VHS of Mich., Inc. v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 01 April 2021
• Docket Number: 352881
• Citation: 337 Mich.App. 360,976 N.W.2d 109
• Parties: VHS OF MICHIGAN, INC. doing business as the Detroit Medical Center, Plaintiff-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

337 Mich.App. 360

976 N.W.2d 109

VHS OF MICHIGAN, INC. doing business as the Detroit Medical Center, Plaintiff-Appellee,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.

No. 352881

Court of Appeals of Michigan.

Submitted March 3, 2021, at Detroit.

Decided April 1, 2021.

Approved for publication May 20, 2021, 9:00 a.m.

Miller & Tischler, PC (by Andrew J. Horne ) for VHS of Michigan, Inc., doing business as The Detroit Medical Center.

Miller, Canfield, Paddock and Stone, PLC (by Paul D. Hudson, Kalamazoo, and Amanda Rauh-Bieri, Grand Rapids) for State Farm Mutual Automobile Insurance Company.

Before: Tukel, P.J., and Jansen and Cameron, JJ.

Per Curiam.

In this no-fault action, defendant, State Farm Mutual Automobile Insurance company, appeals by leave granted¹ the trial court's order denying its motion for leave to amend its affirmative defenses to plead fraud with particularity. We reverse, vacate the trial court's February 10, 2020 order denying defendant's motion to amend its affirmative defenses to plead fraud with particularity, and remand for further proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises out of a motor vehicle collision that occurred on December 2, 2018, near the intersection of Evergreen Road and Seven Mile Road in Detroit, Michigan. At the time of the collision, defendant's insured, Ferlita Reyes, was driving a 2009 GMC Yukon XL, and there were five other passengers in the vehicle. At some point following the collision, Reyes sought medical treatment with plaintiff, VHS of Michigan, Inc., doing business as The Detroit Medical Center (the DMC), in the emergency room. Under MCL 500.3143, Reyes executed an assignment to plaintiff of all her rights, privileges, and remedies for payment of the personal protection insurance (PIP) benefits to which she might be entitled under the no-fault act, MCL 500.3101 et seq. , and under her insurance contract with defendant.

On June 20, 2019, plaintiff filed the complaint in the instant action, asserting that it had submitted reasonable proof of charges incurred to defendant and demanded payment but that defendant had unreasonably delayed or refused payment for the balance of benefits due. Plaintiff claimed that defendant had breached its contractual and statutory obligation to provide no-fault benefits by unreasonably delaying or refusing payment and sought a judgment under MCR 2.605 declaring defendant liable for no-fault benefits and a judgment in the amount of the total liability due, plus costs, interest, and attorney fees.

Defendant timely answered the complaint, denying most of the allegations contained therein, and inter alia , asserted the following affirmative defenses:

1. Plaintiff's patient has made statements which do not comport with known facts. She has made, caused to be made, or submitted false statements in connection with this [claim] that would, therefore, bar her from recovering benefits. If discovery reveals any actionable fraud, [d]efendant will seek leave to amend its affirmative defenses to state a fraud or rescission defense with more particularity.

2. Even if [p]laintiff's patient did not intentionally make false representations, [d]efendant may be entitled to void coverage as a non-intentional or innocent misrepresentation of material fact. Wiemayer [Wiedmayer ] v. Midland Mutual Ins. , 414 Mich. 369 (1992) [(1982)].

The parties engaged in written and oral discovery, and on January 22, 2020, before the expiration of the discovery period on February 4, 2020, defendant moved to amend its affirmative defenses to plead fraud with particularity. Defendant argued that discovery had revealed inconsistencies between Reyes's account of the collision, the five other passengers’ accounts of the collision, medical documentation, and the opinion of defendant's expert, Don Parker, who had reviewed the initial photographs of the vehicle, inspected the vehicle, downloaded the vehicle's information from the event data recorder (EDR), and reviewed the occupants’ testimony.

At the time of the collision, Reyes was driving five passengers in the Yukon: Curtis Houston, FaQuan Houston, Darrell Nickerson, Jermaine Dixon, and Kirshean Nelson. Reyes recalled that she had picked up the passengers in order to meet other friends for dinner at a restaurant. At her deposition, Reyes testified that while driving on Evergreen Road around 9:30 p.m., she looked into her rearview mirror and became aware of a red Ford F-150 driving "crazy" behind her. At some point, the F-150 began to pass Reyes on the left and made contact with the Yukon. Reyes could not remember if the F-150 made contact with the side or rear of the Yukon, but she was certain that impact had occurred. Reyes then lost control of the Yukon and swerved to the right and into a parked Chevrolet Impala. According to Reyes, the F-150 fled the scene. Reyes further testified that she never saw the damage to the Yukon because it was towed from the scene and repaired by defendant. The five other occupants of the Yukon had similar recollections of the collision: that the F-150 had been traveling behind the Yukon in the same direction. Medical records also indicated that the passengers of the Yukon initially reported that the Yukon had been rear-ended by another vehicle.

However, defendant argued, the Michigan Traffic Crash Report was inconsistent with the occupants’ recollection of the collision. The report detailed:

Per a witness at the scene, Unit 1, a red Ford F-150, crossed left of center while southbound on Evergreen. Unit 1 was driving at a high rate of speed and sideswiped Unit 2 [the Yukon].

Unit 2 then rear-ended Unit 3 [the Impala], which was also northbound on Evergreen. Unit 1 left the scene.

The expert report created by Parker also called into question the occupants’ version of events. In support of its motion to amend, defendant attached a copy of the collision damage analysis performed by Parker. Parker wrote in his report that he performed the analysis "to quantify the nature and severity of the subject collision." Parker reviewed the traffic crash report, the CARFAX² vehicle history for the subject Yukon, the repair estimate for the Yukon, deposition transcripts from occupants of the Yukon, industry information for both the Yukon and the Chevrolet Impala involved in the secondary collision, and aerial and street-view photographs of the claimed collision site. Parker also inspected the Yukon in person at a car dealership after the vehicle had been repaired. During this inspection, Parker accessed the airbag control module, which contained an EDR that was "capable of capturing certain pre-crash and crash information[.]" The EDR was imaged by Parker using a "Bosch Crash Data Retrieval (CDR) tool for retained data relevant to the subject incident." Parker also wrote that "[i]n addition to the above-mentioned materials and activities, I have relied on my education and training and my experience in vehicle design, crash testing, crash analysis, and crash reconstruction" in formulating opinions regarding the collision.

Parker first addressed certain inconsistencies in the deposition transcripts he had reviewed and asserted that those inconsistencies challenged the veracity of the testimony. For example, Reyes had testified that Nickerson was a "childhood friend" of hers, but Nickerson testified that he had only known Reyes for "maybe a couple of years." Parker also noted inconsistencies across the testimony regarding who had been picked up first by Reyes and whether the occupants had stayed in the vehicle after the collision, or had gotten out and waited for the police and EMS while sitting on the curb.

Parker next wrote that the repair estimate of the Yukon included photographs of the Yukon that had been taken at the time the estimate was created. These photographs showed damage to the front bumper cover, the plastic lower shield panel, the front grille, the rear bumper cover, and the right tail lamp. All of the aforementioned parts required replacement. There was no structural damage to the Yukon, and no adjacent components such as the radiator, the air conditioning condenser, or the headlights required replacement or repair. Parker opined that there was "little discernable damage to the front end of the Yukon. The hood and grille appear undisturbed, with no buckling of the hood as designed for a frontal impact. Only some minor disruption is visible at the lower central section of the front bumper cover." The rear bumper cover and the right rear quarter panel had some minor longitudinal scratching and shallow denting visible; however, this damage was not consistent with any kind of collision, and because of the location of the damage, it was not consistent with the "claimed collision scenario." There were no repairs to be made on the left side of the Yukon. Parker went on to opine that the "lack of damage to the front end of the Yukon is consistent with at most a minor impact or bump into another vehicle or object. It is not consistent with a 30+ mph impact into another vehicle such as the subject Chevrolet Impala."

Finally, Parker addressed the CDR report for the Yukon's EDR. The EDR was imaged on July 8, 2019, and there were no collision events stored in its memory. Parker submitted that "[f]rom comparison to the extent and nature of physical damage," it is likely that "[t]he incident that caused the damage to the Yukon was not of sufficient severity to induce a 5 mph" change in vehicle velocity so as to register a collision event in the EDR; alternatively, "[i]n the 3,157 miles of usage subsequent to the repair estimate, the ignition had been cycled at least 250 times," which would have reset the EDR. However, Parker opined that "from the combination of physical evidence and imaged EDR data, there is no evidence of a hit-and-run impact to the left rear or side of the subject Yukon. Any frontal impact into another object, such as the subject...