RD v Fick

• Opinion Published: April 18, 2024 (Redford, P.J., and Cameron and Letica, JJ.)

• Docket No. 362739

• Wayne County Circuit Court

Holding: The 2019 amendments to the No-Fault Act apply to insurance policies issued after the effective date of the amendments, and the fee schedule in MCL 500.3157 applies to policies issued after that effective date even if the accident occurred before the fee schedule’s effective date. Because the trial court erred in failing to grant partial summary disposition on this issue, the Court of Appeals reversed.

Facts: On October 1, 2019, Michelle Demske (plaintiff) purchased a no-fault insurance policy through her insurer, State Farm. On October 25, 2019, Demske and RD were involved in a motor vehicle collision with Martin Fick, causing serious and permanent injuries to Demske and RD. On September 8, 2020, Demske, for herself and as conservator and guardian of RD, filed a complaint against Fick and Best Asphalt (Fick’s employer and owner of the vehicle Fick was driving during the accident) alleging negligence. Demske and RD also alleged that State Farm unreasonably refused to pay no-fault benefits pursuant to their October 1, 2019, policy despite presenting reasonable proof of loss for payment of PIP benefits.  

State Farm moved for partial summary disposition arguing that the recently amended fee schedule of MCL 500.3157 applied to treatment that was provided to RD after July 1, 2021, and before July 2, 2022. Plaintiffs responded that their October 1, 2019, policy provided for unlimited benefits. Moreover, they argued that the injury occurred before the effective date of the fee schedule, so their contractual rights became legally vested when the premium was paid and the injury was sustained. Thus, they argued the schedule did not apply to them.  

The trial court denied State Farm’s motion for summary disposition, stating that a question of fact was presented for a jury to decide whether the contract provided for reasonable charges, and not the limited fee schedule, under the no-fault act. State Farm sought leave to appeal to the Court of Appeals, and the Court of Appeals granted leave.

Key Appellate Rulings:

The fee schedule contained in MCL 500.3157 of the No-Fault Act applies to services provided to claimants after July 1, 2021, because the claimant’s policy was issued after the effective date of the 2019 amendments even if the fee schedule was not yet effective when the accident occurred.

In 2019, the Legislature amended the No-Fault Act to implement a fee schedule in MCL 500.3157 to control the cost of automobile insurance. These amendments were effective June 11, 2019. Under this new fee schedule, a physician, hospital, or other person who renders treatment to an injured person under the No-Fault Act between July 1, 2021, and July 2, 2022, is entitled to only 200% of the amount payable under Medicare. The Supreme Court in Andary v USAA Cas Ins Co, 512 Mich 207; 1 NW3d 186 (2023), held that the 2019 amendments to the No-Fault Act apply at the earliest to individuals who were injured while covered by an insurance policy issued on or after June 11, 2019 (the effective date of the amendments) and apply at the latest to individuals who were injured with an insurance policy issued after July 1, 2020, that incorporates the 2019 amendments.  

Under Michigan insurance law, the rights and obligations of the parties vest at the time of the accident, but PIP benefits accrue when the expense is incurred. And although the fee schedule did not take effect until July 1, 2021, the 2019 amendments were effective June 11, 2019. Because the plaintiffs’ October 1, 2019, policy was issued after the June 11, 2019, effective date, the amendments, including the fee schedule, apply to the plaintiffs.  

In a footnote, the Court of Appeals acknowledged that its holding is consistent with the ultimate disposition of Matti v Tahnun, unpublished per curiam opinion of the Court of Appeals, issued February 22, 2024 (Docket Nos. 364473; 364975). Although there was a request for publication in Matti, the panel (Patel, P.J., and K.F. Kelly and Riordan, JJ.) denied that request. Matti currently has a pending Application for Leave in the Michigan Supreme Court. Jennifer Alberts of the Speaker Law Firm represents the plaintiff-appellant in Matti.