Pakenas v. State Farm Ins. Co., No. 09-2305
| Decision Date | 15 June 2012 |
| Docket Number | No. 09-2305 |
| Parties | ELIZABETH PAKENAS, Plaintiff-Appellant, v. STATE FARM INSURANCE COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 12a0624n.06
ON APPEAL FROM THE
UNITED STATES DISTRICT
COURT FOR THE EASTERN
DISTRICT OF MICHIGAN
Before: BOGGS and GIBBONS, Circuit Judges; and RUSSELL, District Judge.*
BOGGS, Circuit Judge. Elizabeth Ann Pakenas, legal guardian of the insured, Patti Rogers, her sister, sued State Farm Insurance Company for unpaid attendant-care benefits. Pakenas had billed State Farm for attendant care, provided 24 hours a day, 365 days per year, for four-and-a-half years. The United States District Court for the Eastern District of Michigan entered a directed verdict in favor of State Farm. The court also granted State Farm's post-trial motion for attorney's fees. Pakenas appealed, arguing that the district court erred when it denied her motion for a mistrial, when it entered a directed verdict, when it denied her motion for a new trial, and when it awarded attorney's fees to State Farm. After careful consideration of the issues, this panel affirms the district court's judgment and award of attorney's fees.
This case originated when Patti Rogers (Rogers), the sister of Elizabeth Ann Pakenas, was injured in an automobile accident in 1976. Rogers suffered a closed head injury in the accident. Shortly after the accident, Rogers developed a seizure disorder that Pakenas claims still continues today. Taking the facts in the light most favorable to Pakenas, after the accident, Rogers "suffered a drop in IQ" from "extremely high"—she had been valedictorian of her high-school class—to "normal"—estimated at 100—or, in some areas, "below normal." She was not able to go to college, she has never been able to drive again, and, for the most part, she has been unable to work. At the time of trial, she saw a neurologist who treated her for seizures and had been taking anti-seizure medication for 30 years.
Pakenas, who has been Rogers's legal guardian since 2002, after she was declared legally incompetent, has been a primary care-provider for Rogers since the accident. Rogers's other primary care-provider has been John Rogers, her husband. According to trial testimony, "[Pakenas] and John flip, take turns caring for [Rogers]." Pakenas claims that Rogers was allowed to be unsupervised after the accident, but that after Rogers "became confused" and "would be found, lost," she was no longer allowed to travel alone. The work Pakenas and Mr. Rogers do for Rogers was described as "orient[ing] . . . help[ing] . . . counsel[ing]." Pakenas "functions really as a case manager." Their care does not include feeding, bathing, toileting—Rogers is capable of doing these things herself. At the time of trial and "over the years," Rogers had a job, sort of a "make work" job, according to plaintiffs, at a pharmacy, "for simple jobs and she's closely supervised."
Since 1976, the year of Rogers's accident, State Farm has paid medical expenses relating to Rogers's treatment, including all pharmaceutical bills, doctor bills, and health insurance. However, Pakenas did not know that she and Mr. Rogers were eligible to receive attendant-care benefits until 2000 or 2001.1 Until that time, she claims, she and Mr. Rogers cared for Rogers without reimbursement.
As a result of discovering that Pakenas and Mr. Rogers were eligible for attendant-care benefits, Rogers filed a suit against State Farm under the Michigan No-Fault Act,2 seeking attendant-care benefits that had been unpaid for 28 years. The attendant care at issue was 24-hour-per-day care that Rogers claimed she required due to seizures, plus 12% statutory interest for payments overdue by 30 days. This claim was settled in 2004 for $5.8 million dollars.3 The settlement agreement "in no way preclude[d]" the recovery of future attendant-care benefits.
After the settlement was reached, Pakenas—now the guardian of Rogers—and Mr. Rogers established Pattico, described by Pakenas during her deposition as "a health-assistance company set up to take care of [Rogers]."4 Pakenas, Mr. Rogers, and Pakenas's daughter were all employed by Pattico during this period. Pakenas, though employed by Pattico, has not been otherwise employed since the 1990s. Pakenas claimed that she was "on call" for Rogers, and that if she was not on call then she was with her. She stated in deposition that she was in contact with Rogers "several times a day or [Rogers] was over at my house or she's with me running errands or I'm taking her on errands." Further, Pakenas claimed that she deals with all of Rogers's legal issues. She stated that she paid herself $3,000 every month in pre-tax income from Pattico.5 Pattico paid Mr. Rogers $5,000 every month in pre-tax income. Pakenas stated that her daughter, Tracey Priska, sometimes provided attendant-care services for Rogers, but that Pakenas did not keep track of the times. She further stated that her daughter was paid by Pattico a "general base salary for whatever is required of her." This amount included health insurance for Priska and her husband.
Between 2004, when the settlement was reached, and 2005, when the instant suit was filed, Pakenas claims that Rogers required 24/7 care.6 During the period of July 1, 2004 until March 13,2009, Pakenas submitted invoices to State Farm for attendant-care expenses. The invoices claimed that 24-hour-per-day care7 had been provided at a rate of $22/hour,8 which Pakenas claimed represented the "constant coverage and supervision of Mrs. Rogers by Mrs. Pakenas and Mr. Rogers and sometimes, other family members." The care claimed included not only physical care of Rogers, but also administrative services such as arranging for medical care or paying bills.
State Farm stopped paying the invoices Pakenas submitted, and Pakenas filed suit. She specifically sought to recover around the clock care, 24/7, for 53 months. She also sought the statutory interest of 12% for payments that are 30 days overdue.
Elizabeth Pakenas filed a one-count suit in diversity in the district court against State Farm on June 29, 2005. She claimed that State Farm breached its contract with Rogers when it failed to pay attendant-care benefits. State Farm responded by admitting that the policy described in the complaint existed and that it fell under the Michigan No-Fault Act, but refused to admit that there were any outstanding unpaid benefits for or on behalf of Rogers.
A number of pretrial motions were filed, as State Farm struggled to compel discovery from the pharmacy where Rogers had worked, had to compel Pakenas to produce her and Mr. Rogers's cell-phone records (necessary because Pakenas had said that they were "on call" by phone for much of the 24/7 supervision), their tax returns, deposition testimony from Pakenas and Mr. Rogers, and an independent medical exam of Patti Rogers.
On July 2, 2008, Thomas Biscup and Paul Zebrowski, Pakenas's attorneys, moved to withdraw, citing a "breakdown in the attorney/client relationship." In an order dated August 22, the motion was granted, and Anthony Malizia was substituted as plaintiff's counsel.
A seven-day jury trial began on March 3, 2009. Pakenas specifically sought to recover for "around the clock care, 24/7, for 53 months;" however, she also stated that she was willing to accept "whatever this jury decides is an appropriate amount of money . . . for [the] attendant care claim .
At trial, the two sides presented dramatically different versions of the facts. According to Pakenas, Rogers is unable to work, has a seizure disorder, is easily lost or confused, requires more or less constant care, and has been severely debilitated by the accident. According to State Farm, Rogers was only mildly injured by the accident; she has held a steady job in a pharmacy since twoyears after the accident, which the owner of the pharmacy attempted to hide; her doctor ignores facts in continuing to prescribe treatment as though Rogers has a seizure disorder, which she does not have; and Rogers basically lives unsupervised while Pakenas and Mr. Rogers bill State Farm for care she does not actually receive.
Pakenas admitted at trial that between 1976 and 2004 she had not provided Rogers with 24/7 care. She stated that she cared for Rogers, but also took care of her own family and her father. She testified that in the 1990s Rogers began to make "sudden changes" that led to an increase in her care, but admitted that there had still been "very short periods of time" when Rogers had been left alone.
On cross-examination, State Farm elicited testimony from Pakenas that Rogers did not have "actual physical seizures," but that "various medical providers . . . have said that [Rogers] is not having real seizures [but] she may be having pseudo seizures." These seizures were deemed "psychosomatic" or "psychogenic." Pakenas admitted that Rogers sometimes went to doctor's appointments by herself, and that "there would be some days where . . . she was by herself, but for the majority, and this is a big majority, either John, myself or she's been at the pharmacy, one of the kids, you know, whatever, somebody has managed to be with Patti." Pakenas equivocated on the number of hours a day that care was provided to Patti, testifying that it might have been
Mr. Rogers's testimony at trial portrayed Rogers as distracted and foolish, a potential danger to herself. He testified that her condition had deteriorated over the years. However, he admitted on cross-examination that he had not begun providing 24-hour-a-day care to Rogers until after his first deposition in 2006, stating as follows:
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