Court re-evaluates punitive fees meted out to Allstate for misconduct
Shirley Augustine was severely injured in a motor vehicle accident. Under Michigan's No Fault Act, she was entitled to receive permanent attendant care from her insurer, Allstate. Allstate paid benefits for two years but then attempted to create an excuse for non-payment by demanding additional documentation. Augusting sued and ultimately she was awarded full attendant care (in the amount of $371,000 dollars) plus $42,000 dollars in interest and $312,000 dollars in attorney fees. (Fees are awardable in no fault only if the judge finds that the insurer's conduct was "unreasonable"). On appeal, the three Judges of the Court of Appeals held that the trial court should re-evaluate the fee award, taking into account the Supreme Court's recent decision in Smith v. Khouri. The Khouri case established new and different standards for awarding fees, making it more difficult for a trial court to punish an intransigent litigant with a large fee award. That is probably good, however, we suspect that slapping Allstate and insurers like Allstate with enormous fee awards is the only way to control their abuse of injured insureds.