No-Fault Fraud: What You Need To Know | Michigan Auto Law

No longer can auto insurance coverage firms use overly broad No-Fault fraud clauses of their insurance policies to remove all your legally-guaranteed Michigan auto insurance coverage advantages after a automobile accident simply by claiming you’ve made a mistake in your claims varieties, an inaccurate assertion up to now, or due to what a some non-public eye they employed claims they noticed you do.

A latest Michigan Court of Appeals ruling – which utilized a landmark resolution by the Michigan Supreme Court from 2020 – has put an finish to this. Until now, insurance coverage firms have been exploiting overly broad anti-fraud provisions in insurance policies to disclaim an ever escalating variety of claims for years.

The one-two punch of those vital No-Fault fraud rulings now sends a transparent message to the auto insurance coverage firms, claims adjusters and insurance coverage protection attorneys that automobile accident victims’ rights can’t be trampled on and brought away at primarily the whim of the insurance coverage business by claiming no matter they need as fraudulent.

The justices on the Supreme Court and the judges on the Court of Appeals have now stopped a apply that has brought on actual hurt to tons of, even 1000’s, of utterly harmless and injured automobile accident victims. Of course, these two rulings simply make clear what ought to have been clear to the insurance coverage firms all alongside.

Using No-Fault fraud clauses to strip away all of a automobile accident sufferer’s advantages primarily based on their statements or actions after the automobile crash has no authorized foundation in Michigan legislation. The No-Fault legislation, handed by the Legislature in 1973 and amended in 2019, doesn’t enable it. And the Michigan common-law, which has existed for many years and a long time, additionally doesn’t enable it.

Accusing automobile accident victims of fraudulent conduct

Auto insurance coverage firms have been utilizing No-Fault fraud provisions of their insurance policies to use automobile accident victims’ errors – regardless of how harmless or how inconsequential – through the claims course of or throughout authorized discovery to remove all Michigan auto insurance coverage advantages, saving insurance coverage firms tens of millions of money. And till now, they’ve been largely getting away with it.

The protection playbook is easy: What the adjusters or protection attorneys do is comb via all the varieties submitted by a automobile accident sufferer. They flyspeck each line. They do the identical with depositions and interrogatories. They rent non-public investigators. The aim of all of that is to discover a mistake, some inaccurate assertion – regardless of how small, harmless, or insignificant it’s – after which use this to accuse the automobile accident sufferer of getting dedicated fraudulent acts.

Accusing the automobile accident of fraudulent conduct holds explicit significance as a result of then the auto insurance coverage business can then avail itself of the overly broad and draconian “anti fraud” provisions its own attorneys had drafted. Using this definition of fraud, the insurer would then search to “void” your complete coverage and stroll away from all authorized and monetary accountability for the victims’ Michigan auto insurance coverage advantages.

Draw the incorrect trial court docket choose, as tons of of individuals did, and the insurance coverage firms would get away with it, too.

The impact of this technique of auto insurance coverage firms utilizing No-Fault fraud towards their very own insureds and the people who find themselves imagined to be really defending has been devastating. Thousands of Michigan automobile accident victims have had their Michigan auto insurance coverage advantages denied in recent times as insurance coverage firms grew to become extra aggressive and extra emboldened to say practically something as fraud.

What began the No-Fault fraud mess

Auto insurance coverage firms’ exploitation of No-Fault fraud clauses began with a ruling from the Michigan Court of Appeals in 2014.

The case was Bahri v. IDS Property Casualty Insurance Company and it intertwined the court docket condoning the auto insurance coverage business’s use of its own “fraud exclusion” to chop off all of its insured’s Michigan auto insurance coverage advantages primarily based on errors in her Household Services Statements and conclusions that the insurance coverage business reached from surveillance footage it took of its insured.

This resolution was horrible. It was poorly written and poorly thought-out. It predictably began a tidal wave of misuse and abuse by auto insurance coverage firms as they claimed practically any mistake was a fraudulent act. It additionally overwhelmed many utterly harmless automobile accident victims.

As a No-Fault lawyer, i’ve been an outspoken critic of the Bahri opinion, which is among the worst legal opinions i’ve ever encountered. i’ve seen insurance coverage protection attorneys and claims adjusters depend on this case to allege fraudulent conduct over each harmless mistake or inconsistency in record-keeping – regardless of how slight or inconsequential.

i’ve watched over the previous years as insurance coverage firms who’re legally accountable under the Michigan auto insurance coverage legislation for paying private damage safety (PIP) advantages have utterly abused and prevented these authorized obligations simply by calling harmless individuals frauds. Insurance firms have used the Bahri resolution to disclaim current and future auto insurance coverage advantages to tons of of significantly injured automobile crash victims. Claims adjusters and insurers may use any pretext to allege No-Fault fraud so they might then deny PIP advantages to individuals who desperately want them.

Thankfully, these latest rulings by the Michigan Supreme Court and the Michigan Court of Appeals will carry a protracted overdue finish to this mess.

Courts cease abuse of No-Fault fraud provisions in auto insurance coverage contracts

The two new instances that can now defend automobile accident victims from having their Michigan auto insurance coverage advantages utterly terminated due to an accusation of No-Fault fraud come from the Michigan Supreme Court and the Michigan Court of Appeals.

In MEEMIC v. Fortson, the Michigan Supreme Court dominated that MEEMIC’s antifraud provision which sought to void your complete coverage primarily based on alleged fraud regarding a automobile accident sufferer’s attendant care advantages was invalid and unenforceable as a result of it has no authorized foundation in both Michigan’s auto insurance coverage legislation nor Michigan’s longstanding common-law.

In Williams v. Farm Bureau, the Michigan Court of Appeals relied on MEEMIC v. Fortson to rule that Farm Bureau’s antifraud provision which sought to void your complete coverage primarily based on its insured’s alleged false statements associated with her No-Fault declare after her automobile accident was invalid and unenforceable. The Court of Appeals defined that MEEMIC “held that antifraud provisions in Michigan auto insurance policies apply to fraudulence in the inducement but not to allegations of postprocurement fraud. Accordingly, the policy provision on which defendant and the trial court relied is ‘invalid and unenforceable’ to the degree a insurer seeks to apply it to allegations of postprocurement fraudulent in a claim under a mandatory coverage, as in this case.”

Examples of No-Fault fraud provisions

Here are examples of the kinds of No-Fault fraud provisions that auto insurance coverage firms put of their insurance policies to make use of towards their insureds after they’ve been injured in a automobile accident:

• “We do not provide coverage for any insured who has made fraudulent statements or engaged in fraudulent conduct in connection with any accident or loss for which coverage is sought under this policy.” (IDS Property Casualty Insurance Company)
• “This entire policy is void if any insured person has intentionally concealed or misrepresented any material fact or circumstance relating to: A. This insurance; B. The Application for it; C. Or any claim made under it.” (MEEMIC)
• “The entire policy will be void if whether before or after a loss, you, any family member, or any insured under this policy has: 1. Intentionally concealed or misrepresented any material fact or circumstances; 2. engaged in fraudulent conduct; or 3. made false statements; relating to this insurance or to a loss to which this insurance applies.” (Farm Bureau)

Need assist? Call the attorneys at Michigan Auto Law

If you could have been injured in a automobile accident or in case you have been wrongly accused of No-Fault fraud and wish to converse with an skilled insurance coverage lawyer, call toll free anytime 24/7 at (800) 777-0028 for a free one on one with certainly one of our attorneys. You can even get assist from an skilled legal professional by emailing [email protected] or you need to use the chat function on our web site.