Valerie Urech v. Pioneer State Mutual Insurance Co ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
VALERIE URECH, UNPUBLISHED
July 2, 2019
Plaintiff-Appellee,
and
JAGANNATHAN NEUROLOGICAL
INSTITUTE PLLC,
Intervening plaintiff-Appellee
v No. 339784
Wayne Circuit Court
PIONEER STATE MUTUAL INSURANCE LC No. 16-013750-NF
COMPANY,
Defendant-Appellant.
Before: SHAPIRO, P.J., and BECKERING and M. J. KELLY, JJ.
PER CURIAM.
In this no-fault personal protection insurance (PIP) case, defendant, Pioneer State Mutual
Insurance Company, appeals as of right the trial court order denying its motion for summary
disposition under MCR 2.116(C)(10). Because plaintiff, Valerie Urech, failed to establish the
existence of a genuine issue of material fact on the issue of fraud, we reverse and remand for
entry of an order granting Pioneer summary disposition.
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I. BASIC FACTS
On July 14, 2016, Urech was driving her husband to a doctor’s appointment when she
briefly lost consciousness and crashed her vehicle.1 Urech sustained injuries in the accident that
required hospitalization and surgery. She was released from the hospital on July 20, 2016. A
nurse practitioner prescribed her with 24-hour per day attendant care and daily replacement
services. Urech’s son, Brian Urech, and Brian’s fiancée, Kelly Haynie,2 agreed to assist. At the
time of the crash, Urech had a no-fault automobile insurance policy with Pioneer, and she sought
first-party benefits pursuant to that policy.
Through her lawyer, Urech sent Pioneer letters in August 2016, September 2016, and
November 2016; the letters demanded Pioneer remit payment to Urech and her lawyers for
attendant care, replacement services, and medical mileage. Attached to the letters were forms
stating that the attendant-care services were performed by Brian and Kelly and listing the number
of hours per day Brian and Kelly provided those services. The attendant-care forms were signed
by Brian, Kelly, and Urech. 3
In October 2016, Urech filed suit against Pioneer, asserting that Pioneer had failed to pay
the no-fault benefits due and owing under her insurance policy. In response, Pioneer asserted
that Urech’s entitlement to no-fault benefits under her policy was in dispute. Subsequently,
Pioneer moved for summary disposition under MCR 2.116(C)(10), contending that Urech’s no-
fault policy was void under the rescission clause in the policy. The rescission provision states:
The entire policy will be void if, in obtaining or maintaining this policy, or
whether before or after a loss, you, an “insured”, a “family member” or any other
person seeking coverage has:
1. Intentionally concealed or misrepresented any material fact or
circumstance;
2. Engaged in fraudulent conduct; or
3. Made false statements;
1
In the lower court proceedings there was some evidence suggesting that Urech deliberately
crashed the vehicle; however, that factual discrepancy is not relevant to the issues raised on
appeal. Further, when reviewing a motion for summary disposition, we view the facts in the
light most favorable to the non-moving party, which is in this case is Urech. See Klein v HP
Pelzer Auto Sys, Inc, 306 Mich. App. 67, 75; 854 NW2d 521 (2014).
2
Kelly married Brian in January 2017. Therefore, at the times relevant to the issue on appeal,
she was not Urech’s family member as that term is defined by Urech’s no-fault policy.
3
In addition, in November 2016 and December 2016, McGuffey Home Care submitted “health
insurance claim forms” to Pioneer for the attendant-care services being provided by Kelly and
Brian.
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relating to this insurance.
Pioneer argued that the attendant-care forms contained material false statements. In particular,
Kelly admitted in her deposition that she had claimed to have provided 12-hours of services to
Urech, even on days when she was in a different city or a different state. Brian also admitted
that Kelly did not provide attendant-care services for 12 hours each day, although he added that
he was present and providing those services for 24 hours each day despite the fact that he only
claimed 12 hours daily. Pioneer argued that Kelly, Brian, and Urech each committed fraud
sufficient to trigger the rescission clause because they each signed the forms, thereby verifying—
falsely—that Kelly had provided 12 hours of care to Urech even on days when she was not
present.
In response, Urech conceded that Kelly made material, false statements. However, she
asserted that at the time Kelly signed the forms she was not a “family member,” which was
defined by the policy to be “a person related to you by blood, marriage or adoption who is a
resident of your household.” Kelly was not related to Urech by blood, marriage, or adoption
when she signed the forms. Urech also contended that Brian was not a family member because,
when he signed the forms, he did not reside with Urech. Finally, Urech asserted that although
she had signed the forms, she could not make “competent statements regarding if she had ever
reviewed the forms that were submitted” because she was diagnosed with a traumatic brain
injury and the symptoms of that injury included short-term memory loss. Additionally, Urech
claimed that when she signed the forms she did not actually review the forms and was, in fact,
unaware of whether she signed them before or after they were filled in. Urech supported her
motion with medical records indicating that since the accident she had memory problems and
had, in fact, been diagnosed with a traumatic brain injury.
Following oral argument, the trial court determined that there was a question of fact with
regard to whether there was intent to defraud. Accordingly, the court denied Pioneer’s motion
for summary disposition. This appeal follows.
II. SUMMARY DISPOSITION
A. STANDARD OF REVIEW
Pioneer argues that the trial court erred by not granting summary disposition. The trial
court’s decision on a motion for summary disposition is reviewed de novo. MEEMIC Ins Co v
Fortson, 324 Mich. App. 467, 473; 922 NW2d 154 (2018), lv gtd 926 NW2d 805 (2019). A
motion under MCR 2.116(C)(10) tests the factual support for a claim. Urbain v Beierling, 301
Mich. App. 114, 122; 835 NW2d 455 (2013).
In evaluating a motion for summary disposition brought under Subrule (C)(10), a
reviewing court considers affidavits, pleadings, depositions, admissions, and other
evidence submitted by the parties in the light most favorable to the party opposing
the motion. Summary disposition is properly granted if the proffered evidence
fails to establish a genuine issue regarding any material fact and the moving party
is entitled to judgment as a matter of law. [Klein v HP Pelzer Auto Sys, Inc, 306
Mich. App. 67, 75; 854 NW2d 521 (2014).]
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B. ANALYSIS
1. BRIAN AND KELLY
Pioneer first argues that Brian and Kelly made fraudulent statements that triggered the
rescission clause in Urech’s no-fault policy. Again, that provision provides:
The entire policy will be void if, in obtaining or maintain this policy, or
whether before or after a loss, you, an “insured”, a “family member” or any other
person seeking coverage has:
1. Intentionally concealed or misrepresented any material fact or
circumstance;
2. Engaged in fraudulent conduct; or
3. Made false statements;
relating to this insurance.
Urech argues that the rescission clause does not apply to any statements made by Brian and
Kelly because they are not “family members” and they are not “seeking coverage” under the
policy. Pioneer responds that Brian and Kelly qualify as “any other person seeking coverage”
because they sought payment for benefits owed to Urech under the no-fault act.
When interpreting an insurance policy, we “must look to the language of the insurance
policy and interpret the terms therein in accordance with Michigan’s well-established principles
of contract construction,” the predominant rule being that “an insurance contract must be
enforced in accordance with its terms.” Henderson v State Farm Fire & Cas Co, 460 Mich. 348,
353-354; 596 NW2d 190 (1999). The goal in doing so “is to honor the intent of the parties.”
Tenneco Inc v Amerisure Mut Ins Co, 281 Mich. App. 429, 444; 761 NW2d 846 (2008). “When a
contract is unambiguous, it must be enforced according to its terms, and this Court must resist
‘the temptation to rewrite the plain and unambiguous meaning of the policy under the guise of
interpretation.’ ” Fortson, 324 Mich. App. at 481, quoting Upjohn Co v New Hampshire Ins Co,
438 Mich. 197, 207; 476 NW2d 392 (1991).
Here, the phrase “seeking coverage” is not defined by the policy. Undefined terms are
accorded their common meaning, which can be derived by reference to a dictionary. Fortson,
324 Mich. App. at 481. The term “coverage” is defined as “[i]nclusion of a risk under an
insurance policy; the risks within the scope of an insurance policy.” Black’s Law Dictionary (8th
deluxe ed). It is also defined by Merriam-Webster’s Collegiate Dictionary (11th ed) as
“[s]omething that covers: as a : inclusion within the scope of an insurance policy . . .” and as “all
the risks covered by the terms of an insurance contract . . .” Furthermore, in 1979, this Court
explained that the term “coverage” when used in connection with insurance means “protected by
the insurance policy.” Orr v Detroit Auto Inter-Ins Exchange, 90 Mich. App. 687, 690; 282
NW2d 177 (1979). In Jarrad v Integon Nat Ins Co, 472 Mich. 207, 213; 696 NW2d 621 (2005)
our Supreme Court relied on Orr for the proposition that “the word ‘coverage’ means protection
by an insurance policy . . .” Therefore, as it relates to insurance, the term “coverage” means the
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protection provided by an insurance policy. “Coverage” does not, therefore, include payments
for benefits made to individuals who provided services to a claimant who has coverage under the
terms of the policy.
Unsurprisingly, this interpretation is consistent with how Urech’s policy refers to the
term “coverage.” Broadly, the policy provides the following coverage: (1) liability coverage, (2)
no-fault coverage, (3) uninsured motorist coverage, and (4) underinsured motorist coverage.
Brian and Kelly are not “seeking” liability coverage, no-fault coverage, uninsured motorist
coverage, or underinsured motorist coverage. They are seeking payment for services that they
claim they provided to Urech. Moreover, Section VI of the no-fault policy addresses “duties
after an accident or loss,” and it expressly provides:
We have no duty to provide coverage under this policy unless there has
been full compliance with the following duties:
A. We must be notified promptly of how, when and where the accident or
loss happened. Notice should also include the names and addresses of any injured
persons and of any witnesses.
B. You, a family member, or any other person seeking coverage must:
1. Cooperate with us in the investigation, settlement or defense of any
claim or suit.
2. Promptly send us copies of any notices or legal papers received in
connection with the accident or loss.
3. As often as we reasonably require:
a. submit to physical exams by physicians we select. We will pay
for these exams.
b. Submit to examinations under oath, while not in the presence of
any other “insured” or “family member” and subscribe the same.
c. Produce representative, employees, members of your household
or others for examinations under oath to the extent it is within your
power to do so.
4. Authorize us to obtain:
a. Medical reports; and
b. Other pertinent record.
5. Submit a proof of loss when required by us. [Emphasis added.]
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As is clear from the above policy provisions, a person “seeking coverage” is a person seeking to
make a claim under the policy. In doing so, the person seeking coverage must fulfill enumerated
duties that would not be expected or required from a person providing services to an insured
person and then seeking payment for the services rendered. Consequently, based on the policy
language, Brian and Kelly—individuals seeking payment for benefits provided to Urech—cannot
trigger the rescission clause. Accordingly, to the extent that they made false or misleading
statements in connection with the attendant-care forms, their fraud is not a basis for voiding the
contract under the rescission clause. See Fortson, 324 Mich. App. at 484 (stating that fraud
committed by an individual not listed in a rescission clause is insufficient to trigger the fr
rescission clause).4
2. URECH
Whether Urech committed fraud sufficient to trigger the rescission clause is a more
nuanced matter. There is no doubt that she is a person whose material, fraudulent statements will
trigger the language voiding the entirety of the policy. In Bahri v IDS Prop Cas Ins Co, 308
Mich. App. 420, 424-425; 864 NW2d 609 (2014), this Court explained that before an insurer may
void a policy based on the insured’s misrepresentation of a material fact, the insurer must show:
(1) the misrepresentation was material, (2) that it was false, (3) that the insured
knew that it was false at the time it was made or that it was made recklessly,
without any knowledge of its truth, and (4) that the insured made the material
misrepresentation with the intention that the insurer would act upon it. [Quotation
marks and citation omitted.]
“A statement is material if it is reasonably relevant to the insurer’s investigation of a claim.” Id.
at 425 (quotation marks and citation omitted).5
In this case, the parties do not dispute that the forms contained material and false
statements.6 However, Urech argues that there is a material, factual dispute with regard to
whether she intended to defraud Pioneer when she signed the forms. She argues that she
4
This is not to say that Pioneer must pay the fraudulent claims made by Brian and Kelly. See
Shelton, 318 Mich. App. 648, 655; 899 NW2d 744 (2017) (“As always, if an insurer concludes
that a claim is fraudulent, it may deny the claim.”).
5
In this regard, although Pioneer’s policy states that it may void the entire policy if the insured
engages in “fraudulent conduct” or makes “false statements,” under Bahri, it may only do so if
the fraudulent conduct or false statements are material, were made with the requisite intent, and
were made with the intention that the insurer act on them. See Bahri, 308 Mich. App. at 424-425.
6
Again, in order to void or rescind an insurance policy on the basis of fraud, there must be a
material misrepresentation. Bahri, 308 Mich. App. at 424-425. Whether the misrepresentations
in the attendant-care forms constitute material misrepresentations was not raised below.
Accordingly, for purposes of this opinion, we will assume that the misrepresentations were, in
fact, material under the facts of this case.
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sustained a traumatic brain injury in the accident. She asserts that, as a result, a legal guardian
was appointed by the court. She also stated that her brain injury causes short-term memory loss,
which “would severely hinder her ability to be able to actually check the forms for accuracy and
completeness.” Finally, she directs this Court to her deposition testimony, where she stated that
she would simply sign the attendant-care forms, that she does not remember signing them, and
that she did not review them or even know if they were filled out when she signed them.
We agree that a person with a traumatic brain injury that causes short-term memory loss
may lack the intent necessary to establish fraud. However, when responding to a motion for
summary disposition, Urech “could not rely on ‘mere allegations or denials’ in [her] pleadings,
but had to, ‘by affidavits or as otherwise provided in [MCR 2.116], set forth specific facts
showing that there is a genuine issue for trial.’ ” Barnard Mfg Co, Inc v Gates Performance
Engineering, Inc, 285 Mich. App. 362, 374; 775 NW2d 618 (2009), quoting MCR 2.116(G)(4).
In this case, Urech did not attach a copy of her deposition to her response for summary
disposition. Although she has attached a copy of it to her brief on appeal, a party may not
expand the record on appeal. People v Nix, 301 Mich. App. 195, 203; 836 NW2d 224 (2013).
Accordingly, we will not consider her deposition testimony when conducting our de-novo review
of the trial court’s summary-disposition decision. 7
Next, although Urech asserted in the proceedings below that she was appointed a
guardian because of her “significant cognitive injuries,” she provided no evidence in support of
that assertion. A trial court may appoint a guardian if it “finds by clear and convincing evidence
both that the individual for whom a guardian is sought is an incapacitated individual and that the
appointment is necessary as a means of providing continuing care and supervision of the
7
In her response to the motion for summary disposition, Urech argued that in her deposition, she
stated that she signed the forms where told and did not know whether the information was filled
in when she signed the forms. However, she did not actually attach a copy of the deposition to
the response, so those statements amount to mere allegations or promises that she will be able to
illuminate a fact question in the future. Those statements, therefore, are insufficient to avoid
summary disposition.
Moreover, Urech’s testimony was that because of her brain injury she has “trouble with
dates and spans.” Yet with regard to the attendant-care forms, she stated that she “just signed my
name to them,” “didn’t look at them,” and did not ask any questions about them. She added that
she never even asked why Brian and Kelly were filling the forms out. The intent requirement for
fraud can be established two ways: (1) by showing that the person making the statement knew
that it was false when he or she made the statement, or (2) by showing that the person made the
statement “reckless, without any knowledge of its truth and as a positive assertion.” Titan Ins Co
v Hyten, 491 Mich. 547, 555; 817 NW2d 562 (2012) (quotation marks and citation omitted).
Thus, even viewing the evidence in the light most favorable to Urech, including her deposition
testimony, her testimony only establishes that she had a brain injury that caused her to have
difficulty with remembering dates, but, even so, she just blindly signed the forms without regard
to the truth or falsity of the statements contained therein.
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incapacitated individual . . . .” MCL 700.5306(1). An incapacitated individual “means an
individual who is impaired by reason of mental illness, mental deficiency, physical illness or
disability, chronic use of drugs, chronic intoxication, or other cause, not including minority, to
the extent of lacking sufficient understanding or capacity to make or communicate informed
decisions.” MCL 700.1105(a). Here, the only evidence presented as to why a guardian was
appointed is Kelly’s testimony that she was appointed because of the traumatic brain injury, and
information included in a neuropsychological evaluation performed by Charles Seigerman, a
licensed psychologist. Seigerman only notes that Urech’s physician, Dr. Bleiberg, recommended
that Urech be “assigned a legal guardian for medical decision-making and [to] facilitate a
transfer to an inpatient traumatic brain injury facility.” Accordingly, even viewing the evidence
in the light most favorable to Urech, there is nothing in the record to support that a guardian was
appointed to her because of her “significant cognitive injuries” existing at the time that she
signed the attendant-care forms. Rather, the evidence only provides that sometime after the
accident, a guardian was appointed, at least in part because of Urech’s brain injury.
Urech also claims that her traumatic brain injury caused short-term memory loss. There
is evidence in the record supporting that Urech had memory problems and a traumatic brain
injury caused by the crash. In December 2016, Urech’s psychiatrist, Dr. Marvin Bleiberg,
diagnosed her with a traumatic brain injury, which he attributed to the crash. Brian testified that
he observed Urech had memory difficulties after the accident, noting that he had to write down
when she took her medication because she was unable to recall if she did or did not. Further,
there is evidence that in January 2017, Urech became intoxicated, shot her bathroom floor, and
made suicidal comments that resulted in her being admitted to the psychiatric ward of War
Memorial Hospital in January 2017. The progress notes from the hospital indicated that Urech
was feeling foggy and confused, and she stated that “there is something wrong with my
thinking.” Urech also self-reported having difficulty remembering the rules to a new game she
learned at the facility. In addition, the neuropsychological evaluation contains evidence that
Urech had difficulties with her memory. For instance, the test showed that Urech’s working
memory index was in the fourth percentile, placing her in the mildly to moderately impaired
range. He also noted in his report that, overall, Urech “demonstrates good overall attention and
concentration but seems to have fluctuating working memory.”
Yet, there is no evidence that the traumatic brain injury and its associated memory
problems affected Urech’s ability to understand that the attendant-care forms were inaccurate
when she signed them. If there were some evidence suggesting that because of her memory
problems she could not form the intent necessary to commit fraud, then there would certainly be
a fact question. If there were evidence that when she signed the forms she believed that they
were accurate based on her memory of the services provided, then there would be a fact question.
However, simply providing evidence that she was sometimes forgetful because of a brain injury
is insufficient to create a genuine issue of material fact. Stated differently, Urech has not
presented any evidence showing that her memory loss affected her ability to understand the
forms that she signed contained false statements. In the absence of such evidence, we can only
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speculate that because she had memory issues and a brain injury she may not have appreciated or
realized that the forms she was signing contained materially false statements.8
In conclusion, in the proceedings before the trial court, Pioneer came forward with
evidence in support of its claim that Urech committed fraud. It presented the attendant-care
forms containing Urech’s signature, and testimony from Brian and Kelly establishing that the
information contained in the forms included numerous false statements. See MCR 2.116(G)(3)
(requiring a party moving for summary disposition to support its motion with affidavits,
depositions, admissions, or other documentary evidence). Because Pioneer properly supported
its motion, the burden shifted to Urech “to establish that a genuine issue of disputed fact
exist[ed].” Quinto v Cross & Peters Co, 451 Mich. 358, 362; 547 NW2d 314 (1996). She failed
to do so. Consequently, because Urech did not support her motion for summary disposition, the
trial court was required to grant Pioneer’s motion. See Barnard, 285 Mich. App. at 370.
Reversed and remanded. No taxable costs are awarded under MCR 7.219(A). We do not
retain jurisdiction.
/s/ Jane M. Beckering
/s/ Michael J. Kelly
8
We do not find persuasive Pioneer’s argument that because Urech was not diagnosed with a
traumatic brain injury until after she submitted the challenged forms she cannot use that injury to
negate the intent element of a fraud claim. Regardless of whether it was diagnosed or not when
she submitted the forms, given that there is evidence that she sustained the injury in the crash,
there is evidence that she was under the effect of it when she signed the forms. Thus, if there
was medical testimony that the traumatic brain injury impaired Urech’s ability to understand or
appreciate the truth or falsity of the forms, there would be evidence to negate the intent element
regardless of whether the injury was diagnosed.
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