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Michigan Court of Appeals Addresses No Fault Attendant Care Benefits and Penalty Interest in Published Opinion

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Joseph E. Kozely & Laura J. Garlinghouse
Foster Swift No-Fault E-News
October 7, 2008

In a published opinion issued October 2, 2008, the Michigan Court of Appeals held that the trial court did not err in allowing a jury to consider agency rates for health care professionals in its determination of hourly rates for attendant care by an unlicensed family member. The Court also held that the trial court could not award penalty interest under MCL 500.3142 for the period  between the entry and the satisfaction of the judgment.  Bonkowski v Allstate Ins Co (Docket No. 273945).

Plaintiff suffered traumatic brain and spinal injuries after being struck by an automobile in 2001.  Plaintiff's father received four months of intensive training so that he could provide in-home attendant care.  Defendant Allstate Insurance Company determined that $19 per hour was reasonable compensation for Plaintiff's father, based on the average hourly rate paid to registered nurses in Michigan.  Plaintiff disagreed and filed suit in 2001, citing the higher hourly rates and shift differentials charged by home health care agencies. There was no dispute over medical expenses, which Allstate continued to pay on a timely basis.

The jury found that Plaintiff was entitled to a higher hourly rate for attendant care benefits, awarded Plaintiff $1,730,723.67 in unpaid attendant care benefits, 12% penalty interest under MCL 500.3142, and attorney fees under MCL 500.3148.  Defendant moved unsuccessfully for Judgment Notwithstanding the Verdict (JNOV). Both sides appealed.

On appeal, Defendant argued that the jury should not have considered health care agency rates when determining the father's compensation.  The Court appeared to agree with the argument but held that Defendant waived this argument by not objecting when the trial court instructed the jury that it could consider agency rates.  The Court also noted that the jury did not award Plaintiff the full amount of the agency rates.

The Court of Appeals rejected Plaintiff's argument that penalty interest should continue until the judgment is satisfied.  The Court held that "postjudgment interest is limited to the interest rate applicable under [MCL 600.6013] - 6 percent."  The Court reasoned that penalty interest is a "substantive element of damages" that cannot be enhanced by the court. 

The Court also vacated the award of attorney fees to Plaintiff, holding that Defendant did not unreasonably delay payment.  The Court noted that "[[n]either the medical community nor legal community has established a hard and fast rule to determine the reasonable rate of compensation due to unlicensed individuals who provide necessary health care services to family members."  There was, therefore, a "bona fide and legitimate dispute" over the amount of benefits due.

This case is important because it clarifies that penalty interest under MCL 500.3142 does not continue to accrue after the entry of the judgment.  It also sheds light on the Court's view regarding the use of agency rates in determining compensation for attendant care benefits provided by unlicensed family members.