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S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

MEEMIC INSURANCE COMPANY,

Plaintiff-Counter DefendantAppellee,

FOR PUBLICATION

May 29, 2018

v No. 337728

Berrien Circuit Court

LOUISE M. FORTSON and RICHARD A. 

FORTSON, individually and as conservator for 

JUSTIN FORTSON,

LC No. 2014-000260-CK

Defendants-Counter PlaintiffsAppellants.

Before: MARKEY, P.J., and M. J. KELLY and CAMERON, JJ.

CAMERON, J. (dissenting).

The majority resurrects, albeit in a new form, the abolished innocent-third-party rule.

1

 It 

also concludes that an insurance policy’s fraud provision contravenes the no-fault act when 

applied to resident relatives. Finally, it concludes that, after cancellation, the policy’s provisions

will no longer apply to the policyholder who committed the fraud when the claimant is a third 

party. Because I disagree with all three holdings, I respectfully dissent. 

Defendants, Louise Fortson and Richard Fortson, submitted false requests for attendant 

care benefits to plaintiff, Meemic Insurance Company, from 2009 to 2015. Defendants provided 

care for their son, Justin Fortson, who was injured while riding on the hood of a car. Because 

Justin was a “resident relative” under defendants’ policy, plaintiff provided personal injury 

protection (PIP) benefits under MCL 500.3114(1). In 2014, plaintiff discovered that defendants 

were fraudulently claiming 24/7 attendant care services even when Justin was incarcerated, in 

drug rehabilitation programs, or staying with his girlfriend. Defendants collected over $100,000 

in payments over six years.

 1 See Bazzi v Sentinel Ins Co, 315 Mich App 763; 891 NW2d 13 (2016), lv gtd 500 Mich 990 

(2017).
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I. INNOCENT-THIRD-PARTY RULE

The majority first concludes that Justin, as an innocent third party, can continue to collect

PIP benefits because there was no fraud in the procurement of the policy. While I agree that the 

fraud did not occur in the procurement of the policy, there is no basis to apply the now-abolished

innocent-third-party rule to the circumstances in this case. 

As the majority correctly states, the innocent-third-party rule prevented insurers from 

voiding a policy using fraud as a defense to paying no-fault benefits, but only if (1) there was

fraud in the procurement of the policy that was easily ascertainable, and (2) involved an innocent 

third-party claimant. Bazzi v Sentinel Ins Co, 315 Mich App 763, 771-772; 891 NW2d 13 

(2016), lv gtd 500 Mich 990 (2017). Neither defendants, nor the majority, have provided support 

for the proposition that the innocent-third-party rule may be applied in cases that do not involve 

fraud in the procurement. Yet, the majority concludes that “because the fraud in this case was 

not fraud in the procurement of the policy and instead arose after the policy was issued, neither 

Titan nor Bazzi are dispositive.” We concluded that our Supreme Court abolished the innocentthird-party rule, and there is no indication that any application of this rule was left open for 

future use. Id. at 767-768, 781-782. 

Furthermore, we should not adopt the rule in a new form in order to allow a third-party 

claimant to collect PIP benefits when an insurer is entitled to void the policy for fraudulent 

conduct on the part of the policyholder. This Court clearly held in Bazzi that “if an insurer is 

entitled to rescind a no-fault insurance policy because of fraud, it is not obligated to pay any 

benefits under that policy, including PIP benefits to a third party innocent of the fraud.” Id. at 

770 (emphasis added). The majority claims there is a “meaningful distinction” between fraud in 

the procurement of an insurance policy and fraud arising after a claim was made under a properly 

procured policy. However, in both instances, the insurer is allowed to void the policy, and under

Bazzi, “if an insurer is entitled to rescind a no-fault insurance policy because of fraud,” an 

innocent third party cannot collect PIP benefits under that policy. Id. As discussed in more 

detail below, plaintiff is entitled to rescind, i.e., void, the no-fault insurance policy, and Justin, as 

an innocent third party, should not be allowed to continue to collect PIP benefits. The fact that 

the fraud here occurred in subsequent claims for services—and not in the procurement of the 

policy—is of no consequence to the outcome of this case. The only question here is whether the 

fraud provision at issue was valid and should be applied to the circumstances of this case. 

II. FRAUD PROVISION

A. VALIDITY

The majority’s application of the innocent-third-party rule is premised on the conclusion 

that the fraud provision does not void the insurance policy governing Justin’s claim. To reach 

this conclusion, the majority determines that the fraud provision contravenes MCL 500.3114(1), 

and therefore, cannot apply to Justin’s claim. I disagree.

According to the majority, “Because MCL 500.3114(1) mandates coverage for a resident 

relative domiciled with a policyholder, the fraud-exclusion provision, as applied to Justin’s 

claim, is invalid because it conflicts with Justin’s statutory right to receive benefits under MCL 
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500.3114(1).” This reasoning is flawed, and the majority’s holding carves out an unprecedented 

exception to the general rule that a fraud provision in an insurance policy is valid. First, in Bahri

v IDS Prop Cas Ins Co, 308 Mich App 420, 424-425; 864 NW2d 609 (2014), this Court 

concluded that a fraud provision in an insurance policy applies to a policyholder’s claim and can

preclude all PIP benefits if the claimant submits fraudulent claims for replacement services. The 

majority concludes that Bahri is not binding in this case because the fraud provision at issue 

applies to a resident relative, not to the named insured under the policy, and a resident relative’s 

entitlement to PIP benefits is governed by statute. However, there is no meaningful distinction 

for purposes of coverage between a policyholder and a resident relative. MCL 500.3114(1) 

states that “a personal protection insurance policy . . . applies to accidental bodily injury to the 

person named in the policy, the person's spouse, and a relative of either domiciled in the same 

household, if the injury arises from a motor vehicle accident.” Whether a policyholder or a 

resident relative, the policy’s provisions are applicable to the no-fault claim as long as they do 

not conflict with the no-fault act. See Auto-Owners Ins Co v Martin, 284 Mich App 427, 434; 

773 NW2d 29 (2009) (“Insurance policy provisions that conflict with statutes are invalid . . . .”). 

In this case, the policy, including the fraud provision, applies to Justin’s claim as a resident 

relative, and that fraud provision does not contravene the no-fault act. See Bahri, 308 Mich App 

at 424-425.2 Contrary to what the majority claims, the policy is not “duplicating statutory 

benefits.” Instead, it is providing the terms of coverage, which are subject to the no-fault act. 

Lewis v Farmers Inc Exch, 315 Mich App 202, 209; 888 NW2d 916 (2016). 

The majority relies on Shelton v Auto-Owners Ins Co, 318 Mich App 648, 653-654; 899 

NW2d 744 (2017), for the proposition that a resident relative’s claim cannot be subject to a fraud 

provision because the claim is governed solely by statute; however, it misconstrues the holding

in that case. In Shelton, we concluded that the plaintiff “was not a party to, nor an insured under, 

the policy; she was injured while a passenger, and because neither she nor her spouse or resident 

relative had a no-fault policy, [the] defendant was required to pay her benefits pursuant to 

statute, not pursuant to a contractual agreement.” Id. at 652. Thus, the plaintiff in Shelton was 

entitled to benefits by operation of the statute only and was not bound by any fraud provision in 

the other driver’s policy because she was not the policyholder, a spouse, or a resident relative. 

Id. at 652-654. Therefore, the plaintiff’s claim in Shelton was not subject to any fraud provision, 

 2 The majority holds that the fraud provision conflicts with the no-fault act, but there is no 

provision in the no-fault act that prevents the use of a fraud exclusion in a policy. Instead, the 

majority concludes that because a resident relative is entitled to PIP benefits by operation of the 

statute, no policy provision can prevent the resident relative, or for that matter anyone entitled to 

claim benefits under another’s policy, from his or her “statutory right to receive benefits under 

MCL 500.3114(1).” Of course, insurers are allowed to include various exclusions to manage 

their risk when insuring drivers so long as those exclusions do not conflict with the no-fault act. 

“It is a bedrock principle of American contract law that parties are free to contract as they see fit, 

and the courts are to enforce the agreement as written absent . . . a contract in violation of law or 

public policy.” Corwin v DaimlerChrysler Ins Co, 296 Mich App 242, 256; 819 NW2d 68 

(2012) (quotation marks and citation omitted). 
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and because the no-fault act does not have its own fraud exclusion, the defendant could not avoid 

paying any remaining PIP benefits.

Unlike the plaintiff in Shelton, Justin is an insured under the policy because he is a 

resident relative. There is no question that the relevant insurance policy applies to his claim for 

PIP benefits under MCL 500.3114(1). Therefore, Justin’s claim is not governed “solely by 

statute,” and just as the fraud provision was valid in Bahri, the fraud provision in defendants’

policy should also be deemed valid. 

B. APPLICABILITY OF THE FRAUD PROVISION

Finally, the majority concludes that the fraud provision, even if it is valid, would not 

apply to Justin’s claim and cannot void the insurance policy. I disagree. 

Insurance policies are agreements between parties, and “[t]he primary goal in the 

interpretation of an insurance policy is to honor the intent of the parties.” Tenneco Inc v 

Amerisure Mut Ins Co, 281 Mich App 429, 444; 761 NW2d 846 (2008). Unless an ambiguity is 

present within the policy, an insurance policy must be enforced in accordance with its terms. 

Upjohn Co v New Hampshire Ins Co, 438 Mich 197, 206-207; 476 NW2d 392 (1991). The 

terms of an insurance policy are interpreted in accordance with their common meanings. Group 

Ins Co of Michigan v Czopek, 440 Mich 590, 596; 489 NW2d 444 (1992). If an ambiguity is 

present, it must be construed in favor of the insured. Auto Club Ins Ass’n v DeLaGarza, 433 

Mich 208, 214-215; 444 NW2d 803 (1989). Further, “when a provision in an insurance policy is 

mandated by statute, the rights and limitations of the coverage are governed by that statute.” 

Titan Ins Co v Hyten, 491 Mich 547, 554; 817 NW2d 562 (2012). However, if a provision is not 

mandated by statute, the rights and limitations of the coverage are interpreted without reference 

to the statute. Id.

This case concerns the fraudulent acquisition of payments for allowable expenses. The 

insurance policy issued to defendants contained the following fraud provision:

22. CONCEALMENT OR FRAUD

This entire Policy is void if any insured person[3] has intentionally 

concealed or misrepresented any material fact or circumstance relating to:

A. This insurance;

 3 The policy defines an “insured person” in part as “You, if an individual.” The policy further 

defines “you” as “any person or organization listed as a Named Insured on the Declarations 

Page” as an assigned driver or another named insured. Louise and Richard were the named 

insureds on the declarations page. 
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B. The Application for it;

C. Or any claim made under it. 

To prove fraud and void a policy, the insurer must demonstrate that

(1) the misrepresentation was material, (2) that it was false, (3) that the insured 

knew that it was false at the time it was made or that it was made recklessly, 

without any knowledge of its truth, and (4) that the insured made the material 

misrepresentation with the intention that the insurer would act upon it. [Bahri, 

308 Mich App at 424-425.]

In Bahri, we concluded that clear evidence of fraud would operate to void a policy under that 

policy’s fraud provision. Id. at 425. 

I agree with the majority that the evidence clearly demonstrates that defendants defrauded 

plaintiff. However, according to the plain terms of the policy, plaintiff was entitled to void the

policy if an insured person made a material misrepresentation in a claim made under the policy. 

See Upjohn Co, 438 Mich at 207 (stating that an insurance policy must be enforced in 

accordance with its terms). Louise was a named insured on the policy, and her fraudulent

requests for attendant care benefits constituted a material misrepresentation in a claim made 

under the policy. Moreover, defendants have not provided statutory authority that would 

specifically prohibit plaintiff from exercising its rights under this clause of the policy. See Titan, 

491 Mich App at 554. There was no genuine issue of material fact precluding the trial court 

from granting summary disposition to plaintiff.

Finally, the majority concludes that defendants were only attendant care providers for

Justin and were no longer the named insureds due to plaintiff’s cancellation of the insurance 

policy in 2010. The majority maintains that “there is no basis to extend [defendants’] status as 

insured persons under the policy beyond the date it was cancelled.” I disagree.

Plaintiff provided Justin coverage by virtue of his status as a “resident relative” of the 

named insureds, i.e., defendants. Justin’s claim is subject to the terms of the policy even if it was 

subsequently cancelled, and defendants remain the named insureds under the policy. The policy 

at issue is an “occurrence” policy, which provides coverage “no matter when the claim is made, 

subject, of course, to contractual and statutory notice and limitations of actions provisions, 

providing the act complained of occurred during the policy period.” Stine v Continental Cas Co, 

419 Mich 89, 98; 349 NW2d 127 (1984). One contractual provision under the policy provides a 

consequence for fraudulent conduct. That provision clearly states that the “entire policy is void 

if any insured person has intentionally concealed or misrepresented any material fact or 

circumstance relating to . . . any claim made under it.” An “insured person” includes the 

“Named Insured on the Declarations Page.” Defendants have been at all times named insureds 

under the policy on which Justin’s claim is based. This makes sense because Justin’s claim is 

governed by the named insureds’ policy. The fact that plaintiff cancelled the policy after Justin’s 

claim was filed does not affect the terms of the policy as it was written. Defendants are still 

named insureds on the declarations page of that policy, and it would be illogical to treat the 

policy, for purposes of Justin’s claim, as not having any named insured simply because plaintiff 
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cancelled the policy after Justin filed his claim. Moreover, the fraud provision at issue states that 

any insured person—rather than the insured person—who commits fraud will void the entire 

policy. For purposes of Justin’s claim, defendants were still considered insureds for servicing 

any and all future claims based on the occurrence at issue—Justin’s injuries from the accident. 

As a final point, the majority relies on the language of the cancellation clause, which 

states, “Cancellation will not affect any claim that originated prior to the date of cancellation.” 

The claims for attendant care benefits—even if sought after the cancellation of the contract—still 

originate from the initial claim for no-fault benefits. Defendants cannot avoid the consequences 

of committing fraud simply because the policy is no longer in effect. Any such outcome 

contravenes the purpose of an occurrence-based policy.

III. CONCLUSION

I would conclude that the trial court did not err in granting summary disposition to 

plaintiff because there is no genuine issue of material fact and plaintiff is entitled to relief.

Defendants submitted fraudulent claims in contravention to the policy’s fraud provision, and the 

innocent-third-party rule should not allow Justin to continue collecting PIP benefits.

/s/ Thomas C. Cameron