UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

State Farm Mutual Automobile 

Insurance Company, 

Plaintiff, Case No: 15-10993

Hon. Victoria A. Roberts

v.

Universal Rehab Services, Inc.,

PhysioFlex, PLLC,

Ahmad T. Abulabon, P.T.,

Summit Medical Group, PLLC, and

David Jankowski, D.O.,

Defendants.

 /

ORDER DENYING MOTION FOR RECONSIDERATION (ECF NO. 66)

I. Introduction

State Farm filed a Motion for Reconsideration of the Court’s February 23, 2016

Order denying its Motion to Dismiss the Counterclaim filed by Summit Medical Group. 

The Motion is fully briefed. 

State Farm says the day before this Court entered its Order, a persuasive

opinion was issued by Judge O’Meara in State Farm Mut. Auto. Ins. Co. v. Radden,

2016 WL 695598 (E.D. Mich. Feb. 22, 2016). Judge O’Meara dismissed nearly identical

counterclaims. State Farm says the Radden case constitutes intervening authority and

is premised on controlling law. 

State Farm fails to allege a palpable, outcome-determinative error. The Motion is

DENIED. 

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II. Legal Standard

A court may grant a motion for reconsideration if it is demonstrated that a

palpable defect misled the Court in its ruling, the correction of which would result in a

different disposition. E.D. Mich. LR 7.1(h)(3). "It is an exception to the norm for the

Court to grant a motion for reconsideration." Maiberger v. City of Livonia, 724 F. Supp.

2d 759, 780 (E.D. Mich. 2010). "[A]bsent a significant error that changes the outcome of

a ruling on a motion, the Court will not provide a party with an opportunity to relitigate

issues already decided." Id. Palpable defects are those which are "obvious, clear,

unmistakable, manifest or plain." Mich. Dep't of Treasury v. Michalec, 181 F. Supp. 2d

731, 734 (E.D. Mich. 2002).

III. Discussion

A. Counterclaim Count 1: Fraud

The Counterclaim alleges State Farm engaged in a systematic scheme to

fraudulently deny, delay, and diminish payment on Summit’s claims. In its Motion to

Dismiss, State Farm argued Count 1 should be dismissed under Cooper v. Auto Club

Ins. Ass'n, 481 Mich. 399, 401 (2008). In Cooper, the Michigan Supreme Court

distinguished a fraud claim from a contractual claim - noting that a fraud claim can’t

arise from the mere failure to perform a contractual or statutory obligation, but instead

arises from an insurer’s breach of its separate and independent duty not to deceive

insureds. Cooper, 481 Mich. at 407-08. State Farm argues the essence of the fraud

counterclaim is simply that State Farm failed to perform its contractual obligation to pay

no-fault benefits. 

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Importantly, Cooper did not hold that a fraud claim cannot be brought against an

insurer, and State Farm presents no new arguments under Cooper that this Court has

not already considered.

State Farm urges the Court to follow the holding in Radden because the fraud

counterclaim which the court dismissed in Radden is nearly identical to the fraud

counterclaim alleged in this case. While the counterclaims are substantially similar, this

Court believes that Summit’s allegations of fraud are sufficiently pled. To state a claim

for fraud, plaintiff must allege: “(1) the defendant made a material representation; (2) the

representation was false; (3) at the time the representation was made, it was either

known to be false, or made recklessly without any knowledge of its truth; (4) the

representation was made with the intention that it should be acted on by plaintiff; (5)

plaintiff, in fact, acted in reliance on it; and (6) plaintiff suffered damages as a result.” 

Little Caesar Enterprises, Inc. v. OPPCO, LLC, 219 F.3d 547, 551 (6th Cir. 2000). See

also, Hi–Way Motor Co. v. Int'l Harvester Co., 398 Mich. 330, 247 N.W.2d 813, 816

(1976). Additionally, Fed. R. Civ. P. 9(b) requires the plaintiff to “. . . state with

particularity the circumstances constituting fraud.” Farnsworth, 569 F. App’x at 427. 

The counterclaim alleges State Farm does not evaluate each claim on its merits,

but sorts claims by doctor/clinic and puts a hold on certain claims. Summit says even if

a recommendation is made that a claim be paid, only certain individuals can lift the hold. 

Summit attached documents identifying two specific claims which Summit says State

Farm represented that it was investigating, but had not yet determined whether to pay

those claims. Summit says these representations were false when made because State

Farm was aware of its internal investigation procedures and it knew that it was not

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actually investigating these claims. Summit says these representations were made with

an intention that they would be acted on by Summit, that Summit relied on them and

suffered injury. 

Count 1 sufficiently states a claim for fraud.

B. Counterclaim Count 2: Civil Conspiracy 

State Farm also asks the Court to reconsider its decision on the Civil Conspiracy

Count. Because the Court believes the fraud count is sufficiently pled, and Summit

provides sufficient factual detail to state a claim for Civil Conspiracy, Count 2 survives

the motion to dismiss as well. 

C. Counterclaim Count 3: Michigan Unfair Trade Practices Act

(“MUTPA”)

State Farm in its Motion for Reconsideration says Count 3 fails because it seeks

relief from persons who are not parties to the litigation and fails to identify any claims on

which Summit is allegedly entitled to penalty interest. In its Response, Summit clarifies

its MUTPA claim is for the limited purpose of recovering penalty interest. This Court

addressed penalty interest in its earlier order. Under MCL §500.2006, an insurance

company can be penalized at a rate of 12% for untimely payment of benefits. Summit

supported its claim by attaching letters from State Farm saying the claim continues to

be under investigation. 

State Farm fails to demonstrate a palpable defect misled the Court in its ruling,

the correction of which would result in a different result. 

IV. Conclusion

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State Farm’s Motion for Reconsideration of the Court’s February 23, 2016 Order

is DENIED.

IT IS ORDERED. 

S/Victoria A. Roberts 

Victoria A. Roberts

United States District Judge

Dated: June 8, 2016

The undersigned certifies that a copy of this

document was served on the attorneys of

record by electronic means or U.S. Mail on

June 8, 2016.

s/Linda Vertriest 

Deputy Clerk

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