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The Michigan Court of Appeals Affirmed that a Dispute in Priority Between Multiple Insurers Is Not A Reasonable Basis To Deny Benefits

By Olga Khessina

In Adanalic v Harco Nat’l Ins.Co, opinion of the Michigan Court of Appeals, approved for publication (Decided February 5, 2015; Docket No. 317764),the Court of Appeals addressed the issue of priority between multiple insurers where the plaintiff was seriously injured while unloading a pallet from a disabled box truck onto a semi-trailer. The plaintiff was contracted by a non-party, DIS Transportation, to pick up, haul, ad deliver various loads of cargo. The box truck from which he was unloading the cargo, as well as the semi-trailer were both insured by Defendant Harco National Insurance Company (“Harco”). The plaintiff had a personal policy of insurance providing for personal protection insurance (“PIP”) benefits through Defendant Michigan Millers Mutual Insurance Company (“Miller”); said policy was issued to the plaintiff’s wife.

The plaintiff sought benefits from both insurers, but each denied the claim. The plaintiff filed suit against both insurers. Following a hearing on a Motion for Summary Judgement, the trial court ruled that the plaintiff was entitled to PIP benefits from Millers. The trial court further held that Millers was responsible for payment of penalty interest for its delay in paying the plaintiff’s PIP benefits but was not responsible for the Plaintiff’s attorney fees.

On appeal, Millers argued, inter alia, that it had no responsibility to pay the plaintiff’s PIP benefits because workers’ compensation benefits were “available” to him under MCL 500.3106(2), which provides, in pertinent part:

Accidental bodily injury does not arise out of the ownership, operation, maintenance, or use of a parked vehicle as a motor vehicle if benefits under the worker’s disability compensation act of 1969 … or under a similar law of another state or under a similar federal law, are available to an employee who sustains the injury in the course of his or her employment…

Following the incident, the plaintiff did file an application for workers’ compensation benefits from DIS Transportation, but was denied the same on the grounds that he was an independent contractor, not an employee. Millers argued that where the employer and no-fault insurer disagree on which of the two (2) schemes is primarily applicable, the injured person is to receive no benefits at all until each of the two (2) insurers are satisfied that their assertion of denial has been fully adjudicated. The Court of Appeals expressly rejected this notion, holding that such a position would require an employee to engage in lengthy litigation before receiving PIP benefits; the same would be in direct contravention of the No-Fault Act’s purpose of providing “assured, adequate, and prompt recovery for economic loss arising from motor vehicle accidents.” The Court further noted that, even upon payment of benefits, Millers retained the right to fully and independently protect its interests as the plaintiff’s subrogee.

In short, as benefits were not “available” to the plaintiff, having been denied by the workers’ compensation insurer, the insurer deemed highest in the order of priority was not entitled to withhold payment of PIP benefits under MCL 500.3106(2).

Practice Tip: A dispute in priority, whether between two (2) automobile insurers or between an automobile and workers’ compensation insurer does not constitute a reasonable basis for a denial. Case in point, in the Adanalic, the Court of Appeals found that as the final basis for Millers’ denial of the plaintiff’s PIP benefits was a priority dispute, the same was unreasonable, entitling the plaintiff to an award of reasonable attorney fees.

Electric Wheelchair Determined to be Motor Vehicle and Required Insurance

Neil E. Hansen won a Motion for Summary Disposition in a lawsuit for personal protection insurance (PIP) benefits in the case of Hindenlang v State Farm. Defendant argued that the undisputed facts established that Plaintiff was operating an electric wheelchair in the roadway at the time the underlying accident occurred. When the accident happened, Plaintiff sought to collect PIP benefits under the insurance policy covering the driver of the other vehicle involved in the accident. The Court ruled that the undisputed facts established that the electric wheelchair met the statutory definition of a motor vehicle, and therefore that Plaintiff was required to insure the vehicle. By failing to do so, Plaintiff was statutorily disqualified from receipt of PIP benefits.

Adjuster Tip:

Think twice about the information placed in your log notes and before you hit save!  Is the information accurate?  Is the information objective and neutral?  How will it read to a jury if read, or blown up, later?


Questions or comments? Email Allison Lazette-Magnan at or visit