Auto insurers have increasingly denied or cut off PIP benefits based on allegations of fraud. However, such a denial is inappropriate unless an insured has willfully misrepresented a material fact and acted to defraud its insurer. In order to prove fraud, the following factors must be shown:
(1) that the misrepresentation was material;
(2) that it was false;
(3) that the insured knew that it was false at the time it was made or that it was made recklessly, without any knowledge of its truth; and
(4) that the insured made the material misrepresentation with the intention that the insurer would act upon it. Minav Gen Star Indem Co, 218 Mich App at 686, 555 NW2d 1 (1996).
In one such case, an insured submitted a PIP claim to his auto insurer claiming injuries to his back, neck, leg and ankles. When the insurer stopped making PIP payments, the insured filed a negligence claim against John Doe, the driver of an unidentified vehicle allegedly involved in the accident, for PIP benefits, and uninsured motorist coverage. The insurer filed for summary disposition based on alleged fraudulent representations in the insured’s application for No Fault benefits. The alleged fraudulent representations involved differing versions of the accident; wrongful denial of receiving medical treatment for the same or similar symptoms before the accident; and wrongful assertion that he had not previously received workers comp or Social Security Disability benefits. The trial court granted the insurer’s motion for summary disposition and insured appealed.
On appeal the court found that the evidence of fraud was rebutted. The court agreed that insured’s answers to defendant's first set of interrogatories, as well as his deposition testimony and records produced during discovery, conflicted with the representations at issue in his application for no-fault benefits. However, at his deposition, the insured did not dispute the discrepancies, but instead provided explanations for them which the court found, if believed, could support a finding that the insured did not knowingly misrepresent the facts with the intent to defraud the defendant insurer. Accordingly, the court reversed the trial court's order granting summary disposition of the insured’s claims in favor of insurer and remanded for further proceedings.
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