Michigan Head & Spine Institute Pc v. Progressive Michigan Ins Co ( 2023 )

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
MICHIGAN HEAD & SPINE INSTITUTE, PC, and UNPUBLISHED
MCLAREN MACOMB, August 17, 2023
Plaintiffs-Appellees,
v No. 362662
Wayne Circuit Court
PROGRESSIVE MICHIGAN INSURANCE , LC No. 21-004516-NF
Defendant-Appellant.
Before: O’BRIEN, P.J., and CAVANAGH and MARKEY, JJ.
PER CURIAM.
Defendant, Progressive Michigan Insurance, appeals as of right the trial court’s order denying
its motion for summary disposition and entering judgment in favor of plaintiffs, Michigan Head &
Spine Institute, PC, and McLaren Macomb. We vacate, reverse, and remand for further proceedings.
I. BACKGROUND
Plaintiffs, medical providers, are seeking payment for services rendered to Patricia Bryant
pursuant to the no-fault statute. Bryant was insured under an automobile policy issued by the
defendant with a policy period covering February 19, 2020 to August 19, 2020. However, Bryant
failed to pay her May 2020 policy premium, and as a result, on May 26, 2020, defendant sent Bryant
a cancellation notice stating, in relevant part:
Unfortunately, we didn’t receive your payment and, as a result, your policy will be
canceled at 12:01 a.m. on June 6, 2020. Please know that this means you will no
longer have insurance coverage. We value you as a customer and want to continue
being your insurance provider. To avoid cancellation, please send us your payment
by check or money order so that it is received or postmarked by 12:01 a.m. on June 6,
2020. This way, there will be no lapse in your coverage.
Defendant never received payment of the premium and the policy was canceled effective June 6,
2020. On June 7, 2020, defendant sent a final bill to Bryant, confirming that the policy was canceled
effective June 6, 2020, and advising that she still had a remaining balance due.
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On June 11, 2020, after the policy was canceled, Bryant was operating a motor vehicle while
traveling east on 13 Mile Road. Bryant suffered a medical emergency while driving, crossed the
center line, and struck a westbound vehicle. Plaintiffs provided medical services to Bryant for bodily
injuries she suffered in the motor vehicle accident.
Following the accident, on June 14, 2020, Bryant contacted defendant to reinstate the policy.
Defendant’s representative advised Bryant that she needed to confirm that no loss occurred between
June 6, 2020 and June 14, 2020 in order to reinstate the policy. Bryant incorrectly reported to
defendant that the accident occurred on June 4, 2020. Defendant relied on Bryant’s statement to
reinstate the policy on June 14, 2020, without a lapse in coverage. Bryant was then forwarded to a
different representative of defendant and made a claim for the alleged June 4, 2020 accident.
Defendant’s investigation of Bryant’s claim revealed that the accident actually occurred on
June 11, 2020. As a result, defendant denied Bryant’s claim. Plaintiffs filed their complaint on April
7, 2021, seeking payment for first-party no-fault benefits under the policy.
On March 22, 2022, defendant filed a motion for summary disposition pursuant to MCR
2.116(C)(10). Defendant argued that the policy under which plaintiffs were claiming coverage was
canceled effective June 6, 2020, before the accident occurred. Defendant stated that it complied with
MCL 500.3020(1)(b) by providing 10-days’ notice prior to the cancellation for nonpayment.
Defendant argued that it mailed the notice to Bryant, as evidenced by the proof of mailing, on May
26, 2020, and that proof of mailing is prima facie proof of notice under MCL 500.3020(5). Defendant
stated that the notice advised Bryant that her premium payment was not received on time and that the
policy would be canceled effective June 6, 2020, unless Bryant chose to pay the delinquent premium
by that date. Bryant failed to pay the premium by June 6, 2020, resulting in the policy’s cancellation,
and the accident occurred on June 11, 2020. Defendant argued that, therefore, on the date of the
accident, no policy was in effect.
Defendant further argued that it only accepted Bryant’s premium payment in reliance on
Bryant’s statement that the accident occurred on June 4, 2020—had defendant known the accident
occurred on June 11, 2020, after the policy was canceled, the policy would not have been reinstated.
Defendant elaborated that the policy contained a fraud or misrepresentation provision that stated in
pertinent part:
When we have not voided or reformed the policy, we may still deny coverage
for an accident or loss if you, in connection with the policy application, in connection
with any requested change, or at any time during the policy period, have concealed or
misrepresented any material fact or circumstance or engaged in fraudulent conduct and
that concealment, misrepresentation, or fraudulent conduct was material to a risk we
assumed.
Defendant argued that assuming Bryant’s misrepresentation was innocent, the Michigan Court of
Appeals has held that personal protection insurance coverage may be denied for an insured’s innocent
misrepresentation. Defendant argued that the elements for innocent misrepresentation were
established as Bryant’s misrepresentation of the date of the accident was made in connection with the
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making of a contract—the reinstatement of her insurance policy. As a result, defendant concluded
that it properly denied coverage for the accident.1
Plaintiffs argued in response that defendant’s cancellation notice was untimely and not
unconditional as required by MCL 500.3020(1)(b). Plaintiffs stated that Bryant could not have
received the requisite ten days’ notice if the notice was mailed on May 26, 2020, advising of a
cancellation effective June 6, 2020. Plaintiffs argued that this case was governed by the ruling in
Yang v Everest Natl Ins Co, 507 Mich 314, 318; 968 NW2d 390 (2021). Plaintiffs argued that
defendant’s May 26, 2020 cancellation notice was invalid and ineffective because it was conditioned
on Bryant’s failure to make a premium payment in the future and was not peremptory, explicit, and
unconditional. Plaintiffs further stated that there was no fraud or misrepresentation by Bryant in the
procurement of the policy and that any analysis of a fraud claim is inapplicable if the policy
cancellation is deemed ineffective. Therefore, plaintiffs argued that defendant’s motion for summary
disposition must be denied.
In reply, defendant argued that Yang was inapplicable to the instant matter because, unlike the
notice in Yang, the notice of cancellation in this case was mailed after non-payment had occurred and
there was no triggering event left to occur as there was in Yang. Defendant argued that the notice was
not conditioned on a failure to make a future payment; rather, the failure to make the payment already
occurred. In Yang, the notice informed the insured that the premium was due by a future date, and if
not paid by that future date, then the policy would be canceled. Defendant argued that the notice here
was made to inform Bryant that the policy would be canceled on June 6, 2020, and gave her the
opportunity to get her affairs in order by either paying her past due premium or by obtaining other
insurance, in compliance with MCL 500.3020(1)(b)’s notice requirement.
The trial court heard defendant’s motion for summary disposition on July 12, 2022, and found
that defendant’s May 26, 2020 letter of cancellation did not satisfy the language set forth by Yang,
requiring that a cancellation notice be preemptory, explicit, and unconditional. The trial court held
that because a cancellation notice must be unconditional to be effective, and the May 26, 2020 letter
contained conditional language, the letter did not constitute a valid cancellation notice pursuant to
MCL 500.3020(1)(b). The trial court further found that the letter sent on June 7, 2020, also was not
a valid cancellation notice because it “was not within the ten days from which the accident occurred
on June 11, 2020.” Therefore, the trial court denied defendant’s motion for summary disposition and
entered an order in that regard on August 1, 2022.
On August 17, 2022, the trial court entered a final order of judgment in favor of plaintiffs in
the total amount of $46,824, “inclusive of all claims and benefits recoverable under the No-Fault Act
with respect to any and all services provided to Patricia Bryant, including but not limited to attorneys’
fees and interest, through August 12, 2022.”
1
Plaintiffs’ response and the trial court’s denial of defendant’s motion, which is discussed in more
detail below, reasoned that defendant’s cancellation of the policy was ineffective, meaning that the
policy was not reinstated because it was never canceled in the first place. This rendered defendant’s
argument regarding the policy’s fraud or misrepresentation provision irrelevant for purposes of this
appeal.
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This appeal followed.
II. STANDARDS OF REVIEW
This Court reviews de novo a trial court’s decision on a motion for summary disposition. El-
Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 159; 934 NW2d 665 (2019). A motion for
summary disposition under MCR 2.116(C)(10) is properly granted when a claim presents no genuine
issue of material fact and the moving party is entitled to judgment as a matter of law. Bazzi v Sentinel
Ins Co, 502 Mich 390, 398; 919 NW2d 20 (2018). Thus, a motion for summary disposition under
MCR 2.116(C)(10) tests the factual sufficiency of a claim. El-Khalil, 504 Mich at 160. When
deciding such a motion, courts must consider all evidence in a light most favorable to the nonmoving
party. Id. “A genuine issue of material fact exists when the record leaves open an issue upon which
reasonable minds might differ.” Johnson v VanderKooi, 502 Mich 751, 761; 918 NW2d 785 (2018).
Questions of law involving statutory interpretation are reviewed de novo. See Slaughter v
Blarney Castle Oil Co, 281 Mich App 474, 477; 760 NW2d 287 (2008); Frierson v West American
Ins Co, 261 Mich App 732, 734; 683 NW2d 695 (2004).
III. ANALYSIS
The trial court erred when it denied defendant’s motion for summary disposition on the ground
that defendant’s notice of cancellation was ineffective.
MCL 500.3020 provides in relevant part:
(1) A policy of casualty insurance, except worker’s compensation and
mortgage guaranty insurance, including all classes of motor vehicle coverage, shall
not be issued or delivered in this state by an insurer authorized to do business in this
state for which a premium or advance assessment is charged, unless the policy contains
the following provisions:
* * *
(b) . . . that the policy may be canceled at any time by the insurer by mailing
to the insured at the insured’s address last known to the insurer or an authorized agent
of the insurer, with postage fully prepaid, a not less than 10 days’ written notice of
cancellation with or without tender of the excess of paid premium or assessment above
the pro rata premium for the expired time.
The outcome of this case depends on the meaning of the phrase “notice of cancellation” as
used in MCL 500.3020(1)(b), which is not defined by the statute. Yang, 507 Mich at 323. The
Michigan Supreme Court interpreted this phrase in Yang. Id. at 325-326. In Yang, the insured
plaintiffs purchased a six-month no-fault policy from the defendant insurance company. Id. at 317.
The policy went into effect on September 26, 2017, when Yang, the primary insured party on the
policy, made the first premium payment. Id. On October 9, 2017, approximately two weeks after
Yang made the first payment, defendant sent him a letter titled “Premium Billing and Cancellation
Notice for Non-Payment,” in accordance with the termination provisions in the policy. Id. The notice
informed Yang that his next premium payment was due on October 26, 2017, and that the policy
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would be canceled if he failed to pay by that date. Id. When the cancellation notice was mailed,
Yang had made all the required payments. Id. at 318. Yang then failed to make the payment due on
October 26, 2017. Id. The defendant terminated Yang’s policy on October 27, 2017, for nonpayment.
Id. On October 30, 2017, the defendant sent Yang a letter informing him that the defendant would
reinstate his policy with a lapse in coverage if he made a payment by November 27, 2017. Id. Yang
did not make another payment to reinstate the policy, and the plaintiffs were struck by a motor vehicle
while walking on November 15, 2017. Id. Two days after the accident, Yang made a payment to the
defendant to reinstate the insurance policy. Id. The defendant denied plaintiffs’ claim, stating that it
was not responsible for PIP benefits because Yang did not have a valid policy when the accident
occurred. Id.
The Michigan Supreme Court held that MCL 500.3020(1)(b) does not allow cancellation
when an insurance company “mails its customer a letter purporting to be a notice of cancellation for
nonpayment of insurance premiums before any nonpayment actually occurred.” Id. at 317 (emphasis
added). The Court interpreted MCL 500.3020(1)(b)’s phrase “notice of cancellation” to require
cancellation notices to be “peremptory, explicit, and unconditional.” Id. at 325-326. The Court found
that the defendant’s cancellation notice was conditional because it “specifically included the condition
that Yang’s no-fault insurance policy would be canceled if he failed to pay his insurance premiums
on time.” Id. at 325-326. Given its holding that a cancellation notice must be unconditional to be
effective, the Court concluded that the notice the defendant sent Yang did not constitute a valid
cancellation notice under MCL 500.3020(1)(b).
Unlike in Yang, defendant in this case mailed the notice of cancellation after nonpayment
occurred. Defendant issued the notice of cancellation on May 26, 2020, after Bryant missed a
payment on May 19, 2020. The notice stated, “Unfortunately, we didn’t receive your payment and,
as a result, your policy will be canceled at 12:01 a.m. on June 6, 2020. Please know that this means
you will no longer have insurance coverage.” (Emphasis added.) This language was peremptory,
explicit, and unconditional that there were no further conditions necessary for the policy’s
cancellation to occur. The cancellation notice necessarily had to refer to a future date—and thus use
words and phrases like “will be”—because defendant was statutorily mandated to give 10-days’
notice for the cancellation to be effective under MCL 500.3020(1)(b).2
The trial court erred when it determined that the notice contained conditional language to
avoid cancellation and was therefore invalid under MCL 500.3020(1)(b). As stated, Bryant had
already missed her May 2020 premium payment when she received the May 26, 2020 cancellation
notice stating that “your policy will be cancelled at 12:01 a.m. on June 6, 2020.” No further condition
existed for cancellation to occur. While it is true that the notice gave Bryant a remedy to avoid
cancellation for her failure to pay her premium, that did not render the notice conditional. Again, the
notice did not condition the cancellation of the policy on any future event. Bryant had already failed
2
MCL 500.3020(1)(b)’s 10-day notice requirement has been interpreted by the Michigan Supreme
Court “to mean that the mailing must be reasonably calculated to be delivered so as to arrive at the
insured’s address at least ten days before the date specified for cancellation for the notice to be
effective.” Nowell v Titan Ins Co, 466 Mich 478, 484; 648 NW2d 157 (2002). On appeal, plaintiffs
do not dispute that the May 26, 2020 cancellation notice was timely. Plaintiffs sole argument
regarding the cancellation notice is that it was conditional, and thus invalid.
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to pay her premium, and the notice advised her that cancellation would occur upon completion of the
10-day notice period as required by MCL 500.3020(1)(b). This notice was clearly different from the
notice mailed to Yang prior to his failure to make a payment.
Moreover, the trial court’s apparent reasoning that the cancellation notice was conditional
because it gave Bryant the option to maintain her policy by paying her past due premium by June 6,
2020, runs counter to the very purpose of MCL 500. 3020. Our Supreme Court explained that the
“obvious objective” of MCL 500.3020 is
to make certain that all of those who are insured under a policy are afforded a period
of time, ten days, either to satisfy whatever concerns have prompted cancellation and
thus revive the policy or to obtain other insurance, or simply to order their affairs so
that the risks of operating without insurance will not have to be run. [Lease Car of
Am, Inc v Rahn, 419 Mich 48, 54; 347 NW2d 444 (1984) (emphasis added).]
Defendant’s notice of cancellation allowed Bryant the option to satisfy defendant’s concern that
prompted cancellation—Bryant’s failure to pay her premium—and thus avoid cancellation. Allowing
Bryant to take certain affirmative steps to avoid cancellation does not make the cancellation notice
“conditional” because again, no further condition was necessary for cancellation to occur. Perhaps
more importantly, it was in accordance with the “obvious objective” of MCL 500.3020(1)(b).
Therefore, because defendant’s May 26, 2020 notice of cancellation was “peremptory,
explicit, and unconditional” in compliance with MCL 500.3020(1)(b), the policy under which
plaintiffs are claiming coverage was canceled effective June 6, 2020, before Bryant’s motor vehicle
accident on June 11, 2020.
Accordingly, we vacate the trial court’s final judgment in favor of plaintiffs, reverse the trial
court’s order denying defendant’s motion for summary disposition on the ground that defendant’s
notice of cancellation was ineffective, and remand for further proceedings to allow the trial court to
address the remainder of defendant’s motion for summary disposition.3 We do not retain jurisdiction.
Defendant, as the prevailing party, may tax costs under MCR 7.219.
/s/ Colleen A. O’Brien
/s/ Mark J. Cavanagh
/s/ Jane E. Markey
3
As explained, defendant argued in its motion for summary disposition that Bryant’s
misrepresentation about the date of the accident was a fraud that vitiated the creation of a new
contract—the reinstatement of the policy. In denying defendant’s motion for summary disposition,
the trial court reasoned that defendant’s cancellation of the policy was ineffective, meaning that the
policy was not reinstated because it was never canceled in the first place. Given our holding that
defendant’s cancellation of the policy was in fact effective, the trial court must now address the
remainder of defendant’s motion for summary disposition.
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