The Michigan Court of Appeals recently upheld a lower court’s grant of summary disposition to a defendant insurance company regarding a lawsuit for personal injury protection (PIP) benefits, due to the fraud exclusion in the defendant’s policy.
Plaintiff Ronald Thomas was involved in a car accident in July 2013. At the time, he was the named insured on a no-fault auto insurance policy issued by the defendant, Frankenmuth Mutual Insurance Company. Thomas received treatment from several medical providers for injuries arising from the accident. The plaintiff’s treating physician, Dr. James Beale, instructed the plaintiff not to drive for a period starting with the day of the accident through January 2014. At his deposition, Thomas denied driving a car at any time during that period. However, surveillance footage collected by the defendant’s employee revealed Thomas driving during that period on two separate occasions. He also used non-emergency medical transportation on both days.
After the accident, the plaintiff claimed PIP benefits, including transportation benefits, under Frankenmuth’s policy. Frankenmuth denied Thomas’ claim for PIP benefits, and Thomas filed suit, seeking payments and a declaration of his rights under the no-fault act.
The defendant moved for summary disposition, arguing the fraud exclusion in the policy barred the plaintiff’s claims. The policy provided that it would not provide coverage for any insured who has made fraudulent statements or engaged in fraudulent conduct in connection with any accident or loss for which coverage is sought under the policy.
The defendant argued that surveillance videos showed the plaintiff driving during the time period proscribed by Dr. Beale, together with deposition testimony asserting otherwise — evidence of fraudulent statements and conduct. Thomas responded that the defendant did not establish several key elements of fraud, including the materiality of the plaintiff’s representation that he did not drive during the relevant time period and the intent to defraud the defendant.
The trial court held that Thomas’ conduct in driving his car despite receiving medical transportation services, as well as his statements at his deposition, constituted fraud under the policy. Thus, the trial court granted summary disposition to the defendant and dismissed the plaintiff’s claims.
The appeals court upheld the lower court’s grant of summary disposition to the defendant. The court rejected the plaintiff’s argument that the trial court erred in determining that the fraud exclusion applied.
To void a policy because the insured has willfully misrepresented a material fact, the court explained, an insurer must show that (1) the misrepresentation was material, (2) it was false, (3) the insured knew that it was false at the time it was made or it was made recklessly, without any knowledge of its truth, and (4) the insured made the material misrepresentation with the intention that the insurer would act upon it. A statement is material if it is reasonably relevant to the insurer’s investigation of a claim.
Here, the court explained, Thomas’ claim for PIP benefits involved in large part a claim for transportation benefits due to his purported inability to drive. Yet the plaintiff was observed driving his car multiple times on the same day he used medical transportation services. Also, when offered a chance to explain why he drove on that particular day, the plaintiff instead represented multiple times that he had not driven at all during the relevant time period. These representations, the court held, were thus “reasonably relevant to the insurer’s investigation of a claim.” The fact that Thomas actually availed himself of transportation services on the day he was observed did not defeat the fact that he was observed performing an activity “inconsistent with [his] claimed limitations” on a day that he asserted he required transportation.
Furthermore, the court also found unpersuasive the plaintiff’s argument that his repeated assertions during his deposition that he did not drive were innocent mistakes. If they were not knowing misrepresentations, they were at least reckless ones, in the face of the proof that he drove his car at least twice on the same day he used transportation services. For these reasons, the court affirmed the lower court’s grant of summary disposition.
Car accident lawyer Kelly Neumann at the Neumann Law Group represents victims of accidents throughout Michigan from offices in Traverse City and Grand Rapids. Call us at (231) 463-0122 or at (616) 717-5666 for a free consultation.
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