Lawyers’ Corner: Sarah Stempky-Kime Provides ICLE’s 2016 No-Fault Update

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Need to know what’s new in Michigan no-fault law this year? Attorney Sarah Stempky-Kime recently teamed up with defense attorney David Pierangeli to give ICLE’s 2016 No-Fault Update.

Every year, the Institute of Continuing Legal Education provides an annual review of the biggest changes in no-fault law. This year, it asked Christensen Law attorney Sarah Stemky-Kime to present the plaintiff’s side of this year’s important legal developments. ICLE’s Rachel Taylor sat down with Kime and insurance defense attorney David Pirangeli of McDonald Pierangeli MacFarlane PLLC, in Grand Rapids, in the First-Party No-Fault Update 2016 (subscription required).

Provider Litigation Developments

The panelists discussed Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co and the resulting trend of “3112 motions”. In Covenant, because State Farm hadn’t given the medical provider notice of a settlement, as required by MCL 500.3112, that settlement could not be held against the medical provider, and Covenant’s lawsuit was allowed to proceed.

As a result, settlements with injured motorists now often result in a collaborative “3112 motion”. Plaintiffs and insurance providers work together to list all medical providers and their bills, including any submitted to the insurer during litigation. Notice is then provided to each medical provider and the court is asked to approve the settlement and apportion any shortfall.

A problem with 3112 motions is that there is no uniform process regarding timing, service, and even whether the court will hear the motion at all. In those cases, arbitration may be an option. Some courts are determining that the plaintiff is the only payee and leaving it to the plaintiff’s attorney to distribute the fees. Other judges are apportioning the settlement among medical providers themselves.

The speakers also noted that this case has gone up on appeal to the Michigan Supreme Court. The Court will be deciding whether the healthcare provider is considered an “other person” under 3112 with standing to file a claim at all. This could have a substantial affect on future medical provider litigation.

Attorneys Sarah Stempky-Kime and David Pirangeli also reviewed recent developments in chiropractic care in Measel and suspension of claims in Chiropractors Rehab Group. They debated whether a suspension in the insured’s first-party case should result in a stay of a medical provider’s claim until the injured party’s cooperation could be obtained.

The Innocent Third Party Rule

Another key development in 2016 was Bazzi v Sentinel Ins Co, and its effect on the Innocent Third Party Rule. This case has far-reaching implications for plaintiffs, especially when no secondary no-fault policies are identified within the first year. When fraud is discovered later, even retroactively, the policy can be rescinded and the innocent third party may have nowhere else to turn for benefits.

Sarah Stemky-Kime noted that Bazzi shifts the burden of investigating possible fraud onto the innocent third party plaintiff. Both parties also noted that the case could cause the Michigan Assigned Claims Plan (MACP) to receive notice in a lot more cases, just in case fraud is discovered later on. Pirangeli also suggested that trial courts may be more hesitant in finding fraud or allowing policies to be rescinded, now that they know it could deprive innocent third parties of PIP benefits.

Fraudulent Claims

Attorneys Sarah Stempky-Kime and David Pirangeli next turned their attention to Bahri v IDS Prop Cas Ins CoWhile the case was decided in 2014, it has caused a trend of Bahri motions to dismiss cases based on fraudulent misrepresentation by the policy holder. While plaintiffs’ attorneys like Sarah see the decision as fact specific based on a black-and-white finding of fraud, insurance defense attorneys tend to say that any fraudulent claim can be the basis of a motion to dismiss.

Stempky-Kime cautioned that defense attorneys are often “trigger-happy”, filing Bahri motions based on inconsistencies in forms or testimony that raise credibility questions better suited to the jury. She called it a defensive tool being used for technical mistakes, rather than the kind of obvious fraud present in Bahri itself. Pirangeli agreed that forms alone aren’t a strong basis for such a motion. He preferred to use a claimant’s deposition testimony.

ICLE Case Summaries

In addition to these three hot auto law issues, the First-Party No-Fault Update 2016 covered a host of other cases. Stempke-Kime and Pirangeli provided concise case summaries on everything from uninsured motorist coverage to attorney fees.

ICLE’s continuing education videos provide a wealth of knowledge to busy no-fault attorneys seeking to stay on top of the law. They always feature reputable attorneys like Christensen Law’s own Sarah Stemky-Kime, so you know the information you receive is thoughtful and well researched.

Attorneys David Christensen and Sarah Stempky-Kime are auto accident attorneys at Christensen Law with offices in Southfield and Ann Arbor. If your client is facing a difficult no-fault issue, contact Christensen Law for a referral today.