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No-Fault Insured Must Show that an Experimental Medical Procedure is "Efficacious" before It Can Be an Allowable Expense under MCL 500.3107(1)

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Joseph E. Kozely Jr.
Foster Swift No-Fault E-News
August 31, 2011

On July 29, 2011, the Michigan Supreme Court held 4-3 that a No Fault insured must show by "objective and verifiable medical evidence" that an experimental medical procedure is efficacious before the procedure can be found to be "reasonably necessary" under MCL 500.3107(1).  Krohn v Home-Owners Insurance Company, __ Mich __ ; __ NW2d __ (2011) (Docket 140945).

A serious motor vehicle accident in 2001 left Kevin Krohn a paraplegic.  Krohn learned of a surgeon in Portugal who was treating injuries such as his by transplanting stem cells from behind the patient's sinus cavities to the injury site.  Krohn could not undergo the procedure in the USA because it did not have FDA approval, so Krohn asked his No Fault insurer to pay for the procedure to be done in Portugal.  The insurer agreed to pay for testing to determine whether Krohn was a candidate for the surgery and for extensive post-surgical rehabilitation but not for the procedure itself on the grounds that it was experimental. Krohn underwent the procedure in Portugal and sued Home-Owners Insurance Company for reimbursement.

The case went to trial, and the jury found for Krohn.  Home-Owners appealed and the Michigan Court of Appeals reversed, holding that Krohn had failed to introduce expert testimony that the procedure had gained general acceptance in the medical community. Krohn v Home-Owners Insurance Company (Unpublished Opinion issued 1/26/10) (Docket No. 283862). The Michigan Supreme Court affirmed the judgment of the Court of Appeals but modified the test for determining whether an experimental procedure could be "reasonably necessary" under MCL 500.3107(1).

The majority opinion, authored by Justice Zahra and joined by Chief Justice Young and Justices Markman and Mary Beth Kelly, held that an insured must establish that a procedure that is not approved by the FDA is efficacious in order to obtain reimbursement:

We conclude that the question whether a product, service or accommodation is reasonably necessary . . . must be determined under an objective standard.  We further conclude that when medical treatment is experimental, an insured seeking reimbursement for the treatment must present objective and verifiable evidence establishing that the treatment is efficacious.

(Slip Opinion, p. 33).

Reimbursement is not precluded for experimental medical treatment, but a No Fault claimant must meet a high standard.