Garden City Rehab LLC v. National General Insurance Co, 331688

Background

On July 11, 2014, Nietesha Lowe was listed as a passenger in a vehicle involved in a reported collision; Allen Baity was the driver and Dave Smith another passenger. Lowe’s address was listed as 8150 Esper, Detroit.
Defendant (National General Insurance) had issued a no-fault policy to Smith that was effective July 5–12, 2014; plaintiffs (medical and transportation providers) submitted bills for services they provided to Lowe and sued for payment of PIP benefits.
Defendant attempted to depose Lowe, Baity, and Smith to investigate the claim but was unable to effect personal service and sought substituted service; the trial court granted alternative service and ordered Lowe’s deposition.
Lowe repeatedly failed to appear for scheduled interviews and two depositions; defendant moved for summary disposition under the policy’s cooperation clause, arguing refusal to cooperate defeated the claim.
The trial court initially denied summary disposition but later granted defendant’s motion and dismissed plaintiffs’ action after Lowe still failed to appear; plaintiffs’ reconsideration was denied.
The Court of Appeals affirmed, reasoning plaintiffs produced no admissible evidence showing Lowe was entitled to no-fault benefits and the trial court did not abuse its discretion in dismissing for noncooperation and granting summary disposition.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a provider can recover PIP benefits when the injured person (Lowe) fails to cooperate with insurer investigation	Provider argues injured person’s noncooperation does not bar provider’s claim for benefits	Insurer contends noncooperation by the injured person frustrates investigation and warrants denial/dismissal under cooperation clause	Held: Dismissal and summary disposition for insurer affirmed—the lack of cooperation and absence of admissible proof of entitlement defeated the claim
Whether Lowe, a nonparty to the insurance contract, is bound by the policy’s cooperation clause	Plaintiffs: Lowe is not a party, so clause cannot be enforced against her to defeat provider’s claim	Defendant: Noncooperation by the insured/claimant prevents insurer from verifying entitlement and supports dismissal of provider’s suit	Held: Court treated noncooperation as dispositive here because plaintiffs offered no admissible evidence independent of Lowe’s cooperation to establish entitlement
Whether summary disposition under MCR 2.116(C)(10) was appropriate	Plaintiffs: Factual disputes exist; dismissal improper without trial	Defendant: No genuine issue of material fact—no admissible evidence that Lowe is entitled to benefits	Held: (C)(10) grant affirmed—plaintiffs failed to present specific admissible facts to create a triable issue
Whether the trial court abused its inherent authority to sanction/dismiss for failure to cooperate	Plaintiffs: Dismissal was an abuse of discretion	Defendant: Court has inherent authority to manage cases and sanction noncooperation	Held: No abuse of discretion; dismissal within court’s inherent powers and within principled outcomes

Key Cases Cited

Maiden v. Rozwood, 461 Mich. 109 (1999) (summary disposition under MCR 2.116(C)(10) requires the nonmoving party to present specific admissible facts creating a genuine issue of material fact)
Shallal v. Catholic Social Services of Wayne County, 455 Mich. 604 (1997) (standard for summary disposition and definition of genuine issue of material fact)
Maldonado v. Ford Motor Co., 476 Mich. 372 (2006) (trial courts possess inherent authority to sanction litigants, including dismissal)
Brenner v. Kolk, 226 Mich. App. 149 (1997) (appellate review of a trial court’s exercise of inherent authority limited to abuse of discretion)
Covenant Medical Center, Inc. v. State Farm Mutual Automobile Insurance Co., 500 Mich. 191 (2017) (healthcare providers lack a statutory cause of action against no-fault insurers for PIP benefits)