PIP benefits; Motion to amend affirmative defenses to plead fraud with particularity; Delay; Prejudice; Futility; Distinguishing Haydaw v Farm Bureau Ins Co, Meemic Ins Co v Fortson, & Williams v Farm Bureau Mut Ins Co

The court reversed and vacated the trial court’s order denying defendant-insurer’s (State Farm) motion to amend its affirmative defenses to plead fraud with particularity, and remanded. The case arose out of a motor vehicle accident. Defendant sought to amend as to fraud allegedly committed by its insured, R, when making the underlying claim for PIP benefits, in violation of an anti-fraud provision in the insurance contract between R and defendant. Defendant moved to amend its affirmative defenses following the close of its investigation into R’s claim. The court held that the trial court abused its discretion by denying defendant’s motion to amend on the basis that defendant’s motion was untimely. In denying its “motion to amend as untimely, the trial court did not make a finding that defendant acted in bad faith; rather, the trial court found that defendant’s delay resulted in prejudice to" plaintiff-healthcare provider. The court disagreed. In its original answer to the complaint, defendant asserted a fraud defense. In “its first responsive pleading, defendant provided plaintiff with reasonable notice that it would be pursuing a fraud defense.” Plaintiff claimed “it suffered prejudice because the delayed motion to amend affected its ‘ability to address [defendant’s] allegations of fraud during the course of depositions of the parties which [defendant] alleges committed it.’ However, not only was plaintiff on notice that defendant would be perusing a fraud defense, but it had counsel present at the depositions of” R and the other occupants of the vehicle. Notably, plaintiff did not claim that the proposed amendment would prevent it from receiving a fair trial. The court held that plaintiff had “not claimed prejudice sufficient to deny defendant’s motion for leave to amend, and the trial court abused its discretion by finding otherwise.” The court also briefly noted that plaintiff argued any amendment to defendant’s affirmative defenses to plead fraud with particularity would be futile. Plaintiff’s futility argument failed. The line of cases (Haydaw, Meemic, and Williams) on which plaintiff relied was procedurally and factually distinguishable from this case.