Hardrick v. Auto Club Ins. Ass'n

• Decision Date: 01 December 2011
• Docket Number: 298661,299070.,Docket Nos. 294875
• Citation: 294 Mich.App. 651,819 N.W.2d 28
• Parties: HARDRICK v. AUTO CLUB INSURANCE ASSOCIATION.
• Court: Court of Appeal of Michigan — District of US

294 Mich.App. 651

819 N.W.2d 28

HARDRICK

v.AUTO CLUB INSURANCE ASSOCIATION.

Docket Nos. 294875, 298661, 299070.

Court of Appeals of Michigan.

Submitted April 5, 2011, at Detroit.

Decided Dec. 1, 2011, at 9:00 a.m.

Liss Seder & Andrews, P.C., Bloomfield Hills (by Nicholas S. Andrews and Arthur Y. Liss), and Larry A. Smith, for William Hardrick.

Hom, Killeen, Siefer, Arene & Hoehn (by Kevin S. Carden) and Gross & Nemeth, P.L.C., Detroit (by Mary T. Nemeth), for Auto Club Insurance Association.

Before: GLEICHER, P.J., and SAWYER and MARKEY, JJ.

GLEICHER, P.J.

In this no-fault insurance action, a jury found defendant Auto Club Insurance Association (ACIA) liable to plaintiff William Hardrick for family-provided attendant-care services at a rate of $28 an hour. The jury reached this judgment after a trial at which ACIA was barred from presenting any evidence.¹ We vacate that judgment and remand for a new trial as the lower court abused its discretion by imposing an unjust and disproportionate sanction against ACIA.

The parties vigorously contest the parameters of the evidence relevant on retrial to prove the reasonable rate for family-provided attendant-care services. ACIA contends that agency rates are irrelevant to establish the cost of family-provided care. We conclude that evidence of agency rates constitutes a material and probative measure of the general value of attendant-care services, including care provided by family members.

I. BACKGROUND FACTS AND PROCEEDINGS

In May 2007, a car struck Hardrick, then aged 19, as he walked home from work. Hardrick suffered a traumatic brain injury resulting in cognitive deficits and emotional instability. Extensive hospital-based rehabilitation yielded only minimal therapeutic gains. In 2008, Hardrick's psychiatrist recommended around-the-clock attendant care “for supervision and safety.” Hardrick's parents provide the prescribed attendant care.

ACIA admitted responsibility for paying Hardrick's personal protection insurance (PIP) benefits, “consisting 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). ACIA classified Hardrick's parents as “home health aides,” and paid them a rate of $10.25 to $10.50 an hour for the attendant care they provided. Hardrick filed this lawsuit seeking a determination that his parents qualified as “behavioral technicians,” entitling them to charge a higher hourly rate. Throughout the litigation, the parties disputed only the “reasonable charge” for Hardrick's parents' services. ACIA never contested the number of hours Hardrick's parents worked providing attendant care or its responsibility to pay PIP benefits. ²

Before trial, the circuit court determined that ACIA had violated its discovery ordersby providing belated and incomplete responses to discovery requests. Hardrick pursued a default judgment, but the court opted to impose a “lesser sanction.” The court precluded ACIA from presenting any witnesses or evidence. As a result, ACIA was limited to cross-examining Hardrick's witnesses and challenging his proffered evidence.

At the trial, Hardrick presented the testimony of Robert Ancell, Ph.D., a vocational rehabilitation counselor and case manager. Ancell opined that Hardrick's psychiatrist ordered attendant-care services at a level consistent with the care provided by behavioral technicians. Ancell explained that within the attendant-care rubric, a “companion, like a baby sitter,” fulfills the lowest level of responsibility. At the next level, nurse's aides, also known as home health aides, attend to “basic care needs” such as “[b]athing, feeding, dressing” and spending time with the brain-injured patient. Licensed practical nurses occupy the next rung of the responsibility ladder. “Somewhere comparable” to the licensed practical nurses, behavioral therapists “understand[ ] how to deal with behavior issues” by “cuing” and “structuring” behavior. According to Ancell, Hardrick's psychiatrist ordered supervision “by someone with [the] experience of a behavioral technician or life skills trainer, or someone who is very familiar to the patient who knows how to distract him, structure him, and set limits on him in a way that won't escalate his behaviors.”

Ancell testified that Hardrick's parents have fulfilled the supervisory duties described by their son's psychiatrist, and opined that the value of their care ranged between $25 and $45 an hour. Ancell derived this range from “the market place ... as it relates to providing that kind of service to individuals and individuals who are clients of ours that receive those types of services[.]” During cross-examination, Ancell clarified that although the “value” of the care fell within the $25 to $45 range, a behavioral technician's hourly wage would be less. Ancell explained that his value calculation factored in benefits and other “government mandated inclusions” applicable to agencies and conceded that employment benefits constitute 30 percent of an agency employee's hourly rate. Ancell agreed that independent contractors receive no benefits, but noted that they pay social security taxes at a rate two times greater than agency employees.

The trial court limited the jury's reasonable-charge calculation to a range of $25 to $45 an hour, and the jury ultimately concluded that $28 an hour represented a reasonable charge for Hardrick's parents' attendant-care services. The trial court then ordered ACIA to pay Hardrick's attorney fees, pursuant to MCL 500.3148(1) of the no-fault act, at a rate of $500 an hour, finding that ACIA “unreasonably delayed in making proper payment.”

II. DISCOVERY VIOLATION

ACIA concedes “that it did not timely respond to Plaintiff's ... interrogatories and requests for discovery” and that the trial court was justified in imposing a sanction. ACIA challenges only the court's choice of a sanction.

As a result of ACIA's failure to provide timely and complete discovery, Hardrick filed a motion for a default judgment. The trial court noted that a default judgment is a “drastic sanction” that “should be only used when there has been a flagrant and wanton refusal to facilitate discovery.” The court further noted that it was required to consider “whether a lesser sanction would better serve the interest of justice.” The court found that Hardrick had been severely prejudiced by ACIA's reticence because discovery had since closed, case evaluation was completed, and the time to file a motion for summary disposition had passed. Yet, the court found that ACIA was not “obfuscating and attempting to impair discovery in a malicious sense.” The trial court then ruled, “I find in light of that that an appropriate lesser sanction is to not allow the defendant to produce any witnesses at all. And that is the Court's finding, that that lesser sanction is appropriate.” (Emphasis added.)

Following the court's imposition of the sanction, the court twice adjourned the trial to accommodate the needs of Hardrick's counsel. As the date for the rescheduled trial approached, ACIA filed a motion for reconsideration, expressing its desire to introduce “expert witnesses regarding rate and level of care.” By then, ACIA had supplied Hardrick with complete discovery and Hardrick had had a sufficient opportunity to review the information, thereby eliminating any possible prejudice. In the interim, however, the case had been reassigned to a visiting judge who declined to overrule the original judge's penalty imposed for ACIA's past conduct.

We review a trial court's imposition of discovery sanctions for an abuse of discretion. Dorman v. Clinton Twp., 269 Mich.App. 638, 655, 714 N.W.2d 350 (2006). An abuse of discretion occurs when the decision is outside the range of principled outcomes. Maldonado v. Ford Motor Co., 476 Mich. 372, 388, 719 N.W.2d 809 (2006). The trial court sanctioned ACIA pursuant to MCR 2.313. “The interpretation and application of a court rule involves a question of law that this Court reviews de novo.” Johnson Family Ltd. Partnership v. White Pine Wireless, LLC, 281 Mich.App. 364, 387, 761 N.W.2d 353 (2008). This Court reviews any factual findings underlying a trial court's decision for clear error. MCR 2.613 (C). “A finding is clearly erroneous when this Court is left with a definite and firm conviction that a mistake has been made.” Johnson, 281 Mich.App. at 387, 761 N.W.2d 353.

MCR 2.313(B)(2) provides for the imposition of discovery sanctions as follows:

If a party or an officer, director, or managing agent of a party, or a person designated ... to testify on behalf of a party, fails to obey an order to provide or permit discovery, ... the court in which the action is pending may order such sanctions as are just, including, but not limited to the following:

(a) an order that the matters regarding which the order was entered or other designated facts may be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;

(b) an order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting the party from introducing designated matters into evidence;

(c) an order striking pleadings or parts of pleadings, staying further proceedings until the order is obeyed, dismissing the action or proceeding or a part of it, or rendering a judgment by default against the disobedient party;

* * *

In lieu of or in addition to the foregoing orders, the court shall require the party failing to obey the order or the attorney advising the party, or both, to pay the reasonable expenses, including attorney fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.

It is readily apparent that the trial court abused its discretion by selecting the sanction imposed. The court...