Court Opinion

ID: 9850519
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:58:38.533563+00
Date Added: 2024-06-11T09:20:38.476233
License: Public Domain

Archer, J.
(dissenting). We granted leave to consider several questions presented, beginning with whether the trial court properly granted plaintiff’s motion for summary disposition regarding whether any personal injury protection benefits to which plaintiff may have been entitled were *64overdue. We would hold the following: The trial court correctly granted plaintiff’s motion; the no-fault act does not preclude an insurer from disputing the validity of a personal protection injury claim; the Court of Appeals properly held that plaintiff was entitled to interest under MCL 500.3142(3); MSA 24.13142(3); the trial court properly denied plaintiff’s claim for attorney fees under MCL 500.3148; MSA 24.13148; and, finally, the trial court properly granted plaintiff’s motion in limine.
i
Plaintiff Nasr Nasser was driving a rented automobile when he collided with another vehicle in a shopping mall parking lot. The damage to plaintiff’s vehicle was minor.
On the day of the accident, plaintiff sought medical treatment from Dr. Roberto William. Over the next two months, Dr. William hospitalized plaintiff for three separate periods totaling fifty days. Dr. William prescribed numerous tests, medications, physical therapy, and other treatments. The only positive test indicated that plaintiff had a slow heartbeat. Plaintiff returned to work after his final hospital discharge.
Plaintiff filed the present lawsuit when his no-fault insurer, defendant Auto Club Insurance Association, refused to pay pip benefits. Plaintiff alleged that defendant’s failure to pay pip benefits was a breach of its insurance contract and that defendant’s outrageous conduct caused him emotional harm.
Plaintiff filed two pretrial motions. The trial court granted the first motion and held that, under the collateral source rule and MRE 403, other insurance coverage plaintiff may have had was inadmissible evidence. The trial court also granted *65plaintiff’s motion for summary disposition and held that any pip benefits he may have been entitled to were overdue under MCL 500.3142(2); MSA 24.13142(2).
Both parties conditionally waived their right to a jury trial. Following the bench trial, the court found defendant liable and plaintiff’s contract damages in excess of $25,000.
Both parties filed claims of appeal. Although it found that the trial court had erroneously refused to award plaintiff interest for overdue pip payments under § 3142, the Court of Appeals otherwise aflirmed. 169 Mich App 182; 425 NW2d 762 (1988). Defendant moved for rehearing, and the Court again aflirmed. 171 Mich App 741; 431 NW2d 103 (1988).
Defendant Auto Club subsequently applied for leave to appeal. We granted leave to appeal on June 30,1989.1
ii
The record clearly establishes that defendant Auto Club disputed the validity of plaintiff’s pip claim. Defendant’s theory of the case was that, under MCL 500.3107(a); MSA 24.13107(a), plaintiff’s treatment was unnecessary and that the expenses incurred were unreasonable.2 The Auto Club’s defense, consequently, was that plaintiff had failed to state a valid claim for allowable expenses under § 3107(a). As to this issue, therefore, a factual dispute arose for the trier of fact to resolve.
Prior to the trier of fact’s resolution of the disputed § 3107(a) claim, however, plaintiff moved for summary disposition to settle a related but distinct issue. At this point in the litigation, plaintiff sought to determine whether, under MCL *66500.3142(2); MSA 24.13142(2),3 the pip benefits he may be entitled to, if any at all, were overdue. 4 In his written motion brought pursuant to MCR 2.116(C)(9), plaintiff argued, in effect, that the lack of necessity of medical treatment and unreasonableness of expenses incurred is not a legally sufficient defense against § 3142(2). Plaintiff also claimed in the same motion that because the Auto Club had received reasonable proof documenting plaintiff’s injuries and medical bills, defendant was estopped from contesting the necessity of plaintiff’s medical care and the reasonableness of the expenses incurred.
At oral argument before the trial court, plaintiff amended his written motion. Plaintiff’s additional claim was that, as a matter of law, the pip benefits he was entitled to, if any at all, were overdue because, under § 3142(2), no genuine factual dispute existed. MCR 2.116(0(10). Because the Auto Club had received his medical records, hospital *67bills, and admittedly refused to pay pip benefits, plaintiff reasoned any pip benefits he was entitled to were overdue under § 3142(2).
The Auto Club raised two defenses in response. Defendant first claimed that the medical treatment provided plaintiff was unnecessary and that the expenses incurred were unreasonable. In addition, defendant also argued that it had not been given reasonable proof of both the fact of plaintiff’s injury and the expenses plaintiff incurred because the documentation supporting plaintiff’s claim was incomplete.
The trial court granted plaintiff’s motion on both grounds, and the Court of Appeals twice affirmed. The principle questions presented today, consequently, are whether the Auto Club’s defense was clearly untenable as a matter of law and therefore legally insufficient with regard to plaintiff’s §3142(2) claim, Armoudlian v Zadeh, 116 Mich App 659, 672-673; 323 NW2d 502 (1982), and whether no possible factual development could justify recovery in defendant’s favor under §3142(2), League Life Ins Co v White, 136 Mich App 150, 152; 356 NW2d 12 (1984).
hi
A
The trial court correctly held that, as against plaintiff’s § 3142(2) claim, the Auto Club’s defense that plaintiff had incurred no § 3107(a) allowable expense was legally insufficient. An insurer’s reasonable and bona fide refusal to pay pip benefits is no defense to a claim that any pip benefits owed are overdue under § 3142(2) when the insurer has received reasonable proof documenting the fact of injury and the expenses incurred. Bradley v *68DAIIE, 130 Mich App 34, 48-50; 343 NW2d 506 (1983).
The no-fault act provides that no-fault insurers must pay first-party pip benefits for accidental bodily injuries arising out of the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle. MCL 500.3105(1); MSA 24.13105(1). Pip benefits are provided without regard to fault, MCL 500.3105(2); MSA 24.13105(2), and are payable as a loss accrues. MCL 500.3142(1); MSA 24.13142(1). A loss accrues when allowable expenses are incurred, not when bodily injury occurs. MCL 500.3110(4); MSA 24.13110(4). Allowable expenses5 consist of "all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation.” MCL 500.3107(a); MSA 24.13107(a). Thus, pip benefits are payable only if two conditions are met: (a) the service, product, or accommodation must be reasonably necessary, and (b) the charge incurred must itself also be reasonable. Kondratek v Auto Club Ins Ass'n 163 Mich App 634, 637; 414 NW2d 903 (1987).
When the insured claims that any pip benefits owed him are overdue, however, the only issue under §3142(2) is whether the insurer has been presented with reasonable proof supporting the insured’s claim that an injury has in fact occurred and that a specific loss has accrued. If reasonable proof is supplied, then whether the treatment was unnecessary or the expense unreasonable is simply irrelevant regarding whether the claim is overdue under § 3142(2). Although the lack of necessity of treatment or the unreasonableness of expenses incurred may explain the insurer’s motive for denying payment under § 3107(a), these are not *69elements of §3142(2). Consequently, this defense fails to address the narrow question whether pip benefits were in fact tendered within the thirty-day period provided in § 3142(2).
The reasonableness of an insurer’s refusal to pay pip benefits is a defense, but only to a claim for attorney fees under MCL 500.3148; MSA 24.13148.6 Butt v DAIIE; 129 Mich App 211, 220; 341 NW2d 474 (1983); see, generally, Wood v DAIIE, 413 Mich 573, 586-589; 321 NW2d 653 (1982). Section 3148(1) not only requires that the claim be overdue under §3142(2), but also that the insurer’s refusal or delay in making payments is unreasonable. Thus, a bona fide factual dispute regarding whether an allowable expense has been incurred or a legitimate question of statutory construction are defenses available under § 3148(1). Liddell v DAIIE, 102 Mich App 636, 650; 302 NW2d 260 (1981). But once an insurer has been presented with reasonable proof of the fact of injury and the loss incurred, these same defenses are irrelevant when a plaintiff seeks to establish merely that whatever pip benefits he may be entitled to, if any at all, are overdue under §3142(2). Bradley, supra at 49. Therefore, the trial court correctly held that, as to plaintiff’s §3142(2) claim, the reasonableness of the Auto *70Club’s refusal to pay pip benefits was not a legally tenable defense.
B
This is not to say, however, that no-fault insurers must process and pay every claim presented. Defendant Auto Club and amici curiae vigorously contend that the effect of the trial court order granting plaintiff’s motion and the Court of Appeals opinions is to impose "strict liability” on no-fault insurers. Under the lower courts’ rulings, defendant argues that, contrary to § 3107(a), an insurer is absolutely liable to pay pip benefits for any and all expenses its insured incurs, even unreasonable expenses resulting from unnecessary treatments. We agree that the analysis the lower courts employed could be mistakenly interpreted as precluding an insurer from contesting the necessity of medical treatment and the reasonableness of the expenses incurred under § 3107(a). We just as emphatically agree this standard would be contrary to the no-fault act. We disagree, however, that the lower courts’ rulings, in effect, impose this type of standard. Rather, in light of the conduct of the underlying litigation as it actually occurred, the Auto Club was properly provided the opportunity to submit to the trier of fact its defense that plaintiff had failed to state a valid pip claim for allowable expenses under § 3107(a).
Under the no-fault act, some first-party claims will be disputed, and insurers are not required to merely process and pay all claims. Lewis v Aetna Casualty & Surety Co, 109 Mich App 136, 139; 311 NW2d 317 (1981). Under the act, for example, an insurer is not penalized for denying or withholding payment of a claim unless it is first presented with *71reasonable proof of the fact of injury and loss incurred. MCL 500.3142; MSA 24.13142. Although § 3142(3) penalizes an insurer at the rate of twelve percent annual interest for overdue pip claims, Wood v DAIIE, supra at 589, n 17, "overdue” is narrowly defined and includes only claims unpaid within thirty days of an insurer’s receipt of reasonable proof of both the fact and amount of loss. Section 3148 likewise provides for the award of reasonable attorney fees in an action seeking overdue pip payments, but only where the insurer unreasonably refuses to pay the claim or unreasonably delays tendering proper payments. When considered as a whole,7 therefore, the no-fault act clearly contemplates that disputed claims will arise. Although they bear the risk of being penalized for overdue payments and unreasonable delay or nonpayment, no-fault insurers clearly have the right to contest claims for expenses not allowable under § 3107 and are not subjected to a "strict liability” standard.
c
The Auto Club did present to the trier of fact its defense that plaintiff’s treatment was unnecessary, the expenses incurred unreasonable, and, consequently, that no § 3107(a) allowable expense accrued. Following plaintiff’s motion for summary disposition, both parties conditionally waived their right to a jury trial with regard to whether plaintiff had stated a claim for allowable expenses under § 3107(a). Although in light of the conditional waiver the lower courts’ opinions could mistakenly be read as adopting a flawed analysis *72of the no-fault act,8 it is clear that with regard to the ultimate issue of the case, plaintiff properly continued to bear the burden of proof regarding the necessity of treatment and the reasonableness of expenses incurred. Subsequent to defendant’s motion for a directed verdict, in which the trial court properly rejected defendant’s claim that plaintiff had failed to establish the necessity of treatment and the reasonableness of expenses incurred, and the close of all evidence, the trial court made specific findings of fact.
The Court: This Court has had an opportunity to make a ruling on a summary judgment disposition.
This Court also had an opportunity to take testimony concerning the issue of damages.
This Court listened to the keeper of the medical records from Kirwood General Hospital and this Court also had an opportunity to listen to a Miss Edwardine Schuelte, who was called as a witness under the adverse statute rule, by the plaintiffs.
As a result of the testimony of both of those witnesses and as a result of the depositions that this Court had an opportunity to read, specifically, of a Dr. Roberto Williams [sic] and also a Dr. Mitchell C. Pollack [sic], this Court is prepared to make a ruling on the issue of damages.
I do believe that, after reading the deposition of Dr. Pollack, who, basically, through his deposition *73enlightened the Court that he would have given different types of medical treatment, I do not believe that the medical treatment rendered to this particular plaintiff was unreasonable medical treatment, but I do believe it to be reasonable.
I do also believe that the amount of medical expenses that were incurred to this plaintiff in the amount of $25,059.29 were, in fact, reasonable. [Emphasis added.]
Thus, as the trier of fact, the court expressly found that plaintiff’s medical treatment was necessary and that the expenses incurred were reasonable. Far from being denied the opportunity to raise its defense that plaintiff incurred no allowable expense within the meaning of § 3107(a), defendant was fully given the opportunity to show that plaintiff’s treatment was unnecessary and that the expenses incurred were unreasonable. Although it did not prevail, defendant Auto Club presented its theory of the case to the trier of fact. Consequently, defendant had its day in court.
IV
The second defense the Auto Club raised in response to plaintiff’s motion for summary disposition was that it refused to pay pip benefits because, contrary to § 3142(2), plaintiff had failed to provide reasonable proof of the fact of his injury and the expenses incurred. We agree with the Auto Club’s argument that this defense is legally tenable under § 3142(2) and would survive a motion for summary disposition under MCR 2.116(C)(9). Unlike the Auto Club’s previous argument, this defense rebuts the requirement of § 3142(2) that the claimant provide proof reasonably supporting the alleged injury and expenses incurred.
The trial court, nevertheless, properly held un*74der MCR 2.116(0(10) that no genuine factual dispute existed as to whether plaintiff’s pip claim was overdue. Upon the basis of our review of the record, we can only conclude that, within the meaning of § 3142(2), plaintiff presented defendant with reasonable proof of the fact of his injury and the losses incurred in the treatment of that injury. Although defendant disputed the necessity of plaintiff’s treatment and the reasonableness of the expenses incurred, it was undisputed that, as of November, 1982, defendant had obtained itemized billing statements and plaintiff’s medical and hospital records. When added to defendant’s admission that it refused to pay plaintiff’s pip claim, the trial court properly granted plaintiff’s motion.
v
We also reject defendant’s argument that the trial court committed error requiring reversal by excluding evidence of plaintiff’s Blue Cross/Blue Shield coverage as to the limited issue of motive under count n of plaintiff’s complaint alleging emotional harm. Although the trial court awarded plaintiff damages for breach of contract, no damages were awarded for emotional harm. With regard to this second count, the trial court ruled in defendant’s favor. Defendant’s claim, therefore, is moot, and the Auto Club has suffered no prejudice.
CONCLUSION
We would hold, therefore, that the Court of Appeals properly affirmed the trial court’s order granting plaintiff’s motion in limine and motion for summary disposition. The Court of Appeals also properly held that plaintiff was entitled to *75interest under § 3142(3), since the trial court had ruled that, as a matter of law, plaintiff’s pip benefit payments were overdue. We also would affirm the Court of Appeals holding that the trial court properly concluded that no award of attorney fees under § 3148 was justified, since the Auto Club reasonably and in good faith disputed the validity of plaintiff’s claim for allowable expenses under § 3107.

 432 Mich 921 (1989).

 For text of § 3107(a), see text accompanying n 5.

 Section 3142 provides:
(2) Personal protection insurance benefits are overdue if not paid within 30 days after an insurer receives reasonable proof of the fact and of the amount of loss sustained. If reasonable proof is not supplied as to the entire claim, the amount supported by reasonable proof is overdue if not paid within 30 days after the proof is received by the insurer. Any part of the remainder of the claim that is later supported by reasonable proof is overdue if not paid within 30 days after the proof is received by the insurer. . . .
(3) An overdue payment bears simple interest at the rate of 12% per annum.

Presumably for strategic reasons, plaintiff’s counsel chose to resolve this limited issue before the trier of fact first determined whether he had stated a valid claim for allowable expenses under § 3107(a). Whether the § 3142(2) issue was resolved before or after resolution of the § 3107(a) factual dispute, however, is of no consequence. The Auto Club did present to the trier of fact its defense that no § 3107(a) allowable expense was incurred because plaintiff’s treatment was unnecessary and the expenses incurred unreasonable. See part m(C).

 Pip benefits are also payable for work loss expenses. MCL 500.3107(b); MSA 24.13107(b).

 Section 3148 provides:
(1) 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.
(2) An insurer may be allowed by a court an award of a reasonable sum against a claimant as an attorney’s fee for the insurer’s attorney in defense against a claim that was in some respect fraudulent or so excessive as to have no reasonable foundation.

 See also MCL 500.3112, 500.3145, 500.3151; MSA 24.13112, 24.13145, 24.13151.

 Part of the confusion as to the scope of the trial court’s order granting plaintiff’s motion arose from the court’s use of the terms "damages” and "unreasonable.” The Court of Appeals further confused the issue when it referred to the trial court order as determining defendant’s "liability.” See 171 Mich App 741. "Liability” and "damages,” however, are terms that can only be defined in the context in which they arose. In light of plaintiff’s motion, which merely established that any pip benefits owed plaintiff were, as a matter of law, overdue, it is clear that defendant was found “liable” only in the sense that any pip benefits it owed plaintiff were overdue under § 3142(2). Thus, the "damages” issue was left to the trier of fact for resolution, and it concerned the reasonableness and necessity of plaintiff’s medical treatment and expenses under § 3107, the very essence of the Auto Club’s defense.