson (On Rehearing), 206 Mich App 83; 520 NW2d 633 (1994).

MCR 2.116(C)(8) permits summary disposition When the opposing party has failed to state a claim upon which relief can be granted. A motion under this subrule determines whether the opposing party’s pleadings allege a prima facie case. The court must accept as true all well-pleaded facts. Only if the allegations fail to state a legal claim is summary disposition valid. Stehlik, supra.

Plaintiffs complaint alleges the existence of a contract of automobile insurance between the parties pursuant to MCL 500.3101; MSA 24.13101, which entitled plaintiff to personal protection insurance benefits. Plaintiff further alleges he was injured in an automobile accident and properly applied for benefits. Defendant’s answer admits these allegations. Plaintiff further alleges defendant has failed, refused, and neglected to pay health care expenses due him under the policy, causing him damages such as impairment of his credit rating, emotional stress and anxiety, and attorney fees. Defendant’s answer denied these allegations or left plaintiff to his proofs.

Accepting all well-pleaded facts as true, plaintiff’s complaint clearly sets forth a breach of contract claim. Nonperformance of an obligation due is a breach of contract even though the liability of the nonperforming party is limited or nonexistent. Woody v Tamer, 158 Mich App 764; 405 NW2d 213 (1987). The grant of summary disposition under MCR 2.116(C)(8) was clearly erroneous and contrary to law.

A motion pursuant to MCR 2.116(0(10) tests the *588factual basis underlying a plaintiffs claim. MCR 2.116(0(10) permits summary disposition when, except for the amount of damages, there is no genuine issue concerning any material fact and the moving party is entitled to damages as a matter of law. A court reviewing such a motion must consider the pleadings, affidavits, depositions, admissions, and any other evidence in favor of the opposing party and grant the benefit of any reasonable doubt to the opposing party. Stehlik, supra. Generally, summary disposition is premature if discovery concerning a disputed issue is incomplete. Adams v Perry Furniture Co (On Remand), 198 Mich App 1; 497 NW2d 514 (1993); Ransburg v Wayne Co, 170 Mich App 358; 427 NW2d 906 (1988).

As previously discussed, the pleadings raise a question of fact regarding whether defendant paid all reasonable and necessary expenses that were submitted by plaintiff for payment. Further, review of the transcript of the hearing regarding the motion for summary disposition indicates plaintiff furnished defendant with documentation showing a blemished credit rating. Although defendant filed an affidavit of the medical director of its auditing firm in support of its motion indicating the method used in determining a reasonable and necessary charge for medical services, plaintiff claimed defendant’s expert, during his deposition, refused to give an opinion regarding which of plaintiff’s medical bills were reasonable or unreasonable. Plaintiff’s counsel also advised the court he did not have sufficient time to have the expert’s deposition transcribed for use at the hearing, to support his position with counter affidavits and deposition testimony, reminding the court, pursuant to its order, he had approximately six additional weeks to complete discovery.

*589Clearly, the question whether the bills for medical services provided to plaintiff were reasonable charges and whether some of the services were necessary is a factual dispute of a material issue. "The reasonableness and necessity of the particular expenses incurred by plaintiff are relevant to the question of defendant’s 'liability’ under [MCL 500.3107; MSA 24.13107] Nasser v Auto Club Ins Ass’n, 435 Mich 33, 63; 457 NW2d 637 (1990).” The question whether expenses are reasonable and reasonably necessary is generally one of fact for the jury. Id. If an insurer refuses to make prompt payments of no-fault benefits, it runs the risk of sanctions under § 3142 of the act, but § 3107 guarantees that, where an insurer opts to run that risk, it is entitled to a jury trial regarding both liability and damages to the extent questions, of fact are found to exist. Nasser, supra.

In summary, after reviewing the pleadings, affidavits, depositions, admissions, and the whole record, in a light most favorable to plaintiff because there was a genuine issue of material fact and discovery had not been completed, I believe the trial court clearly erred and acted contrary to law in granting defendant’s motion for summary disposition under MCR 2.116(0(10).

The majority’s reliance on McGill v Automobile Ass’n of Michigan, 207 Mich App 402; 526 NW2d 12 (1994), is misplaced. In McGill, the record reveals no evidence the plaintiffs therein suffered injury as a result of the defendant’s partial payment of their medical bills. In the present case, plaintiff has presented evidence of being exposed to harassment, dunning, disparagement of credit, and incurring liability as a result of a dispute between the health care provider and the insurer.

Plaintiff also argues that a rule requiring that the insured first to be sued by a medical provider *590for nonpayment before an injury is said to have occurred could expose an insured to an unprotected five years of liability. This argument has merit. An insured has only one year in which to file a claim for benefits while a medical provider has six years in which to file suit for nonpayment of a bill. The majority opinion summarily dismisses this argument stating plaintiff has failed to allege or provide any evidence to suggest this has happened. However, contrary to the majority’s finding, the record clearly shows support for plaintiff’s argument. Defendant’s answer raised such an affirmative defense, stating:

1. That Plaintiff’s claim is barred in whole or in part by the applicable Statute of Limitations including the one year back rule pursuant to [MCL 500.3145; MSA 24.13145].

The Court in McGill and the majority seem to place great reliance on the insurer’s "agreement” to defend and indemnify its insureds against suits filed by medical providers and to further protect the insureds from damaged credit ratings caused by the nonpayment of medical bills. My review of McGill and the record herein has revealed no such "agreement” between the insurers and their insureds or anyone else. Any such assertions are nothing more than unenforceable promises to do the right thing if an insurer’s insureds suffer damages from its breach of its written contract of insurance. To deny an insured access to our courts on the basis of such an unenforceable promise is a denial of due process and a serious impairment of an insured’s contractual rights. No reasonable person would suggest that insurers should pay health care charges incurred by their insureds regardless of whether the charges are reasonable *591or the services necessary. However, to forge a judicial solution that allows an insurer immunity from suit for breach of contract based upon its unilateral determination of which health care charges are reasonable and what medical services are necessary is an unwise intrusion into a domain traditionally governed by the Legislature. The holding in McGill ignores well-established contract law and current case law governing summary dispositions under MCR 2.116(C)(8) and (10).

This Court in McGill, supra at 408, holds its interpretation of § 3107 enforces the Legislature’s intent to "place a check on health care providers who have no incentive to keep the doctor bill at a minimum.” The Court’s myopic view totally ignores the rights of an insured under the no-fault law and the intent of the Legislature in passing the law. As explained in Shavers v Attorney General, 402 Mich 554, 578-579; 267 NW2d 72 (1978):

The goal of the no-fault insurance system was to provide victims of motor vehicle accidents assured, adequate, and prompt reparation for certain economic losses. The Legislature believed this goal could be most effectively achieved through a system of compulsory insurance, whereby every Michigan motorist would be required to purchase no-fault insurance or be unable to operate a motor vehicle legally in this state. [Emphasis added.]

Although the holding in McGill protects the insurance carriers from paying unreasonable medical charges and unnecessary services, it does so by placing the insured in harm’s way. In order to expose unreasonable medical expenses, the insured must be subjected to multiple lawsuits by various medical providers. Thus, the injured insured party must not only endure the pain and suffering resulting from the accident but must further endure *592the stress of being sued and dunned by the very medical providers relied upon to make them well, as. well as the possibility of being refused future medical treatment by those same providers.

In finding the law constitutional in Shavers, the Court found the no-fault law an innovative social and legal response to the long payment delays, inequitable payment structure, and high legal costs inherent in the tort (or "fault”) liability system. The Court further reasoned at 623:

By partially abolishing tort liability to those who suffer personal injuries as a result of motor vehicle accidents, the act may lessen the number of motor vehicle personal injury tort suits in the courts. The prompt availability of compensation for economic losses may relieve the undereducated or those with lower income from the pressure— "legal” or economic — to settle serious claims prematurely and for less than an equitable amount. [Emphasis added.]

The holding of McGill and of the majority herein does not further the intent of the Legislature but is clearly contrary to its goals.

I would reverse and order the parties to trial with regard to the issue of reasonable charges and necessary services.