Douglas v. Allstate Ins. Co.

• Decision Date: 30 July 2012
• Docket Number: Calendar No. 1.,Docket No. 143503.
• Citation: 492 Mich. 241,821 N.W.2d 472
• Parties: DOUGLAS v. ALLSTATE INSURANCE COMPANY.
• Court: Michigan Supreme Court

492 Mich. 241

821 N.W.2d 472

DOUGLAS

v.ALLSTATE INSURANCE COMPANY.

Docket No. 143503.

Calendar No. 1.

Supreme Court of Michigan.

Argued April 4, 2012.

Decided July 30, 2012.

Bredell & Bredell (by John H. Bredell) for plaintiff.

Potter, DeAgostino, O'Dea & Pattersoni (by P. Kelly O'Dea) for defendant.

Miller Johnson (by Richard E. Hillary, II, and Stephen R. Ryan) for the Coalition Protecting Auto No–Fault.

Gross & Nemeth, P.L.C. (by Mary T. Nemeth), for the Insurance Institute of Michigan.

YOUNG, C.J.

Under the terms of the no-fault act,¹ a person injured in a motor vehicle accidentis entitled to recover personal protection insurance (PIP) benefits for “[a]llowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person's care, recovery, or rehabilitation.” ² This case requires this Court to consider whether the services provided by plaintiff's wife constituted services “for an injured person's care,” whether the Court of Appeals properly remanded this case to the circuit court for findings of fact regarding the extent to which expenses for services for plaintiff's care were actually incurred, and whether the circuit court erred by awarding an hourly rate that corporate agencies charge for rendering services, rather than an hourly rate that individual caregivers receive for those services.

We hold that “allowable expenses” must be “ for an injured person's care, recovery, or rehabilitation.” ³ Accordingly, a fact-finder must examine whether attendant care services are “necessitated by the injury sustained in the motor vehicle accident” before compensating an injured person for them.⁴ However, the services cannot simply be “ ‘[o]rdinary household tasks,’ ” which are not for the injured person's care.⁵ Moreover, because an allowable expense consists of a “charge[ ]” ⁶ that “ ‘must be incurred,’ ” ⁷ an injured person who seeks reimbursement for any attendant care services must prove by a preponderance of the evidence not only the amount and nature of the services rendered, but also the caregiver's expectation of compensation or reimbursement for providing the attendant care. Because the no-fault act does not create different standards depending on who provides the services, this requirement applies equally to services that a family member provides and services that an unrelated caregiver provides.

If the fact-finder concludes that a plaintiff incurred allowable expenses in receiving care from a family member, the fact-finder must also determine to what extent any claimed expense is a “reasonable charge[ ].” ⁸ While it is appropriate for the fact-finder to consider hourly rates charged by individual caregivers when selling their services (whether to their employers that commercially provide those services or directly to injured persons), comparison of hourly rates charged by commercial caregiving agencies is far too attenuated from an individual's charge for the fact-finder simply to adopt that agency charge as an individual's reasonable charge.

In applying these principles of law to the facts of this case, we hold that the Court of Appeals correctly determined that plaintiff may recover “allowable expenses” to the extent that they encompass services that are reasonably necessary for plaintiff's care when the care is “related to [plaintiff's] injuries.” ⁹ However, because the circuit court erred by awarding damages for allowable expenses without requiring proof that the underlying charges were actually incurred, we agree with the decision of the Court of Appeals to remand this case to the circuit court for a determination whether charges for allowable expenses were actually incurred. Nevertheless, we also conclude that the Court of Appeals erred to the extent that its decision limited the scope of the determination on remand to the period after November 7, 2006. Instead, the circuit court must reexamine on remand the evidentiary proofs supporting the entire award. While we reject defendant's request for a verdict of no cause of action because there remain unresolved questions of fact, we caution the circuit court that a fact-finder can only award benefits that are proved to have been incurred. Finally, in determining the hourly rate for attendant care services, the circuit court clearly erred by ruling that plaintiff is entitled to an hourly rate of $40 for attendant care services because that rate is entirely inconsistent with the evidence of an individual's rate of compensation, including the compensation that Katherine Douglas, plaintiff's wife, actually received as an employee hired to care for plaintiff. We reverse the judgment of the Court of Appeals on this issue. Therefore, we affirm in part, reverse in part, vacate the award of attendant care benefits, and remand this case to the circuit court for further proceedings consistent with this opinion.

I. FACTS AND PROCEDURAL HISTORY

In 1996, plaintiff, James Douglas, sustained a severe closed-head brain injury when a hit-and-run motorist struck the bicycle he was riding. Plaintiff was hospitalized for approximately one month after the accident and received therapy and rehabilitation after his discharge. Because the driver of the motor vehicle that struck plaintiff could not be identified, plaintiff sought assignment of a first-party insurance provider through the Michigan Assigned Claims Facility.¹⁰ The facility assigned defendant, Allstate Insurance Company, to plaintiff's claim. In the three years after the accident, defendant paid plaintiff PIP benefits for his hospitalization, medical expenses, wage loss, and attendant care, as well as for replacement services, in accordance with the no-fault act. Defendant claims that plaintiff did not seek additional PIP benefits after 1999 until he filed the instant lawsuit in 2005.

In 1999, plaintiff began the first of a series of full-time jobs. However, he was unable to hold a job for very long, and he eventually stopped working. During this time, he twice attempted suicide. After the second suicide attempt, a 2005 letter written by plaintiff's psychiatrist indicated that plaintiff “requires further treatment” because he “continues to suffer from ill-effects as a result of his closed-head injury....” In particular, the psychiatrist emphasized that plaintiff suffered from short-term memory problems and impulsivity as a result of the accident and explained that plaintiff “should have the opportunity to obtain the care that will most likely restore him to a good level of functioning.” Defendant claims that it did not receive this letter before plaintiff initiated this lawsuit.

Plaintiff filed the instant lawsuit on May 31, 2005, in the Washtenaw Circuit Court seeking compensation for unspecified PIP benefits that defendant “has refused or is expected to refuse to pay....” ¹¹ Defendant filed three successive dispositive motions, only the first of which was granted.¹² Relevant here, the second motion for summary disposition claimed that attendant care was not reasonably necessary because none of plaintiff's medical providers had prescribed attendant care for plaintiff. The circuit court denied the motion without prejudice in advance of further discovery. The third motion for partial summary disposition claimed that plaintiff could not recover for attendant care services provided before November 7, 2006, because plaintiff's treating psychologist, Dr. Thomas Rosenbaum, neither authorized nor prescribed attendant care services before that date. In opposing the motion, plaintiff offered an affidavit from Dr. Rosenbaum, which stated that plaintiff “is in need of aide care during all waking hours” and that Katherine Douglas “has been providing her husband with aide care, while the two of them are together, since the motor vehicle accident.” After hearing oral argument, the circuit court denied defendant's third motion, ruling that Dr. Rosenbaum's affidavit created a question of fact that precluded partial summary disposition.

The parties proceeded to a bench trial on the claim for attendant care services that Mrs. Douglas allegedly provided. Defendant's claims adjuster testified during plaintiff's case-in-chief as an adverse witness. This witness agreed with plaintiff's counsel that plaintiff “would have needed [attendant care] back when the lawsuit first began” in 2005 and that “it would be appropriate to pay Mrs. Douglas for some of [the] care that she provides ... at home[.]” However, on direct examination by defendant's counsel, the claims adjuster testified that there was no evidence that any compensable care had actually been provided to plaintiff.

Katherine Douglas testified that when she was at home, her entire time was spent “babysitting” and “watching James,” even while she was performing other household chores. She believed that her presence in the house kept plaintiff from being hospitalized or incarcerated. She also testified about a series of forms, each labeled “AFFIDAVIT OF ATTENDANT CARE SERVICES,” all dated June 25, 2007, covering each month between November 2004 and June 2007. These forms totaled up the number of hours during which she claimed to have provided services and outlined the various tasks that she performed, including organizing her family's day-to-day life, cooking meals, undertaking daily chores, maintaining the family's house and yard, ordering and monitoring plaintiff's medications, communicating with health care providers and Social Security Administration officials, calling plaintiff from work to ensure plaintiff's safety, monitoring plaintiff's safety, and cueing or prompting various tasks for plaintiff to undertake. However, she admittedthat the forms were all completed in June 2007, that she did not contemporaneously itemize the amount of time she spent on any particular item, and that in completing the forms, she went through household bills to reconstruct what had occurred in her life...