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A Better Partnership
February 09, 2015

No-fault insurer liable for attorney fees after its attempt to “rewrite” statute and failure to pay first and seek reimbursement later

The Court of Appeals held a no-fault insurer liable for the plaintiffs’ attorney fees where it attempted to “rewrite” a parked vehicle exception and disputed the availability of workers’ compensation benefits  and priority between potential no-fault insurers.  Because there was no legitimate question of statutory interpretation regarding the parked vehicle exception, the no-fault insurer in Adanalic v. Harco National Insurance Co., No. 317764, should have paid the personal injury protection (“PIP”) benefits and then exercised its subrogee rights to pursue worker’s compensation benefits or reimbursement from the other no-fault insurer. 
In this no-fault action, plaintiff Salko Adanalic and the intervening hospital plaintiffs sought first-party benefits from defendants Harco National Insurance Company (“Harco”) and Michigan Millers Mutual Insurance Company (“Millers”).  Adanalic had contracted with DIS Transportation (“DIS”) to pick up, haul, and deliver various loads of cargo.  His truck and semi-trailer were insured by Harco under a no-fault insurance policy issued to DIS.  Adanalic also had no-fault insurance through Millers under a policy issued to his wife.  While Adanalic was pulling a loaded pallet onto his semi-trailer, the loaded pallet fell and pulled Adanalic, who was attached by the pallet straps, down with it, injuring him.  Adanalic sought workers’ compensation benefits from DIS, but DIS denied his claim on the ground that Adanalic was an independent contractor.  Adanalic then sought no-fault PIP benefits from Millers and Harco, but each denied his claims.  The trial court found that Millers was liable to plaintiffs for no-fault PIP benefits.  Millers appealed, asserting (1) Adanalic was not entitled to payment of first-party PIP benefits; and (2) Harco, rather than Millers, was the highest priority PIP insurer.  On cross-appeal, plaintiff Spectrum Health Hospitals (“Spectrum”) argued that Millers and/or Harco were liable for attorney fees and penalty interest due to their unlawful failure to promptly pay PIP benefits.
First, the Court rejected Millers’ contention that, in order to obtain PIP benefits under the parked vehicle exception provided by MCL 500.3106(1)(b), the injuries must result from direct physical contact with property being loaded or unloaded.  MCL 500.3106(1)(b) allows recovery where “the injury was a direct result of physical contact with . . . property being lifted onto or lowered from the vehicle in the loading or unloading process.”  The Court concluded that Millers’ construction of the exception was an attempt to “fundamentally rewrite the statute” in a manner wholly unsupported by caselaw, as the statute does not require that the property itself inflict the injuries.  Adanalic was entitled to no-fault PIP benefits because the facts establish that Adanalic’s injuries were “a direct result of physical contact” with the pallet being loaded.
The Court then rejected Millers’ argument that it had no responsibility to pay Adanalic’s PIP benefits because workers’ compensation benefits were “available” to him under MCL 500.3106(2) because DIS denied Adanalic’s workers’ compensation claim.  The Court also rejected Millers’ argument that it was not primarily liable by affirming that DIS’s no-fault insurer Harco was not liable under MCL 500.3114(3) because Adanalic was an independent contractor rather than an employee of DIS. 
Finally, the Court agreed with Spectrum’s argument on appeal that it was entitled to attorney fees under MCL 500.3148(1).  Millers did not pose a legitimate question of statutory interpretation by simply inventing an alternative reading of the parked vehicle exception that was inconsistent with the statute as written and the prior caselaw applying it.  Millers should have promptly paid Adanalic’s PIP benefits and exercised its subrogee rights to seek workers’ compensation or PIP benefits from DIS or Harco, respectively.  Its failure to do so was unreasonable and inconsistent with the no-fault act’s purpose of providing prompt recovery for loss arising from motor vehicle accidents, making Millers liable for reasonable attorney fees.

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