What happens when a no-fault carrier identifies a higher priority carrier during litigation, and after the one year notice period has expired? We recently learned the answer from the Michigan Supreme Court in Griffin v Trumbull. While the claimant is required to exercise reasonable diligence to identify the highest priority, it is ultimately up to the default carrier to investigate and identify the higher priority carrier and take action to preserve the claim. This has major implications for how Michigan insurance carriers handle this situation going forward.
The Facts
Willie Griffin was the named insured on a personal automobile with Trumbull Insurance Company. On May 6, 2016, he was operating a motorcycle that was struck by a truck[1]. The responding police officer obtained the name of the truck driver and his contact information, but did not obtain any information regarding the vehicle. Mr. Griffin retained an attorney and, five days later, the attorney sent a letter to the truck driver requesting that he notify his insurance carrier. The attorney never received a response.
The attorney provided notice of the claim to Trumbull Insurance Company on June 30, 2016. Trumbull responded that it needed to investigate the claim. Trumbull also attempted to contact the driver. However, after no success, it eventually closed its file in December 2016. Trumbull’s attorney requested a status on the claim at that time, which went unanswered. Trumbull’s attorney then placed the Michigan Assigned Claims Plan on notice, as well as two other lower priority insurers. Eventually suit was filed against these carriers in April 2017, after the attorney hired an investigator who also failed to locate any additional coverage.
During discovery, the deposition of the truck driver was taken. At that time, it was learned that the truck was owned by Pavex and was insured through Harleysville. Unfortunately, though, Harleysville was never put on notice within one year of the accident, as required by MCL 500.3145. Trumbull filed a motion for summary disposition, arguing that it was not the highest carrier in the order of priority to pay no-fault benefits. The trial court granted the motion, finding that Griffin did not engage in reasonable diligence to locate the carrier. The Court of Appeals affirmed, finding instead that since a higher priority carrier was identifiable, Trumbull was not responsible for benefits.
The Ruling
The Michigan Supreme Court reversed, and found that Trumbull was responsible for no-fault benefits. The Court noted that the initial onus was on the injured person to claim benefits within the statutory framework, which the Court interpreted here as placing potential insurers on notice and submitting claims for payment. While due diligence was required, it does not require a claimant to perform impossible or impermissible acts. The Court also weighed heavily the obligation of insurance carriers under the provisions of the Michigan No Fault Act which, when read together, establish that “an insurer who receives a claim for PIP benefits prior to the expiration of the limitation period must act diligently when investigating, responding to, and resolving the claim, and the provisions provide a strong financial incentive to do so.” An insurer is not permitted to delay payment of an otherwise valid claim based on a priority, and insurance carriers have avenues to recoup payments and pursue equitable subrogation.
The Court found that Griffin acted diligently under the circumstances by informing all known carriers and making several attempts to ascertain the coverage on the truck. Conversely, Trumbull indicated that it was investigating the claim, did not pay or deny the claim, and did not respond to inquiries from Griffin’s attorney. It closed its investigation four months prior to the one year limitation period and did not share its investigation with the claimant. It also did not formally deny the claim until the matter was in litigation. While Griffin could have filed suit and utilized subpoena power, he did not know he was required to do so when his claim had not been denied.
The Court noted that, when the presumed highest priority insurer cannot be identified, an injured party should be able to look to another insurer in the order of priority, such as the default PIP insurer (i.e., the person’s own policy) or the MACP. The Court cautioned “[w]hat Trumbull could not do was leave its insured in limbo for nearly a year under the guise of investigation, while refusing to pay or deny the pending PIP benefits claim and then pull the rug out after a lawsuit was filed and the limitations period in MCL 500.3145(1) had run.”
The Takeaway
When an insurer is the highest (known) priority insurer, and another higher insurer may be ascertainable, the insurer must aggressively investigate the existence of that carrier. Furthermore, the carrier must communicate with the claimant on several issues, including the facts of its order of priority investigation, and the status of the claim. The Court noted in its opinion that Trumbull had several options, including denying the claim and forcing litigation, or paying the claim and seeking recoupment from the responsible carriers. In either scenario, it is imperative to communicate the claims decision to the claimant.
Had Trumbull denied the claim, potentially on a basis of not having reasonable proof, leaving sufficient time for Griffin to file suit, Trumbull may have had a more persusive argument that Griffin did not engage in due diligence. Conversely, had Trumbull promptly paid, it would have been able to bring an action against 3 other carriers, and use subpoena authority to get the facts needed to complete its investigation. Either way, carriers need a process in place to quickly handle these claims to have a chance to avoid being held responsible for another carrier’s obligations.
[1] With the accident involving a motorcycle, the controlling order of priority is MCL 500.3114(5), which requires a claimant to seek benefits from carriers in the following order: (1) insurer of the owner of the motor vehicle involved, (2) insurer of the operator of the motor vehicle involved, (3) the motor vehicle insurer of the operator of the motorcycle, and (4) the motor vehicle insurer of the owner of the motorcycle.
