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Lawyers’ Corner: Insurance Fraud in Secura Ins v Thomas

Trial lawyers must always deal with the facts they are given, even the bad ones. A recent Michigan Court of Appeals decision provides a cautionary tale of insurance fraud to auto accident attorneys.

In Secura Insurance v Thomas, the Michigan Court of Appeals upheld a judge’s decision in favor of Secura Insurance and approved some “restitution” damages, when the policy holders committed insurance fraud seeking benefits for their daughter.

In February 2010, Joy Thomas was in an auto accident in Atlanta, Georgia. She was driving a Chevy Impala that was insured by her parents under their Michigan no-fault insurance. When her mother, Delores Swingler-Reid, added the vehicle to their policy she said she owned it.

Secura paid PIP benefits and assisted Thomas in a third-party lawsuit in Georgia. Then Thomas underinsured motorist benefits. When Secura deposed Thomas and Swinger-Reid, each testified that the mother had driven the Impala down to Georgia to visit her daughter, and that the daughter was using the vehicle to run errands.

But while the UIM litigation was going on, Swinger-Reid filed another lawsuit against Secura for two other accidents. In that lawsuit, Swinger-Reid testified that she did not drive at all between December 2009 and April 2010. She was in Michigan receiving medical treatment in February 2010 when her daughter’s accident happened. Her medical records supported that version of the story.

Secura filed a motion for summary disposition, arguing that the policy was void or rescinded by the insured’s fraud or misrepresentations. Secura requested “restitution” in several forms:

  • PIP benefits paid to Thomas;
  • Costs, expenses, and attorney fees for Thomas’s Georgia lawsuit;
  • Costs, expenses, and attorney fees in the present case;
  • Benefits paid in Swingler-Reid’s other lawsuits; and
  • Costs, expenses, and attorney fees in Swingler-Reid’s other lawsuits.

The trial court awarded $68,787.24 jointly and severally against Thomas and Swingler-Reid.

The Michigan Court of Appeals said that the insured’s insurance fraud was grounds for Secura to rescind its UIM policy (which was not mandatory by statute), so summary disposition was appropriate.

However, the issue of “restitution” was more complicated. The court agreed Secura was entitled to Thomas’s PIP benefits, but ruled that Thomas could not be held jointly and severally responsible for her mother’s insurance fraud, especially when it came to Swingler-Reid’s separate lawsuit for her own injuries. The court also ruled that the judge had failed to state a basis for awarding attorney fees. Since these fees may only be recovered under certain statutes, the court directed the judge to say which law was being used to justify the award.

Secura Ins v Thomas is a warning to trial attorneys to be aware of everything going on in your clients’ lives. What your client says in one case can hurt you in another. Coordinate with your clients’ other attorneys to prevent clients from accidentally committing insurance fraud.

David Christensen of Christensen Law in Southfield, Michigan, is an auto accident attorney with 25 years experience. If your clients have a difficult insurance problem, contact Christensen Law today for a referral.