Michigan Supreme Court 

# Order

Lansing, Michigan

March 7, 2008 Clifford W. Taylor,
Chief Justice

132949 Michael F. Cavanagh
Elizabeth A. Weaver Marilyn Kelly Maura D. Corrigan Robert P. Young, Jr. RANDY C. BURRIS, Stephen J. Markman, Plaintiff-Appellee, Justices

v SC: 132949 COA: 261505 Wayne CC: 02-208320-NF ALLSTATE INSURANCE CO., Defendant-Appellant.

________________ _______________ __________/

On January 9, 2008, the Court heard oral argument on the application for leave to appeal the September 21, 2006 ju dgment of the Court of Appeals. On order of the Court, the application is again considered. MCR 7.302(G)(1). In lieu of granting leave to appeal, we REVERSE the judgment of th e Court of Appeals and REINSTATE the Wayne Circuit Court’s September 10, 2004 Order Granting Judgment Notwithstanding

the Verdict in Part and th e February 23, 2005 Order for Final Judgment and for Sanctions, because the plaintiff did not present sufficient eviden ce at trial that he incurred attendant care expenses. The evidence failed to establish that the attendant care providers expected compensation for thei r services. Therefore, the evid ence failed to establish that the plaintiff “incurred” attendant care expenses. Proudfoot v State Farm Mut Ins Co , 469 Mich 476, 484 (2003).

C ORRIGAN , J., concurs and states as follows:

I concur with the order reversing the judgment of th e Court of Appeals and reinstating the trial court’s order partially granting judgment notwithstanding the verdict (JNOV) and the order for final judgment and sanctions. I write separately to complete the picture plaintiff presente d in this record and to res pond to the dissents’ legal
arguments.

I. Facts and Procedural History

In 1978, plaintiff, who was then six years old, sustained severe and permanent injuries when he was struck by a drunken driver. After th e accident, plaintiff underwent extensive medical treatment, including multiple surgeries, a ll of which defendant covered2

under its no-fault policy. Despite plaintiff’s physical limitations, he attended college, obtained employment, married , fathered a child, and performed routine activities, including driving. After plaintiff had an un successful surgery in 20 00, however, one of plaintiff’s three treating physicians prescribe d 24-hour attendant care. Defendant paid plaintiff’s then-wife, Diane Vermette, for round-the-clock a ttendant-care services at the rate of $1,428 weekly. V ermette stopped furnishing attendant-care services just one month after plaintiff’s surgery . Nevertheless, plaintiff c ontinued to cl aim attendant-care services Vermette purportedly provided. He went to great lengths to hide his fraud from

defendant. He instructed defendant to make the benefit checks paya ble to Vermette in her maiden name because plain tiff did not want d efendant to know th at it was paying his spouse to care for him. Plai ntiff directed defendant to se nd the checks to his post office

box. Plaintiff then cashed th e checks, using Vermette’s id entification, and deposited the money into his bank account.

Plaintiff abused defendant’s trust in ot her ways. Plaintiff submitted claims for
several thousands of dollars for gym equipment and a speci al bed, neither of which plaintiff had actually purchased. Defendant paid these claims. Plaintiff also stole prescription pads from one of hi s treating physicians. He forg ed his name for the purpose of illegally obtaining prescripti on medication for which defenda nt paid. Plaintiff also forged a legitimate $50 receipt from a health -care provider to claim $1,200. Because of questions related to the forged receipt and a private investigator ’s observations during surveillance of plaintiff, defendant notified plaintiff to appear for an examination under oath, as the insurance policy pr ovided. Plaintiff failed to ap pear for that examination. Defendant suspended the payment of all p ersonal protection insurance benefits because of plaintiff’s fraud, his viola tion of the terms of the insu rance policy by failing to appear

for the examination und er oath, and a letter from one of plaintiff’s doctors stating that he did not require 24-hour care.

Plaintiff and Vermette separated in No vember 2001 and later divorced. Plaintiff moved back to his parents’ hom e. Three people cared for plai ntiff while he was living at his parents’ home: Richard Bu rris (plaintiff’s father), Ryan Burris (plaintiff’s brother), and Christopher Marcott (pla intiff’s friend). All three ack nowledged that they had no

record of the dates and times they allegedly cared for pl aintiff and never submitted a claim to defendant for payment of those serv ices. Further, none of them ever asked plaintiff for any payment for th eir services, and plaintiff nev er promised them payment. Ryan and Christopher fu rther testified that th ey did not expect to be paid for their services. Ryan testified that he just wanted to help his br other (“This is my brother, it’s not about money”), and Christopher testified th at he just wanted to “hang out” with his best friend (“[It’s] not a job, he’s my friend”).

In 2002, plaintiff filed this first-p arty no-fault action, s eeking payment of attendant-care benefits and unpaid medical e xpenses. Plaintiff sought an award of $156,376 in attendant-care expenses (approxim ately $8.50 an hour, 24 hours a day for3

761 days). The primary issue at the jury trial was wheth er defendant was obligated to pay for attendant-care services allegedly provided by Richard, Ryan, and Christopher after plaintiff moved back into his parents ’ home in December 2001. The jury awarded plaintiff $7,610.98 in medical expenses an d $78,438 in attendant -care expenses ($26,146 for Richard, $6,536.50 for Ryan , and $45,75 5.50 for Christopher). 1 The verdict was about half the amount plainti ff sought. The jury thus rej ected plaintiff’s exaggerated

claims.

The trial court thereafter granted defenda nt’s motion for JN OV and vacated the jury’s award of attendant-care e xpenses. The court ruled that plaintiff had failed to provide sufficient evid ence that he had incurred such expenses:

With regard to the attendant care circumstances, I understand that

there are some cases that sa y that there is some l eeway with regard to family members. But in th is case, they [Richard, Ryan, and Christopher] couldn’t say what they di d. They couldn’t specify the number of hours. They couldn’t even manage to say that they expected re imbursement. They went so far as to say they didn’t expect to get anyt hing. And with regard to Mr. Marcott, it’s all the worse b ecause he’s not a family member.

The motion is granted w ith regard to the a ttendant care expenses awarded with regard to Richard Burris, Ryan Burris and Christopher

Marcott. These didn’t come close to being reimbursable. And the verdict is affirmed in all other regards. [2]

The Court of Appeals reversed and reinstated the ju ry verdict in an unpublished opinion per curiam.

II. Response to the Dissents

MCL 500.3107(1) provides , in pertinent part:

Except as provided in subsection (2), personal protection insurance benefits are payable for the following:

1 The trial court entered a judg ment of $133,013.28 in plaintiff’s favor. The judgment included the jury verdict of $86,048.98, taxable costs of $8,292.53, case-evaluation sanctions of $27,750, and accrued interest of $10,921.77.

2 As a result of the trial court’s ruling on defendant’s motion for JNOV, defendant became the prevailing party an d was, therefore, entitled to an award of case-evaluation sanctions. Accordingly, the trial court entered an or der awarding defendant a net judgment of $10,000.4

(a) Allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services an d accommodations for an injured person’s care, recovery, or rehabilitation. [Emphasis added.]

MCL 500.3110(4) provides that “[p]ersonal protection insurance benefits payable for accidental bodily injury accrue not when the injury occurs but as the allowable expense,
work loss or survivors’ loss is incurred .” (Emphasis added.) In Nasser v Auto Club Ins

Ass’n , 435 Mich 33 (1990), this Court stated the elements of an “allowable expense”

under the no-fault act:

“The statute requires that three factors be met before an item is an ‘allowable expense’: 1) th e charge must be reasonabl e, 2) the expense must be reasonably nece ssary, and 3) the expense must be incurred . These are the standard requirements for recovery of such e xpenses under all no-fault plans . . . .” [ Id. at 50, quoting Manley v DAIIE , 425 Mich 140, 169 (1986) (Boyle, J., concurring in part and dissenting in part) (emphasis added).]

The issue in the instant case is whether plaintiff incurred an y expenses for attendant care
services.

Justice Weaver argues in her dissent that Proudfoot v State Farm Mut Ins Co , 469 Mich 476 (2003), is distingui shable because there the plaintiff sought advance payment for future expenses, rather than reimbursement for an expe nse for a service that had already been provided, as in the instant case. This factua l distinction, however, is
irrelevant to the Proudfoot Court’s discussion of the mean ing of the term “incur.” In Proudfoot, supra at 484, this Court adopted the following dictionary definition of “incur”: “[t]o become liable or subject to, [especially] because of one’s own actions.” “Liable” means “obligated according to law or equity: responsible.” Webster’s Ninth New Collegiate Dictionary (1987). Thus, the definition of “incur” adopted in Proudfoot requires a legal or equitable obligation to pay. In Proudfoot , this Court elaborated on this

definition of “incur” in a footnote:

An insured could be liable for costs by various means, including paying for costs out of pocket or signing a contract for products or services.
Should the insu red present a contract for produc ts or services rather than a paid bill, the insurance co mpany may, in order to protect itself, make its check payable to the insu red and the contractor. [ Proudfoot, supra at 484 n 4.] [3]

3 Justice Weaver adopts sections of the Court of Appeals opi nion that do not mention Proudfoot . The Court of Appeals analysis was based on Court of A ppeals cases decided

before Proudfoot that are now of ques tionable validity. Booth v Auto-O wners Ins Co

, 224 Mich App 724 (1997), and its predecessors are no long er controlling to the extent5

Under Proudfoot , the term “incur” does not mean that an insured must necessarily enter contracts with the care provider to be entitle d to reimbursement for attendant-care expenses (“liable” means “ obligated according to law or equity ”). Nor does it mean that an insured must necessarily present a formal bill es tablishing that the attendant-care services were provided. It merely means that the insured must have an obligation to pay the attendant-care-service providers for their serv ices. I agree with Ju stice Kelly that in determining allowable attendant -care expenses, there is no basi s to treat fa mily members differently than hired attenda nt-care-service workers. But to incur an expense for attendant-care services, the insured’s family members and friends, just like any other provider, must perform the services with a reasonable expectation of payment.

Plaintiff furnished no evid ence that he was liable fo r any attendant-care expenses. Plaintiff did not pay Richard, Ryan, or Christop her for their services. Further, these three witnesses testified that they di d not expect to be paid. Plai ntiff does not even argue that he was liable or obligated in any way to pa y anything to his family or friend for taking care of him. “Where a plaintiff is unable to show that a particular, reasonable expense

has been incurred for a reasonabl y necessary product or service, there can be no finding of a breach of the insurer’s duty to pay that e xpense, and thus no fi nding of liability with regard to that expense.” Nasser, supra at 50. Because plainti ff furnished no evidence that he incurred charges for the assistance of his family members and friend, the trial court properly granted JNOV on the atte ndant–care-expens es portion of the jury’s
verdict. 4

W EAVER

, J., dissents and states as follows:

that they are inconsistent with Proudfoot ’s definition of “incur,” which requires that the insured be liable for payment.

4 Justice Weaver presents the following hypothetical exampl e in support of her argument that plaintiff incurred attendant-care expenses: “[ H ] ad the providers requested payment, they would have been entitled to payment from defendant for their s ervices.” (Emphasis added.) In fact, howev er, the providers did not request payment. Therefore, plaintiff was

not obligated to pay them for their services. Accordingly, defendant had no statutory duty to pay plaintiff for e xpenses he did not incur.

Additionally, Justice Weaver ar gues that defendant had an obligation to pay Richard, Ryan, and Christopher for thei r services. Justice Weaver ov erlooks that defendant pays personal protection insurance ben efits to plaintiff, not his attendant-care providers. Even under Justice Weaver’s position, the providers woul d not be guaranteed to receive any compensation, because the jury 's verdict awarded the attenda nt-care expenses solely to plaintiff. Under Justice Weaver’s argumen t, plaintiff would receive payment for the
attendant-care services withou t any obligation to forward the payment to those who performed the services.6

I dissent from the order reversing the j udgment of the Court of Appeals and reinstating the Wayne Circuit Court’s Septem ber 10, 2004, order partially granting judgment notwithstanding the verdict and the February 23, 2005, order for final judgment and for sanctions. I would deny the applica tion for leave to app eal, thereby leaving in place the Court of Appeals judgm ent reinstating the jury’s award of $78,438 for expenses incurred by plaintiff for attendant-care services. A jury found that plai ntiff presented sufficient evidence establishing that the plaintiff’s physicia n prescribed 24-hour attendant care for plaintiff and that plaintiff in fact received attendant care from family members and a close family friend. I agree with the Court of App eals that, as construed under MCL 500.3107(1)(a), plaintiff pres ented sufficient evidence that he “incurred” expenses for the attendant care services pr ovided to him. Further, I disagree with the majority’s application of the holding in Proudfoot v State Farm Mut Ins Co, 469 Mich 476 (2003), to this case given the marked factual distinctions between this case and Proudfoot

.

Plaintiff, Randy Burris, was six years old when he was struck by a car being driven by a drunken driver. Mr. Burris was seriously injured and suffered both orthopedic and internal injuries , including a traumatic brain in jury. He was in a coma for
several months and then suffered a stroke. His injuries have left him with significant and permanent weakness in his l eft extremities such that hi s left arm and leg are nearly

nonfunctional. Mr. Burris has had numerous surgeries sin ce the accident, the most recent being a cervical spinal fusion to repair a hern iated cervical disc. Mr. Burris was unable to
work after the neck su rgery and has been p ermanently disabled since approximately

2000.

As a result of this permanent disab ility, a physician prescribed 24-hour care for Mr. Burris. Thereafter, pursuant to its duty to pay personal protec tion insurance (PIP) benefits, MCL 500.3107(1), defendant, Allsta te Insurance Company, paid Mr. Burris’s wife for 24-hour attendant-care services she provided to Mr. Burris until December 4,

2001. 5

In November 2001, Mr. Burris and his wife separated, and Mr. Burris moved to his parents’ house. For approximately two years, while he lived with his parents, Mr.
Burris received attendant-care se rvices from his father and br other, Richard and Ryan Burris, respectively, and from a close family friend, Ch ristopher Marcott. Mr. Burris needed help with dressing, bathing, cooking, laundr y, and shopping and general supervisory care to assist him because of hi s cognitive and physical limitations. While
Mr. Burris never received a formal bill for the provision of su ch services, and while none of the care providers kept track of the exact numb er of hours of care th ey provided, nor

5 In December 2001, Allstate suspended PIP payments after it determined that Mr. Burris had altered a receipt from a health-care provider to make it appear that he was entitled to reimbursement in the amount $1,200 instead of $50.7

did they expect to be paid, Mr. Burris p resented evidence that he both required and
received attendant care from these three individuals. 6

The jury, after hearing te stimony from the plaintiff, his physician, and the plaintiff’s care providers, evidently conclude d that Mr. Burris had incurred allowable expenses entitling him to PIP benefits given that the expenses for attendant care were “reasonable” and were “reasonably necessary,” and that such expenses were in fact

“incurred.” 7 And while there may have been some que stion as to the appropriateness of the amount Mr. Burris sought, the jury nevertheless awarded him $78,438 in attendant

care expenses, roughly half of the amount he had requested.

MCL 500.3107(1)(a) states th at personal protection insu rance benefits are payable for “[a]llowable expens es consisting of all reasonable charges incurred for reasonably necessary products, services and accommodati ons for an injured person’s care, recovery,
or rehabilitation.” To be considered an “a llowable expense” under § 3107, the expense must be (1) reasonable, (2) reasona bly necessary, and (3) incurred. 8 As the Court of Appeals correctly noted, the only issue in dispute was whether the expenses for attendant

care services were “incurred.”

Defendant argues that under Proudfoot

, an expense is not “incurred” until the recipient of such services “beco me[s] liable or subject to, [especially] because of one’s own actions.” The pertinent passage from Proudfoot, supra at 483-484 states:

MCL 500.3110(4) provides that “[p]ers onal protection insurance benefits payable for accidental bodily injury accrue not when the injury occurs but as the allowable expens e, work loss or survivors’ loss is
incurred ” (emphasis added).

To “incur” means “[t]o become liable or subject to, [especially]
because of one's own actions.” 4 A trial court may enter “a declaratory judgment determining that an expense is both nece ssary and allowable and the amount that will be allowed [, but s]uch a declaration does not oblige a no-fault insurer to pay for an expense until it is act ually incurred.” At the

6 During closing argument, coun sel for the plaintiff noted th at Allstate had previously paid the plaintiff’s wife $8.50 an hour for attendant-care services a nd that 761 days had elapsed since the plaintiff’s family and friend had provided attendant care. Acting on his counsel’s calculations, plaintiff sought $1 56,376 from Allstate for the attendant-care services provided to him.

7 See MCL 500.3107(1)(a).

8 Owens v Auto Club Ins Ass’n, 444 Mich 314, 323 (1993); Davis v Citizens Ins Co of America, 195 Mich App 3 23, 326 (1992).________________ _________________________________ ___________

________________ ____________________________________ ________ 8

time of the judgment, plaintiff had not yet taken action to become liable for the costs of the proposed home modifi cations. Because the expenses in question were not yet “incurred,” the Court of Appeals erred in ordering defendant to pay the total amount to the trial court. [Citations omitted; emphasis added.]

4 Webster's II New College Dictionary (2001). An insured could be liable for costs by various means, in cluding paying for costs out of pocket or signing a contract for pr oducts or services. Shoul d the insured present a contract for products or services rat her than a paid bill, the insurance company may, in order to protect its elf, make its check payable to the

insured and the contractor.

Defendant asserts that becau se Mr. Burris’s family members and Mr. Marcott did not keep track of their hours, subm it a written bill for their services, or even expect to be paid at all, no expenses were “incurred” as interpreted by this Court in Proudfoot. In making this argument, the defenda nt relies heavily on the Webster’s II New College Dictionary (2002) definition of “incur” as a legal obligation, and asserts that under Proudfoot , there must be some “legal obligation to pay.” D efendant’s assertion is that because the care providers in this case did not ask or expect to be paid fo r their services, there was no “legal obligation to pay” fo r such services; hence, no expenses were “incurred.”

However, when viewed in its proper context, that defi nition of “incurred” has only a limited application to the facts presented in Proudfoot I therefore disagree with the majority’s adoption of the defendant’s strained interpretation of Proudfoot . In Proudfoot

, the issue was whether an insurer was responsible for future home modifications desired by the plaintiff to assist her in accessing her house in a wheelchair. This Court agreed with dissenting Court of App eals Judge Danhof that an in surer could not be held liable

for future PIP expenses that had not even been “incurred” yet.

The point of distinction in Proudfoot is that the plaintiff was seeking payment in advance for a future expense, not reimbursement for an expe nse for a service that had already been provided, that is, incurred. The language cited by this Court that is critical to understanding the context in wh ich that case was decided states:

At the time of the judgment, plaintiff had not yet taken action to become liable for the costs of the proposed home modifications. Because the expenses in question were not ye t “incurred,” the Court of Appeals erred in ordering defendant to pay th e total amount to the trial court. [ Proudfoot, supra at 484.]9

In other words, because th e plaintiff “had not yet taken action” to install home modifications, the plaintiff was not “liable” for any costs for which he might seek PIP coverage. Had the home modi fications already been made, th e plaintiff would have been

liable for such modifications because they would have been “incurred.” Thus, the application of Proudfoot to this case is inappropriate as there is no question that Mr. Burris’s expenses were “incurred” because the attendant-care services were not future expenses for which Mr. Burris sought advance payment. The services in question had already been provided to plaintiff.

In her concurrence to the order, Justice Corrigan insists that Proudfoot is not distinguishable because Mr. Burris failed to establish that he “incurred” any attendant

care expenses given that there was no expecta tion of payment from the care providers. However, the fact is that Mr. Burris did pres ent evidence that he received such care, and, had the providers requested payment, they woul d have been entitle d to payment from defendant for their services. Thus, the true “obligation” to pay for attendant-care expenses belongs to defendant . Once the care has b een provided, wheth er or not the care providers were even aw are of their right to compensation, the defendant had a statutory duty to pay for a ttendant-care services. 9

Moreover, as the Court of Appeals wisely noted, the Proudfoot definition of “incur” as to “become liable or subject to, [especially] because of one’s own actions,” does not equate to a “legal obligation to pay.” One can be “subject to” a claim for reimbursement simply on the basis of the provision of a service, even without the preparation or receipt of a formal bill establishi ng that the service wa s provided. In that regard, I would affirm the Court of Appeals judgment and adopt that Court’s analysis as

set forth below:

[T]his Court has addressed this issue, at least implicitly, on several occasions but particul arly instructive is Booth v Auto-O wners Ins Co , 224 Mich App 724; 569 NW 2d 903 (1997). In Booth , the plaintiff was severely injured in an au tomobile accident and requi red attendant care from her parents on a continual basis. After the defendant insur er refused to pay the parents for the 24-hour a day attendant care that they provided, the plaintiff

9 MCL 500.3107(1) provide s, in pertinent part:

Except as provided in subsection (2 ), personal protection insurance benefits are payable for the following:

(a) Allowable expens es consisting of all reasonable charges incurred for reasonably necessary produ cts, services an d accommodations for an injured person’s care, recovery, or rehabilitation . [Emphasis added.]10

filed suit. Id . at 726. The trial court gr anted the defendant summary disposition, ruling that the plaintiff failed to submit evidence establishing that she incurred expenses because h er parents did not ch arge her for their
services. Id. at 726-727. This Court rev ersed the trial court’s ruling, holding that the plain tiff was not required to actually be billed by her family in order to esta blish that she “incurred” the expense of their
attendant care services. Id. at 730. Further, relying on Botsford Gen Hosp
v Citizens Ins Co , 195 Mich App 127, 143; 489 NW2d 137 (1992), this Court held that “whether the plaintiff was entitled to collect the value of the
services and the determination of the value are matters properly left for the jury to decide.” Booth, supra

. Here, plaintiff produced evidence th at his family and a friend began providing 24-hour attendant care in December 2001, after plaintiff was
divorced and moved back into his parents’ house. Plaintiff[’s] father, Richard Burris, plaintiff's brother, Ryan Burris, and pl aintiff's friend, Christopher Marcott, all testified that plaintiff required, a nd they provided, significant attendant care services. Dr. Maryann Guyon testified that plaintiff required 24-hour attendant care services as a result of the injuries plaintiff suffered in the 1978 automob ile accident and wrote a prescription for the same. Defendant's claims adju ster, Kimberly Dotson, testified she had previously paid attendant care at $ 8.50 per hour. Thus, unlike the factual scenario presented in Moghis v Citizens Ins Co of America , 187 Mich App 245, 247; 466 NW2d 290 ( 1990), plaintiff pr oduced evidence
that attendant care services were actua lly provided to him since December 2001. Plaintiff was not required to actually be billed by his family and

friend in order to establish that he “i ncurred” the expense of their attendant care services; thus, it was fo r the jury to decide wh ether he was entitled to
collect the value of the serv ices and to make the det ermination of the value.

See Booth, supra . Accordingly, the trial cour t’s order granting defendant’s motion for [judgment notwith standing the verdict] on the ground that there was insufficient evidence p resented to create an issu e for the jury as to whether plaintiff “incurred” the expense is reversed. [ Burris v Allstate Ins Co, unpublished opinion per curiam of the Court of Appeals, issued September 21, 2006 (Doc ket No. 261505), p 2.]

Thus, I dissent from the order reversing th e judgment of the Court of Appeals and reinstating the Wayne Circuit Court’s Septem ber 10, 2004, order partially granting judgment notwithstanding the verdict and the February 23, 2005, order for final judgment and for sanctions. I would deny the applica tion for leave to app eal, thereby leaving in place the Court of Appeals judgm ent reinstating the jury’s award of $78,438 for expenses incurred by plaintiff for attendant-care services.

C AVANAGH , J., joins the statement of W EAVER , J._______________________________________ __ 11

K ELLY , J., dissents and states as follows:

I concur in Justice Weaver’s dissenting st atement. I write separately to note that
the no-fault insurer would be liable if a ttendant care were provid ed by a hired home-care agency. Family attendant care is a cheaper, more in formal alternative to such hired care. The determinative question should be whether the atte ndant care was provided, not whether the care was provid ed with the same or similar le vel of formality. The majority
does not conclude that the evidence was insuffi cient to establish that the attendant care here was provided. Because the care was provided, expe nses were incurred—whether by the insured or by the insurer who is ultimately responsible to pay for attendant-care
services.

p0304 I, Corbin R. Davis, Clerk of the Mi chigan Supreme Cour t, certify that the foregoing is a true and complete copy of the order entered at the direction of the Court.

March 7, 2008

Clerk