In Smejkal v Beck, ___NW2d___; 2024 Mich. App. LEXIS 3019, (Ct App, Apr. 18, 2024), Terry Smejkal renewed his automobile insurance policy with Home-Owners Insurance Company on August 11, 2020, with the policy effective from September 16, 2020, through March 16, 2021. The policy reflected that Smejkal selected the option of “Unlimited Person Primary” under the coverage for “Allowable Expenses (Medical).” Per the policy, allowable expense coverage also encompassed attendant care benefits, which essentially compensates a third-party individual who assists an injured party unable to care for themselves due to injuries sustained in a motor vehicle accident.
The Case
The plaintiffs (Terry and Brandon Smejkal) were subsequently involved in an automobile accident in December 2022, after which they required attendant care 24 hours a day. The plaintiffs sued Home-Owners to recover the cost of the care, and Terry estimated he incurred $157,584 in attendant care expenses.
Home-Owners subsequently moved for partial summary disposition as it related to the attendant care claim, arguing that the 2019 amendments to the Michigan No-Fault Act capped the plaintiffs’ attendant care at eight hours per day, or 56 hours each week, pursuant to MCL 500.3157(10). The trial court agreed with Home-Owners and granted partial summary disposition.
The Appeal & Ruling
On the plaintiffs’ appeal, the Michigan Court of Appeals noted that an unambiguous statute must be applied as written, and that the terms of a contract must be enforced as written where there is no ambiguity. The court then analyzed MCL 500.3157(10), which in essence mandates that an insurer is only required to pay benefits for attendant care for up to eight hours per day, or 56 hours each week, if the attendant care is provided directly or indirectly by an individual related to the injured person, an individual domiciled in the injured person’s household, or an individual with whom the injured person had a business or social relationship with before the injury. The court also referred to MCL 500.3157(11), which permits insurers to contract to pay attendant care benefits for more than the hourly limitation in MCL 500.3157(10).
Of note, under Michigan case law, attendant care benefits are usually considered an allowable expense for purposes of the No-Fault Act. In line with that precedent, and applying the dictionary definition of “unlimited” given the actual policy did not define the word “unlimited,” the Smejkal court concluded that by selecting Unlimited Allowable Expenses coverage, Terry Smejkal essentially selected allowable expenses that were “boundless, infinite, and not subject to any exceptions” — and given the policy explicitly listed attendant care as being included under the umbrella of allowable expenses, one could argue that such “boundless” and “infinite” coverage necessarily included the number of attendant care hours because there were no exceptions listed under the policy.
Implications and Best Practices Moving Forward
The Smejkal opinion emphasizes the customary importance of explicitly including unambiguous contractual/policy terms, definitions, limitations, exceptions, exclusions, etc. Truly, courts would prefer insurance carriers to be explicit in including any provisions/limitations in their policies to keep insureds informed. Practically, the lingering question is to what extent, and whether an attempt to be as explicit as possible, could be detrimental to the insurer, especially in circumstances where the policy provision does not necessarily align with legislation and/or precedent.
It is clear that in Michigan, an insurer’s reliance on statutory authority alone may not be sufficient particularly for limiting coverage for personal injury protection (PIP) benefits, as is evident in the Smejkal opinion. There is also a possibility that other jurisdictions beyond Michigan may adopt this approach.
Accordingly, we recommend that when an insured selects unlimited PIP benefits coverage, Michigan insurance carriers specifically and explicitly include language indicating that attendant care benefits are capped at the statutory maximum hours (i.e., eight hours per day or 56 hours per week) if those hours have been directly or indirectly provided by an individual related to the injured person, an individual domiciled in the injured person’s household, or an individual with whom the injured person had a business or social relationship prior to the injury. Furthermore, even though Michigan courts have consistently held that attendant care benefits are an allowable expense for purposes of the No-Fault Act, it may be best practice for carriers to identify attendant care coverage (where applicable) on the declarations page and explicitly indicate that the coverage is capped at the statutory maximum hours.
Beyond Michigan, and beyond the context of attendant care benefits, we also recommend that in circumstances where a legislation or legal precedent provides for a limitation in terms of certain benefits or coverages in an insurance contract, the insurance carrier should still explicitly indicate such limitation in the insurance contract.
