Auto Owners penalized for delaying home modifications needed by paralyzed auto accident victim
Clyde Everett was paralyzed in a motor vehicle collision. When he was ready to come home from the hospital, he needed certain modifications to his home to accomodate his wheelchair. Under the no fault law, his personal injury protection [PIP] insurer [Auto Owners, in this case] was statutorily obligated to pay for those home modifications. Everett secured a bid of $64,000.00 from a contractor to complete the modifications in December of 2005. The contractor insisted on a $30,000.00 down payment, however, and Auto Owners refused to pay that.
Everett couldn't afford the down payment, so the modifications were not made, and in May of 2006, Everett filed suit, attempting to compel Auto Owners to initiate his improvements, however, Auto Owners delayed the legal action through multiple adjournments, even though it "never articulated an objection to the plans drawn up." When Everett lost patience with Auto Owners nearly a year later and filed a motion for summary disposition, alleging bad faith by Auto Owners, the insurer arranged for a meeting at Everett's home where unanimous agreement on a plan was achieved. Nevertheless, from March of 2007 through July of 2007, Auto Owners continued to stone-wall the work and refused to issue a down payment check.
At Auto Owners' request, Everett's motion for a judicial resolution was adjourned several more times while Auto Owners sought to force Everett to waive his remaining PIP medical and wage loss benefits as part of a settlement. Eventually, in February, 2008, the parties reached a binding settlement and the home modifications were commenced. Everett's attorneys then filed a motion with the trial court, seeking attorneys' fees to compensate Everett for Auto Owner's "unreasonable delay" in making statutory PIP payments. The Court agreed and awarded Everett $12,000 in fees. Auto Owners appealed from this decision.
Auto Owners primarily relied upon an "Engler Majority" ruling from several years ago, entitled Proudfoot v. State Farm. In Proudfoot, the insurance activists on Michigan's Supreme Court exercised their majority muscle to protect auto insurers from statutorily-imposed liability for behavior that unreasonably delayed payment of PIP benefits. In circumstances similiar to Everett's, the Engler Majority held that State Farm was not accountable for attorney's fees because the injury victim had not yet "incurred" related home improvement expenses---even though the expenses were not incurred because State Farm had unreasonably delayed approval and therefore blocked needed medical accommodations.
In the Everett case, however, two of the three sitting judges determined that Proudfoot could be distinguished, and forced Auto Owners to indemnify Everett for the modest attorney's fees he incurred to secure statutorily-mandated medical expenses. The third judge pointed out that however unfair Auto Owners' behavior may have been, it was really indistinguishable from the ruling in Proudfoot.