No-Fault Insurer Cannot Refuse to Pay for Attendant Care Based on Not Having Provider's Taxpayer Identification Number
Foster Swift No-Fault E-News
November 15, 2011
In an Opinion and Order dated October 20, 2011, the U.S. District Court for the Eastern District of Michigan (Southern Division) granted summary judgment against a no-fault insurer's defense that it needed the taxpayer identification number (TIN) of the attendant care provider in order to have received "reasonable proof" under MCL 500.5142(2). Bajraszewski v. Allstate Insurance Co., 2011 WL 5008360 (E.D. Mich.)
Plaintiff was seriously injured in a motor vehicle accident in 2002 and required attendant care, which family members provided. Defendant reimbursed Plaintiff for the care until 2010, when it contended it needed the taxpayer identification number (TIN) of the provider in order to comply with federal tax reporting requirements. It was undisputed that the insurer had otherwise received reasonable proof of the fact and amount of the attendant care expenses.
The Court ruled that the insurer had no reporting requirements under the federal tax code because the payments did not constitute income to the Plaintiff and the insurer was not the care giver's employer. Although the insurer could be liable for withholding taxes if it knew that the Plaintiff did not intend to withhold taxes from the care giver, the Court found that there was no evidence that the Plaintiff would do that. Thus the care giver's TIN was not part of the "reasonable proof" that the Defendant needed, and summary judgment was warranted in favor of the Plaintiff.
Since the record did not contain information on the amount of attendant care expenses or the amount of penalty interest being claimed, additional time was given to Plaintiff to submit that information and to Defendant to file objections.
This case is important because it clarifies that an insurer that withholds attendant care payments until it receives the care giver's TIN cannot be confident that it will not be exposed to penalty interest and perhaps attorney fees. The insurer might, on the other hand, have a good faith defense if the tax authorities were to assert that it failed in its obligation to report payments based on not having the care giver's TIN.
For details concerning the relevant sections of the tax code, the reader is referred to the body of the Court's Opinion and Order. (Link to the Court's Opinion and Order is no longer active)