Opinion
No. 345332
11-07-2019
BRONSON HEALTH CARE GROUP, INC., Plaintiff-Appellant, v. STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY and State Automobile Mutual Insurance Company, Defendants-Appellees.
Miller Johnson (by Thomas S. Baker, Christopher Schneider, Grand Rapids, and Patrick M. Jaicomo ) for Bronson Health Care Group, Inc. Garan Lucow Miller, PC (by Daniel S. Saylor ), Detroit, for State Auto Property and Casualty Insurance Company and State Automobile Mutual Insurance Company.
Miller Johnson (by Thomas S. Baker, Christopher Schneider, Grand Rapids, and Patrick M. Jaicomo ) for Bronson Health Care Group, Inc.
Garan Lucow Miller, PC (by Daniel S. Saylor ), Detroit, for State Auto Property and Casualty Insurance Company and State Automobile Mutual Insurance Company.
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 Auto to Maria Caballero (Maria), Victor's wife. Victor sustained injuries and was treated by plaintiff, Bronson Health Care Group, Inc. He assigned to plaintiff his right to seek payment of personal protection insurance (PIP) benefits under the Michigan no-fault insurance act (the no-fault act), and 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; instead, it 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.
The Policy bears the caption "STATE AUTO ® Insurance Companies," and it identifies the State Auto Insurance Companies as 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."
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.
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 N.W.2d 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, 832 N.W.2d 266 (quotation marks and citations omitted).]
We review de novo as a question of law the interpretation of statutes. McCormick v. Carrier , 487 Mich. 180, 188, 795 N.W.2d 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 N.W.2d 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 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.
We may affirm the trial court when it reached the right result, even if we differ on the reasoning underlying that result. See Burise v. Pontiac , 282 Mich. App. 646, 652 n. 3, 766 N.W.2d 311 (2009).
Although plaintiff argues that the issue before us is purely one of contractual interpretation, we conclude that when, as in this case, the benefits in question are mandated by statute, the issue is actually one of statutory interpretation. "[T]he 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." Rednour v. Hastings Mut. Ins. Co. , 245 Mich. App. 419, 422, 628 N.W.2d 116 (2001), rev'd on other grounds 468 Mich. 241, 661 N.W.2d 562 (2003). For nonmandated 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 N.W.2d 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) ("Personal protection insurance benefits are due under this chapter without regard to fault."); MCL 500.3105(1) ("Under 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, 614 N.W.2d 689 ("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 involved 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,[ ] 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 N.W.2d 310 (1993).
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, 530-531 n. 10, 502 N.W.2d 310 (1993) (citing 12A Couch, Insurance, 2d (rev. ed.), § 45:699, p. 336).
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 act, to provide PIP benefits to a "named insured" and to his or her spouse and household relatives. See MCL 500.3114(1) ; see also Dobbelaere v. Auto-Owners Ins. Co. , 275 Mich. App. 527, 532, 740 N.W.2d 503 (2007). But MCL 500.3113(d) provides in relevant part that a person is not entitled to PIP 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) provides:
MCL 500.3009(2) is part of the Insurance Code, but it predates and is not part of the no-fault act.
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 four endorsements, each entitled Named Driver Exclusion Endorsement, one for each of four persons who were identified by those endorsements as a "Person Excluded." One of those persons was Victor. The endorsements became part of the Policy. The Endorsement applicable to Victor reads as follows:
Named driver exclusion endorsements "are intended to reduce premiums, and the excluded drivers are generally the highest risk drivers." Detroit Auto. Inter-Ins. Exch. v. Comm'r of Ins. , 86 Mich. App. 473, 479, 272 N.W.2d 689 (1978). Presumably, Maria received a reduced policy premium as a result of listing Victor and the other three excluded drivers in the endorsements.
The Endorsement thus clearly identifies "Victor Caballero" as a "Person Excluded." In addition, the declarations page of the Policy 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 the car covered by the Policy at the time of the accident. The Certificate of No-Fault Insurance issued to Maria reiterates that Victor is an excluded driver who would not be entitled to PIP benefits if he was driving the vehicle at the time of an accident, and it also contains the warning language of MCL 500.3009(2). 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).
The declarations page is part of the Policy. See, e.g., Dancey v. Travelers Prop. Cas. Co. of America , 288 Mich. App. 1, 8, 792 N.W.2d 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).
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 declarations 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 they identify Victor as "excluded" under the "driver exclusion endorsement" 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), but argues that, by its terms, the Endorsement did not apply to PIP benefits.
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.
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 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 coverages 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, 628 N.W.2d 116, 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 N.W.2d 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, 531 N.W.2d 138 (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, 502 N.W.2d 310, 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; quotation marks and citation omitted); see also Farmers Ins. Exch. v. Kurzmann , 257 Mich. App. 412, 418, 668 N.W.2d 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) (quotation marks and citation omitted).
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. Further, 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) and MCL 500.3009(2), Victor was not entitled to PIP benefits.
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).
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 N.W.2d 197 (2012) ; see also Frankenmuth Ins. Co. v. Poll , 311 Mich. App. 442, 447, 875 N.W.2d 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, 832 N.W.2d 266 ; MCR 2.116(C)(10).
Affirmed.
Markey, P.J., and Borrello, J., concurred with Boonstra, J.