Personal injury protection (PIP) benefits claim under the No-Fault Act (NFA); Effect of a policy fraud provision; Meemic Ins Co v Fortson; Williams v Farm Bureau Mut Ins Co of MI

On remand from the Michigan Supreme Court, the court held that defendant-insurer could not void plaintiff-insured’s policy contract completely, but that it was “not obligated to pay PIP benefits for claims that are clearly fraudulent.” Thus, it vacated the order denying defendant’s summary disposition motion and remanded for reconsideration. Reviewing Fortson and Williams, it found that the relevant considerations are generally “(1) whether there is any factual dispute that fraud was committed, (2) when the alleged fraud occurred, in relation to when the policy was procured and when litigation commenced, (3) whether the insurer seeks to avoid paying mandatory benefits or optional ones; (4) whether the policyholder is also the claimant and individual alleged to have committed fraud, and (5) whether the insurer seeks to rescind the entire policy” or only to deny a particular claim due to fraud. The answers to these considerations were clear here, and under “Fortson, as interpreted by Williams, the antifraud provision of the policy is unenforceable, at least” as to mandatory coverage under the NFA, because the fraud was “not related to the procurement of the policy. And, the allegations of fraud do not rise to the level described in Fortson: fraud related to ‘a party’s failure to perform a substantial part of the contract or one of its essential terms.’” But the fact defendant sought “to deny this specific claim because plaintiff made material misrepresentations” rather than to rescind the whole policy was a consideration. “Fortson’s statement that an insurer can reject fraudulent claims is a recognition that, if a specific claim is clearly fraudulent, the plaintiff will not be able to” show entitlement to NFA benefits. This was a distinct issue from a fraud provision. A “claimant must establish that any PIP benefits sought are actually payable.” It was clear here “plaintiff did not actually incur claimed benefits for attendant care and replacement services while she was out of state and away from her named caregivers” and she could not recover for those claims. But this did not necessarily bar her from recovering for such care or services she actually incurred “at other times, or for other PIP benefits to which she can prove entitlement. This holding does not conflict with Williams or Fortson, as the issue ultimately boils down to whether plaintiff can prove those specific claims, not whether the antifraud provision applies.”