BEACH v STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Docket No. 174556
216 MICH APP 612
May 17, 1996
Submitted November 14, 1995, at Grand Rapids. Decided May 17, 1996, at 9:00 A.M. Leave to appeal sought.
The Court of Appeals held:
- Error requiring reversal cannot be attributed to the verdict form for the absence of a question asking whether the plaintiff‘s injury arose out of the accident and for the presence of a question asking the jury to choose the type of future medical treatment from among four options. The verdict form asked the jury to determine whether the plaintiff incurred expenses arising out of the accident, and the trial court instructed the jury that the plaintiff needed to prove that his injury arose out of the operation of a motor vehicle and that the jury needed to base any award on the accident alone. Case law exists in support of permitting the jury to determine the type of medical treatment needed in the future.
- The trial court abused its discretion in not imposing sanctions on the plaintiff, pursuant to
MCR 2.313(B)(2) , for the plaintiff‘s failure to supplement answers to the defendant‘s interrogatories concerning the plaintiff‘s proposed expert witness and failure to pro-vide the defendant with a copy of that witness’ written evaluation of the plaintiff until shortly before the trial. On remand, the trial court must conduct a hearing concerning reasonable sanctions for these discovery violations by the plaintiff. - The trial court did not abuse its discretion in excluding from evidence an audit report on bills generated by a rehabilitation service for the plaintiff‘s treatment. The report was not kept in the course of a regularly conducted business activity and therefore does not satisfy the hearsay exception for records of regularly conducted activity.
- Costs may be awarded to a prevailing party only where an award of costs is authorized by statute. The fact that the plaintiff incurred expenses in obtaining copies of his medical and other records does not entitle the plaintiff to an award of costs under
MCL 600.2405(1) ;MSA 27A.2405(1) . Costs may be awarded for such expenses underMCL 600.2549 ;MSA 27A.2945 if the documents were obtained from a public office, were certified copies, and were necessarily used at trial. On remand, the trial court must determine whether the plaintiff is entitled to costs underMCL 600.2549 ;MSA 27A.2945 . - Prejudgment interest was properly awarded for benefit claims that had already been denied by the defendant when the plaintiff filed his complaint in this action, but was improperly denied for benefit claims denied after the complaint was filed and before judgment was entered. On remand, the plaintiff must be awarded additional prejudgment interest for claims denied after the complaint was filed. Such additional interest is payable from the date each claim was denied to the date of the judgment.
- Mediation sanctions must be reconsidered on remand in light of changes that will be made to the amount of plaintiff‘s recovery as a result of the Court of Appeals determination with respect to costs and prejudgment interest. The plaintiff is entitled to actual costs, including attorney fees, pursuant to
MCR 2.403(O) if it is determined that the plaintiff improved his position by more than ten percent after trial. - The trial court properly denied the defendant‘s request for attorney fees under
MCL 500.3148(2) ;MSA 24.13148(2) after correctly ruling that the plaintiff‘s claims for wage loss and replacement service benefits were not fraudulent or unreasonable. - The trial court properly denied the plaintiff‘s request for attorney fees under
MCL 500.3148(1) ;MSA 24.13148(1) in light of the jury‘s finding that no benefits were overdue for purposes ofMCL 500.3142 ;MSA 24.13142 . The jury‘s determination that no benefits were overdue precluded an award of attorney fees to the plaintiffbecause attorney fees are awardable to a claimant only where personal or property protection insurance benefits are overdue.
Affirmed in part, reversed in part, and remanded.
MICHAEL J. KELLY, J., concurring in part and dissenting in part, stated that sanctions should not be imposed on the plaintiff for the delay in providing the defendant with a copy of the written evaluation of the plaintiff‘s proposed expert witness. The delay was not unreasonable and did not impose a hardship on the defendant, and no discovery order was violated.
- PRETRIAL PROCEDURE — DISCOVERY — SUPPLEMENTATION OF RESPONSES.
A party whose response to a request for discovery was complete when made must seasonably supplement its response to include information acquired later where the request relates to the identity of a person expected to be called as an expert witness, the subject matter on which the expert is expected to testify, and the substance of the expert‘s testimony; failure to supplement makes the party subject to sanctions as provided in
MCR 2.313(B) (MCR 2.302[E][1][a][ii] ). - COSTS — PREVAILING PARTIES — STATUTORY BASIS.
The prevailing party in an action may recover only those costs that are statutorily authorized for a prevailing party (
MCR 2.625[A] ). - INTEREST — PREJUDGMENT INTEREST — INSURANCE BENEFITS.
Prejudgment interest on an award of money damages for insurance claims wrongfully denied by the insurer is awarded from the date of the complaint to the date of the judgment for a claim denied before the date of the complaint and from the date a claim is denied to the date of the judgment for claims denied after the date of the complaint (
MCL 600.6013 ;MSA 27A.6013 ). - INSURANCE — NO-FAULT — FRAUDULENT, EXCESSIVE, OR UNREASONABLE CLAIMS — ATTORNEY FEES.
A trial court‘s finding with respect to whether a claim for personal or property protection insurance benefits is so fraudulent, excessive, or unreasonable as to warrant, in an action for such benefits, an award of reasonable attorney fees to the insurer will not be reversed on appeal unless it is clearly erroneous (
MCL 500.3148[2] ;MSA 24.13148[2] ). - INSURANCE — NO-FAULT — DELAY IN PAYMENT OF CLAIMS — ATTORNEY FEES.
Attorney fees may be awarded to a claimant in an action for personal or property protection insurance benefits where such benefits are overdue and the trial court finds that the insurer unreasonably refused or delayed proper payment; the trial court‘s finding with
respect to unreasonable refusal or delay is reviewed on appeal for clear error ( MCL 500.3148[1] ;MSA 24.13148[1] ).
Logeman & Associates, P.C. (by James A. Iafrate), for the plaintiff.
Shaner & Olsen, P.C. (by Robert John Daly), for the defendant.
Before: DOCTOROFF, C.J., and MICHAEL J. KELLY and MARKEY, JJ.
MARKEY, J. In November 1988, plaintiff was involved in a one-car accident and suffered severe injuries to his face and head. Defendant, plaintiff‘s no-fault insurance provider, paid $41,271.66 in no-fault benefits for plaintiff through December 1991. In 1992, the Department of Social Services referred plaintiff to a psychologist who would determine plaintiff‘s eligibility for a DSS program exchanging volunteer work for welfare benefits. Dr. Rosenbaum, the psychologist, concluded that residual effects from the 1988 accident were exacerbating plaintiff‘s prior learning difficulties and recommended that plaintiff receive vocational and other rehabilitation at Ann Arbor Rehabilitation Services, which was owned in part by the psychologist. Defendant refused to pay for this treatment1 because defendant could not determine whether plaintiff‘s rehabilitation was related to the accident. According to defendant, plaintiff dropped out of school in the eighth grade, intelligence tests showed that plaintiff was functioning at lower levels, and plaintiff suffered closed head injuries from a 1977 motorcycle accident
Plaintiff filed an action requesting that defendant fulfill its contractual obligations as plaintiff‘s no-fault insurer and also asked for a declaratory ruling concerning defendant‘s responsibility for plaintiff‘s future rehabilitation. A jury awarded plaintiff $17,500 and found that plaintiff was entitled to future vocational counseling, psychiatric or psychological care, and therapy for traumatic brain injury. The jury refused, however, to require that defendant pay for plaintiff‘s future physical therapy or pay a no-fault interest penalty. On the basis of the jury‘s refusal to award interest, the court also denied plaintiff‘s request for attorney fees,
I
First, defendant asserts that the trial court committed error requiring reversal because the jury verdict form was defective in that (1) it did not ask whether plaintiff‘s injuries arose out of the November 1988 accident, and (2) it asked the jury to determine what future medical treatment plaintiff needed. After reading the jury verdict form in conjunction with the jury instructions, we disagree. The first and fourth questions on the jury verdict form state:
Question No. 1: Did the plaintiff incur “allowable expenses” arising out of a November 28, 1988 motor vehicle accident which are defined as reasonable charges for reasonably necessary products, services, and accommodations for the plaintiff‘s care, recovery, or rehabilitation?
Question No. 4: Which of the following types of medical care arises out of the November 28, 1988 accident and [are] reasonable and necessary for [plaintiff‘s] care, recovery, or rehabilitation at the present time:
a. Physical [t]herapy and treatment?
b. Psychiatric or psychological care?
c. Traumatic brain injury therapy?
d. Vocational counseling? [Emphasis added.]
While we acknowledge that the verdict form did not contain a separate question asking the jury whether plaintiff‘s injuries arose out of the subject accident, the trial court remedied any doubt left open by the verdict form when it correctly instructed the jury. Specifically, the trial court informed the jury that in order for plaintiff to recover no-fault benefits from defendant, plaintiff had to prove, first, that his injuries arose out of the operation of a motor vehicle as a motor vehicle. The court also instructed that the jury must determine an award based on the 1988 accident
We also believe that the trial court did not err in permitting the jury to determine the type of future medical treatment that plaintiff would need. See Manley v DAIIE, 425 Mich 140, 157-159; 388 NW2d 216 (1986); Moghis v Citizens Ins Co, 187 Mich App 245, 248; 466 NW2d 290 (1991). Accordingly, defendant properly was found responsible for certain expenses payable in the future related to plaintiff‘s psychiatric or psychological care, therapy for traumatic brain injury, and vocational counseling. Manley, supra; Moghis, supra.
II
Next, defendant asserts that the court abused its discretion when it failed to exclude plaintiff‘s expert, Dr. Gerald Shiener, from testifying after plaintiff failed to provide to defendant a copy of Dr. Shiener‘s evaluation regarding plaintiff‘s condition until after defendant filed its motion in limine, which was just before trial. We agree that some sanctions are in order. We review for abuse of discretion the decision whether to impose sanctions for discovery violations. Merit Mfg & Die, Inc v ITT Higbie Mfg Co, 204 Mich App 16, 21; 514 NW2d 192 (1994).
Here, plaintiff listed Dr. Shiener as an expert, and defendant sent interrogatories inquiring about this expert‘s treatment and evaluation of plaintiff. The interrogatories requested not only a summary of the
Although the trial court overlooked it,
III
Defendant further challenges the trial court‘s denial of its request to admit into evidence an audit report on the bills Ann Arbor Rehabilitation Services generated with respect to plaintiff. We find that the trial court did not abuse its discretion when it excluded from evidence an audit report that defendant had prepared in anticipation of litigation. See Cleary v Turning Point, 203 Mich App 208, 210; 512 NW2d 9 (1994). Given that defendant failed to make Martha Shipley, the nurse who wrote the audit report, available for
IV
Defendant also challenges the trial court‘s decision to award as taxable costs the cost that plaintiff incurred in procuring copies of plaintiff‘s medical and other records that were not introduced at trial. Although we find that the trial court abused its discretion when it awarded costs to plaintiff with respect to documents that plaintiff obtained from private entities, we recognize that there is a dearth of case law in this complex area. See Herrera v Levine, 176 Mich App 350, 356-357; 439 NW2d 378 (1989).
While “expenses” is used by the Michigan Court Rules in its generic sense, i.e., the reasonable charges, costs, and expenses incurred by the party directly relating to the litiga-
tion, “costs” or “taxable costs” are strictly defined by statute, and the term is not as broad. . . .
MCR 2.625(A) states the starting presumption, that in any action or proceeding, whether legal or equitable, costs shall be allowed as a matter of course to the prevailing party. This does not mean, of course, that every expense incurred by the prevailing party in connection with the proceeding may be recovered against the opposing party. The term “costs” as used [in]MCR 2.625(A) takes its content from the statutory provisions defining what items are taxable as costs.
Plaintiff asserts that
Likewise,
On remand, therefore, the trial court should determine whether records (such as the records from the Lenawee Social Security Office) that form the basis for plaintiff‘s request for taxable costs (1) are documents obtained from a public office, (2) are “certified copies,” i.e., “cop[ies] of a document or record, signed and certified as a true copy by the officer to whose custody the original is intrusted,”3 and (3) were “necessarily used” at trial. Herrera, supra at 358. Thus, for any document that does not fulfill all three prerequisites, plaintiff cannot tax costs for that document under
V
Defendant also argues that the trial court erred in awarding plaintiff prejudgment interest on those claims that existed at the time plaintiff filed his complaint because the jury found that no benefits were overdue. On cross appeal, plaintiff argues that the trial court erred in granting prejudgment interest only on medical expenses incurred before the complaint was filed instead of on the entire amount of medical expenses from the date of his complaint. We review de novo the award of prejudgment interest pursuant
For claims that arise after the complaint is filed, however, it is erroneous to award prejudgment interest from the date of the complaint because “[s]uch an award exceeds the purpose of compensating for a delayed payment, overcompensates for the related litigation, and departs from the purpose of providing an incentive for prompt settlement by both imposing a penalty upon the defendant and conferring a favor upon the plaintiff.” McKelvie, supra at 339. Rather, prejudgment interest regarding subsequent claims would be properly awarded from the “date of delay,”
In the case at bar, the trial court awarded prejudgment interest on all claims that had occurred before and on the date that plaintiff filed his complaint, but it refused to order interest on those claims that arose after the complaint was filed. We agree that plaintiff is entitled to prejudgment interest for all rehabilitation bills that were due and owing but that defendant refused to pay as of the date that plaintiff filed his complaint. In this situation, the interest will be calculated from the date the complaint was filed to the date the judgment was entered. Id.;
We disagree, however, with the court‘s conclusion that plaintiff was not entitled to any other prejudgment interest. McKelvie, supra at 333, 339-340, establishes that plaintiff is entitled to additional prejudgment interest from the date that defendant refused to pay bills as they became due after the complaint was filed, not from the date that plaintiff filed his complaint. This way, plaintiff cannot receive retroactive interest on rehabilitation bills that were neither incurred nor due when the complaint was filed. Id. On remand, the trial court should recalculate plaintiff‘s prejudgment interest accordingly.
VI
Next, defendant challenges the trial court‘s award of mediation sanctions and the amount of those sanctions on the basis that the jury verdict plus assessable costs and interest did not exceed the mediation evaluation by more than ten percent. A trial court‘s award
The mediation panel unanimously awarded $17,573.75 in plaintiff‘s favor on October 14, 1993. Assuming that plaintiff raised the same issues at mediation and at trial,5 the court should add to the $17,500 jury verdict all assessable costs, including costs taxable in a civil action and a reasonable attorney fee incurred from the date of mediation, as well as any interest on the verdict amount from the date the complaint was filed to the date of the mediation evaluation, in order to determine whether plaintiff improved his position at trial by more than ten percent, i.e., plaintiff received more than $19,331.12.
VII
Finally, defendant argues that the trial court erred in denying defendant‘s motion for attorney fees pursu-
An insurer may be allowed by a court an award of a reasonable sum against a claimant as an attorney‘s fee for the insurer‘s attorney in defense against a claim that was in some respect fraudulent or so excessive as to have no reasonable foundation.
Generally, the decision to award or deny attorney fees is reviewed for an abuse of discretion. Haberkorn, supra; Cleary, supra at 210-211. A trial court‘s findings regarding the fraudulent, excessive, or unreasonable nature of a claim should not be reversed on appeal unless they are clearly erroneous. Accord McCarthy v Auto Club Ins Ass‘n, 208 Mich App 97, 103; 527 NW2d 524 (1994); McKelvie, supra at 335.
Here, the trial court denied defendant‘s request because plaintiff‘s claims for wage loss and replacement service were not unreasonable, given plaintiff‘s treatment of those claims before and during trial. Upon reviewing the record, we believe that the trial court was not clearly erroneous in its finding of reasonableness. The absence of any jury instructions or verdict form questions regarding these damages as well as plaintiff‘s statements during opening arguments that he was not seeking wage-loss benefits and plaintiff‘s interrogatory answers that he may not be entitled to these benefits evidenced that plaintiff had
VIII
On cross appeal, plaintiff also challenges the trial court‘s refusal to award attorney fees pursuant to
An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue. The attorney‘s fee shall be a charge against the insurer in addition to the benefits recovered, if the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment. [Emphasis added.]
Our research has revealed no cases addressing whether the jury‘s finding that personal protection insurance (PIP) benefits were not overdue for purposes of
Accordingly, in the absence of a contrary statutory definition of the term “overdue,” we find that the jury‘s determination that plaintiff‘s benefits were not “overdue” for purposes of the no-fault penalty interest provision,
Affirmed in part, reversed in part, and remanded to the trial court for proceedings consistent with this Court‘s opinion. We do not retain jurisdiction.
DOCTOROFF, C.J., concurred.
MICHAEL J. KELLY, J. (concurring in part and dissenting in part). I concur in part and dissent in part. I join the majority opinion in parts I, III, IV, V, VI, VII, and VIII, but dissent with respect to part II, with regard to which I would affirm the decision of the trial court.
The majority cites
Both cases cited by the majority involved the imposition of sanctions following a long history of egregious discovery violations not found in the case at bar. The first featured a plaintiff who, months after the expiration of the local court rule deadline, had not filed a witness list and additionally failed to answer interrogatories about any witness for more
The second case relied upon by the majority dealt with dismissal of an action because of the plaintiff‘s violation of a direct order of the court involving discovery matters. Barlow v John Crane-Houdaille, Inc, 191 Mich App 244; 477 NW2d 133 (1991). The trial court there noted how the defendant was significantly prejudiced by the late receipt of materials necessary for mediation hearings and summary disposition motion deadlines. Id. at 252. Clearly, no court orders were violated here, and the majority‘s skepticism of plaintiff‘s motives for this short delay is merely speculative.
I find no abuse of discretion and hence would affirm. The trial court is in the best position to evaluate the modest delay regarding disclosure of the proposed testimony of Dr. Shiener, and, since that court has already done so, there is no need for any remand.
