Opinion ID: 837886
Heading Depth: 3
Heading Rank: 4

Heading: Erroneous Statement of Law

Text: The Court of Appeals majority erred by relying on McCarthy v. Auto Club Ins. Ass'n, 208 Mich.App. 97, 527 N.W.2d 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, 527 N.W.2d 524. 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, 748 N.W.2d 552. This Court's statement in Ross and the Court's statement in McCarthy, 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, 741 N.W.2d 38.