Ronald Francis McPhilmy v. Hunter Anthony Michalik

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
RONALD FRANCIS MCPHILMY, UNPUBLISHED
October 17, 2019
Plaintiff-Appellant,
v No. 344385
Genesee Circuit Court
HUNTER ANTHONY MICHALIK, LC No. 17-108379-NI
BROOKE DIANE BELANGER, and
STATE AUTO PROPERTY & CASUALTY
INSURANCE COMPANY,
Defendant-Appellees.
Before: REDFORD, P.J., and JANSEN and LETICA, JJ.
PER CURIAM.
In this action for outstanding personal protection insurance (PIP) benefits under
Michigan’s no-fault act, MCL 500.3101 et seq., plaintiff appeals as of right the order granting
summary disposition in favor of defendant State Auto Property & Casualty Insurance Company
under MCR 2.116(C)(10).1 We reverse and remand for further proceedings consistent with this
opinion.
I. RELEVANT FACTUAL BACKGROUND
Plaintiff, a self-employed residential painter, was injured in an automobile accident on
July 2, 2015, and sustained a pinched nerve in his neck, four bulging discs in his lower back, and
numbness in his right hand. Several medical providers, including physical therapy and pain
management providers, treated plaintiff. At the time of the accident, plaintiff had medical
insurance through Molina Healthcare of Michigan, a state Medicaid insurer. Plaintiff filed this
1
Plaintiff named State Auto in a first-party claim as well as additional defendants in a third-party
claim. The third-party claim has been settled, and only the claim against defendant State Auto is
at issue in this appeal.
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action on January 6, 2017, seeking unpaid medical expenses, as well as replacement care benefits
and work loss benefits.2
Throughout the lower court proceedings, defendant had requested documentation of
plaintiff’s medical bills incurred as a result of the accident, as well as documentation to support
his work loss claim. Defendant maintained that plaintiff failed to provide such documentation,
resulting in defendant filing a motion to compel discovery. Plaintiff stipulated to the order to
compel, yet failed to provide the requested documentation. Plaintiff indicated that he was still in
the process of obtaining documentation and outstanding bills from his medical providers, and
would supplement his responses. However, plaintiff did provide defendant with his tax returns
from 2014 and 2015. These returns included the IRS Form 1040 and Schedule C, which detailed
plaintiff’s business revenue, gross profits, expenses, and net profits.
At the close of discovery, defendant filed a motion for summary disposition, arguing that
plaintiff had failed to provide documentation of his claimed unpaid expenses. In response to
defendant’s motion for summary disposition, plaintiff sent defendant various documents,
including tax returns, medical bills, a disability certificate, and an affidavit from plaintiff’s wife,
who acted as his caregiver, detailing the services she had provided. In the affidavit, plaintiff’s
wife averred that plaintiff had agreed to pay her $20 per day for “replacement” services.
Plaintiff attached these same documents to his response to defendant’s motion for summary
disposition. Plaintiff also attached to his response medical bills, that showed an outstanding
amount of $1,000 owed to a Dr. Devenderjit Bhangu, and a Medicaid lien from Molina
Healthcare of Michigan in the amount of $1,647.01.
The trial court granted summary disposition in favor of defendant, concluding that no
evidence of work loss was produced, as plaintiff’s income tax returns did not establish work loss,
and that “[m]edical services and transportation ha[d] not been documented to the Defendant
within the appropriate time with discovery having been cut off in January[.]” Further, the trial
court determined that the replacement services claimed were not for “heavy work,” as was
required by plaintiff’s disability certificate. Accordingly, the trial court granted summary
disposition under MCR 2.116(C)(10). This appeal followed.
II. STANDARD OF REVIEW
We review the trial court’s decision on a motion for summary disposition de novo.
Sabbagh v Hamilton Psychological Services, PLC, ___ Mich App ___, ___; ___ NW2d ___
(2019) (Docket No. 343204); slip op at 4. Summary disposition under MCR 2.116(C)(10) is
appropriate where “there is no genuine issue as to any material fact, and the moving party is
entitled to judgment or partial judgment as a matter of law. 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.” George v Allstate Ins Co, ___ Mich App
2
Plaintiff also made a claim for attendant care benefits, however that claim was abandoned in
the trial court.
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___, ___; ___ NW2d ___ (2019) (Docket No. 341876); slip op at 5 (quotation marks and
citations omitted). When reviewing a summary disposition motion brought under MCR
2.116(C)(10), the “trial court must consider the pleadings, affidavits, depositions, admissions and
other documentary evidence submitted in the light most favorable to the nonmoving party.” Id.;
slip op at 5. Reasonable inferences are drawn in favor of the nonmoving party. Id.; slip op at 5.
“This Court is liberal in finding genuine issues of material fact.” Jimkoski v Shupe, 282 Mich
App 1, 5; 763 NW2d 1 (2008).
III. ANALYSIS
Plaintiff argues on appeal that the trial court erroneously granted summary disposition
where a genuine issues of material fact remained regarding his claims for outstanding medical
costs, work loss, and replacement services.
Plaintiff’s claims are for no-fault benefits under the prior version of MCL 500.3101(2),
which was amended by 2019 PA 21, and provided that “[t]he owner or registrant of a motor
vehicle required to be registered in this state shall maintain security for payment of benefits
under personal protection insurance. . . .” See also MCL 500.3107. An insurer is liable for
claimed benefits that are “causally connected to the accidental bodily injury arising out of an
automobile accident.” Griffith v State Farm Mut Auto Ins Co, 472 Mich. 521, 531; 697 NW2d
895 (2005). “Allowable expenses” include coverage for “reasonable charges incurred for
reasonably necessary products, services, and accommodations for an injured person’s care,
recovery, or rehabilitation.” MCL 500.3107(1) (unamended by 2019 PA 21).3
The plaintiff bears the burden of proving, by a preponderance of the evidence, whether
expenses were reasonable and necessary. Douglas v Allstate Ins Co, 492 Mich. 241, 269; 821
NW2d 472 (2012). This is generally a question of fact for a jury. Kallabat v State Farm Mut
Auto Ins Co, 256 Mich. App. 146, 151; 662 NW2d 97 (2003). “This evidentiary requirement is
most easily satisfied when an insured or caregiver submits itemized statements, bills, contracts,
or logs listing the nature of services provided with sufficient detail for the insurer to determine
whether they are compensable.” Douglas, 492 Mich. at 269. However, a plaintiff is not required
to offer “direct” evidence that an expense was reasonably necessary; “circumstantial evidence,
and permissible inferences therefrom, may be considered by the jury to determine whether there
is sufficient proof that the expenses were both reasonable and necessary.” Kallabat, 256 Mich
App at 152. Because an insurer’s liability is limited to expenses that were actually incurred, “an
insurer ‘is not obliged to pay any amount except upon submission of evidence that services were
actually rendered and of the actual cost expended.’ ” Douglas, 492 Mich. at 266-267 (citation
omitted) (emphasis in original).
A moving party must support its motion for summary disposition with evidence. MCR
2.116(G)(3); Quinto v Cross and Peters Co, 451 Mich. 358, 362; 547 NW2d 314 (1996). If the
nonmoving party has the burden of proof at trial, the moving party may satisfy its initial burden
3
The amended version is the same but subject to exceptions.
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of production either by “submit[ting] affirmative evidence that negates an essential element of
the nonmoving party’s claim,” or by “demonstrat[ing] to the court that the nonmoving party’s
evidence is insufficient to establish an essential element of the nonmoving party’s claim.”
Quinto, 451 Mich. at 362, quoting Celotex v Catrett, 477 U.S. 317, 331; 106 S. Ct. 2548; 91 L. Ed.
2d 265 (1986). If the moving party properly supports its motion for summary disposition, the
burden “then shifts to the opposing party to establish that a genuine issue of disputed fact exists.”
Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich. App. 362, 370; 775
NW2d 618 (2009), quoting Quinto, 451 Mich. at 362.
“The reviewing court should evaluate a motion for summary disposition under MCR
2.116(C)(10) by considering the substantively admissible evidence actually proffered in
opposition to the motion.” Maiden v Rozwood, 461 Mich. 109, 121; 597 NW2d 817 (1999). The
supporting documents filed by the parties “must be considered by the court when the motion is
based on subrule (C)[](10).” MCR 2.116(G)(5) (emphasis added)). “However, although the
evidence must be substantively admissible, it does not have to be in admissible form.” Barnard
Mfg Co, 285 Mich. App. at 373. As long as there is a “plausible basis for the admission” of the
evidence, the trial court must consider it. Id., citing Maiden, 461 Mich at 125 n 8.
At the time defendant filed its motion for summary disposition, it had not yet received
sufficient documentation to support plaintiff’s claim for outstanding costs related to his accident.
By demonstrating that plaintiff had failed to support his claim for outstanding costs under the no-
fault act, defendant satisfied its burden demonstrating that plaintiff could not establish an
essential element of his claims, i.e., showing by a preponderance of the evidence that his
expenses were reasonable and necessary. Douglas, 492 Mich. at 269; Quinto, 451 Mich. at 362.
This is not the end of the analysis, however. This merely shifted the burden to plaintiff to
establish a genuine issue of material fact. Barnard Mfg Co, 285 Mich. App. at 370.
In his response to defendant’s motion, plaintiff attached documentation to support his
claims. Regarding medical costs, plaintiff attached documentation of $1,000 owed to Dr.
Bhangu and $1,647.01 owed to Molina. At the hearing, defendant conceded that the $1,000
might be in dispute. Also, although defense counsel argued that “there’s no documentation that
anything represented in [the Molina] lien letter was related to this particular medical case,” a
ledger accompanying the October 3, 2017 lien letter indicates that plaintiff received services
from September 1, 2015 to August 2, 2017 for diagnoses including “Person Inj In Unsp Motor-
Vehicle Acc Traf Init.” Moreover, although both the trial court and defendant stated at the
hearing that they had not received evidence of the Molina amount, this document was clearly
attached to plaintiff’s response, and plaintiff’s response, based on the Register of Actions and
timestamp on the document itself, was filed on February 13, 2018, seven days before the hearing.
As a result, the trial court granted summary disposition under the mistaken belief that plaintiff
had not provided evidence as he was required to do. Additionally, plaintiff testified at deposition
that his injuries were a result of the accident, and he submitted an “Attending Physician’s
Report” indicating that his injuries were indeed directly caused by the accident. A jury,
reviewing the facts and making reasonable inferences, could reasonably conclude that plaintiff
had shown by a preponderance of the evidence that he had incurred reasonably necessary
medical expenses still owed to Bhangu and Molina. Because a genuine question of material fact
regarding reimbursement of plaintiff’s medical expenses remained, summary disposition on that
basis was improper.
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Regarding work loss, under MCL 500.3107(1)(b), a no-fault claimant is entitled to work-
loss benefits to recover the “loss of income from work an injured person would have performed
during the first 3 years after the date of the accident if he or she had not been injured.”
“[C]laimants bear the burden of proving the amount they would have earned had they not been
injured,” Anton v State Farm Mut Auto Ins Co, 238 Mich. App. 673, 684; 607 NW2d 123 (1999),
by a preponderance of the evidence, Hannay v Dep’t of Transp, 497 Mich. 45, 86-87; 860 NW2d
67 (2014). Work-loss benefits do not cover loss of earning capacity. Hannay, 497 Mich. at 80-
81. In other words, a claimant must demonstrate what he would have earned “but for” the
accident, not what he could have earned. Id. at 81. However, “when the evidence presented
demonstrates that the wages at issue were inevitable but for the accident, a damages award based
on such wages will not be barred as a matter of law on grounds of being contingent and
speculative.” Id. at 85.
“Because work-loss damages are intended to replace the income a person would have
received but for the accident, prior wages generally are the most relevant and reliable evidence
for determining what a plaintiff actually would have earned had the accident not occurred.” Id.
at 82 (emphasis in original). However, work loss under the statute is not limited only to “wages”
from an employer; the statute also covers “lost profit which is attributable to personal effort and
self-employment.” Moghis v Citizens Ins Co of America, 187 Mich. App. 245, 250; 466 NW2d
290 (1990). Because the purpose of the no-fault act is to “place individuals in the same, but no
better, position that they were before their automobile accident,” when a claimant is self-
employed, actual net income loss is calculated by deducting certain business expenses from gross
income. Adams v Auto Club Ins Ass’n, 154 Mich. App. 186, 193; 397 NW2d 162 (1986).
As evidence of work loss, plaintiff submitted IRS 1040 income tax forms, with the
accompanying Schedule C forms, that demonstrated his lost profit by highlighting his net income
loss resulting from the accident. According to these forms, defendant and his wife’s joint
income included $3,363 of business income in 2014, $46 of business income in 2015, and $183
of business income in 2016. We conclude that plaintiff’s Schedule C forms for 2014 and 2015
provide a sufficient basis from which a trier of fact could reasonably determine plaintiff’s work
loss in a manner that avoids being too contingent and speculative. The forms showed
specifically detailed expenses and which expenses should be considered when calculating work-
loss benefits is a question for the trier of fact. See Adams, 154 Mich. App. at 194. This evidence,
when considered in the light most favorable to the non-moving party, was enough to support
plaintiff’s wage loss claim.
Regarding replacement services, we note that recoverable replacement services do not
include “ordinary and necessary” household services, such as yard, house and car maintenance,
that are not for the injured person’s “care.” Douglas v Allstate Ins Co, 492 Mich. 241, 261-262;
821 NW2d 472 (2012); see also Meemic Ins Co v Forston, 324 Mich. App. 467, 474; 922 NW2d
467 (2018), lv gtd 503 Mich. 1031 (2019). Here, plaintiff’s response to defendant’s motion for
summary disposition included an affidavit from his wife indicating that plaintiff agreed to pay
her $20 per day for replacement services. In her affidavit, plaintiff’s wife listed the following
replacement services: preparing meals, doing laundry, cleaning house, washing windows,
grocery shopping, lifting and carrying groceries, driving, gardening, mowing the lawn, taking out
the garbage, shoveling snow, household repairs, anything requiring bending or lifting, washing
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the car, and caring for pets. Since these services were not for plaintiff’s care, the cost allegedly
incurred in providing them was not recoverable.
Finally, defendant raises for the first time on appeal an argument concerning the one-
year-back rule. The one-year-back rule “places a limitation on the amount of damages a
claimant is entitled to recover,” Joseph v Auto Club Ins Ass’n, 491 Mich. 200, 216; 815 NW2d
412 (2012), and a claimant “may not recover benefits for any portion of the loss incurred more
than 1 year before the date on which the action was commenced,” MCL 500.3145(2). The one-
year-back rule is an affirmative defense and “must be raised in a party’s responsive pleading,
either as originally filed or as amended.” MCR 2.111(F)(3). An affirmative defense not raised
in accordance with court rules is generally deemed to be waived. Stanke v State Farm Mut Auto
Ins Co, 200 Mich. App. 307, 312, 503 NW2d 758, 760 (1993).
We reverse and remand for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ James Robert Redford
/s/ Kathleen Jansen
/s/ Anica Letica
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