Moore v. Secura Insurance

Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:

Opinion Clifford W. Taylor Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman

FILED DECEMBER 30, 2008

HATTIE MOORE and JAMES MOORE,

Plaintiffs-Appellees,

v No. 135028

SECURA INSURANCE,

Defendant-Appellant.

BEFORE THE ENTIRE BENCH (except CAVANAGH, J.).

CORRIGAN, J.

In this case, we consider the assessment of attorney fees for “overdue”

benefits under Michigan’s no-fault insurance statutes. MCL 500.3101 et seq.1

1
The relevant statutory provisions of MCL 500.3101 et seq. provide:
MCL 500.3142:
(1) Personal protection insurance benefits are payable as loss
accrues.
(2) Personal protection insurance benefits are overdue if not
paid within 30 days after an insurer receives reasonable proof of the
fact and of the amount of loss sustained. If reasonable proof is not
supplied as to the entire claim, the amount supported by reasonable
proof is overdue if not paid within 30 days after the proof is received
by the insurer. Any part of the remainder of the claim that is later
supported by reasonable proof is overdue if not paid within 30 days
Under these statutes, personal protection insurance benefits become “overdue”

when an insurer fails to pay “within 30 days after an insurer receives reasonable

proof of the fact and of the amount of loss sustained.” MCL 500.3142(2). “An

attorney is entitled to a reasonable fee for advising and representing a claimant in

an action for personal . . . protection insurance benefits which are overdue.” MCL

500.3148(1). Moreover, “the attorney’s fee shall be a charge against the

insurer . . . if the court finds that the insurer unreasonably refused to pay the claim

after the proof is received by the insurer. For the purpose of
calculating the extent to which benefits are overdue, payment shall
be treated as made on the date a draft or other valid instrument was
placed in the United States mail in a properly addressed, postpaid
envelope, or, if not so posted, on the date of delivery.
(3) An overdue payment bears simple interest at the rate of
12% per annum.
MCL 500.3148:

(1) An attorney is entitled to a reasonable fee for advising and
representing a claimant in an action for personal or property
protection insurance benefits which are overdue. The attorney’s fee
shall be a charge against the insurer in addition to the benefits
recovered, if the court finds that the insurer unreasonably refused to
pay the claim or unreasonably delayed in making proper payment.

(2) An insurer may be allowed by a court an award of a
reasonable sum against a claimant as an attorney’s fee for the
insurer’s attorney in defense against a claim that was in some respect
fraudulent or so excessive as to have no reasonable foundation. To
the extent that personal or property protection insurance benefits are
then due or thereafter come due to the claimant because of loss
resulting from the injury on which the claim is based, such a fee may
be treated as an offset against such benefits; also, judgment may be
entered against the claimant for any amount of a fee awarded against
him and not offset in this way or otherwise paid.

or unreasonably delayed in making proper payment.” Id. Therefore, whether a

claimant’s benefits qualify as overdue and whether an insurer unreasonably

refused to pay or unreasonably delayed in making payment determine if a

claimant’s attorney may receive attorney fees.

In this case, a jury awarded plaintiff $50,000 in noneconomic damages and

$42,755 in unpaid work loss benefits after defendant insurer stopped paying

personal protection insurance benefits. The jury also awarded $98.71 in penalty

interest for overdue work loss benefits. The trial court granted plaintiff’s motion

for attorney fees and costs, and the Court of Appeals affirmed.

Because the Court of Appeals erred in its interpretation of MCL 500.3142

and MCL 500.3148, we reverse. Because the jury awarded plaintiff only $98.71

in penalty interest and failed to award penalty interest on the $42,755 awarded in

unpaid work loss benefits, we conclude that those benefits do not qualify as

overdue pursuant to MCL 500.3124(2). We also conclude that the discontinuation

of plaintiff’s benefits was reasonable under MCL 500.3148(1). Because plaintiff

offered no additional reasons to support the unreasonableness of defendant’s

refusal to pay benefits, plaintiff is not entitled to attorney fees. Moreover, we

reject the Court of Appeals erroneous statement that an insurer’s initial refusal to

pay no-fault insurance benefits can be deemed unreasonable even though it is later

determined that the insurer was not required to pay those benefits.

I. FACTS AND PROCEDURAL HISTORY

On September 27, 2000, a pickup truck struck the passenger side of

plaintiff Hattie Moore’s automobile while she was driving on I-475 in Genesee

County. Because of the accident, plaintiff fractured her right knee, causing a bone

chip. Before the accident, plaintiff had suffered from osteoarthritis in both knees,

and she had been treated by an orthopedic surgeon, Dr. Norman Walter.

According to Dr. Walter, in November 1999, 10 months before the accident, he

discussed knee replacement surgery and injection treatments with plaintiff.

After the accident, plaintiff could not return to her regular employment as a

custodian. Defendant began paying plaintiff work loss and other no-fault benefits

in December 2000. Defendant first paid plaintiff in December 2000. Because of a

computer glitch, however, defendant did not make its next payment to plaintiff

until March 2001. Before the trial, defendant rectified its error, paying plaintiff

the omitted payments as well as the 12 percent penalty interest that defendant

owed. Dr. Walter recommended surgery on plaintiff’s right knee to repair the

injury caused by the accident. On January 22, 2001, Dr. Charles Xeller, a second

orthopedic surgeon, performed an independent medical evaluation (IME) of

plaintiff at defendant’s request. Dr. Xeller agreed that plaintiff’s right knee

required surgery, which Dr. Walter performed on January 26, 2001.

Following surgery, plaintiff remained off work and continued treatment

with Dr. Walter. In March 2001, defendant retained Dan Schingeck, a nurse case

manager, to evaluate whether plaintiff could return to work. Schingeck met with

Dr. Walter on August 30, 2001. After their meeting, Dr. Walter opined that

plaintiff would never be able to return to her normal employment as a custodian.

Dr. Walter’s records do not reflect whether he attributed plaintiff’s inability to

work to her accident-related injuries or her preexisting osteoarthritis.

Defendant continued to pay work loss and other no-fault benefits until Dr.

Xeller performed a second IME on September 25, 2001. After the second IME,

Dr. Xeller prepared a seven page report for defendant. In his report, Dr. Xeller

opined that plaintiff did not need further treatment for her orthopedic complaints

related to the accident. Rather, he concluded that plaintiff had severe

osteoarthritic degeneration in both knees that predated the accident, and that the

accident had not exacerbated plaintiff’s underlying osteoarthritis. Dr. Xeller

determined that plaintiff could return to work with restrictions including, “no

climbing, no walking on uneven ground, no kneeling or squatting, limited

walking, and no overhead lifting.” Additionally, Dr. Xeller opined that plaintiff

needed a total left knee replacement and possibly a total right knee replacement in

the future.

In November 2001, defendant discontinued plaintiff’s no-fault benefits

because reasonable proof of plaintiff’s claim no longer existed on the basis of Dr.

Xeller’s report. Plaintiff filed suit, seeking first-party no-fault benefits from

defendant. Plaintiff and her husband also filed a second suit seeking uninsured

motorist benefits from defendant.

At trial, plaintiff sought approximately $96,000 in work loss benefits,

$21,000 for household or replacement services, and more than $11,000 in penalty

interest. The jury awarded plaintiff $42,775 in work loss benefits, no damages for

household or replacement services, and only $98.71 in penalty interest for overdue

payments. Plaintiff filed a postjudgment motion for no-fault attorney fees and

costs under MCL 500.3148(1). After a hearing to determine attorney fees and

costs, the trial court awarded plaintiff the full amount that she requested, $79,415.

Defendant appealed both the trial court’s decision to grant attorney fees and

costs and the amount of attorney fees and costs awarded to plaintiff. In a divided

opinion, the Court of Appeals affirmed.2 In a divided opinion, the Court of

Appeals affirmed the trial court’s award of $79,415 in attorney fees and costs.3

Relying on a definition of unreasonableness from Liddell v Detroit Automobile

Inter-Ins Exch, 102 Mich App 636, 650; 302 NW2d 260 (1981), the Court

concluded that “the trial court properly found the denial of benefits here

unreasonable where defendant made no inquiry beyond the opinion of its own

IME doctor.”4 The Court held that the defendant insurer owed overdue benefits

2
Moore v Secura Ins, 276 Mich App 195; 741 NW2d 38 (2007).
3
Moore, supra.
4
Moore, supra at 202.

and that the plaintiff satisfied conditions for attorney fees when “it was determined

below that the denial of the benefits was unreasonable, and the jury found at least

some of the benefit payments overdue.”5 The Court held that the trial court did

not abuse its discretion “in awarding plaintiff $79,415 in attorney fees when the

jury awarded plaintiff only $98.71 in penalty interest” because an insurer may

“unreasonably refuse to pay benefits even if the insurer is later deemed not liable

for them.”6

Court of Appeals Judge Kurtis T. Wilder dissented.7 Judge Wilder

reasoned that plaintiff’s benefits were not overdue and, therefore, plaintiff had no

claim for attorney fees “[u]nder the unambiguous language of MCL

500.3148(1).”8 Moreover, Judge Wilder concluded that, given the jury’s award of

$98.71 in penalty interest, it necessarily determined that defendant unreasonably

had delayed payment of only one week of work loss benefits.9 Judge Wilder

further stated that, “[i]n my view, no part of the $79,415 in attorney fees and costs

in this case was attributable to collecting the $822.52 overdue benefit, because that

overdue benefit was paid long before litigation.”10 Therefore, Judge Wilder would

5
Id.

6
Id. at 203-204.

7
Id. at 205.

8
Id. at 208-209.

9
Id. at 209.

10
Id. at 214.

have held “that the trial court erred as a matter of law in granting attorney fees,

because the jury did not award overdue benefits to the plaintiff.”11 Defendant then

applied for leave to appeal to this Court. We scheduled oral argument on the

application and directed the parties to address:

(1) whether the benefits at issue were “overdue,” MCL
500.3148(1), 500.3142(2); (2) whether defendant “unreasonably
refused to pay the claim or unreasonably delayed in making proper
payment,” MCL 500.3148(1); (3) assuming defendant unreasonably
refused to pay, but also assuming that only a portion of the benefits
sought and awarded were “overdue,” whether MCL 500.3148(1)
permits recovery of attorney fees for all benefits sought and
recovered; and (4) whether the Court of Appeals erred in suggesting
that “it is . . . possible for an insurer to unreasonably refuse to pay
benefits even if the insurer is later deemed not liable for them.”
[Moore v Secura Ins, 482 Mich 883 (2008).]

II. STANDARD OF REVIEW

The Court reviews de novo issues of statutory interpretation. Saffian v

Simmons, 477 Mich 8, 12; 727 NW2d 132 (2007). “The trial court’s decision

about whether the insurer acted reasonably involves a mixed question of law and

fact. What constitutes reasonableness is a question of law, but whether the

defendant’s denial of benefits is reasonable under the particular facts of the case is

a question of fact.” Ross v Auto Club Group, 481 Mich 1, 7; 748 NW2d 552

(2008). This Court reviews de novo questions of law, but we review findings of

fact for clear error. Id. “A decision is clearly erroneous when ‘the reviewing

11
Id. at 215.

court is left with a definite and firm conviction that a mistake has been made.’”

Id., quoting Kitchen v Kitchen, 474 Mich 654, 661-662; 641 NW2d 245 (2002).

Moreover, we review a trial court’s award of attorney fees and costs for an abuse

of discretion. Smith v Khouri, 481 Mich 519, 526; 751 NW2d 472 (2008). An

abuse of discretion occurs when the trial court’s decision is outside the range of

reasonable and principled outcomes. Id.

III. LEGAL ANALYSIS

A. Overdue Benefits

“When interpreting statutes, our primary goal is to give effect to the intent

of the Legislature.” Nastal v Henderson & Assoc Investigations, Inc, 471 Mich

712, 720; 691 NW2d 1 (2005). We review the language of the statute itself and

give the words used by the Legislature their common and ordinary meaning. Id.

“If the statutory language is unambiguous, we must presume that the Legislature

intended the meaning it clearly expressed and further construction is neither

required nor permitted.” Id.

MCL 500.3148(1) establishes two prerequisites for the award of attorney

fees. First, the benefits must be overdue, meaning “not paid within 30 days after

[the] insurer receives reasonable proof of the fact and of the amount of loss

sustained.” MCL 500.3142(2). Second, in postjudgment proceedings, the trial

court must find that the insurer “unreasonably refused to pay the claim or

unreasonably delayed in making proper payment.” MCL 500.3148(1). Therefore,

assigning the words in MCL 500.3142 and MCL 500.3148 their common and

ordinary meaning, “attorney fees are payable only on overdue benefits for which

the insurer has unreasonably refused to pay or unreasonably delayed in paying.”

Proudfoot v State Farm Mut Ins Co, 469 Mich 476, 485; 673 NW2d 739 (2003)

(emphasis omitted).

In this case, the verdict form instructed jurors to award “12 percent interest

per annum from the date that the expense or loss became overdue.” In contrast,

the trial court’s jury instructions simply directed jurors to award 12 percent

interest with no indication that the 12 percent interest should be “per annum.”

Moreover, the trial court specifically instructed the jury that if plaintiff did not

provide reasonable proof for her entire claim, then it must award interest for any

pro rata portion for which plaintiff did supply reasonable proof. While plaintiff

requested more than $11,000 in penalty interest, defendant requested that the jury

award plaintiff only $121.50 in penalty interest. Instead of awarding the amount

requested by either party, the jury awarded only $98.71 in penalty interest.12

The jury’s decisions to award plaintiff $42,755 in unpaid work loss

benefits, but only $98.71 in penalty interest, seems inconsistent because if the jury

had determined that the work loss benefits owed were overdue, then the jury

instructions mandated that it award 12 percent penalty interest on the full amount

of overdue benefits, as required by MCL 500.3142(3). This Court will uphold a

jury’s verdict, however, where “‘there is an interpretation of the evidence that

provides a logical explanation for the findings of the jury.’” Bean v Directions

Unlimited, Inc, 462 Mich 24, 31-32; 609 NW2d 567 (2000), quoting Granger v

Fruehauf Corp, 429 Mich 1, 7; 412 NW2d 199 (1987).

The jury’s conclusion that plaintiff was owed work loss benefits did not

also require it to conclude that those benefits were overdue. It may have

concluded that the preexisting osteoarthritic degeneration in plaintiff’s knees cast

doubt on whether defendant had reasonable proof of plaintiff’s accident-specific

injuries, and, therefore, whether payments were due under MCL 500.3142(2). The

jury also may have concluded that defendant should not be faulted for its computer

glitch where plaintiff did not promptly notify defendant about the error. The

jury’s award of $98.71 in penalty interest represents exactly 12 percent of one

week of plaintiff’s work loss benefits, which defendant calculated at $822.52.

Thus, the jury decided that only one week of work loss benefits was overdue.

Because there is an interpretation of the evidence that provides a logical

explanation for the jury’s verdict, we uphold it.

MCL 500.3148(1) further provides that an attorney may only receive fees

for representing a claimant in an action for “benefits which are overdue.” In MCL

12
As Judge Wilder notes in his dissent, $98.71 is 12 percent of $822.52, and
$822.52 represents the one week of delayed work loss benefits for which plaintiff

500.3142(2), the Legislature explains that overdue benefits refer to those benefits

“not paid within 30 days after an insurer receives reasonable proof of the fact and

of the amount of loss sustained.” Neither MCL 500.3142(2) nor MCL

500.3148(1) permits the recovery of attorney fees for actions in which a court

awarded plaintiff benefits that were reasonably in dispute, or, stated slightly

differently, benefits not yet overdue.

In addition to being consistent with Judge Wilder’s dissent,13 our view

coincides with another Court of Appeals decision in which a jury refused to award

penalty interest because benefits were not overdue under MCL 500.3142. Beach v

State Farm Mut Automobile Ins Co, 216 Mich App 612; 550 NW2d 580 (1996).

In Beach, the Court held that a jury’s decision that benefits were not overdue for

purposes of MCL 500.3142 precluded the trial court from awarding attorney fees

pursuant to MCL 500.3148(1) because a plaintiff is entitled to attorney fees only

for overdue benefits. Id. at 630.

The Court of Appeals erred by failing to follow the unambiguous language

of MCL 500.3142 and MCL 500.3148. In this case, despite instructions from the

trial court and on the verdict form, the jury declined to award penalty interest on

the $42,755 in unpaid work loss benefits that it awarded plaintiff. From its award

of $98.71 in penalty interest, we conclude that the jury found that only one week

provided reasonable proof. Moore, supra at 209.
13
Moore, supra at 205-215.

of work loss benefits was overdue. Therefore, the jury must have found that the

$42,755 in work loss benefits was not overdue under the plain meaning of MCL

500.3142 and MCL 500.3148. Because, as noted above, “‘there is an

interpretation of the evidence that provides a logical explanation’” for this finding,

Bean, supra at 31, quoting Granger, supra at 7, we agree with the jury’s

conclusion that the $42,755 in work loss benefits was not overdue at the time of

the trial.

B. Unreasonable Refusal or Delay

MCL 500.3148(1) provides in relevant part, “[t]he attorney's fee shall be a

charge against the insurer in addition to the benefits recovered, if the court finds

that the insurer unreasonably refused to pay the claim or unreasonably delayed in

making proper payment.” The Court of Appeals recognized that an insurer’s

refusal to pay benefits is not unreasonable “‘[i]f the insurer’s refusal or delay in

payment is the product of a legitimate question of statutory construction,

constitutional law, or a bona fide factual uncertainty.’”14 The Court traced its

definition of “unreasonableness” to Liddell, supra at 650, in which the Court

affirmed attorney fees under MCL 500.3148 “on the basis of the refusal of the

defendant insurer to reconcile the opinion of one doctor that the plaintiff’s injuries

from an accident no longer precluded him from employment with the

14
Moore, supra at 199, quoting Beach, supra at 629.

contradictory opinions of the plaintiff’s treating physicians.”15 Comparing the

facts of this case to the facts of Liddell, the Court reasoned, “[h]ere, as in Liddell,

defendant insurer terminated plaintiff’s work loss benefits without attempting to

reconcile the opinions of its independent medical examiner and plaintiff’s treating

physicians.” The Court of Appeals concluded, “[u]nder these circumstances, the

trial court did not clearly err in finding that defendant unreasonably terminated

plaintiff’s benefits . . . .”16

We reject the Court of Appeals analysis of Liddell. In Liddell, the Court

held that a trial court did not clearly err when it found an insurer’s conduct

unreasonable where the insurer “did not attempt to contact” physicians with

conflicting opinions “or in some other way attempt to ascertain the true situation

in the face of contradictory reports.”17 Nothing in the plain language of MCL

500.3148(1), however, requires an insurer to reconcile conflicting medical

opinions. Moreover, nothing otherwise implicit in the statute requires an insurer

to reconcile competing medical opinions. Therefore, in accordance with the plain

language of MCL 500.3148(1), we overrule Liddell.

The Court of Appeals erred in affirming the trial court’s finding that,

because defendant knew that other doctors were involved in plaintiff’s case, it was

“incumbent upon the carrier to go beyond” defendant’s doctor and that the

15
Moore, supra at 200.
16
Id. at 201.

defendant insurer “could have sought further information before exercising the

draconian termination of critical benefits for one who is injured.”18 The Court of

Appeals misconstrued the plain language of MCL 500.3148(1) and thereby

imposed additional duties on insurers beyond those duties already established in

Michigan’s no-fault insurance statutes. We acknowledge that the trial court’s

decision about whether an insurer acted reasonably presents a mixed question of

law and fact.19 We hold that the trial court here erred as a matter of law.

The plain language of MCL 500.3101 et seq. does not impose an

independent duty on insurers to “go beyond” the medical opinion of their

physicians and the IMEs that those physicians perform. Instead, “[t]he

determinative factor in our inquiry is not whether the insurer ultimately is held

responsible for benefits, but whether its initial refusal to pay was unreasonable.”20

To determine whether the initial refusal to pay was unreasonable, the trial court

must give effect to the unambiguous language of MCL 500.3148(1). MCL

500.3148(1) requires that the trial court engage in a fact-specific inquiry to

determine whether “the insurer unreasonably refused to pay the claim or

unreasonably delayed in making proper payment.”

17
Liddell, supra at 651.
18
Moore, supra at 200.
19
Ross, supra at 7 (“What constitutes reasonableness is a question of law, but
whether the defendant’s denial of benefits is reasonable under the particular facts

of the case is a question of fact.”).

20
Id. at 11.

We conclude that an insurer need not resort to a “tie breaker” to resolve

conflicting medical reports, but we note that an insurer acts at its own risk in

terminating benefits in the face of conflicting medical reports.21 Here, however,

defendant’s decision not to seek out another physician to prepare yet another IME

in order to reconcile the conflicting opinions of Dr. Walter and Dr. Xeller was not

unreasonable under the fact-specific inquiry mandated by MCL 500.3148. MCL

500.3142(2) provides in relevant part: “[i]f reasonable proof is not supplied as to

the entire claim, the amount supported by reasonable proof is overdue if not paid

within 30 days after proof is received by the insurer.” Under the plain language of

the statute, the claimant shoulders the initial burden to supply reasonable proof of

her entire claim, or reasonable proof for some portion thereof. When the claimant

provides such evidence, the insurer then must evaluate that evidence as well as

evidence supplied by the insurer’s doctor before making a reasonable decision

regarding whether to provide the benefits sought.

We reject the trial court’s conclusion that the defendant insurer must “go

beyond” defendant’s doctor or IME. We hold that the Court of Appeals erred in

affirming the trial court’s ruling that defendant unreasonably terminated plaintiff’s

benefits. Under the unambiguous language of MCL 500.3148(1) and MCL

21
Id. (“Accordingly, an insurer’s refusal or delay places a burden on the insurer to
justify its refusal or delay. The insurer can meet this burden by showing that the
refusal or delay is the product of a legitimate question of statutory construction,
constitutional law, or factual uncertainty.”)

500.3142(2), defendant’s decision to discontinue plaintiff’s benefits in light of a

legitimate factual uncertainty was reasonable.

C. Attorney Fees

In Proudfoot, supra at 485, this Court held that “attorney fees are payable

only on overdue benefits for which the insurer has unreasonably refused to pay or

unreasonably delayed in paying.” (Emphasis omitted.) MCL 500.3148(1)

provides in relevant part, “[t]he attorney’s fee shall be a charge against the insurer

in addition to the benefits recovered, if the court finds that the insurer

unreasonably refused to pay the claim or unreasonably delayed in making proper

payment.”

In this case, the jury found that $822.52, or only one week of plaintiff’s

unpaid work loss benefits, were overdue. Generally, plaintiff’s attorney would be

entitled to attorney fees incurred to collect those overdue benefits. Here, however,

before plaintiff’s suit went to trial, defendant already had paid plaintiff $822.52 for

one week of work loss benefits and all other payments that defendant owed as a

result of the computer glitch. Because plaintiff did not attribute any of the

$79,415 that the trial court awarded her in attorney fees and costs to collecting

$822.52 in overdue work loss benefits, plaintiff is not entitled to attorney fees.

Moreover, because, as shown above, defendant did not unreasonably refuse

to pay work loss benefits, plaintiff is not entitled to attorney fees incurred to

collect the $42,755 awarded by the jury. Our review of the lower court record

reveals that plaintiff proffered only one reason that defendant’s refusal to pay

benefits was unreasonable under MCL 500.3148(1). Specifically, during the

hearing on plaintiff’s motion for attorney fees, plaintiff’s counsel argued that

defendant unreasonably discontinued benefits solely because of defendant’s

reliance on the second IME performed by Dr. Xeller. Related to his broader

argument, plaintiff’s counsel faulted defendant for not sharing Dr. Xeller’s IME

with plaintiff’s other physicians, not asking plaintiff’s other physicians if they

agreed with Dr. Xeller’s second IME, and not educating themselves about

osteoarthritis. To further buttress his argument, plaintiff’s counsel relied on

Liddell for the proposition that defendant must reasonably evaluate plaintiff’s

medical condition.

As previously discussed, however, defendant’s reliance on Dr. Xeller’s

second IME was not unreasonable under the plain language of MCL 500.3148(1).

Forcing defendant to “go beyond” what the unambiguous statutory language

mandates would effectively require it to shoulder plaintiff’s initial burden pursuant

to MCL 500.3142(2). Further, this Court already has concluded that the Court of

Appeals misconstrued Liddell and, therefore, that Court’s reading of Liddell is

inapplicable. Moreover, even if we had not overruled Liddell and the case were

applicable, we note that defendant here did significantly more than the insurer in

that case, including requesting two separate IMEs and hiring a nurse case manager

to investigate whether plaintiff could return to work.

Because plaintiff did not attribute any of the $79,415 that the trial court

awarded her in attorney fees and costs to collecting the $822.52 in overdue work

loss benefits as determined by the jury’s penalty interest award, and because there

is no evidence in the lower court record that defendant’s refusal to pay benefits

was unreasonable, plaintiff is not entitled to any attorney fees under MCL

500.3148(1).

D. Erroneous Statement of Law

The Court of Appeals majority erred by relying on McCarthy v Auto Club

Ins Ass’n, 208 Mich App 97; 527 NW2d 524 (1994), for the proposition that “[i]t

is . . . possible for an insurer to unreasonably refuse to pay benefits even if the

insurer is later deemed not liable for them.”22 In actuality, the McCarthy Court

addressed the inverse proposition, namely, that “the scope of inquiry under [MCL

500.3148] is not whether the insurer ultimately is held responsible for a given

expense, but whether its initial refusal to pay the expense was unreasonable.”

McCarthy, supra at 105. Otherwise stated, an insurer’s initial refusal to pay

benefits under Michigan’s no-fault insurance statutes can be deemed reasonable

even though it is later determined that the insurer was required to pay those

benefits.

We recently affirmed the proposition expressed in McCarthy that an

insurer’s initial refusal to pay no-fault benefits can be deemed reasonable even if it

is later determined that the insurer was required to pay those benefits. Ross, supra

at 11. This Court’s statement in Ross and the Court’s statement in McCarthy,

22
Moore, supra at 204, citing McCarthy, supra at 105.

however, do not permit us to assume that the inverse proposition as expressed by

the Court of Appeals is similarly correct. Nothing in our jurisprudence suggests

that an insurer’s initial refusal to pay no-fault insurance benefits can be deemed

unreasonable, even though it is later determined that the insurer did not owe those

benefits. The Court of Appeals proposition effectively penalizes an insurer for

refusing to pay benefits that the insurer had no obligation to pay. In contrast, we

conclude that if an insurer does not owe benefits, then benefits cannot be overdue.

Therefore, before a court may award attorney fees, benefits must be overdue, and

an insurer must have unreasonably refused to pay the claim or delayed in payment.

Accordingly, we reject the Court of Appeals statement that “it is . . .

possible for an insurer to unreasonably refuse to pay benefits even if the insurer is

later deemed not liable for them.” Moore, supra at 204.

IV. CONCLUSION

If an insurer’s payment does not qualify as overdue, a claimant’s attorney

may not receive attorney fees under Michigan’s no-fault insurance statutes. MCL

500.3101 et seq. In this case, the Court of Appeals failed to give effect to the

clearly expressed intent of the Legislature in MCL 500.3142 and MCL 500.3148.

Because the jury awarded plaintiff only $98.71 in penalty interest and failed to

award penalty interest on the $42,755 that it awarded in unpaid work loss benefits,

we conclude that those benefits do not qualify as overdue pursuant to MCL

500.3124(2). Moreover, defendant’s act of discontinuing plaintiff’s benefits did

not constitute either an unreasonable refusal to pay or unreasonable delay under

MCL 500.3148(1). Because plaintiff offered no additional reasons to support the

unreasonableness of defendant’s refusal to pay benefits, plaintiff is not entitled to

attorney fees. Finally, we reject the Court of Appeals erroneous statement that an

insurer’s initial refusal to pay no-fault insurance benefits can be deemed

unreasonable even though it is later determined that the insurer was not required to

pay those benefits.

Accordingly, we reverse the Court of Appeals and remand for further

proceedings consistent with our opinion.

Maura D. Corrigan
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman

Cavanagh, J., did not participate because of a familial relationship with

counsel for Secura Insurance.

STATE OF MICHIGAN

SUPREME COURT

HATTIE MOORE and JAMES MOORE,

Plaintiffs-Appellees,

v No. 135028

SECURA INSURANCE, A MUTUAL
COMPANY, a foreign corporation,

Defendant-Appellant.

KELLY, J. (dissenting).

I dissent from the majority opinion reversing the Court of Appeals

judgment. I would hold that the Court of Appeals correctly analyzed the issues

involved. I also believe that the majority opinion improperly substitutes its

judgment for that of the trial court and ignores the deferential standards of review

applicable here. I would therefore uphold the trial court’s award of attorney fees

and its determination that defendant’s behavior was unreasonable. Finally, I

would not overrule Liddell v Detroit Automobile Inter-Ins Exch.1

FACTS AND PROCEDURAL HISTORY

In September 2000, plaintiff Hattie Moore’s automobile was struck while

she was driving on I-475 in Genesee County. Plaintiff’s right knee was fractured

1
Liddell v Detroit Automobile Inter-Ins Exch, 102 Mich App 636; 302
NW2d 260 (1981).
in the accident. She was unable to return to her custodial job. Defendant,

plaintiff’s no-fault insurer, began paying her work loss benefits and other no-fault

benefits in December 2000.

Both before and after the accident, plaintiff received treatment from an

orthopedic surgeon, Dr. Norman Walter. She had originally sought treatment from

Dr. Walter for osteoarthritis in both knees. Following the accident, Dr. Walter

recommended surgery on plaintiff’s right knee to repair the injury caused by the

accident. At defendant’s request, Dr. Charles Xeller, also an orthopedic surgeon,

also examined plaintiff. Dr. Xeller, in his independent medical examination

(IME), agreed with the need for surgery. Dr. Walter operated on plaintiff’s right

knee on January 26, 2001.

Plaintiff remained unable to return to work after the surgery and continued

to treat with Dr. Walter. Defendant meanwhile retained Dan Schingeck, a nurse

case manager, to explore whether plaintiff could return to work. Schingeck met

with Dr. Walter in August 2001. Some time after that meeting, Dr. Walter

expressed his opinion that plaintiff would never be able to return to her normal

employment. It is unclear, however, whether Dr. Walter formed that opinion

because of the injuries plaintiff suffered in the automobile accident or because of

plaintiff’s osteoarthritis.

Dr. Xeller performed a second IME of plaintiff at defendant’s request on

September 25, 2001. This report stated that plaintiff no longer required any

treatment for her orthopedic injuries sustained in the accident. The report further

concluded that plaintiff had significant osteoarthritic deterioration in both knees

that had not been exacerbated by the accident. Dr. Xeller opined that plaintiff

could return to restricted work activities.

On the basis of Dr. Xeller’s second IME, defendant terminated plaintiff’s

no-fault benefits. Plaintiff then filed a lawsuit seeking first-party no-fault benefits.

Plaintiff later added a second lawsuit seeking uninsured motorist benefits from

defendant. The cases were tried together before a jury, in June 2005.

The jury awarded plaintiff $42,775 in work loss benefits, $98.71 in penalty

interest, and $50,000 in noneconomic losses related to plaintiff’s uninsured

motorist claim. After judgment was entered, plaintiff filed a motion for attorney

fees and costs under MCL 500.3148(1). The trial judge heard oral argument on

the motion and ultimately granted it. Following a hearing before another judge,

plaintiff was awarded $79,415 in attorney fees and costs.

Defendant appealed only the award of attorney fees and costs. The Court

of Appeals affirmed in a divided opinion,2 and defendant sought leave to appeal in

this Court. We scheduled oral argument on the application.3

2
Moore v Secura Ins, 276 Mich App 195; 741 NW2d 38 (2007).
3
Moore v Secura Ins, 482 Mich 883 (2008).

ANALYSIS

A. Overdue Benefits

Under MCL 500.3148(1), attorney fees may be awarded only (1) “in an

action for personal or property protection insurance benefits which are overdue”

and (2) when the insurer “unreasonably refused to pay the claim or unreasonably

delayed in making proper payment.” The jury’s finding that benefits were

“overdue” will be upheld if “there is an interpretation of the evidence that provides

a logical explanation for the findings of the jury.”4 In this case, the majority

upholds the jury’s finding that some benefits were overdue. However, it then

extrapolates from the amount of penalty interest awarded that “the jury declined to

award penalty interest on the $42,775 in unpaid work loss benefits that it awarded

plaintiff.”5

Instead, the majority concludes that the jury found “only one week of work

loss benefits was overdue.”6 The majority then opines (1) that the jury attributed

this overdue week of work loss benefits to benefits paid late by defendant to

plaintiff before trial to a computer glitch, and (2) “that the $42,755 in work loss

benefits was not overdue at the time of the trial.”7 Therefore, the majority asserts

4
Granger v Fruehauf Corp, 429 Mich 1, 7; 412 NW2d 199 (1987).

5
Ante at 12.

6
Ante at 11.

7
Ante at 11, 13. Because the majority makes this logical leap on the basis

of speculation about the jury’s conclusions, I reject it from the outset.

that “the $42,755 in work loss benefits was not overdue under the plain meaning

of MCL 500.3142 and MCL 500.3148.”8

The majority cannot claim to have insight into the minds of the jurors in

this case. Any analysis of the jury’s conclusions must be based on the record.

With that in mind, it should be noted that, the majority fails to reference the

parts of the jury verdict form where the jury was specifically asked these

questions:

QUESTION NO. 1: Did Hattie Moore sustain work loss
arising out of the accidental bodily injury she sustained in the
September 27, 2000 motor vehicle accident?

(Work loss consists of loss of income from work the plaintiff
would have performed during the first three years after the date of
the accident if the plaintiff had not been injured. Work-loss benefits
are computed at 85 percent of the plaintiff’s loss of gross income,
but they may not exceed the sum of $3,898.00 per 30-day period
from October 1, 2000 – September 30, 2001, and, $4,027 per 30-day
period from October 1, 2001 – September 30, 2002, and, $4,070 per
30-day period from October 1, 2002 – September 30, 2002 [sic], nor
may they be payable beyond three years after the date of the
accidental bodily injury.)

A. Answer: Y (yes or no)

B. If your answer is “yes,” what is the amount of work
loss owed to Hattie Moore (include only work loss not already paid
by defendant)?

Answer: $ 42 K .
755.

***

8
Ante at 13.

QUESTION NO. 3: Was payment for any of the expenses or
losses to which the [sic] Hattie Moore was entitled overdue?

(Payment for an expense or loss is overdue if it is not paid
within 30 days after the defendant receives reasonable proof of the
fact and the amount of the claim. An overdue claim bears interest at
the rate of 12 percent per annum from the date the expense or loss
becomes overdue.)

A. Answer: Y (yes or no)

B. If your answer is “yes,” what is the amount of interest
owed to Hattie Moore on overdue benefits (include only interest not
already paid by the defendant)?

Answer: $ 98.00

The jury verdict form provides an answer to the first inquiry: was payment

to which the plaintiff was entitled overdue? The jury answered yes. Therefore,

contrary to the majority’s conclusion, the verdict establishes that this lawsuit was

“an action for personal or property protection insurance benefits which are

overdue.”

Defendant is correct that over $11,000 in penalty interest would have been

the appropriate amount of penalty interest had the jury found the entire $42,755 in

benefits overdue. Again, however, I would decline to speculate about the reasons

for the size of the jury’s award. As the Court of Appeals majority noted, plaintiff

filed an “applications of benefits” form with defendant in December 2000 and

plaintiff’s employer provided employment information indicating plaintiff’s wage

history. A reasonable jury may have found that those proofs established that some

portion of work loss benefits was overdue.9

I acknowledge that the majority identifies a logical explanation for the

amount of the penalty interest award. Nonetheless, the majority reaches this

conclusion by speculating about the jury’s rationale for awarding a dollar amount

that neither party suggested was correct. Unlike the majority, I decline to

substitute my judgment for that of the jury, which definitively found that some

payment to plaintiff was “overdue.”10

Finally, the majority’s citation of Beach v State Farm Mut Automobile Ins

Co11 as consistent with its decision here is misplaced. In Beach, the jury awarded

no penalty interest to the plaintiff. The trial court rightfully concluded that, given

that penalty interest was not awarded, the jury must have concluded that the no-

fault benefits at issue were not overdue. Also, attorney fees could not be awarded.

Beach is easily distinguishable, as plaintiff noted in her brief, because the

Court in Beach had no need to speculate about how or why the jury had awarded

penalty interest. The jury in Beach awarded no penalty interest, precluding both a

9
Oddly, the majority asserts that it is “uphold[ing]” the jury’s verdict. But,
contrary to the majority’s assertion, nowhere in the record is it apparent that “the
jury decided that only one week of work loss benefits was overdue.” Ante at 11.
Rather, the majority arrives at this conclusion only after a series of speculative
remarks about what the jury “may have concluded” in arriving at its verdict.
10
As the Court of Appeals majority noted, “[t]he jury is the finder of fact,
and we will not second-guess it.” Moore, supra at 202.

finding that benefits were overdue and an award of attorney fees. In this case,

conversely, the majority notes the amount of penalty interest awarded, then makes

a series of guesses about the jury’s intent. I would adhere to the clear answer on

the jury verdict form: the jury concluded that benefits were overdue.

B. Unreasonable Refusal or Delay

An insurer’s refusal to pay benefits is not unreasonable when it is “the

product of a legitimate question of statutory construction, constitutional law, or a

bona fide factual uncertainty.”12 The trial court’s application of that standard to

the particular facts of the case is reviewed for clear error.13 The majority

concludes that defendant’s refusal to pay benefits in this case was the product of a

legitimate factual uncertainty and therefore was reasonable. In the process, the

majority overrules Liddell, supra. In Liddell, the Court of Appeals upheld the trial

court’s determination that an insurer acted unreasonably because it did not attempt

to contact physicians with conflicting opinions or reconcile contradictory medical

reports.14

11
Beach v State Farm Mut Automobile Ins Co, 216 Mich App 612; 550
NW2d 580 (1996).
12
Gobler v Auto-Owners Ins Co, 428 Mich 51, 66; 404 NW2d 199 (1987).
13
Ross v Auto Club Group, 481 Mich 1, 7; 748 NW2d 552 (2008).
14
“The testimony . . . indicated that defendant did not attempt to contact
these physicians or in some other way attempt to ascertain the true situation in face
of the contradictory reports.” Liddell, supra at 651.

I disagree with the majority and would not overrule Liddell. Moreover, I

cannot agree with the majority’s conclusion that the trial court erred as a matter of

law in concluding that defendant’s refusal to pay benefits to plaintiff was

unreasonable.

In this case, I believe that it was certainly possible that the trial judge

determined that no bona fide factual uncertainty existed. Ample evidence exists

on the record to support this conclusion. First, defendant did not even attempt to

reconcile the competing medical opinions of the IME and plaintiff’s doctors.

More importantly, defendant did not provide plaintiff’s doctors with the results of

the IME that conflicted with their medical opinions.

The majority’s declaration that the “plain meaning” of MCL 500.3142(2)15

and MCL 500.3148(1)16 provides a basis for overruling Liddell is unavailing. As

15
MCL 500.3142 provides:
(1) Personal protection insurance benefits are payable as loss
accrues.
(2) Personal protection insurance benefits are overdue if not
paid within 30 days after an insurer receives reasonable proof of the
fact and of the amount of loss sustained. If reasonable proof is not
supplied as to the entire claim, the amount supported by reasonable
proof is overdue if not paid within 30 days after the proof is received
by the insurer. Any part of the remainder of the claim that is later
supported by reasonable proof is overdue if not paid within 30 days
after the proof is received by the insurer. For the purpose of
calculating the extent to which benefits are overdue, payment shall
be treated as made on the date a draft or other valid instrument was
placed in the United States mail in a properly addressed, postpaid
envelope, or, if not so posted, on the date of delivery.

is apparent from the text of these statutes, they are entirely silent on the

circumstances here, where the parties have conflicting medical opinions.17

Notably, the statute requires only “reasonable proof” of the plaintiff’s claim

and the amount of loss sustained in order to make unpaid benefits overdue.

Contrary to the majority, I submit that, under the plain meaning of “reasonable

proof,” the medical opinion of plaintiff’s doctor meets that standard.

A lay dictionary defines “reasonable” as “agreeable to or in accord with

reason; logical.”18 “Proof” is defined as “1. evidence sufficient to establish a thing

(3) An overdue payment bears simple interest at the rate of
12% per annum.
16
MCL 500.3148 provides, in relevant part:
(1) An attorney is entitled to a reasonable fee for advising and
representing a claimant in an action for personal or property
protection insurance benefits which are overdue. The attorney’s fee
shall be a charge against the insurer in addition to the benefits
recovered, if the court finds that the insurer unreasonably refused to
pay the claim or unreasonably delayed in making proper payment.
17
The majority rejects Liddell because “[n]othing in the plain language of
MCL 500.3148(1) . . . requires an insurer to reconcile conflicting medical
opinions.” Ante at 14. This argument makes little sense given that no language in
either MCL 500.3142 or 500.3148(1) requires an insurer to do anything other than
pay benefits within 30 days of proof from the claimant. Otherwise, the benefits
are deemed “overdue” and the insurer is liable for attorney fees under § 3148(1).
Aside from the term “reasonable proof,” nothing in either statute discusses
evidentiary burdens, offers any guidance for what constitutes “reasonable proof,”
or provides any edification on the issues before us in this case. In fact, it is the
majority that writes words into the statute by requiring claimants to provide more
than “reasonable proof” when there is conflicting evidence regarding the cause of
claimant’s injuries. This outcome is startling given the majority’s oft-repeated
mantra that unambiguous statutes must be enforced as written. See, e.g., Koontz v
Ameritech Services, Inc, 466 Mich 304, 312; 645 NW2d 34 (2002).

as true or believable. . . . 5. (in judicial proceedings) evidence that seems to

substantiate or corroborate a charge or allegation.”19

In this case, it was not clearly erroneous for the trial judge to conclude that

the medical opinion of plaintiff’s doctor was sufficiently “logical” to establish

plaintiff’s claim “as true or believable.” Therefore, the trial judge’s finding that

defendant’s refusal to pay benefits was unreasonable under MCL 500.3142(2)

does not constitute clear error.

However, even if, after defendant’s doctor performed the IME that yielded

a conflicting conclusion, plaintiff’s doctor’s opinion no longer sufficed as

“reasonable proof” of plaintiff’s claim, defendant may not immediately terminate

benefits. Rather, an insurer that does not attempt to reconcile credible conflicting

medical opinions before terminating benefits acts unreasonably.20

At the least, defendant in this case should have alerted plaintiff’s treating

physicians of the new contradictory opinion. This would have allowed plaintiff an

18
Random House Webster’s College Dictionary (2001).
19
Id.
20
I recognize that the majority criticizes this view for supposedly
“impos[ing] additional duties on insurers beyond those duties already established
in Michigan’s no-fault insurance statutes.” Ante at 15. However, as stated
previously, I believe this requirement is consistent with the plain meaning of
“reasonable proof.” Moreover, I note that in practice, this requirement puts
insurers on notice that immediately terminating benefits in the face of
contradictory medical information, without any further action, is probably
“unreasonable.” By contrast, the majority’s rule does not impose such a
requirement but leaves an insurer to “act[] at its own risk in terminating benefits in

opportunity to submit additional proof to satisfy the “reasonable proof” threshold

in MCL 500.3142(2). In my view, an insurer should not be able to create a bona

fide factual uncertainty by choosing to reject plaintiff’s doctor’s credible opinion

and rely solely on its doctor’s “independent medical report.” To allow insurers to

terminate benefits on this basis alone contradicts the requirement that the factual

uncertainty be “bona fide.”

I further conclude that, even if Liddell is overruled, I would reach the same

result because defendant “unreasonably delayed in making proper payment” under

MCL 500.3148(1). I would so hold because defendant failed to pay plaintiff

monies it knew were owed considering the computer glitch that had delayed

payment.

Defendant conceded that the payment covering December 2000 to March

2001 was overdue and that it “admittedly owed” plaintiff 12 percent penalty

interest for that late payment under MCL 500.3142(3). Defendant’s failure to pay

penalty interest that it acknowledged was owed to plaintiff constitutes an

unreasonable delay in making “proper payment” under MCL 500.3148(1).

Nothing in the statutory language restricts “proper payment” to overdue benefits.

The Legislature’s decision to allow attorney fee awards where “the insurer

unreasonably refused to pay the claim or unreasonably delayed in making proper

payment” demonstrates a preference that plaintiffs recover attorney fees in the

the face of conflicting medical reports.” Ante at 15-16. It seems to me that the

following circumstances: (1) if insurers unreasonably refuse to pay a claim at all,

(2) if they unreasonably delay in paying the claim, or (3) if they unreasonably

delay in paying the proper amount of the claim. Here, because defendant

conceded that the penalty interest was owed on the overdue payment, it was

unreasonable for it not to pay plaintiff the proper amount of that claim. The

proper amount was the overdue benefits plus the 12 percent penalty interest.

I therefore conclude that the trial judge did not clearly err by holding that

defendant’s refusal to pay benefits was unreasonable.

C. Attorney Fees

Because I believe that the trial court did not clearly err by concluding that

(1) some benefits were overdue and (2) defendant’s refusal to pay the claim was

unreasonable, I further conclude that the trial court did not abuse its discretion in

awarding plaintiff $79,415 in attorney fees. I also see no merit in defendant’s

argument that, even if plaintiff is entitled to attorney fees, she may recover only

the portion directly attributable to securing overdue benefits.

In Cole v Detroit Automobile Inter-Ins Exch,21 the defendant asserted that

the trial court should have based its claim for attorney fees on the portion of time

the attorney expended in pursuit of the unreasonably denied claim. The Court of

Appeals rejected this position. Defendant here rejects Cole and relies on

majority’s analysis leaves insurers twisting in the wind.
21
Cole v Detroit Automobile Inter-Ins Exch, 137 Mich App 603, 613-614;
357 NW2d 898 (1984).

Proudfoot v State Farm Mut Ins Co22 arguing that Proudfoot supports its argument

and effectively overruled Cole.

This Court in Proudfoot reversed an award of attorney fees for benefits that

were not yet overdue because they had not yet been incurred. Defendant argues

that the Court of Appeals in this case incorrectly distinguished Proudfoot because

the benefits at issue there had not yet been incurred, whereas the benefits at issue

here were incurred.

However, as the Court of Appeals majority in this case held, there is no

support for defendant’s position in the plain language of the statute. The critical

inquiry when determining whether attorney fees may be awarded is whether the

plaintiff is maintaining “an action for personal or property protection insurance

benefits which are overdue.”23

If at least some of the benefits are found to be overdue, the lawsuit

constitutes “an action for personal or property insurance benefits which are

overdue” under MCL 500.3148(1). Under these circumstances, a plaintiff is

entitled to an award of attorney fees. Here, the trial judge’s award of the entire

amount of attorney fees requested by plaintiff was not outside the range of

principled outcomes because the jury found that benefits were overdue. Thus, the

trial judge did not abuse his discretion.

22
Proudfoot v State Farm Mut Ins Co, 469 Mich 476; 673 NW2d 739
(2003).
23
MCL 500.3148(1).

D. Public Policy and the No-Fault Act

Finally, I note that my dissent is consistent with the purpose of the no-fault

act.24 The majority’s opinion, by contrast, undermines the Legislature’s intent of

providing injured parties adequate and prompt reparation from insurers. I fear that

the majority opinion provides further opportunity for insurers to abruptly deny

claims by holding plaintiffs to a higher standard than the “reasonable proof”

requirement of MCL 500.3142(2).

CONCLUSION

I dissent from the majority’s decision to reverse the trial court’s award of

attorney fees to plaintiff. The Court of Appeals decision should be affirmed.

Marilyn Kelly
Elizabeth A. Weaver

24
See, e.g., Shavers v Attorney General, 402 Mich 554, 578-579; 267
NW2d 72 (1978), which observed that the “goal of the no-fault insurance system
[is] to provide victims of motor vehicle accidents assured, adequate, and prompt
reparation for certain economic losses.”