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No PIP Benefits for Injured Excluded Driver

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Mark J. Colon
Foster Swift No-Fault E-News
October 25, 2012

In a per curiam, published decision, the Michigan Court of Appeals affirmed the trial court's decision to deny first-party no-fault benefits to an injured driver who had been specifically named on the subject insurance policy as an excluded driver.  Bronson Methodist Hospital v Michigan Assigned Claims Facility, et al (Nos. 300035 and 300066) (Oct. 23, 2012).

Progressive Insurance Company issued a no-fault insurance policy to Nicholas Owsiany insuring a vehicle owned by Owsiany's fiancĂ©, Danielle Pillars.  The policy contained, pursuant to MCL 500.3009(2), a "Named Driver Exclusion Endorsement." That endorsement provided in part that no Personal Protection Insurance (PIP) was being provided for an owner who was injured if the auto was being driven by a named excluded driver.  The endorsement further provided that if a covered auto was operated by the excluded driver, the auto would be considered uninsured under the no-fault law, and all liability coverage would be void. 

Pillars was specifically named as an excluded driver on the Progressive policy.  Pillars was injured while driving the subject auto, and plaintiff Bronson Methodist Hospital treated Pillars for her injuries.  When Progressive denied PIP benefits to Pillars, Bronson brought separate suits against Progressive and the Michigan Assigned Claims Facility ("MACF") (in case Progressive was found not liable to Bronson). 

The Court of Appeals held that, applying the plain language of both Progressive's named driver exclusion and MCL 500.3009(2), at the time of Pillars' accident, all liability coverage was void because an excluded driver was operating the vehicle.  Pillars' act of driving the insured vehicle rendered the vehicle uninsured, and there was no personal liability or property damage "security" as required by MCL 500.3101 in effect at the time of the accident.  Pursuant to MCL 500.3113(b), Pillars was not entitled to PIP benefits at the time of the accident as she was the owner of a motor vehicle involved in the accident and the security required by MCL 500.3101 was not in effect.  Consequently, the Court of Appeals affirmed Progressive's grant of summary disposition against Bronson in Docket No. 300066. 

As to Bronson's action against the MACF, the Court of Appeals held that Bronson offered no argument or legal authority to support its contention that the MACF had to assign Bronson's claim to another no-fault carrier because of the named driver exclusion and statutory provisions that rendered Pillars ineligible for PIP benefits under Progressive's policy.

It is unknown whether an application will be filed for leave to appeal to the Michigan Supreme Court.