Personal protection insurance (PIP) benefits; MCL 500.3112; Policy-limit exhaustion; Good-faith payment & discharge; Written notice of another claimant; Insurer’s burden on affirmative defense; Phase One Rehab, LLC v Allstate Prop & Cas Ins Co

The court held that defendant-insurer was not entitled to summary disposition based on exhaustion of its $250,000 PIP medical-benefits limit because the evidence showed that it received written notice of plaintiff-healthcare provider’s claim before it paid out, or even finally agreed to distribute, the remaining policy benefits. The insured, nonparty-W, was injured in a motor vehicle collision and received treatment and services from multiple providers. After approximately $181,000 in PIP benefits remained, defendant participated in a 4/24 global facilitation with W and several providers, but no agreement was reached. Plaintiff later submitted a claim for home-health services, which defendant received on 5/23/24. Under MCL 500.3112, an insurer’s good-faith payment of PIP benefits discharges its liability to the extent of the payments unless it has been notified in writing of another person’s claim. On appeal, the court explained that the statute functions as an affirmative defense and places the burden on the insurer to support it. Defendant contended that it effectively exhausted its limits by extending the remaining benefits at the April facilitation. But its evidence included no resulting facilitation agreements, releases, or dismissals. Instead, a 5/23/24 email stated that the participants had “reached an impasse,” and later emails showed that additional providers were added to the proposed distribution after defendant received plaintiff’s claim. Defendant’s counsel further stated that it could not “finalize settlements and exhaust the policy limits” until all parties approved the distribution. The payment ledger likewise showed that no additional payments were made until 7/10/24. Thus, defendant’s proofs did not establish exhaustion before written notice of plaintiff’s claim and “if anything, they demonstrate the opposite.” Reversed and remanded.