General Article

Getting What Your Client Paid For (Making the PIP Insurance Carrier Pay for Fiduciary Help That is Needed Because of an Accident)


by B. Andrew Rifkin

The most sacred of the duties of a government [is] to do equal and impartial justice to all its citizens....While the laws shall be obeyed, all will be safe. He alone is your enemy who disobeys them.

—Thomas Jefferson

On a late winter evening, Darlene Ward was walking down Gilbert Street, leaning hard into the frozen wind that swept across the intersection of Michigan Avenue. She was cold and tired, and she wanted to get home.

After 15 long minutes, Darlene finally was in sight of her house. As she began to cross the last slush-covered expanse of Michigan Avenue, a drunk driver sped through the intersection behind her, fishtailing towards the curb and slamming the side of his car into Darlene.

From those few seconds, Darlene’s life would never be the same. Somehow, Darlene lived through the accident, but she was barely alive. In order to survive, she was fully dependent on a feeding tube for all of her nutrition, and she needed around-the-clock nurses for her constant medical care.

After the accident, Darlene was unable to perform any of the basic functions of daily life that she had done so easily before the accident. Just as the accident had wrecked Darlene’s mind and body, it also had destroyed her ability to manage the ordinary affairs of her life. For that reason, Darlene now needed a guardian and conservator to conduct her personal and financial affairs.

Darlene’s PIP insurance carrier paid for her medical expenses, as it was required to do when one of its insureds was injured in a car accident, but the insurance company refused to pay for her guardian and conservator fees, even though the only reason Darlene needed a guardian and a conservator was because of the accident.

DARLENE’S RIGHTS TO FULL PROTECTION

Michigan automobile insurers traditionally have refused to pay for anything beyond wage loss and medical/rehabilitation expenses when people have been injured in car accidents. Yet, under "No Fault," Michigan law requires PIP insurance carriers to reimburse motorists for all "allowable expenses" caused by an automobile accident:

Sec. 3107. (1) Except as provided in subsection (2), personal protection insurance benefits are payable for the following:

(a) Allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation. Allowable expenses within personal protection insurance coverage shall not include charges for a hospital room in excess of a reasonable and customary charge for semiprivate accommodations except if the injured person requires special or intensive care, or for funeral and burial expenses in the amount set forth in the policy which shall not be less than $1,750.00 or more than $5,000.00.1

Those "allowable expenses" include guardianship fees, according to the Michigan Court of Appeals in Heinz v Auto Club Ins Ass’n.2 In Heinz, the court specifically held that if it is necessary to appoint a guardian or conservator for a person injured in a car accident, the PIP insurance carrier must reimburse its insured for those expenses; after all, they too were caused by the accident, and they are reasonably necessary for the injured person’s care:

In short, § 3107(1)(a) provides for the payment of expenses incurred for the reasonably necessary services for an injured person’s care. It is clear to us that if a person is so seriously injured in an automobile accident that it is necessary to appoint a guardian and conservator for that person, the services performed by the guardian and conservator are reasonably necessary to provide for the person’s care. Therefore, they are allowable expenses under § 3107.3

The Michigan Supreme Court already has denied leave to hear Heinz on appeal, so that case is binding law that must be followed by all courts—and automobile insurance companies—operating in Michigan.4

In Heinz, the plaintiff estate’s ward was injured in an automobile accident, and the defendant was the provider of his no-fault insurance benefits. The ward was incapacitated, and a guardian and conservator was appointed for him. The defendant insurance company argued that it was not required to pay for the guardianship fees because legal fees were not encompassed by the No-Fault Act.

The Heinz court specifically disagreed with that reasoning. It reasoned instead that "the No-Fault Act encompasses payment of expenses beyond just medical expenses, inasmuch as § 3107(1)(c) provides for the payment of replacement services that an injured person would have performed for himself. Thus, the No-Fault Act is not limited strictly to the payment of medical expenses."5

In light of Heinz, then, it is clear that auto insurers are required by law to pay for a ward’s guardian and conservator if those fiduciaries are needed because of an automobile accident.

HOW TO PROTECT THE WARD’S ESTATE

When the ward’s PIP insurance carrier refuses to pay for the guardianship and conservatorship protection the ward needs, the attorney representing the estate should file a lawsuit in the district or circuit court to compel the insurance company to pay the benefits that are required under Michigan law. Demanding full payment for this legally-mandated benefit is required to fully protect the ward’s rights and pursue financial security to which the ward’s estate is entitled. Merely filing a lawsuit is only a small part of the story; the complaint itself should be promptly followed by a motion for summary disposition on both liability and damages.

Summary disposition in cases like this is relatively straightforward, and district and circuit courts routinely have granted summary disposition on the issue of liability for the wards’ estate when these motions have been properly filed and clearly presented. After all, the Michigan appellate courts have already decided that PIP carriers are required to reimburse their insureds’ estates for all the guardianship and conservatorship fees that were required by the automobile accident. For that reason, there are no genuine issues involving liability when a case to recover PIP benefits for guardianship and conservatorship fees is filed.

What is more surprising to most practitioners, however, is that there is no genuine issue of material fact regarding the amount of compensation that the PIP insurance carrier must pay, so summary disposition properly should be granted for damages as well. Summary disposition is appropriate for the amount of money that the PIP insurance carrier owes whenever the probate court has approved the estate’s guardianship and conservatorship fees.

In Darlene’s case, her estate had paid its conservator his fees for acting as the estate’s fiduciary under the supervision and approval of the probate court. Once the probate court approved the conservator’s fees for Darlene’s estate, that approval is res judicata on that issue. The Michigan Legislature has given the probate court exclusive jurisdiction to make a finding that a fiduciary’s fees are reasonable and to approve the payment of the fiduciary’s fees:

700.21 Exclusive Jurisdiction

Sec. 21. The [probate] court has exclusive legal and equitable jurisdiction of all of the following:

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(c) Proceedings concerning guardianships, conservatorships, and protective proceedings.

(d) Proceedings to review and settle the accounts of a fiduciary as defined in section 5, and to order, upon request of an interested person, instructions or directions to a fiduciary, concerning an estate within the court’s jurisdiction.6

For that reason, determinations about the reasonableness of a fiduciary’s fees are beyond the scope of other courts’ jurisdictional authority.7 The PIP insurance carrier may not subsequently contest the probate court’s determination in any other forum, including the district or circuit court in which the action to recover unpaid PIP benefits is filed.

A finding by the probate court that a fiduciary’s fees are reasonable is final, conclusive, and dispositive on that issue, even as to a party that may later become interested in the probate court’s ruling:

700.564 Hearing on accounting; conclusiveness of allowance of account

(4)...the order of the court allowing an account of a fiduciary shall be final and conclusive against all persons in any way interested therein who are legally competent at the date of the order and against all other persons who are or may become interested therein....8

When a probate court approves an accounting, that is an adjudication of each item in the account.9 This ruling cannot be relitigated or attacked collaterally:

The orders of the probate court are judgments, res judicata of the matters involved, and cannot be attacked collaterally....The finding of the payment of claims and residue is binding on the interested parties and is not open to question in a collateral proceeding....Except on appeal, no other court may inquire into the sufficiency of the testimony to determine whether it sustains the findings and orders, nor whether they were supported by the evidence.10

Even on appeal, the value of attorney fees charged to an estate for a fiduciary’s services is a matter within the probate court’s sound discretion, and it cannot be lightly overturned or relitigated. Michigan courts have repeatedly held that:

The value of disputed attorney services is a matter vested in the probate court’s discretion, and only when there is a manifest abuse of that discretion will such a decision be overruled on appeal.11

The proper standard of review is to affirm the probate court’s decision unless there is a manifest abuse of discretion.12

The appellate courts of this state do not permit equal branches of the judicial system to address and resolve the same issue twice, so PIP insurance carriers cannot attempt to create an issue of fact in this case by trying to relitigate the "reasonableness" of the fiduciary’s fees. After all, "[t]he orders of the probate court are judgments, res judicata of the matters involved, and cannot be attacked collaterally."13 Where a probate court establishes the value of attorney fees charged to an estate for a fiduciary’s services, that value may be challenged only on appeal.14 Even then, the probate court’s determination still is a matter within its sound discretion, and that determination cannot be lightly overturned or relitigated.15

Whenever the probate court has already decided that guardianship fees and expenses were reasonable, that question no longer is a genuine issue. For that reason, summary disposition on the issue of damages is proper, just as it was on the issue of liability.

THE STATUTE OF LIMITATIONS DEFENSE

When confronted with summary disposition motions on both liability and damages, many insurance companies have attempted to argue that these suits are time-barred. They make these arguments even though they know the ward’s mental incapacity is the reason that the estate is owed these benefits in the first place.

Fortunately for accident victims in this state, Michigan courts have been very protective of the rights of mentally disabled wards. As long as an estate’s ward remains mentally disabled, lawsuits to recover insurance benefits are not time-barred.16 Instead, during the mental incapacity period, the one-year period of limitation on first-party PIP claims is tolled by the Disability Savings Provision Act.17 That Act allows a disabled person’s estate to file suit even after the period of limitation passes because of "the significant public policy clearly reflected in MCLA 600.5851(1)—the protection and preservation of the substantive rights of mentally incompetent persons."18

In the Disability Savings Provision Act, the term "insane" is defined to include a condition of mental derangement that prevents the sufferer from comprehending his or her legal rights:

The term insane as employed in this chapter means a condition of mental derangement such as to prevent the sufferer from; comprehending rights he or she is otherwise bound to know and is not dependent on whether or not the person has been judicially declared to be insane.19

The Michigan Court of Appeals has repeatedly interpreted this statute to mean that a guardian or conservator’s suit is timely, even if it is filed after the one-year period of limitation has passed.

For example, in Hartman v Ins Co of North America, the court of appeals considered a mentally incompetent adult who was seriously injured when a car ran over him while he was riding his bicycle. A conservator was appointed more than two years after the accident had occurred, and he filed suit five months after his appointment. The Hartman court held:

Michigan law is clear that the general saving provisions of Revised Judicature Act. MCL 600.5851; MSA 27A.5851, apply to causes of action created by Michigan Statutes. The insanity saving provision in the Revised Judicature Act thus extends the time during which plaintiff could bring suit on behalf of [the mentally incompetent adult] under the No-Fault Automobile Insurance Act.20

Even where a mentally incapacitated ward already has a competent fiduciary, Michigan courts have held that ward still is considered disabled, and the ward’s estate still is protected by the tolling provisions of MCLA 600.5851(1).21

In jurisdictions where this issue has been addressed, it has generally been held that, absent contrary statutory authority, the appointment of a guardian for a mentally incompetent person does not have the effect of starting the running of a period of limitation tolled by virtue of the disability of mental incompetence.

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We adopt the view generally held in other jurisdictions and hold that the appointment of a guardian for an insane person does not constitute removal of the insane person’s disability for purposes of [the tolling provisions of] MCLA 600.5851(1).22

Michigan courts consistently reject insurance company arguments that tolling the statute of limitations—despite the appointment of a guardian or a conservator—is unfair. For example, in Paavola v St Joseph Hospital Corp, the Michigan Court of Appeals held:

Defendant urges that our holding effects the "impalatable result" that the guardian of a mentally incompetent person may bring suit on the wards’ behalf during the entire period of mental incompetency—a period potentially many decades long. In our judgment, however, a contrary holding would constitute unjustifiable tampering with the significant public policy clearly reflected in MCLA 600.5851(1)—the protection and preservation of the substantive rights of mentally incompetent persons.23

Subsequent courts in Michigan have also addressed this same issue, and all have made it perfectly clear that the rule explained in Paavola is to be strictly followed.24 In Wallisch v Fosnaugh, the court of appeals even expanded the Paavola rule to related issues within the same statutory scheme:

In the recent case of Paavola v St. Joseph Hospital Corp., [citation omitted], this court held that the appointment of a guardian for an insane person does not remove the disability and commence running of the limitation period. Although the court in Paavola was interpreting the present disability savings statute, MCL 600.5851 (MSA 27A.5851), we find that decision to apply with equal force to the predecessor disability statute involved in this case.25

Michigan courts have been careful to distinguish the rights of mentally disabled wards from their nondisabled family members. In Walter v City of Flint, the parent/guardians of a minor child brought suit both individually (to cover their own expenses) and on behalf of their daughter.26 The Walter court recognized that the minor’s claims—which her parent/guardians brought on her behalf—were tolled by MCLA 600.5851(1), even though they were filed by competent guardians more than one year after the claims had accrued.27 The Walter court disallowed only the individual claims of the parent/guardians, reasoning that those claims were separate actions from the ward’s own claims, and the parent/guardians were not suffering from any mental incapacities themselves.28

For exactly the same reason, the court in Wold v Jeep Corporation held that the one-year period of limitation for the plaintiff ward’s claims "were tolled due to her mental incapacity."29 The ward’s husband had filed his own separate claim, but the statute of limitations for his claim only was not tolled because he was not suffering from any mental incapacity.30

Both the Michigan Legislature and appellate courts have been abundantly clear that whenever a claim is brought on behalf of a mentally incapacitated ward, the period of limitation is tolled. In light of the ample statutory and case law protecting the ward’s right to recovery, attorneys representing wards injured in car accidents should not hesitate to seek PIP reimbursement for the fiduciary fees charged to the ward’s estate, even if those charges were incurred long ago.

CONCLUSION

Where a person is so seriously injured in an automobile accident that it is necessary to appoint a guardian or conservator for that person, the services performed by the guardian are reasonably necessary to provide for that person’s care, and they are allowable expenses under MCLA 500.3107(1)(a).31 In addition, the Michigan Legislature has given the probate court exclusive jurisdiction to make a finding that a fiduciary’s fees are reasonable and to approve the payment of the fees.

For these reasons, attorneys representing wards injured in automobile accidents should immediately file motions for summary disposition after filing suit to recover the PIP benefits owed by the auto insurance carrier. Under Heinz, there are no genuine issues involving liability when a case to recover PIP benefits for guardianship and conservatorship fees is filed. There also are no genuine issues of material fact regarding the amount of damages that the PIP insurance carrier must pay whenever the probate court has approved the estate’s guardianship and conservatorship fees.

In winning summary disposition on liability and damages, these cases can be filed and resolved in the ward’s favor very quickly, thereby avoiding the typical lengthy litigation course that most cases follow and efficiently protecting the rights of wards injured in tragic car accidents.

Footnotes

1 MCLA 500.3107(1)(a) (emphasis added).

2 214 Mich App 195, 198 (1995), lv den 453 Mich 913 (1997).

3 214 Mich App 198 (emphasis added).

4 214 Mich App 198.

5 214 Mich App 197.

6 MCLA 700.21 (emphasis added).

7 MCLA 700.21(c).

8 MCLA 700.564 (emphasis added).

9 McDannel v Black, 270 Mich 305, 310 (1935).

10 Id. (emphasis added).

11 In re Estate of Weaver, 119 Mich App 796, 799 (1982) (emphasis added).

12 In re Estate of Rice, 138 Mich App 261 (1984).

13 McDannel, 270 Mich 310.

14 In re Estate of Weaver, 119 Mich App 799.

15 Id.

16 Hartman v Ins Co of North America, 106 Mich App 731 (1981).

17 MCLA 600.5851(1).

18 Paavola v St Joseph Hospital Corp, 119 Mich App 10, 14-15 (1982).

19 MCLA 600.5851(2) (emphasis added).

20 Hartman, 106 Mich App 743-744 (emphasis added).

21 Paavola v St Joseph Hospital Corp, 119 Mich App 10, 13-14 (1982).

22 119 Mich App 13-14 (emphasis added).

23 119 Mich App 14-15 (emphasis added).

24 Wallisch v Fosnaugh, 126 Mich App 418, 426 (1983).

25 126 Mich App 426 (emphasis added).

26 Walter v City of Flint, 40 Mich App 613 (1972).

27 40 Mich App 614.

28 40 Mich App 615.

29 Wold v Jeep Corporation, 141 Mich App 476, 479 (1985) (emphasis added).

30 141 Mich App 480.

31 Id.



B. Andrew Rifkin
B. Andrew Rifkin is a member of the State Bar of Michigan and the State Bar of Colorado. He graduated from the University of Michigan with distinction and honors in economics. He also graduated from the University of Michigan Law School, where he won the Campbell Moot Court Competition and taught legal research and writing. He currently is a member of the American Bar Association, the Michigan Trial Lawyers Association, the Oakland County Bar Association, the Colorado Bar Association, the Denver Bar Association, and the Colorado Lawyers Trial Association.


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