Mich. appeals court says insurer shouldn't have to pay attorney fees

Jessica M. Karmasek May 9, 2013, 8:30pm

LANSING, Mich. (Legal Newsline) -- The Michigan Court of Appeals ruled this week that a lower court was wrong to make an insurer that already was ordered to shell out money for Medicare and personal injury protection payments to also pay a plaintiff's attorney fees.

In a prior majority opinion, the appeals court held that, despite the "seemingly absurd and unfair result," the relevant statutes permitted the plaintiff in the case, Antoine Lee, to recover both Medicare and personal injury protection, or PIP, payments from defendant Farmers Insurance Exchange to pay for medical expenses arising out of a 1978 vehicle accident in which Lee was an uninsured passenger.

The appeals court concluded -- reluctantly, it noted -- that Lee was entitled to such "double dipping," and affirmed the Wayne County Circuit Court's grant of summary disposition in favor of the plaintiff.

The state Supreme Court denied Farmers' leave to appeal, but remanded the matter to the appeals court for it to consider whether the circuit court properly awarded Lee attorney fees.

The appeals court said in its two-page, unpublished opinion Tuesday that the lower court did not, but still affirmed its grant of summary disposition.

The court pointed to state law:

"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 three-judge panel said there was "no serious dispute" that the benefits at issue were overdue.

Farmers argued that its refusal to pay was not unreasonable.

"Although this Court has already determined that defendant's position was legally incorrect, we cannot conclude that it was devoid of even arguable merit or advanced in bad faith," the appeals court wrote in its per curiam opinion.

"Simply put, as we previously noted, the double recovery allowed in this case is bizarre and unfair, even if this Court has found it to be permitted by the Legislature and our Supreme Court has declined to review that conclusion. More importantly, given our legal system's general predisposition to compensating people for losses while avoiding windfalls, it is not a result one would naturally tend to expect.

"We do not believe that it was unreasonable for defendant to seek to persuade a court to absolve it of responsibility, nor do we believe that defendant's proffered argument was not based on a legitimate question of statutory interpretation."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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