Blue Cross and Blue Shield of Michigan v. Folkema, Docket No. 101605

• Decision Date: 15 March 1989
• Docket Number: Docket No. 101605
• Citation: 174 Mich.App. 476,436 N.W.2d 670
• Parties: BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Plaintiff-Appellant, v. Judith L. FOLKEMA, M.D., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 670

436 N.W.2d 670

174 Mich.App. 476

BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Plaintiff-Appellant, v. Judith L. FOLKEMA, M.D., Defendant-Appellee.

Docket No. 101605.

Court of Appeals of Michigan.

Submitted June 20, 1988.

Decided Nov. 9, 1988.

Released for Publication March 15, 1989.

Teresa Mikan and Steven C. Hess, Lansing, for plaintiff-appellant.

Bruggink & Valentine by Anthony J. Valentine, Grand Rapids, for defendant-appellee.

Before MacKENZIE, P.J., and BEASLEY and HARRISON, ^* JJ.

PER CURIAM.

Plaintiff appeals as of right from an order granting summary disposition in favor of defendant on the ground that plaintiff's action was time-barred. We reverse.

Defendant is a psychiatrist whose patients include subscribers of plaintiff, Blue Cross and Blue Shield of Michigan, which provides prepaid medical benefits. During the 1980 calendar year, plaintiff allegedly paid to defendant $26,392.35 for psychiatric services rendered to plaintiff's subscribers upon defendant's representation that the services were performed either by a physician or under the direct or personal supervision of a physician and in the presence of a physician, a requirement for coverage. Following a January, 1982, audit of defendant's records, plaintiff concluded that most of the services for which it had paid defendant during 1980 were either not performed by defendant or were not performed in her presence and under her supervision. On March 5, 1982, plaintiff advised defendant by letter of its alleged overpayment. Plaintiff demanded reimbursement of $25,414.06 and stated that it would make an automatic deduction from defendant's account if reimbursement was not made. Defendant failed to reimburse and plaintiff's deduction attempt was largely unsuccessful.

On March 11, 1986, plaintiff instituted the instant action for repayment. On February 6, 1987, defendant filed a motion for summary disposition asserting that plaintiff's action was barred by the applicable statute of limitations. According to defendant, plaintiff's complaint stated a claim for fraud and sought recovery for damages to person or property, so that the period of limitation was three years. M.C.L. § 600.5805(8); M.S.A. § 27A.5805(8). Defendant contended that since plaintiff did not commence its action within three years of its communication to defendant that psychotherapy services had been improperly claimed for reimbursement, in other words, by no later than March 5, 1985, the suit was untimely. Plaintiff, on the other hand, maintained that a claim of fraudulent misrepresentation is not an action for injury to person or property, so that the general six-year limitation period of M.C.L. § 600.5813; M.S.A. § 27A.5813 controlled. Alternatively, plaintiff argued that its complaint was based on breach of contract, which is also governed by a six-year limitation period. M.C.L. § 600.5807(8); M.S.A. § 27A.5807(8). Under either of plaintiff's theories the complaint was timely filed.

The trial court characterized plaintiff's action as follows:

"Obtaining that money by means of false representation amounts to a conversion. Conversion is an act of dominion wrongly asserted over another's property. Continental Casualty [Co.] v Huron Valley National Bank, 85 Mich App 319, 322 (1978). Michigan case law recognizes that a conversion is within the legal concept of an injury to property. Ins Co of North America v Manufacturers Bank [of Southfield, N.A.], 127 Mich App 278, 284 (1983).

"It is my opinion that the plaintiff is seeking recovery for injury to [its] property; that is, money wrongfully obtained by defendant by means of false representation, which money defendant converted to her own use."

Accordingly, the court applied the three-year limitation period of M.C.L. § 600.5805(8); M.S.A. § 27A.5805(8) and dismissed plaintiff's action.

On appeal, plaintiff first contends that the trial court erred in characterizing its claim as one for conversion. Defendant contends that the trial court did not find the action to be one for conversion, but used the word "conversion" to articulate its finding that the action was one for fraudulent misrepresentation. Suffice it to say that this is not an action for conversion, since plaintiff has not pled an obligation on the part of defendant to return specific, identified monies. See generally People v. Christenson, 412 Mich. 81, 91, 312 N.W.2d 618 (1981) (Moody, J., concurring); Garras v. Bekiares, 315 Mich. 141, 147-149, 23 N.W.2d 239 (1946). To the extent that the trial judge's opinion suggests otherwise, he was in error.

Plaintiff next contends that the trial court erred in characterizing its claim as one for injury to person or property, to be governed by the three-year limitation period of M.C.L. § 600.5805(8); M.S.A. § 27A.5805(8). That statute provides:

"(8). The period of limitations is 3 years after the time of the death or injury for all other actions to recover damages for the death of a person, or for injury to a person or property."

M.C.L. § 600.5813; M.S.A. § 27A.5813, which plaintiff urges to be controlling, provides:

"All other personal actions shall be commenced within the period of 6 years after the claims accrue and not afterwards unless a different period is stated in the statutes."

The applicable limitation period is determined by focusing upon the nature of the interest allegedly harmed. Stringer v. Bd of Trustees of Edward W. Sparrow Hospital, 62 Mich.App. 696, 699-700, 233 N.W.2d 698 (1975), lv. den. 395 Mich. 768 (1975). The determination requires a claim to be read as a whole to arrive at the gravamen of a plaintiff's grievance. Smith v. Holmes, 54 Mich. 104, 112, 19 N.W. 767 (1884); Adkins v. Annapolis Hospital, 116 Mich.App. 558, 563, 323 N.W.2d 482 (1982), aff'd 420 Mich. 87, 360 N.W.2d 150 (1984). Here, the parties are in basic agreement that plaintiff's complaint states a claim for fraudulent misrepresentation. The crucial question, however, is whether or not plaintiff was seeking damages for injury to property or person. See Borman's, Inc. v. Lake State Development Co., 60 Mich.App. 175, 187-188, 230 N.W.2d 363 (1975).

We cannot agree that this action is best characterized as one for damage to person or property. Plaintiff's claim is that, based on defendant's representations, it paid defendant for services which it believed were reimbursable, but which later investigation revealed were not. Plaintiff's payments were made based on its belief that it "got what it paid for." Plaintiff now seeks repayment for the disbursements it understood to be compensation for services rendered by defendant personally. The six-year limitation period of M.C.L. § 600.5813; M.S.A. § 27A.5813 applies when damages are sought for injury to the plaintiff's financial expectations. Bacco Construction Co. v....