Andary v. USAA Cas. Ins. Co.

Decision Date25 August 2022
Docket Number356487
PartiesELLEN M. ANDARY, a Legally Incapacitated Person, by and through her Conservator and Guardian, MICHAEL T. ANDARY, M.D., PHILIP KRUEGER, a Legally Incapacitated Person, by and through his Guardian, RONALD KRUEGER, and MORIAH, INC., doing business as EISENHOWER CENTER, Plaintiffs-Appellants, v. USAA CASUALTY INSURANCE COMPANY and CITIZENS INSURANCE COMPANY OF AMERICA, Defendants-Appellees.
CourtCourt of Appeal of Michigan (US)

ELLEN M. ANDARY, a Legally Incapacitated Person, by and through her Conservator and Guardian, MICHAEL T. ANDARY, M.D., PHILIP KRUEGER, a Legally Incapacitated Person, by and through his Guardian, RONALD KRUEGER, and MORIAH, INC., doing business as EISENHOWER CENTER, Plaintiffs-Appellants,


No. 356487

Court of Appeals of Michigan

August 25, 2022

Ingham Circuit Court LC No. 19-000738-CZ

Before: MARKEY, P.J., and SHAPIRO and PATEL, JJ.


The question in this case is whether legislative amendments to the no-fault act, MCL 500.3101 et seq., limiting reimbursement for expenses covered by personal protection insurance apply retroactively so as to limit benefits to those injured before the effective date of the amendments. We conclude that they do not because the Legislature did not clearly demonstrate an intent for the amendments to apply retroactively to persons injured in pre-amendment accidents. We further conclude that even if retroactive intent had been demonstrated, imposing the new limits would substantially impair no-fault insurance contracts entered into before the amendments' effective date, and therefore would violate the Contracts Clause of the Michigan Constitution.


Since the inception of the no-fault act in 1973, Michigan law has required that personal protection insurance (PIP) policies provide for payment of "all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person's care,


recovery or rehabilitation." MCL 500.3107(1)(a). Previously, the rates of reimbursement were limited only by what constituted "reasonable" and "customarily charge[d]" fees. MCL 500.3157, as enacted by 1972 PA 294. And there was no cap on the amount of attendant care that could be provided by family.

Effective June 11, 2019, the Legislature enacted 2019 PA 21 and 2019 PA 22, both of which made significant amendments to the no-fault act. Relevant to this case, 2019 PA 21 amended MCL 500.3157 to include fee schedules limiting a medical provider's reimbursement amount.[1] This case specifically concerns MCL 500.3157(7), which caps a provider's reimbursement for services not covered by Medicare to 55 percent of the fees charged as of January 1, 2019.[2] Also at issue is MCL 500.3157(10), which limited the reimbursable hours of family-provided attendant care to 56 hours per week.[3]

Plaintiffs Ellen Andary and Philip Krueger are individuals who suffered traumatic brain injuries in motor vehicle accidents prior to June 11, 2019. Both Andary and Krueger are permanently disabled as a result of their respective accidents. Andary requires 24-hour in-home attendant care, most of which is performed by family members. Krueger is a patient at plaintiff Eisenhower Center, which provides inpatient living accommodations and rehabilitative services to


individuals with traumatic brain injuries. The vast majority of the residential patients at Eisenhower Center are victims of motor vehicle accidents, and the services Eisenhower Center provides to them are reimbursed through the no-fault system. Most of the services performed by Eisenhower Center are not compensable under Medicare, however.

The defendants in this case are the insurers responsible for providing no-fault benefits to the two injured plaintiffs, respectively. At the time of their respective accidents, Andary was covered under a PIP policy issued by defendant USAA Casualty Insurance Company; Krueger was covered under a PIP policy issued by defendant Citizens Insurance Company of America.

In this declaratory action, the injured plaintiffs assert that because they (1) were injured prior to the effective date of 2019 PA 21, and (2) have vested contractual rights under the policy in effect when they were injured, they are not subject to 2019 PA 21's limitations on benefits and payment contained in MCL 500.3157(7) and (10). Plaintiffs further argue that the limitations on payments violate the Contracts Clause of the Michigan Constitution and their constitutional rights to equal protection and due process. In lieu of filing an answer, defendants filed a motion for summary disposition under MCR 2.116(C)(8) (failure to state a claim). They argue that regardless of when Andary's and Krueger's injuries occurred, they are subject to the newly enacted limitations of MCL 500.3157, and that this does not violate that Contracts Clause or any other constitutional provision. Defendants also assert that no factual development is necessary to consider plaintiffs' constitutional challenges to the future application of the 2019 amendments. The trial court agreed with defendants and granted them summary disposition as to all counts. The court also denied plaintiffs' motion to amend the complaint to include a breach-of-contract claim. This appeal followed.[4]



The first question presented by this appeal is whether the Legislature intended MCL 500.3157(7) and (10) to apply retroactively to those injured before 2019 PA 21's effective date.

Statutes and amendments of statutes are presumed to operate prospectively. Davis v State Employees' Retirement Bd, 272 Mich.App. 151, 155; 725 N.W.2d 56 (2006). To overcome this presumption, the Legislature must clearly manifest an intent for retroactive application.


Johnson v Pastoriza, 491 Mich. 417, 429; 818 N.W.2d 279 (2012). As stated by this Court in Davis, 272 Mich.App. at 155, "[t]he Legislature's expression of an intent to have a statute apply retroactively must be clear, direct, and unequivocal as appears from the context of the statute itself." (Emphasis added). Given the presumption against retroactive application of statutory amendments, courts commonly apply the version of the no-fault act in effect at the time of the accident. See e.g., Fuller v GEICO Indemnity Co, 309 Mich.App. 495, 501; 872 N.W.2d 504 (2015) (applying the definition of "registrant," MCL 500.3101(2)(i), in effect "at the time of the accident . . . ").[5]

Defendants argue that the Legislature clearly stated its intention in 2019 PA 21 for the newly imposed limits contained within MCL 500.3157 to apply to those injured before their effective date. However, defendants fail to identify any language within chapter 31 of the Michigan Insurance Code, i.e., the no-fault act, so indicating, either explicitly or by implication. Indeed, 2019 PA 21 provided an effective date of June 11, 2019, and it contains no language referring to retroactive application. See Brewer v AD Transport Exp, Inc, 486 Mich. 50, 56; 782 N.W.2d 475 (2010) ("[P]roviding a specific, future effective date and omitting any reference to retroactivity supports a conclusion that a statute should be applied prospectively only.") (quotation marks and citation omitted).

Defendants direct this Court only to 2019 PA 21's inclusion of a new provision, MCL 500.2111f, within chapter 21 of the Insurance Code, which they assert demonstrates an intent to retroactively apply the amendments by implication. We disagree. Chapter 21 of the Insurance Code does not define the benefits and payments that must be provided to no-fault policy beneficiaries. Rather, MCL 500.2111f merely defines how premium rates are to be determined under the new no-fault scheme. Defendants specifically rely on MCL 500.2111f(8), which provides that in its rate filings, "An insurer shall pass on . . . savings realized from the application of section 3157(2) to (12) to treatment, products, services, accommodations, or training rendered to individuals who suffered accidental bodily injury from motor vehicle accidents that occurred before July 2, 2019." But this rate-setting provision does not mandate that the limits on benefits provided in MCL 500.3157 shall be applied to persons injured before its effective date. And the claim that it does so by implication is very weak. The statute merely provides that if there are such


savings, they must be used to reduce future rates. Whether such savings will occur is not defined by this statute. For these reasons, we conclude that MCL 500.2111f does not "clearly, directly and unequivocally" demonstrate an intent to apply the new limits retroactively.[6] Davis, 272 Mich.App. at 155.

As stated, defendants do not identify any language within Chapter 31 itself mandating application of benefit reductions to those injured prior to 2019 PA 21's effective date, either explicitly or implicitly. Had the Legislature wished to overcome the presumption against retroactivity, it surely could have expressed its intent plainly, directly and unequivocally, but it did not do so.[7] We will not find legislative intent to apply the new benefit limitations to those injured prior to 2019 PA 21's effective date based solely on a rate-setting provision that does not mandate it.


Defendants alternatively argue that the issue of retroactivity is a red herring because the benefit reductions apply only to claims made after the amendments' effective date. But this argument runs afoul of the principle defined in LaFontaine Saline, Inc v Chrysler Group, LLC, 496 Mich. 26; 852 N.W.2d 78 (2014).

LaFontaine concerned the applicable "market area" of an automobile dealership, i.e., the size of the area around the dealership in which a manufacturer could not establish a new dealership without notifying the existing dealer, who then had a right to object. Id. at 28. When the plaintiff dealership was established in 2007, the relevant radius of each dealer's market area was defined by statute as six miles. Id. at 29. However, in 2010 the Legislature passed an amendment which- to the dealers' benefit-expanded this area to nine miles. Id. at 28. The question as to which limit applied arose in LaFontaine because the defendant manufacturer case sought to establish a new dealership...

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