Pioneer State Mutual Insurance Company v. Vanetta Wright
335025
| Mich. Ct. App. | Dec 14, 2017Background
- On Sept. 13, 2013, Dana Harris was injured as a passenger in a car insured by State Farm; Harris had no vehicle or PIP policy.
- Harris sought PIP benefits from Pioneer under a policy issued to his mother, Vanetta Wright. Pioneer denied payment; Harris sued Pioneer and later added State Farm; medical providers intervened seeking payment.
- Pioneer later filed a separate declaratory action seeking rescission of Wright’s policy, alleging Wright failed to disclose Harris as a household resident when applying for insurance.
- Key factual dispute (but largely undisputed evidence): Harris moved into Wright’s apartment in late 2012, had his own bedroom, received some mail there, intended to remain, and had no other lodging; some records (DMV, employer, accident report) listed a Macomb address.
- Trial court held Harris was a resident relative domiciled with Wright (making Pioneer first-priority insurer) and applied the innocent-third-party rule to allow Harris benefits even if Wright committed fraud; the court dismissed Pioneer’s declaratory action on laches grounds.
- The Court of Appeals affirmed domicile, reversed the innocent-third-party holding (following Bazzi), reversed dismissal of Pioneer’s rescission suit on laches grounds, and rejected providers’ direct claims under Covenant Med Ctr.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Harris was domiciled with Wright for MCL 500.3114 priority | Harris: lived with Wright, had bedroom, intended to remain, dependent | Pioneer: DMV/employment records show Macomb address; Wright didn’t list him on application | Affirmed: Harris was domiciled with Wright; Pioneer not first-priority under (4) because (1) applies |
| Whether innocent-third-party rule allows Harris to recover PIP if policy procured by fraud | Harris: he did not participate in any fraud, so innocent-third-party rule protects his claim | Pioneer: Wright’s omission was material; insurer may rescind policy for fraud | Reversed: innocent-third-party rule rejected for no-fault PIP claims per Bazzi; insurer may rescind for fraud and deny benefits |
| Whether Pioneer’s rescission suit was barred by laches | Pioneer: timely filed after legal developments; acted with diligence once law clarified | Harris/others: Pioneer delayed despite early knowledge, causing prejudice | Reversed dismissal: delay not unreasonable given prior law; laches did not bar Pioneer’s declaratory action |
| Whether provider plaintiffs may directly sue Pioneer for no-fault benefits and recover interest/fees | Providers: entitled to recover unpaid charges, interest, and fees under no-fault statutes | Pioneer/Harris: providers lack statutory cause of action to sue insurers directly | Affirmed denial of providers’ summary disposition: providers have no statutory right to sue insurers for no-fault benefits (per Covenant), so no statutory interest or fees |
Key Cases Cited
- Bazzi v. Sentinel Ins. Co., 315 Mich. App. 763 (Mich. Ct. App. 2016) (rejected innocent-third-party rule for no-fault PIP; insurer may rescind for fraud)
- Titan Ins. Co. v. Hyten, 491 Mich. 547 (Mich. 2012) (fraud is defense to insurance contract except as limited by statute)
- Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191 (Mich. 2017) (healthcare providers have no statutory cause of action against no-fault insurers)
- Corwin v. DaimlerChrysler Ins. Co., 296 Mich. App. 242 (Mich. Ct. App. 2012) (discussing priority under MCL 500.3114)
- Fowler v. Auto Club Ins. Ass’n, 254 Mich. App. 362 (Mich. Ct. App. 2002) (factors for determining domicile)