No-fault act doesn’t cap expenses where policy had no limits

By Correy E. Stephenson

A trial court erred by ruling that the no-fault act capped the number of hours an insured was entitled to because the insured’s automobile insurance policy provided for unlimited allowable expenses, including attendant care, a panel of the Michigan Court of Appeals has held, reversing a grant of partial summary disposition in favor of the insurer.

“[The insured] selected boundless and infinite coverage for allowable expenses, which included attendant care,” the panel pointed out. “The policy did not list any exceptions.”

The published per curiam decision, Smejkal v. Beck (MiLW 07-107912, 7 pages), was issued by Judges Michael J. Kelly, Kathleen Jansen and Christopher M. Murray.

Jonathan A. Abent of White Lake represented the insured, and Jackson attorney Christopher M. Jennings of Girodat Jennings & Best represented the insurer. Neither responded to a request for comment.

Attendant care after accident

Terry Smejkal renewed his automobile insurance policy with Home-Owners Insurance Company on Aug. 11, 2020.

The policy contained language explaining the then-recent 2019 amendments to the no-fault act and personal protection insurance, or PIP, coverage. Terry selected “Unlimited person primary” for the category “Allowable Expenses (Medical).” The policy provided that allowable expenses were subject to the no-fault act.

In December 2020, Terry and his son Brandon were injured in a car accident. Both received attendant care 24 hours per day.

The Smejkals sued to recover the cost for this care as part of Terry’s PIP benefits.

Home-Owners moved for partial summary disposition on the attendant care claim, arguing that the 2019 amendments to the no-fault act capped the Smejkals’ attendant care at eight hours per day, or 56 hours each week.

The Smejkals countered that the policy explicitly allowed them to recover unlimited attendant care benefits, in excess of the statutory default of 56 hours per week.

Siding with the insurer, the Livingston Circuit Court granted the motion.

The Smejkals appealed.

Policy language clear, unambiguous

In 2019, the Michigan Legislature made sweeping changes to the no-fault statutes with two bills that affected MCL 500.3157 , the judges explained.

The default restrictions for attendant care benefits are contained within MCL 500.3157(10) and set a statutory maximum of 56 hours per week.

However, MCL 500.3157(11) contains an exception to the default cap, providing that “[a]n insurer may contract to pay benefits for attendant care for more than the hourly limitation under subsection (10).”

This provision is in keeping with Michigan law allowing for insurance policies to provide broader coverage than the minimum mandated by the no-fault act, the court said.

Another tweak to the statute made in 2019 was MCL 500.3107c, which allows insurers to now offer less-than unlimited PIP coverage, provided certain statutory requirements are satisfied. The provision provides four possible coverage amounts, ranging from $50,000 per individual to unlimited coverage.

Here, the parties disputed the meaning of Terry’s selection of “unlimited person primary.” Terry took the position that this unlimited selection meant that he opted for unlimited attendant care hours, contracting around the default cap within MCL 500.3157(10).

In contrast, the insurer backed by the trial court found that Terry’s unlimited selection merely meant that he was choosing an unlimited dollar amount for purposes of MCL 500.3107c.

The appeals court acknowledged “some merit” to the trial court’s interpretation of both the policy and the no-fault act, which would result in an insured selecting an unlimited dollar amount while still being restricted to 56 hours of attendant care per week.

However, the judges disagreed due to the specific language of Terry’s policy.

“The policy explicitly listed ‘Allowable Expenses (Medical),’ which explicitly included attendant care, and Terry selected unlimited coverage,” the court wrote. “This was not a situation in which Terry selected a mere unlimited dollar amount for PIP coverage and later sought to extrapolate this to attendant care.”

Rather, Terry selected “boundless and infinite coverage” for allowable expenses, which included attendant care, with no exceptions listed in the policy.

“The policy in the present case was clear and unambiguous in its language,” the court said, noting that the trial court focused too much on the statute rather than the policy language.

Insurers could take steps to avoid similar outcomes in the future, the appellate judges added.

Nothing about Terry’s interpretation prevented future parties from allowing for unlimited PIP benefits in terms of the dollar amount while still restricting attendant care hours to 56 hours per week.

“To avoid the result in the present case, insurers must simply not allow insureds to select unlimited allowable expenses,” the panel explained. “Insurers could also simply include a provision explicitly providing that unlimited coverage does not include attendant care hours.”

The trial court’s ruling disrupted the principle that parties may contract for broader coverage than what the no-fault act mandates, the judges said.

“[T]he policy provided that it would pay PIP benefits under the no-fault act unless the policy’s language provided otherwise,” they wrote. “This yet again reflects the ability for parties to contract for broader coverage than that required by the statute. Here, the parties did so, and the trial court erred by ruling otherwise. [The insurer] was not entitled to partial summary disposition on the issue of Terry’s attendant care claims because Terry was not limited to 56 hours per week.”

The matter returns to Livingston County for further proceedings.

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