Court of Appeals Enforces Strict PIP Statutory Language in Coverage Selection Case

Following Michigan’s 2019 no-fault reforms, the state’s insureds can help control their premiums by selecting from various personal protection insurance (PIP) benefits coverage options when purchasing auto insurance. These options, and the process for selecting one, are dictated by statute, primarily MCL 500.3107c, and not all options are available to all consumers.  

For example, the lowest coverage option of $50,000 for medical expenses benefits is only available to people enrolled in Medicaid. Similarly, some insureds with Medicare or certain “qualified health coverage” can opt-out of or exclude medical expenses coverage altogether. But what makes an insured’s selection effective? And how far does the insurer have to go to verify that the insured is actually eligible for the coverage level they select? 

The Court of Appeals Weighs In  

Michigan appellate courts have begun addressing pieces of this issue, but many questions regarding the mechanics and enforcement of post-reform coverage selections remain unsettled. As more post-reform cases progress, however, the Court of Appeals has had more opportunities to chime in, such as in Michigan Ambulatory Surgical Center v Esurance Property & Casualty Co. The opinion is unpublished, so it doesn’t create new law on the topic, but it provides insight into which direction this question could be heading.  

In the case, the plaintiff medical provider argued that its patient, who had no-fault coverage from Esurance Property and Casualty Co. (Esurance), should receive unlimited medical expenses coverage by default, even though she previously selected limits of only $50,000.  

Plaintiff emphasized that this option is only available to Medicaid enrollees and argued that because Esurance did not obtain proof of its insured’s Medicaid coverage, her selection was ineffective. Plaintiff also argued that the insured’s selection did not extend to the accident date because she did not reaffirm her choice with a new coverage selection form before the applicable policy renewal period.  

No Statutory Requirement to Verify Medicaid Enrollment  

The Court disagreed. Regarding the Medicaid proof, the Court identified two distinct statutory requirements pertaining to the $50,000 coverage level: that the insured make a coverage selection on an approved selection form and in the manner prescribed by the statute (that is, by meeting certain signature or verbal instruction requirements); and that the insured actually be enrolled in Medicaid.  

But, the Court noted, there is no statutory language specifically “mandating that insurers secure proof of Medicaid enrollment,” and the Court is not permitted to read requirements into statutes that aren’t already there.  Therefore, obtaining proof of Medicaid enrollment is not a requirement of an effective selection of this PIP coverage level. In other words, the statute “does not impose an obligation or onus on no-fault insurers, either directly or through their agents, to secure proof of an individual’s Medicaid coverage at the time of the no-fault policy’s issuance or renewal.” 

No Requirement for New Selection Forms at Renewal  

For similar reasons, the Court also rejected the plaintiff’s argument that a new selection form needed to be executed with every policy renewal. Although the statute requires the insured to make an effective PIP selection “as it relates to all policies issued or renewed after July 1, 2020,” the Court explained, it “does not specifically provide that an updated form be completed at each subsequent renewal of the policy.” The Court further noted that the statute explicitly sets forth criteria for the choice-of-coverage form, and the issuance of a new form at every policy renewal does not appear among those criteria. Thus, as with the Medicaid enrollment proof, the Court found this could not be a requirement of the statute.  

In affirming the lower court’s ruling in favor of the insurer, the Court also rejected evidentiary arguments regarding the sufficiency of the evidence as to the insured’s signature on the choice of coverage form under Bronson Health Care Group v Esurance Prop & Cas Ins Co, and whether the $50,000 policy limits had truly been exhausted.  

Key Takeaways for Insurers  

While this opinion does not create binding precedent, it is an interesting interpretation of MCL 500.3107c that strictly follows the confines of its plain language. To varying degrees of success, insureds and providers in PIP disputes often press emphatically to place the onus on insurers to verify the soundness of their insureds’ coverage selections and representations. For insurers, this opinion offers an example of a ruling that may help dampen those efforts, particularly if other panels of the Court follow suit in more direct and binding cases to come.