Manley v. Detroit Automobile Inter-Insurance Exchange , 425 Mich. 140 ( 1986 )

Boyle, J.

(concurring in part, dissenting in part). I concur with Justice Levin’s determination that the Court of Appeals correctly affirmed the trial court’s directed verdict for daiie on the Manleys’ claim for mental anguish. However, I write separately to explain my disagreement with the trial court’s order awarding a set amount for future nursing care and room and board, the award for past nursing care and room and board without proof and a jury verdict of expenses incurred, and the award of attorney fees.

The Court of Appeals opinion provides a concise review of the facts of this case:

John Manley, son of Kenneth A. Manley and Betty D. Manley, suffered a severe head injury when he was struck by an automobile on May 10, 1974. Defendant Detroit Automobile Inter-Insurance Exchange was the Manleys’ no-fault automobile insurance carrier at the time of the accident. In this action, plaintiffs sought to recover damages and past expenses from defendant and to obtain a declaratory judgment as to the benefits due from defendant in the future. After a jury trial, defendant was found liable for $19,087.26 for modifications to the Manleys’ home and for $12,000 for past services performed by Kenneth and Betty Manley. Defendant was further ordered to pay the Manleys $30 per day for room and board and $128 per day for care by nurse’s aides as long as John Manley is cared for at his parents’ home or until further order of the court. For slightly more than a year prior to trial, defendant was required by a preliminary injunction to pay plaintiffs $78 per day for room and board and $128 per day for care by nurse’s aides. Defendant was allowed a credit for the amount paid under the preliminary injunction in excess of the rates later found by the jury. Defendant appeals by right, while plaintiffs cross-appeal. [Manley v DAIIE, 127 Mich App 444, 448-449; 339 NW2d 205 (1983).]

I

FUTURE "ALLOWABLE EXPENSES”

On May 17, 1982, the trial court entered a declaratory judgment on a special verdict. At trial, the jury found, on December 17, 1981, that the Manleys had incurred allowable expenses under MCL 500.3107(a); MSA 24.13107(a); that room and board, nurse’s aides, home modifications, and services performed by the Manleys were reasonably necessary for John Manley’s care, recovery, or rehabilitation; and that the reasonable charge for the various items were as follows: room and board, $30 per day, nursing care, $128 per day, home modifications, $19,087.26, services by the Manleys, $12,000.¹ There was no jury verdict concerning the actual expenses incurred by the Manleys in the past, nor was there a jury verdict concerning the Manleys’ future expenses. However, the trial court entered the following:

It is hereby ordered, adjudged and decreed that the Plaintiffs have judgment on said verdict and that the Defendant is liable to pay the sum of Thirty ($30.00) Dollars per day for Room and Board and One Hundred and Twenty Eight ($128.00) Dollars per day for a Sitter or Nurse’s Aide for as long as John Manley is cared for at the home of his parents, Kenneth A. Manley and Betty D. Manley, or until further order of this Court.

The Court of Appeals found that requiring the daiie to pay for unincurred future expenses was erroneous because "the no-fault statute only requires insurers to pay for allowable expenses actually incurred . . . .” Manley v DAIIE, supra, p 451.1 agree.

Personal injury protection (pip) benefits include payment for "allowable expenses.” MCL 500.3107(a); MSA 24.13107(a) defines "allowable expenses” as follows: "[a]ll reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation.” (Emphasis added.) MCL 500.3110(4); MSA 24.13110(4) provides that pip benefits "accrue not when the injury occurs but as the allowable expense ... is incurred.” (Emphasis added.) Finally, MCL 500.3142(1), (2); MSA 24.13142(1), (2) provides:

(1) Personal protection insurance benefits are payable as loss accrues.

(2) Personal protection insurance benefits are overdue if not paid within 30 days after an insurer receives reasonable proof of the fact and of the amount of loss sustained.

The Michigan no-fault act requires that an expense under §3107 be incurred before it is an "allowable expense.” There is no insurer liability to pay under § 3142(1) until loss accrues, and loss accrues under § 3110(4) as the expense is incurred, not at the time of the injury.

The commentary to the Uniform Motor Vehicle Accident Reparations Act (umvara), § 23 is pertinent since the language in §§ 3110(4) and 3142(1) is substantially similar² to the language in um-vara, §23. The umvara commissioner’s comment to § 23 provides:

This Section describes what is intended to be customary practice — paying basic reparation benefits monthly as loss accrues — contrasted to the customary practice of paying tort claims in lump sum settlements or judgments .... While this Section . . . provides that loss occurs only as loss or expense is incurred, in limited circumstances judgments may be entered covering future benefits (Section 27[a]).

Section 27 of the umvara, entitled "Judgments for Future Benefits,” provides specifically that no judgment for future allowable expenses can be entered. The commentary³ refers to the commentary for § 26, which states:

Settlements for future loss representing medical and other allowable expenses are not permitted. Given the provisions of this Act mandating the full payment of medical expense, without temporal or dollar limits, such a settlement might prejudice the claimant’s ability to obtain future medical treatment or rehabilitation services if his injury should require more ambitious treatment than had been supposed at the timé of settlement .... [14 . ULA 100-101].

Although unaccrued future medical expenses cannot be awarded, § 27(a) specifically describes the sort of declaratory relief which is proper:

In an action for reparation benefits or to enforce rights under this Act, however, the court may enter a judgment declaring that the reparation obligor is liable for the reasonable cost of appropriate medical treatment or procedures, with reference to a specified condition, to be performed in the future if it is ascertainable or foreseeable that treatment will be required as a result of the injury for which the claim is made.

The policy behind the umvara, § 27 bar against judgments for future medical and other allowable expenses is that the act "mandat[es] the full payment of medical expense, without temporal or dollar limits” and the only sure way to enforce this goal is to have the insurer pay all actual allowable expenses as they are incurred.

While the Michigan no-fault act has no sections comparable to umvara, §27, I believe the provisions concerning when loss accrues and when expenses are payable by the insurer indicate a similar legislative intent that unincurred expenses not be subject to a judgment such as that ordered by the trial court in this case.⁴ Under Michigan’s no-fault statute, the jury had no authority to find that $30 per day would be the proper payment for room and board in the future or that $128 per day would be the proper future expense for nursing care. John Manley’s actual future expenses could be far more than this, and our no-fault system is not intended to be limited in this fashion. To the extent the trial court ordered the payment of $30 per day for future room and board and $128 per day for future nursing care, the order should be set aside and the Court of Appeals decision on this issue should be affirmed.

n

PAST "ALLOWABLE EXPENSES”

A. Room and Board

At trial, the jury found that $30 per day was a reasonable charge by the Manleys for providing room and board to their son John.⁵ As with nursing care, the jury was not asked, and did not find, the expense actually incurred by the Manleys for room and board.⁶1 agree with the Court of Appeals to the extent that it remanded the case for a determination of actual expenses incurred for room and board. However, I cannot agree with the Court of Appeals broad determination that "[products, services, or accommodations which are as necessary for an uninjured person as for an injured person are not 'allowable expenses,’ ” Manley v DAIIE, supra, p 454, for purposes of MCL 500.3107(a); MSA 24.13107(a).

While daiie did not specifically raise the question, what expenses are properly included in room and board in a home-care situation such as the one in this case, I do not believe that this issue was waived. Daiie sought throughout the trial both to require proof of actual expenses incurred and to obtain a jury verdict of expenses incurred. Neither the jury nor the trial court could consider the propriety of various items of expense when no proof of them was allowed. While generally this Court will not decide an issue that was not raised at trial, we will decide unraised issues where "necessary to a proper determination of a case.” Prudential Ins Co of America v Cusick, 369 Mich 269, 290; 120 NW2d 1 (1963); see also Felcoskie v Lakey Foundry Corp, 382 Mich 438, 442; 170 NW2d 129 (1969). In this case, the Court of Appeals, sua sponte, raised the issue of the proper components of room and board, the parties and various amici curiae have extensively briefed the issue, and the issue will arise upon remand. Therefore, it is proper for this Court to review the Court of Appeals determination.

The "test” adopted by the Court of Appeals— that any expense equally necessary to an uninjured person is not an "allowable expense” — is unwieldy and unworkable. The cost of institutional care for John Manley included, for example, food, an item as necessary to uninjured persons as to John. I find no principled basis for deciding that food provided to John at home is not as much an "allowable expense” as the food provided in a licensed medical care facility. Cf. Paul v Ohio Casualty Ins Co, 196 NJ Super 286; 482 A2d 199 (1984) (similar therapy would be required if claimant were hospitalized). Where a person who normally would require institutional treatment is cared for at home in a quasi-institutional setting made possible by the love and dedication of the injured victim’s family, the test for "allowable expenses” should not differ from that set out in MCL 500.3107(a); MSA 24.13107(a):

Personal protection insurance benefits are payable for the following:

(a) Allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation.

The statute requires that three factors be met before an item is an "allowable expense”: 1) the charge must be reasonable, 2) the expense must be reasonably necessary, and 3) the expense must be incurred. These are the standard requirements for recovery of such expenses under all no-fault plans, 12A Couch, Insurance (2d ed), §45.674, and they are the proper requirements for application in this case. The focus should be on the product, service, or accommodation provided, not upon the provider’s status as a relative. An item that would be provided in an institutional setting is not barred from being an "allowable expense” merely because it is provided at home instead.

As the Court of Appeals noted, "comparison to rates charged by institutions provides a valid method for determining whether the amount of an expense was reasonable and for placing a value on comparable services performed by Mr. and Mrs. Manley . . . .” Manley, supra, p 455. Since no comprehensive proof was presented at trial concerning the various items of expense incurred by the Manleys under the rubric of "room and board,” this Court is not in a position to state whether specific items are, or are not, an "allowable expense” in this case. This is a proper inquiry for the factfinder on remand.

B. Nursing Care

The jury found that sitter or nurse’s aide services were reasonably necessary for John Manley’s care, and that a reasonable charge for the service was $128 per day.⁷ There was no jury verdict concerning the actual past expenses incurred by the Manleys for unskilled nursing care provided by themselves or by outside personnel. The trial court determined daiie’s liability for past nursing care by applying the daily rate of $158, found by the jury to be a reasonable charge for nursing care ($128 per day) and room and board ($30 per day), against the total monies paid by daiie under the December 1, 1980, preliminary injunction.⁸

A remand to determine past expenses incurred for nurse’s aides or sitters is necessary for reasons similar to those requiring a remand to determine actual expenses incurred for room and board. MCL 500.3107(a); MSA 24.13107(a) requires that expenses be incurred before they qualify as an allowable expense for which an insurer is liable.

iii

AWARD OF ATTORNEY FEES

I would affirm the Court of Appeals decision that no award of attorney fees is proper in this case. MCL 500.3148(1); MSA 24.13148(1) describes when a claimant’s attorney fees must be paid by a no-fault insurer:

An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue. The attorney’s fee shall be a charge against the insurer in addition to the benefits recovered, if the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.

The Court of Appeals decision aptly explains the attorney fee issue and the proper treatment of that issue in this case:

Here, the trial court determined that defendant had unreasonably refused to pay plaintiffs’ claim for care by nurse’s aides and awarded plaintiffs an attorney fee for that portion of their claim. Defendant argues that the trial court erred by awarding any attorney fee, while plaintiffs argue that the trial court should have awarded them an attorney fee covering their entire case.

The statute conditions an award of attorney fees on a finding that the insurer unreasonably refused to pay or unreasonably delayed in making payment. We therefore conclude that plaintiffs are not entitled to an award of'attorney fees for that portion of their claim which involved future expenses because the insurer’s obligation to pay those expenses would not arise until the expenses were incurred. The evidence introduced at the trial showed that plaintiffs made no claim for home modification expenses or the value of their services before commencing this action; the trial court therefore did not err in holding that defendant had not unreasonably refused to pay or unreasonably delayed in making payment for those expenses. The only remaining elements of plaintiffs’ recovery are the expenses for room and board and for care by nurse’s aides between the time of the preliminary injunction and the time of trial. Those expenses could not support an award of attorney fees because defendant paid those expenses promptly pursuant to the preliminary injunction. We therefore conclude that plaintiffs were not entitled to an attorney fee under MCL 500.3148(1); MSA 24.13148(1). [Manley, supra, p 462.]

The judgment of the Court of Appeals should be affirmed on this issue.

IV

CONCLUSION

For the reasons articulated above, I would affirm the Court of Appeals remand of this case for a determination of past expenses incurred for nurse’s aides and room and board. I would also affirm the Court of Appeals determination that the defendant was improperly ordered to pay unincurred future expenses. The Court of Appeals "test” limiting "allowable expenses” for quasi-institutional home care to those expenses not as necessary to uninjured as to injured persons should be explicitly disavowed. Finally, I would find that an award of attorney fees is improper in this case.

Archer, J., took no part in the decision of this case.

1 The questions put to the jury and the jury’s answers to the questions follow:

Question 1: Did the Plaintiffs incur any allowable expenses as the result of this accident, which are defined as reasonable charges for reasonably necessary products, services and accommodations for John Manley’s care, recovery or rehabilitation?

Yes.

Question 2: If your answer to Question 1 is "yes,” please specify which of the following products, services and accommodations are reasonably necessary for John Manley’s care, recovery or rehabilitation.

a. Room and Board Yes

b. Sitter or Nurse’s Aide Yes

c. Home modifications Yes

d. Services performed by Mr. and Mrs. Manley Yes

Question 3: For each "yes” to Question 2, please specify the reasonable charge for that particular product, service or accommodation.

a. Room and Board (per day) $ 30.00

b. Sitter or Nurse’s Aide (per day) $ 128.00

c. Home Modifications $19,087.26

d. Services performed by Mr. and Mrs. Manley $12,000.00

2 One difference in language is that the first sentence in umvara, § 23(a) states that "benefits are payable monthly as loss accrues” (emphasis added), while MCL 500.3142(1); MSA 24.13142(1) merely states that pip benefits "are payable as loss accrues.”

3 The comment to § 27 provides:

This Section deals with the criteria under which a judgment may be entered for loss which will accrue after the date of the award. A specific provision prohibits money judgments for future medical expense and other items of allowable expense, parallel to the similar provision in the Section dealing with settlements (Section 26). [Emphasis added. 14 ULA 103.]

4 I agree that a declaratory judgment using language such as that found in umvara, § 27(a) would, in the proper circumstances, be appropriate. Declaratory judgments are appropriate for declaring the rights and other legal relations of interested parties. See MCR 2.605. As the Court of Appeals observed in this case:

In Shavers v Attorney General, 402 Mich 554, 588-589; 267 NW2d 72 (1978), the Court explained that declaratory judgments exist to provide broad, flexible remedies for plaintiffs who seek guides for future conduct in order to preserve their legal rights. The Court further explained that in an action for a declaratory judgment the trial court is not precluded from reaching issues before actual injuries or losses have occurred. An action for a declaratory judgment is therefore an appropriate mechanism for determining whether an expense will be "allowable” under the standard stated in MCL 500.3107(a); MSA 24.13107(a), before the expense is actually incurred. Plaintiffs may use an action for a declaratory judgment to avoid the risk of incurring expenses for which the insurer will not reimburse them. [Manley v DAIIE, supra, pp 450-451.]

5 See n 1.

6 We note that SJI2d 67.01, Form of Verdict: No-Fault First-Party Benefits Action, questions the jury regarding whether an allowable expense was incurred and, if so, what the amount of the expense was:

Question No. 3: Did the plaintiff incur "allowable expenses” as a result of this accident, which are defined as reasonable charges for reasonably necessary products, services and accommodations for the plaintiffs care, recovery and rehabilitation?

Answer: _(yes or no)

Question No. 4: If your answer to Question No. 3 is "yes,” what is the amount of the allowable expenses incurred by plaintiff?

Answer: $___

7 See n 1.

8 The May 17, 1982, order granting termination of the preliminary injunction provided in pertinent part:

It is further ordered, adjudged and decreed that the Judgment in this cause shall grant Defendant a credit amounting to the difference between what was actually paid pursuant to the terms of the Preliminary Injunction and the One Hundred Fifty Eight ($158.00) Dollars per day awarded by the jury, plus interest at 12% per annum.

Similarly, the declaratory judgment provided:

It is further ordered, adjudged and decreed that the said payments shall be made to Kenneth A. Manley and Betty D. Manley or to their order subject to a credit in favor of Defendant amounting to the difference between what was actually paid pursuant to the terms of the Preliminary Injunction and the One Hundred and Fifty Eight ($158.00) Dollar amount awarded by the jury, plus interest at the rate of twelve (12%) percent per annum.