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Lawsuit Against Progressive Insurance For Medical Benefits - Court Holds Reimbursement Too Soon For Adjudication

Posted on Aug 16, 2012

In Berdel v. Progressive Michigan Insurance Company, unpublished opinion per curiam of the Court of Appeals decided October 25, 2011, (Docket No. 302954), the Court of Appeals held that Plaintiff’s declaratory Judgment action against Progressive was not yet ripe for adjudication. On October 13, 2009, the plaintiff sustained a serious elbow fracture in an automobile accident. Plaintiff was a passenger in a vehicle that collided with another vehicle when the other vehicle turned in front of the vehicle plaintiff was in without warning.


At the time of the accident, plaintiff carried a health insurance policy with a German company, Central Krankenversicherung AG (“Central”), and a coordinated or excess no-fault insurance policy with the defendant, Progressive Michigan Insurance Company. Following the accident, Central paid about $75,000 in medical bills and related expenses that were incurred as a result of the accident. Plaintiff filed a separate tort claim against the driver of the other vehicle involved in the accident, seeking noneconomic damages. Central notified plain-tiff that it would seek reimbursement for the medical expenses it paid from any recovery plaintiff received from the other driver pursuant to German law.


On January 8, 2010, plaintiff filed a complaint alleging that defendant breached the excess medical benefits policy when it re-fused to make payments that plaintiff alleged were required under the policy. After Central notified plaintiff of its intent to seek reimbursement from any recovery plaintiff obtained from the other driver, plain-tiff amended his complaint against defendant to seek reimbursement from defendant in the event that plaintiff had to reimburse Central from his non-economic damages in his pending tort case.


Plaintiff and defendant settled all the issues except the issue regarding whether defendant would have to reimburse plaintiff in the event that plaintiff recovered in tort and was required to reimburse Central from that recovery. On the issue of reimbursement, the trial court concluded that “in the event plaintiff is required to reimburse his health insurance carrier from his tort recovery for any amounts paid... [defendant] must reimburse plaintiff the same amount.”


On Appeal, Defendant Progressive argued that the trial court followed federal law instead of binding Michigan law. Defendant maintained that it should not be required to reimburse plaintiff in the event that plaintiff had to reimburse his medical insurer, Central, from any tort recovery plaintiff may have. Instead of deciding the case based upon the arguments presented by the parties, the Court went in a different direction. In this regard, although not raised on below or on appeal, the Court decided the case on whether the issue was ripe for adjudication.


The doctrine of ripeness focuses on the timing of an action, and is “designed to prevent the adjudication of hypothetical or contingent claims before an actual injury has been sustained.” “A claim is not ripe if it rests upon contingent future events that may not occur as anticipated, or may not occur at all.”


In this case, the Court held that the trial court decided an indemnification claim that was not ripe because it rested on two contingent future events: (1) that plaintiff would recover from the allegedly negligent driver in tort, and (2) that plain-tiff would be required to reimburse the health in-surer out of his tort recovery. The Court noted that there was no indication in the record that plaintiff has or will recover in tort, or that the health insurer has or will recover any money obtained by plaintiff as a result of the tort law-suit.


Thus, the Court stated the claim rested upon two contingent future events that are also contingent up-on each other, i.e. plaintiff’s health insurer will not at-tempt to obtain reimbursement if plaintiff does not recover in tort. In summary, the Court held that the issue could not be decided because there was no actual controversy - the entire claim is premised on the idea that defendant might have to reimburse plaintiff if a future contingent event occurs. The Court, in our opinion, failed to recognize the one year back rule, and that plaintiff was required to file the lawsuit based on the possible contingent events in order to avoid the application of the one year back rule. We believe that the lawsuit should have been stayed until the other matters were resolved, and not dismissed by the Court.

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