Bronson Health Care Group Inc v. State Auto Property and Casualty ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
BRONSON HEALTH CARE GROUP, INC., FOR PUBLICATION
November 7, 2019
Plaintiff-Appellant, 9:00 a.m.
v No. 345332
Kalamazoo Circuit Court
STATE AUTO PROPERTY AND CASUALTY LC No. 2017-000582-NF
INSURANCE COMPANY and STATE
AUTOMOBILE MUTUAL INSURANCE
COMPANY,
Defendants-Appellees.
Before: MARKEY, P.J., and BORRELLO and BOONSTRA, JJ.
BOONSTRA, J.
Plaintiff appeals by right the trial court’s order granting summary disposition in favor of
defendants under MCR 2.116(C)(10). We affirm.
I. PERTINENT FACTS AND PROCEDURAL HISTORY
Victor Caballero (Victor) was involved in an automobile accident while driving a motor
vehicle insured under a Personal Auto Policy (the Policy) issued by State Auto1 to Maria
Caballero (Maria), Victor’s wife. Victor sustained injuries and was treated by plaintiff; he
assigned to plaintiff his right to seek payment of personal injury protection (PIP) benefits under
1
The Policy bears a caption of STATE AUTO® Insurance Companies, and identifies the State
Auto Insurance Companies are including, among others, State Auto Property & Casualty
Insurance Company and State Automobile Mutual Insurance Company. The Policy’s
declarations page identifies the company providing coverage under the Policy as “State
Automobile Mutual.” For simplicity, and consistently with the parties’ treatment of the issue, we
will refer to the insurer under the Policy, and collectively to the named defendants, as “State
Auto.”
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the Michigan no-fault insurance act (the no-fault act);2 plaintiff in turn sought to recover them
from State Auto. State Auto denied coverage on the ground that Victor was an excluded
operator under the Policy. Plaintiff brought suit, asserting that Victor had a statutory right to
receive PIP benefits and that plaintiff, by assignment, had a right to recover those benefits for the
services it provided to Victor. State Auto moved for summary disposition under
MCR 2.116(C)(10), contending that, as an excluded operator, Victor (and therefore plaintiff by
assignment) was not entitled to recover PIP benefits from State Auto. Plaintiff argued that it was
entitled to recover PIP benefits from State Auto because the Policy’s applicable Named Driver
Exclusion Endorsement (the Endorsement) did not specify that PIP benefits would not apply (if
Victor operated a covered motor vehicle); it instead only stated that certain other types of
benefits would not apply. The trial court concluded that the language of the Policy as a whole
reflected an intent to exclude PIP benefits when Victor, an excluded driver, was driving a
covered vehicle. It therefore granted State Auto’s motion. This appeal followed.
II. STANDARD OF REVIEW
This Court reviews de novo a trial court’s ruling on a motion for summary disposition.
Zaher v Miotke, 300 Mich. App. 132, 139; 832 NW2d 266 (2013).
A motion under MCR 2.116(C)(10) tests the factual support of a plaintiff’s
claim. Summary disposition is appropriate under MCR 2.116(C)(10) if there is no
genuine issue regarding any material fact and the moving party is entitled to
judgment as a matter of law. In reviewing a motion under MCR 2.116(C)(10),
this Court considers the pleadings, admissions, affidavits, and other relevant
documentary evidence of record in the light most favorable to the nonmoving
party to determine whether any genuine issue of material fact exists to warrant a
trial. A genuine issue of material fact exists when the record, giving the benefit of
reasonable doubt to the opposing party, leaves open an issue upon which
reasonable minds might differ. [Id. at 139-140 (quotation marks and citations
omitted).]
We review de novo as a question of law the interpretation of statutes. McCormick v
Carrier, 487 Mich. 180, 233; 795 NW2d 517 (2010). We also review de novo the construction
and interpretation of an insurance contract. Lewis v Farmers Ins Exch, 315 Mich. App. 202, 209;
888 NW2d 916 (2016).
III. ANALYSIS
Plaintiff argues that the trial court erred by granting summary disposition in favor of State
Auto because, based on the plain and unambiguous language of the Endorsement, it did not
2
The no-fault act was enacted by 1972 PA 294, which added a chapter to the insurance code of
1956, MCL 500.100 et seq. The no-fault act is found in chapter 31 of the insurance code,
MCL 500.3101 et seq.
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apply to PIP benefits. However, we disagree with plaintiff’s framing of the issue. Moreover, we
conclude, after appropriately framing the issue, that the trial court properly granted summary
disposition in favor of State Auto, although our reasoning differs somewhat from that of the trial
court.3
Although plaintiff argues that the issue before us is purely one of contract interpretation,
we conclude that where, as here, the benefits in question are mandated by statute, the issue is
actually one of statutory interpretation. “The no-fault act mandates certain minimal coverage,”
although “a policy of insurance may provide broader coverage than that mandated under the
statute or may provide supplemental coverage for benefits not required by the no-fault act.” See
Rednour v Hasting Mut Ins Co, 245 Mich. App. 419, 422; 628 NW2d 116 (2001), rev’d on other
grounds 468 Mich. 241 (2003). For non-mandated coverage, “ it is the insurance policy as a
contractual agreement between the parties that governs the coverage, rather than the statutory
provisions of the no-fault act.” Id. However, for mandated coverage, it is the no-fault act itself
that governs the coverage. Id. See also, Cruz v State Farm Mut Auto Ins Co, 241 Mich. App. 159,
164-167; 614 NW2d 689 (2000).
PIP benefits are mandated by the no-fault act, and a claimant’s entitlement to PIP benefits
is therefore based in statute, not in contract. See, e.g., MCL 500.3105(2) (“[p]ersonal protection
benefits are due under this chapter without regard to fault”); MCL 500.3105(1) (“[u]nder
personal protection insurance an insurer is liable to pay benefits for accidental bodily injury
arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor
vehicle”); Cruz, 241 Mich. App. at 164-167 (“The no-fault act mandates that insurers ‘pay
benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use
of a motor vehicle as a motor vehicle.’ ”) (quoting MCL 500.3105(1)). “Because [PIP] benefits
are mandated by the no-fault statute, the statute is the ‘rule-book’ for deciding the issues in
questions regarding awarding those benefits.” Id., (citation omitted). Therefore, “our task is to
interpret the statute and not the policy. Where insurance policy coverage is directed by the no-
fault act and the language in the policy is intended to be consistent with that act,4 the language
should be interpreted in a consistent fashion, which can only be accomplished by interpreting the
statute, rather than individual policies.” Rohlman v Hawkeye-Security Ins Co, 442 Mich. 520,
530; 502 NW2d 310 (1993).
Because of the statutorily-mandated nature of PIP benefits, the no-fault act requires an
insurer, in order to issue a policy consistent with the no-fault act, to provide PIP benefits to a
“named insured” and to his or her spouse and household relatives. See MCL 500.3114(1); see
3
We may affirm the trial court when it reached the right result, even if we differ on the
reasoning underlying that result. See Bruise v City of Pontiac, 282 Mich. App. 646, 652 n 3; 766
NW2d 311 (2009).
4
As noted, it is permissible for an insurance policy to provide for broader coverage than is
required by statute, in which case the policy may be enforced as written. See Rohlman v
Hawkeye-Security Ins Co, 442 Mich. 520, 530 n 10; 502 NW2d 310 (1993) (citing 12A Couch,
Insurance, 2d (rev ed), § 45.699, p 336).
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also Dobbelaere v Auto-Owners Ins Co, 275 Mich. App. 527, 532; 740 NW2d 503 (2007). But
MCL 500.3113(d) provides in relevant part that a “person is not entitled to be paid personal
protection insurance benefits for accidental bodily injury if at the time of the accident . . . the
person was operating a motor vehicle or motorcycle as to which he or she was named as an
excluded operator as allowed under section 3009(2).” MCL 500.3009(2)5 provides:
If authorized by the insured, automobile liability or motor vehicle liability
coverage may be excluded when a vehicle is operated by a named person. An
exclusion under this subsection is not valid unless the following notice is on the
face of the policy or the declaration page or certificate of the policy and on the
certificate of insurance:
Warning—when a named excluded person operates a vehicle all liability coverage
is void—no one is insured. Owners of the vehicle and others legally responsible
for the acts of the named excluded person remain fully personally liable.
The no-fault act thus provides a mechanism by which a person may be statutorily excluded from
entitlement to PIP benefits notwithstanding that he or she may otherwise have been entitled to
them. Therefore, the issue before us is whether Victor was properly named as an excluded
operator under MCL 500.3009(2)—if so, he was statutorily barred from receiving PIP benefits
by MCL 500.3113(d).
When Maria purchased the policy from State Auto, she signed 4 endorsements, each
entitled Named Driver Exclusion Endorsement, one for each of four persons who were identified
on those endorsements as a “Person Excluded.”6 One of those persons was Victor. The
endorsements became part of the Policy. The Endorsement applicable to Victor reads as follows:
5
MCL 500.3009(2) is part of the insurance code, but it predates and is not part of the no-fault
act.
6
Named driver exclusion endorsements “are intended to reduce premiums, and the excluded
drivers are generally the highest risk drivers.” Detroit Automobile Inter-Insurance Exchange v
Commissioner of Insurance, 86 Mich. App. 473, 479; 272 NW2d 689 (1979). Presumably, Maria
received a reduced policy premium as a result of listing Victor and the other three excluded
drivers in the endorsements.
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The Endorsement thus clearly identifies “Victor Caballero” as a “Person Excluded.” In
addition, the declarations page of the Policy7 contains the full language of the warning required
by MCL 500.3009(2), and further states that “A NAMED EXCLUDED DRIVER IS NOT
ENTITLED TO BE PAID PERSONAL PROTECTION BENEFITS FOR ACCIDENTAL
BODILY INJURY” if the named excluded driver was driving that car at the time of the accident.
And the Certificate of No-Fault Insurance issued to Maria again reiterates that Victor is an
excluded driver and that he would not be entitled to PIP benefits if he was driving the vehicle at
7
The declarations page is part of the Policy. See e.g., Dancey v Travelers Prop Cas Co, 288
Mich. App. 1, 8; 792 NW2d 372 (2010) (“The policy application, declarations page of [the]
policy, and the policy itself construed together constitute the contract. . . . An insurance contract
should be read as a whole, with meaning given to all terms.”) (citation omitted).
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the time of an accident, and also contains the warning language of MCL 500.3009(2).8 In sum,
the Policy, read as a whole, and related documents clearly and unambiguously name Victor as an
excluded operator and comply with MCL 500.3009(2).9
Plaintiff nonetheless contends that Victor was entitled to PIP benefits. Plaintiff’s
argument is premised on the fact that the Endorsement did not specifically list PIP benefits as
among the benefits that would not apply when an otherwise covered motor vehicle was operated
by an excluded operator; rather, it only identified “Liability, Uninsured Motorists, and Physical
Damage” as benefits that would not apply when the vehicle was operated by an excluded
operator. In other words, plaintiff’s position at bottom is that State Auto is liable for PIP benefits
because it failed to exclude them in the Endorsement. But this position runs afoul of the fact that
PIP benefits are not contract-based, but are instead statutorily mandated.
Because PIP benefits are not a creature of contract but instead are statutorily mandated,
Rednour, 245 Mich. App. at 422, they are not subject to contractual exclusion. See e.g., Citizens
Ins Co of America v Federated Mut Ins Co, 448 Mich. 225, 229-231, 238; 531 NW2d 138 (1995).
Therefore, a contractual exclusion of PIP benefits would have been unenforceable, as it would
have resulted in a policy that provided more restrictive coverage than is mandated by the no-fault
act, and thus would have been contrary to the mandates of the act. Id. at 238 (holding that “the
policy [excluding mandated benefits] is invalid as violative of the no-fault act”). See also
Rohlman, 442 Mich. at 530 n 10, quoting 12A Couch, Insurance, 2d (rev ed), § 45.697, p 334 n 3
(“A compulsory insurance statute in effect declares a minimum standard which must be
observed, and a policy cannot be written with a more restrictive coverage. The statute is
manifestly superior to and controls the policy, and its provisions supersede any conflicting
provisions of the policy.) (emphasis added); see also Farmers Ins Exch v Kurzmann, 257 Mich
App 412, 418; 668 NW2d 199 (2003) (noting that “[a]n insurer is free to define or limit the
scope of coverage as long as the policy language . . . is not in contravention of public policy” and
that the exclusion of benefits mandated by the no-fault act renders such an exclusion void).
8
As noted, and like the statutes in question, the documents use various terminology seemingly
interchangeably. The Endorsement is entitled Named Driver Exclusion Endorsement, refers to a
“named excluded driver,” and identifies Victor as the “Person Excluded” and “Named Person.”
The declaration page and certificate of no-fault insurance alternatively refer to a “named
excluded person [who] “operates a vehicle” and to a “named excluded driver,” and identify
Victor as “excluded” under the “driver exclusion endorsement” or if driving the insured vehicle.
Plaintiff appears to concede that the various language is designed to name Victor as an “excluded
operator” under MCL 500.3113(d) and MCL 500.3009(2). Plaintiff’s argument instead is that,
by its terms, the Endorsement did not apply to PIP benefits.
9
Consistent with MCL 500.3009(2), the declarations page of the Policy and the Certificate of
No-Fault Insurance clearly state that “[o]wners of the vehicle and others legally responsible for
the acts of the named excluded person remain fully personally liable.” As those recitations
reflect, plaintiff is therefore not without recourse.
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Indeed, and directly contrary to plaintiff’s position that a contractual exclusion of PIP
benefits was required (in order for State Auto to avoid liability for PIP benefits), a contractual
exclusion of PIP benefits would instead have been improper, as it would have been in derogation
of the mandates of the no-fault act. Simply put, PIP benefits are statutory and thus not subject to
a contractual exclusion. As relates to PIP benefits, therefore, the import of the Endorsement was
not in the listing of inapplicable coverages (relating to the operation of a vehicle by an excluded
operator), but rather in the identification of Victor as an excluded operator. Accordingly, the
exclusionary effect of MCL 500.3009(2) was not dependent on the inclusion within the
Endorsement of language specifically excluding PIP benefits, and the fact that the Endorsement
did not include language specifically excluding PIP benefits is immaterial, because as a matter of
statutory law, see MCL 500.3113(d); MCL 500.3009(2), Victor was not entitled to PIP
benefits.10
As we have previously observed, a validly-excluded-driver’s “act of driving the insured
vehicle at the time of the accident render[s] the vehicle uninsured;” no further reference to the
Policy is required because at the time of the accident “there was no personal liability or property
damage ‘security’ required by MCL 500.3101 in effect.” Bronson Methodist Hosp v Mich
Assigned Claims Facility, 298 Mich. App. 192, 198; 826 NW2d 197 (2012); see also
Frankenmuth Ins Co v Poll, 311 Mich. App. 442, 447; 875 NW2d 250 (2015) (noting that when a
validly-excluded-driver drove the vehicle in question, “the insurance policy was void, and
therefore the security required by MCL 500.3101 was not in effect at the time of the accident
(i.e., no one was insured),” and the defendant insurer was not “the insurer of the vehicle involved
in the accident” at the time the accident occurred) (quotation marks and citations omitted).
For all of these reasons, we conclude that Victor was properly named as an excluded
operator and that he was therefore statutorily barred from receiving PIP benefits. Accordingly,
the trial court properly granted State Auto’s motion for summary disposition because, when
viewed in the light most favorable to plaintiff, no genuine issue of material fact existed regarding
Victor’s entitlement to PIP benefits. See Miotke, 300 Mich. App. at 139-140; MCR 2.116(C)(10).
Affirmed.
/s/ Mark T. Boonstra
/s/ Jane E. Markey
/s/ Stephen L. Borrello
10
In part because the Endorsement could not properly have excluded PIP benefits, we also reject
plaintiff’s contention that the Policy was ambiguous as between the declarations page (which
clearly stated that Victor was not entitled to PIP benefits) and the Endorsement (which, as noted,
did not specifically refer to PIP benefits).
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