Liberty Mutual Fire Insurance Company v. Michael T Ross, 332597

Background

In a 2010 car accident Michael Ross suffered a traumatic brain injury; Liberty Mutual (his no-fault insurer) paid PIP benefits, including wage-loss payments.
Liberty Mutual encouraged Ross to apply for Social Security Disability; SSA awarded benefits effective July 2010, and Liberty Mutual sought reimbursement under MCL 500.3109(1) of $35,501.60 for duplicated benefits.
Ross did not reimburse; Liberty Mutual sued. Ross answered, asserted affirmative defenses (including that Liberty Mutual’s claim is barred by the wrongful-conduct rule), and filed a counterclaim alleging breach of contract and unjust enrichment for Liberty Mutual’s alleged failure to pay reasonable and necessary rehabilitation (including vocational rehabilitation) expenses.
Liberty Mutual moved for summary disposition under MCR 2.116(C)(8), (C)(9), and (C)(10). The trial court granted summary disposition for Liberty Mutual on all claims and entered judgment; Ross appealed.
The Court of Appeals affirmed Liberty Mutual’s reimbursement claim but reversed dismissal of Ross’s counterclaim as to unpaid rehabilitation expenses, finding triable issues of fact regarding whether the claimed expenses were reasonably necessary vocational rehabilitation to restore Ross to his preinjury condition.

Issues

Issue	Plaintiff's Argument (Liberty Mutual)	Defendant's Argument (Ross)	Held
1. Is Liberty Mutual entitled to reimbursement under MCL 500.3109(1)?	Yes—SSA benefits duplicate PIP; Ross admitted policy and SSA award, so Liberty Mutual is entitled to repayment.	The wrongful-conduct rule bars reimbursement because Liberty Mutual induced Ross to apply for SSD and thereby caused false/fraudulent claims.	The Court held reimbursement was proper; wrongful-conduct rule not implicated—no evidence Liberty Mutual caused Ross to commit fraud.
2. Did Ross state a valid affirmative defense that bars Liberty Mutual’s claim?	N/A (Liberty sought dismissal).	Liberty Mutual’s conduct was illegal/caused fraudulent SSD application, so claim should be barred.	Rejected—Ross presented no evidence of fraud or of Liberty requiring false statements; defense fails.
3. Are the disputed rehabilitation expenses "reasonable and necessary" PIP benefits under MCL 500.3107(1)(a)?	The expenses are routine licensure/maintenance costs, not compensable vocational rehab.	The costs (CEUs, supervised mentorship, specialized indemnity insurance, re-credentialing) were part of cognitive vocational rehabilitation necessary to restore Ross to preinjury work.	The Court held there is a factual dispute; summary disposition improper as to counterclaim—issues for jury.
4. Were the claimed rehabilitation expenses "incurred" as required by §3107(1)(a)?	Argues they were not incurred (thus not payable).	Ross contends services were rendered or are required as part of rehab.	Court declined to decide; remanded for trial/court to address whether expenses were incurred.

Key Cases Cited

Orzel v. Scott Drug Co., 449 Mich 550 (1995) (wrongful-conduct rule requires plaintiff’s conduct to be criminal/penal to bar claim)
Douglas v. Allstate Ins. Co., 492 Mich 241 (2012) (elements for PIP recovery under MCL 500.3107(1)(a): care/recovery/rehabilitation, reasonably necessary, incurred, reasonable charge)
Krohn v. Home–Owners Ins. Co., 490 Mich 145 (2011) (objective standard for "reasonably necessary"—fact question)
Griffith v. State Farm Mut. Auto. Ins. Co., 472 Mich 521 (2005) (definitions of "recovery" and "rehabilitate"—restore to preinjury condition)
Maxwell v. Citizens Ins. Co. of Am., 245 Mich App 477 (2001) (vocational rehabilitation is an allowable PIP expense)
Maiden v. Rozwood, 461 Mich 109 (1999) (standards for MCR 2.116(C)(8) pleadings review)
Barnard Mfg. Co. v. Gates Performance Eng’g, Inc., 285 Mich App 362 (2009) (appeal timeliness and final order rules)
Nelson v. Detroit Inter-Ins. Exch., 137 Mich App 226 (1984) (disputes over reasonable necessity for rehab are factual issues for jury)