Nasser v. Auto Club Ins. Ass'n
| Decision Date | 26 June 1990 |
| Docket Number | Docket No. 84510 |
| Citation | 457 N.W.2d 637,435 Mich. 33 |
| Parties | Nasr NASSER, Plaintiff-Appellee, v. AUTO CLUB INSURANCE ASSOCIATION, a Michigan Corporation, Defendant-Appellant. |
| Court | Michigan Supreme Court |
We granted leave to appeal in this first-party action to recover no-fault benefits to determine whether the trial court properly granted plaintiff's motion for summary disposition on the basis that the reasonableness and necessity of medical expenses incurred by plaintiff did not affect defendant's liability for those expenses under § 3107 of the no-fault act, M.C.L. § 500.3101 et seq.; M.S.A. § 24.13101 et seq. We also consider whether the trial court properly concluded that the collateral source rule applied in this case to preclude any evidence of other insurance benefits that plaintiff may have received or been entitled to receive. The Court of Appeals affirmed the decision of the trial court with regard to both issues. We now reverse the decision of the Court of Appeals.
On April 13, 1982, plaintiff Nasser was involved in an apparently minor automobile accident in a shopping mall parking lot. That afternoon, complaining of pain in his head, neck, chest, shoulder, and both upper and lower back, as well as blurred vision and nausea, he sought medical treatment from Dr. Roberto William, an internist. Dr. William admitted plaintiff to Kirwood Hospital on the following day, April 14, 1982, where he remained until April 30, 1982. Dr. William later hospitalized plaintiff a second time, from May 4 through May 21, 1982, and then again from June 1 through June 18, 1982. All told, plaintiff spent fifty days in the hospital as a result of this parking lot accident.
During the three months he was treated by Dr. William, plaintiff underwent a battery of medical tests, all of which returned negative results, except one that indicated that plaintiff had an abnormally slow heartbeat. He also received physical therapy and other treatments, including pelvic traction, during this time. Immediately following his discharge from the third hospitalization, plaintiff returned to work. He sought no further treatment from Dr. William.
Plaintiff's medical expenses as a result of this accident totaled $25,059.29. He applied for no-fault benefits after his first hospitalization, on or about April 30, 1982. Defendant requested an independent examination of plaintiff by a physician of its choice. On July 10, 1982, after plaintiff's final hospitalization, he was examined by defendant's doctor, Dr. Mitchell Pollak, who pronounced him able to return to work and in need of no further treatment. After a further examination of Dr. William's report and plaintiff's other records, at defendant's request, Dr. Pollak later submitted his own reports, dated January 12 and January 31, 1983, stating that in his belief all three instances of hospitalization and much of the treatment and testing performed on plaintiff had been unnecessary. On the basis of this opinion, defendant refused to pay any benefits.
In February, 1983, plaintiff filed this first-party action, alleging both a breach of the no-fault insurance contract and intentional and outrageous conduct on defendant's part causing him emotional harm. Defendant answered by denying any liability for plaintiff's expenses; its eventual position was that the expenses were unreasonable, unnecessary, and undocumented.
Prior to trial, plaintiff filed two motions, which were heard on the scheduled date of trial. The first was a motion in limine to bar reference to other insurance coverage. 1 The trial court granted this motion, citing the collateral source rule and MRE 403. The second motion was for summary disposition on the merits of both claims. In his written motion, plaintiff relied on MCR 2.116(C)(9), failure to state a valid defense. According to plaintiff, defendant was "estopped" to claim that any expenses were not reasonably or necessarily incurred, since it had waited more than six months after the bills were submitted to review plaintiff's medical records. More substantively, however, plaintiff argued that defendant had no legal basis for claiming that the expenses were not reasonable and necessary, since a mere assertion by its expert that he would have treated plaintiff differently is insufficient "as a matter of law" to preclude liability. As plaintiff argued in his brief in support of the motion, summary disposition should have been granted pursuant to MCR 2.116(C)(9) "for the reason that a defense predicated solely upon the word of one physician against another that he would not have performed the same medical care and treatment does not, as a matter of law, render such treatment unreasonable pursuant to statute so as to permit the insurer to deny or otherwise avoid personal insurance protection or medical payments."
At oral argument, plaintiff amended his written motion to claim additionally that there was no genuine issue of fact to be resolved with respect to liability, and that he was therefore entitled to summary disposition pursuant to MCR 2.116(C)(10). On this point, plaintiff essentially restated his argument that a mere assertion by defendant's expert that there were alternative methods of treatment available cannot defeat plaintiff's claim.
Defendant responded that it had raised a valid defense to plaintiff's claim by challenging the reasonableness and necessity of the expenses under § 3107 of the no-fault statute, which provides that an insurer is liable only for "reasonable charges incurred for reasonably necessary products [and] services." Defendant also argued that there were issues of fact to be resolved with respect to liability, since "[w]hether in fact these services, etc., are reasonable and necessary is most definitely a question of fact for the jury to decide."
The trial court granted plaintiff's motion for summary disposition on both grounds. It found initially that challenging the reasonableness and necessity of the medical expenses was not a "valid defense to a contract action," or to plaintiff's claim of emotional distress, since those considerations went to the issue of damages, not liability. For the same reason, it found that this stated defense also failed to establish any genuine issue of fact regarding liability. The court did indicate, however, that it was willing to let the issue of damages go to the jury.
Apparently believing that the trial court would allow it to contest, under the title "damages," only the reasonableness of the actual charges for particular products and services and not their necessity as well, defendant indicated that it was willing to waive its right to a jury trial and allow the trial court to hear the evidence on damages. It made clear, however, that it considered this waiver "conditional," and that it intended to appeal the trial court's ruling regarding its liability under § 3107; if it prevailed, it would seek a jury trial on all issues. The trial court agreed that defendant's request for a jury trial would be "reserved."
The issue of damages was then tried, largely on the strength of the depositions of the two physicians. The trial court found for plaintiff in the amount claimed as contract damages, $25,059.29. In so ruling, the court arguably found the expenses not only reasonable, but also necessary. 2 The trial court did not award damages on the basis of defendant's "intentional" and "outrageous" conduct, although it did award plaintiff attorney fees under M.C.L. § 500.3148; M.S.A. § 24.13148 and statutory postcomplaint interest pursuant to M.C.L. § 600.6013; M.S.A. § 27A.6013. It also declined to award plaintiff interest pursuant to M.C.L. § 500.3142; M.S.A. § 24.13142, the provision of the act providing penalty interest for overdue payments.
Defendant appealed in the Court of Appeals, which, in June, 1988, affirmed the trial court's grant of summary disposition, but reversed its refusal to grant penalty interest under § 3142. 3 169 Mich.App. 182 425 N.W.2d 762 (1988) (Nasser I ). The Court first addressed defendant's contention that it had presented a valid defense to plaintiff's breach of contract claim. The Court disagreed, concluding that "[t]he reasonableness of medical expenses cannot be used as a defense to liability in a no-fault accident case." Id., p. 186, 425 N.W.2d 762. It relied on "[s]trong policy considerations" to support its conclusion:
The Court also rejected the defendant's argument that summary disposition...
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