Case Name: MOORE v. SECURA INSURANCE
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 2007-07-03
Citations: 276 Mich. App. 195
Docket Number: Docket No. 267191
Parties: MOORE v SECURA INSURANCE
Judges: Before: WILDER, EJ., and SAWYER and DAVIS, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 276
Pages: 195–215

Head Matter:
MOORE v SECURA INSURANCE
Docket No. 267191.
Submitted April 5, 2007, at Detroit.
Decided July 3, 2007, at 9:05 a.m.
Leave to appeal sought.
Hattie and James Moore brought an action in the Genesee Circuit Court against Secura Insurance, seeking no-fault insurance benefits for injuries sustained by Hattie Moore (hereafter plaintiff) in an automobile accident. The plaintiff had filed an application for benefits with the defendant, seeking wage loss benefits, personal protection insurance (PIP) benefits, and uninsured motorist benefits for pain and suffering. The defendant had paid wage loss and injury benefits for approximately one year until it stopped the payment of benefits after a doctor retained by the defendant to conduct an independent medical examination (IME) concluded that the plaintiffs injuries caused by the accident had healed and that her other pain was caused by preexisting conditions. The jury awarded the plaintiff $50,000 in noneconomic damages for the uninsured motorist claim, $42,755 for unpaid wage loss for the PIP claim, and $98.71 in penalty interest for overdue wage loss benefits. The court, Thomas L. Brown, J., granted the plaintiffs motion for attorney fees and, pursuant to MCL 500.3148, awarded the plaintiff $79,415 in attorney fees and costs. The defendant appealed, alleging that the trial court erred both in its decision to grant attorney fees and costs and with regard to the amount awarded.
The Court of Appeals held:
1. An award of attorney fees in a no-fault case pursuant to § 3148 requires that the insurer unreasonably refused to pay benefits or unreasonably delayed in making proper payment and that those benefits were overdue. A refusal or delay in making payments is not unreasonable if the refusal or delay is the product of a legitimate question of statutory construction, constitutional law, or a bona fide factual uncertainty.
2. The trial court properly found the denial of benefits to be unreasonable on the basis that the defendant made no inquiry beyond the opinion of the doctor who conducted the IME before denying the benefits.
3. The conditions for an award of attorney fees under § 3148 were satisfied because the jury found that at least some of the benefit payments were overdue and the trial court determined that the denial of benefits was unreasonable.
4. The decision of the trial court regarding the amount of attorney fees awarded fell within the range of principled outcomes and therefore was not an abuse of discretion.
5. There is no statutory support for the defendant’s claim that the plaintiff is entitled only to the portion of the attorney fees directly attributable to securing the $98.71 penalty interest award. The fact that the jury determined that only some of the benefits were actually overdue does not negate the fact that this was “an action for personal or property protection insurance benefits which are overdue.” MCL 500.3148(1) provides for attorney fees in this circumstance and the trial court found the fees sought to be reasonable.
Affirmed.
Wilder, EJ., dissenting, stated that the award of attorney fees is clearly erroneous and should be reversed because the jury did not find that any benefits were overdue at the time of trial and, even if an award of attorney fees was permissible, the award should have been for only the attorney fees that were attributable to the recovery of overdue benefits. The jury determined that the $42,755 it awarded for wage loss was not overdue. Where a jury fails to award penalty interest on benefits it awards at trial, those benefits are not overdue and the plaintiffs attorney is not entitled to an award of fees.
1. Insurance — No-Fault — Delay in Payment of Claims — Attorney Fees.
An insurer is required to pay an insured’s attorney fees in a no-fault automobile insurance action for personal or property protection insurance benefits where the insurer unreasonably refused to pay benefits or unreasonably delayed in making proper payment and those benefits were overdue; a refusal or delay in making payments is not unreasonable if it is the product of a legitimate question of statutory construction, constitutional law, or a bona fide factual uncertainty (MCL 500.3148[1]).
2. Insurance — Delay in Payment of Claims — Attorney Fees.
The proper inquiry in determining whether a no-fault automobile insurer unreasonably refused to pay the insured’s claim for overdue personal or property protection insurance benefits or unreasonably delayed in making proper payment and therefore is responsible for the insured’s attorney fees is whether the insurer’s initial refusal to pay the expense was unreasonable, not whether the insurer is ultimately held responsible for a given expense; an insurer may be found to have unreasonably refused to pay benefits even if the insurer is later deemed not liable for them (MCL 500.3148[1]).
Joliat, Tosto, McCormick & Bade, PLC (by Peter M. Bade), for the plaintiffs.
Garan Lucow Miller, PC. (by Megan K. Cavanagh and Daniel S. Saylor), for the defendant.
Before: WILDER, EJ., and SAWYER and DAVIS, JJ.

Opinion:
DAVIS, J.
In this no-fault insurance action, defendant appeals both the trial court's decision to grant plaintiff attorney fees and costs and the amount of attorney fees and costs awarded to plaintiff. We affirm.
Plaintiff Hattie Moore was involved in an automobile accident on September 27, 2000. Plaintiff was driving her automobile on 1-475, when her automobile was struck on the passenger side by a pickup truck. Plaintiff lost control of her vehicle and crashed into the freeway median. Plaintiff fractured her right kneecap and impinged her right shoulder. The driver of the pickup truck fled the accident scene. Plaintiff filed an application for benefits with defendant insurer, seeking wage loss and first-party personal injury protection (PIP) benefits. Plaintiff also sought uninsured motorist benefits for pain and suffering. Defendant paid wage loss and injury benefits for approximately one year, and then stopped. Plaintiff brought suit. A jury awarded plaintiff $50,000 in noneconomic damages on the uninsured motorist claim, and $42,755 for unpaid wage loss for the PIP claim. In addition, the jury awarded plaintiff $98.71 in penalty interest for overdue wage loss benefits. After the trial, plaintiff moved for attorney fees pursuant to MCL 500.3148. The trial court granted plaintiffs motion and awarded plaintiff $79,415 in attorney fees and costs. Defendant appeals, arguing that it was clear error to award attorney fees and that, in any event, the amount awarded was an abuse of discretion.
We review for clear error a trial court's finding that an insurance company unreasonably refused to pay benefits and its decision to award attorney fees under MCL 500.3148(1). Attard v Citizens Ins Co of America, 237 Mich App 311, 316-317; 602 NW2d 633 (1999); Beach v State Farm Mut Automobile Ins Co, 216 Mich App 612, 628; 550 NW2d 580 (1996). A finding is clearly erroneous when, even if there is evidence in the record to support it, this Court is left with the definite and firm conviction that a mistake has been made by the trial court. Amerisure Ins Co v Auto-Owners Ins Co, 262 Mich App 10, 24; 684 NW2d 391 (2004); Christiansen v Gerrish Twp, 239 Mich App 380, 387; 608 NW2d 83 (2000). We review for an abuse of discretion the amount of attorney fees awarded. Wood v Detroit Automobile Inter-Ins Exch, 413 Mich 573, 587-588; 321 NW2d 653 (1982). An abuse of discretion occurs when the trial court's decision results in an outcome that falls outside the principled range of outcomes. Radeljak v Daimler-Chrysler Corp, 475 Mich 598, 603; 719 NW2d 40 (2006).
The statutory basis for the award of attorney fees in this case is MCL 500.3148(1), which provides:
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.
The plain language of this statute provides for the assessment of attorney fees if a plaintiffs benefits are owed by a defendant insurer, payment of those benefits is overdue, and the defendant insurer's delay was unreasonable. However, expenses cannot be overdue unless they are "incurred"; to "incur" means " 'to become liable or subject to, [especially] because of one's own actions.' " Proudfoot v State Farm Mut Ins Co, 469 Mich 476, 484; 673 NW2d 739 (2003) (citation omitted). Benefits are overdue if they are not paid within 30 days after the insurer received reasonable proof of the fact of the loss and the amount of the loss. MCL 500.3142(2). "If 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, the refusal or delay will not be found unreasonable under MCL 500.3148(1)...." Beach, supra at 629. Overdue benefits give rise to a rebuttable presumption of unreasonable refusal or undue delay. Combs v Commercial Carriers, Inc, 117 Mich App 67, 73; 323 NW2d 596 (1982). Payment of attorney fees in a no-fault case requires that the insurer unreasonably refused to pay benefits and that those benefits were overdue. Roberts v Farmers Ins Exch, 275 Mich App 58, 66-67; 737 NW2d 332 (2007).
Defendant does not contend that it did not pay the benefits at issue. Rather, defendant contends that it did not receive reasonable proof of the fact and amount of plaintiffs loss until trial, so the benefits were not "overdue." However, plaintiff in fact filed an "applications of benefits" form with defendant in December 2000, and plaintiffs employer provided employment information indicating plaintiffs wage history. "The statute requires only reasonable proof of the amount of loss, not exact proof. MCL 500.3142(2)." Williams v AAA Michigan, 250 Mich App 249, 267; 646 NW2d 476 (2002) (emphasis in original). Defendant argues that it reasonably refused to make payments because there existed a legitimate factual uncertainty about plaintiffs injuries. Defendant relies on its retention of a doctor to conduct an independent medical examination (IME) of plaintiff and that doctor's opinion that plaintiffs injuries from the accident had healed and that her other pain was caused by preexisting conditions. However, defendant did not contact plaintiffs treating physicians and did not disclose the IME doctor's report to plaintiffs treating physicians. The trial court concluded that defendant knew that other doctors had been involved and that it was "incumbent upon the carrier to go beyond" just the IME doctor's opinion and "could have sought further information before exercising the draconian termination of critical benefits for one who is injured." We agree.
This Court has recently reaffirmed that a refusal to pay benefits will not be "unreasonable" if " 'the refusal or delay is the product of a legitimate question of statutory construction, constitutional law, or a bona fide factual uncertainty.' " Roberts, supra at 67, quoting McCarthy v Auto Club Ins Ass'n, 208 Mich App 97, 103; 527 NW2d 524 (1994). We are unaware of any outstanding legal or constitutional uncertainties defendant might have had. More importantly, the genesis of the above definition of unreasonableness is in Liddell v Detroit Automobile Inter-Ins Exch, 102 Mich App 636, 650; 302 NW2d 260 (1981). In that case, this Court upheld the trial court's award of 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 plaintiffs injuries from an accident no longer precluded him from employment with the contradictory opinions of the plaintiffs treating physicians. Liddell, supra at 641, 650-651. Here, as in Liddell, defendant insurer terminated plaintiffs work loss benefits without attempting to reconcile the opinions of its independent medical examiner and plaintiffs treating physicians. In fact, defendant did not even contact plaintiffs treating physicians after receiving the IME report, and it did not disclose the IME report to plaintiffs treating physicians. Furthermore, plaintiffs physicians had not communicated to defendant any change in their initial diagnosis. Under these circumstances, the trial court did not clearly err in finding that defendant unreasonably terminated plaintiffs benefits and, therefore, in awarding plaintiff attorney fees and costs pursuant to MCL 500.3148.
Several unpublished opinions of this Court, although not binding pursuant to MCR 7.215(C)(1), have reached similar results. In Clack v Allstate Ins Co, unpublished opinion per curiam of the Court of Appeals, issued January 23, 1998 (Docket No. 192420), this Court affirmed a finding that an insurer's denial of benefits was unreasonable where the insurer never attempted to resolve the conflict between the plaintiffs doctors' recommendation for treatment and the IME doctor's recommendation. In Hannawi v American Fellowship Mut Ins Co, unpublished opinion per curiam of the Court of Appeals, issued November 12, 1999 (Docket No. 207629), this Court upheld a finding that the insurer unreasonably denied benefits where the IME doctor failed to find evidence of a herniated disc, the plaintiffs doctors subsequently found such evidence through an MRI (magnetic resonance imaging) examination, and the insurer continued to deny benefits. In Villegas v Allstate Ins Co, unpublished opinion per curiam of the Court of Appeals, issued July 29, 2003 (Docket No. 235512), the plaintiffs doctors opined that the plaintiffs injury was caused by an automobile accident, the IME doctor opined that some of the plaintiffs symptoms may have been unrelated to the accident, and this Court upheld a finding that the denial of benefits solely on the basis of the latter opinion was unreasonable. By way of contrast, in Stoops v Farm Bureau Ins Co, unpublished opinion per curiam of the Court of Appeals, issued March 23, 2006 (Docket Nos. 260454, 261917), this Court overturned a finding of unreasonableness where some of the plaintiffs own doctors actually supported the insurer's decision to terminate benefits and private investigators determined that the plaintiff was performing activities she claimed caregivers were required to perform. We find these cases persuasive. Again, we conclude 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.
The next question is whether those benefits were overdue. The jury's $98.71 penalty interest award, at the 12 percent rate specified by the trial court, is suggestive of a finding that defendant unreasonably delayed payment of only $822.52, or one week of work loss benefits. The necessary corollary to this finding is that the jury found the remainder of its $42,755 award for unpaid wage loss not to be overdue. We decline the invitations to speculate regarding why the jury so found, or to conclude that this is such a de minimis amount so as to be tantamount to a finding that no payments were overdue. The jury is the finder of fact, and we will not second-guess it. Again, it was determined below that the denial of benefits was unreasonable, and the jury found at least some of the benefit payments overdue. The conditions for an award of attorney fees were therefore satisfied. Roberts, supra at 66-67.
Finally, defendant argues that the trial court abused its discretion in awarding plaintiff $79,415 in attorney fees when the jury awarded plaintiff only $98.71 in penalty interest. We disagree.
We first note that the attorney fee award itself was determined to be reasonable. There is no precise formula for computing the reasonableness of attorney fees, but the factors to be considered include: (1) the professional standing and experience of the plaintiff s attorney; (2) the skill, time, and labor involved in the plaintiffs no-fault claim; (3) the amount in question and the results achieved by the plaintiffs attorney; (4) the difficulty of the no-fault case; (5) the expenses incurred; and (6) the nature and length of the professional relationship between the plaintiffs attorney and the plaintiff. Wood, supra at 588. Plaintiffs attorney provided information about the skill, time, and labor involved in plaintiffs no-fault claim, the result he achieved for plaintiff, the difficulty of the case, and the expenses he incurred for plaintiff. The record created by plaintiffs attorney supports the amount of fees and costs awarded by the trial court. The mere fact that it is disproportionate to the amount of penalty interest is not relevant to the time and effort expended by plaintiffs attorney, the amount of the jury award on plaintiffs PIP claim, or the expenses incurred by plaintiffs attorney in securing that award. This is particularly true given the trial court's correct finding that defendant's termination of plaintiffs benefits was unreasonable. The decision by the trial court fell within the principled range of outcomes, so the trial court did not abuse its discretion when it determined the amount of awardable attorney fees.
Defendant nevertheless argues that the maximum to which plaintiff could be entitled is the portion of attor ney fees directly attributable to securing the $98.71 penalty interest award, and no more. We find no support for this position in the plain language of the statute. Under, MCL 500.3148(1), attorney fees are available "for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue." Thus, the first condition for an award of attorney fees is that the action is for overdue benefits. For a benefit to be "overdue," the insurer must have become liable to pay it. Proudfoot, supra at 483-485. The second condition is that "the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment." The Legislature's use of the words "the claim" indicates that an insurer must have failed to pay all of it, but the Legislature's use of "delayed in making proper payment," in contrast, indicates that only some payment need be delayed. Furthermore, this inquiry "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. It is therefore possible for an insurer to unreasonably refuse to pay benefits even if the insurer is later deemed not liable for them.
Defendant points out that in Proudfoot, our Supreme Court permitted an attorney fee award only for an architect's fee that the plaintiff had paid and that the defendant insurer had not repaid. The Court reversed an award of attorney fees for the cost of modifying the plaintiffs home, which the plaintiff had not yet incurred. Our Supreme Court emphasized that attorney fees were only available in an " 'action for personal or property protection insurance benefits which are overdue.' " Proudfoot, supra at 485, quoting MCL 500.3148(1) (emphasis added by the Proudfoot Court). "Thus, attorney fees are payable only on overdue ben efits for which the insurer has unreasonably refused to pay or unreasonably delayed in paying." Proudfoot, supra at 485 (emphasis in original). But the significant issue in Proudfoot was that none of the modification expenses could be "overdue" because the defendant insurer had not yet become liable for any of them, in turn because the plaintiff had not yet incurred them. Id. at 483-484. In this case, defendant insurer was found liable for unpaid benefits and found to have unreasonably refused to pay or unreasonably delayed in paying. The fact that the jury apparently determined that only some of the benefits were actually overdue does not negate this being "an action for personal or property protection insurance benefits which are overdue." MCL 500.3148(1). The statute provides for attorney fees in such a circumstance, and the trial court found the fees sought to be reasonable.
Affirmed.
Sawyer, J., concurred.
Although the plaintiffs husband also brought a derivative claim, for ease of reference, Hattie Moore will be referred to as the plaintiff throughout this opinion.