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Hurt, innocent motorist who paid two premiums must pay medical expenses from his pocket

Arthur Hill was very severely injured by an uninsured motorist.  He was covered under a health plan at work and also paid for "coordinated" medical coverage under a no fault policy with Citizens Insurance.  He also bought Uninsured Motorist Coverage from Citizens in the amount of $500,000.00. 

Citizens ultimately paid its full UM policy limts to Hill for excess wage loss and pain and suffering, whereupon his employer's insurer, ArvinMeritor, demanded repayment from that recovery  the $375,000.00 of medical expenses Hill had incurred. Needless to say, after payment of attorney's fees and costs, this would leave Hill paying his own medical expenses and recovering nothing for what were obviously catastrophic injuries.  Hill sued Citizens to reimburse the health expenses under its PIP coverage obligation.  He cited pre-existing Michigan Supreme Court and Federal judicial decisions holding that even with "coordinated" medical coverage, the PIP insurer must cover losses that are not intended to come out of the insured's pocket.

The trial judge ruled that this was a simple case of contract interpretation.  It concluded that Hill paid for coordinated coverage under which ArvinMeritor covered primary medical and Citizens paid only the balance.  If ArvinMeritor had separate insurance language that required Hill to reimburse it, the judge ruled that this language did not influence the No Fault PIP insurer's obligation.

The Court of Appeals found that this analysis contradicts the Michigan Supreme Court's long-standing explication of the Legislative intent when enacting the No Fault law.  The panel pointed to a 1988 precedent in which the Supreme Court held that a PIP insurer was obligated to re-pay to the insured any wage loss reimbursed to an employer disability plan.  In that case, Sibley v. DAIIE, the Supreme Court ruled that the intent of the No Fault Act was to assure that citizens with mandatory coverage NOT pay their own medical expenses or immediate wage loss.

Since Sibley was decided, however, Republican insurance-oriented judges like Justice Markman have argued that under similar circumstances the insured should be forced to reimburse medical expenses out of their "pain and suffering" recovery.  Recently, one panel of the Court of Appeals drew an artificial distinction between the case it was considering and Sibley, and under the pretext of avoiding a "double-recovery," it held that the PIP carrier need not reimburse an insured for medical expenses deducted from a pain and suffering recovery. 

The Federal District Court for the Eastern District evaluated the same situation and rejected the Court of Appeals' analysis, finding that it conflicted with Sibley.  In the instant case, the Court agreed with the Federal Court analysis and also noted that allowing Hill to recover his medical expenses would not constute a "double recovery" since Hill would only recovery his medical once---despite paying two (presumably reduced) premiums that included coverage of medical risks.  Despite its analysis, the Court allowed Citizens to avoid re--paying the $375,000.00 in medical expense (and left the injury victim with no recovery), because under Supreme Court rules, it was required to follow the holding of the first decision rendered by the Court of Appeals on this topic.

Thompson O’Neil, P.C.
309 East Front Street
Traverse City, Michigan 49684
Toll Free: 1-800-678-1307
Fax: 231-929-7262