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DeLuca v. Amica Mutual Insurance Co.

United States District Court, E.D. Michigan, Southern Division

July 24, 2018

ELIZABETH DeLUCA, and EDS CARE MANAGEMENT, INC., Plaintiffs/Counter-Defendants,
AMICA MUTUAL INSURANCE COMPANY, Defendant/Counter-Plaintiff.



         I. Introduction

         This is an insurance dispute. Plaintiffs/Counter-defendants, Elizabeth DeLuca (DeLuca) and EDS Care Management, LLC (EDS) (collectively, where appropriate, EDS) sued defendant/counter-plaintiff Amica Mutual Insurance Company (Amica) seeking payment of personal insurance protection (PIP) benefits under Michigan's No-Fault Act from defendant. The PIP benefits are for the care of Stephanie Rudd (Rudd), the insured. Amica filed a counterclaim seeking recoupment of benefits.

         Before the Court is Amica's motion to dismiss EDS's First Amended Complaint (Doc. 67) on the grounds that the September 2017 assignments of Rudd's rights to EDS and DeLuca are invalid. For the reasons that follow, the motion will be granted. As will be explained, the assignments are valid; however, recovery is limited to recovering PIP benefits from one year back from the date of the assignment, or September 2016. Because EDS is seeking benefits incurred prior to that time, the complaint must be dismissed for failure to state a claim. In light of the dismissal, Amica's pending summary judgment motion (Doc. 52) is moot.

         II. Background

         A. Factual Background

         This dispute arose from an automobile accident that occurred on December 26, 2002 in which 14 year old Rudd suffered what was later to be determined a traumatic brain injury. At the date of the accident, Rudd was insured under an automobile policy held with Amica, through her father.

         In 2007, Rudd's mother sued Amica on behalf of Rudd in state court, seeking PIP benefits through April 18, 2008. The case settled for $200, 000; a Stipulation and Order for Dismissal was entered. In 2010, Rudd's mother filed a second case against Amica for PIP benefits incurred after April 18, 2008. The parties went to arbitration on this claim; Rudd was awarded $178, 593.96. This award covered the period April 18, 2008 through October 26, 2011.

         In 2012, DeLuca was appointed Rudd's legal guardian. DeLuca owns EDS, the facility that provided care for Rudd. EDS says that it has incurred reasonable expenses in caring for Rudd during her recovery from the accident and seeks payment from Amica for these expenses. Amica has negotiated payment with EDS in the amount of $268, 555.50 for the period of August 19, 2012 through July 31, 2013, and $41, 815.88 with DeLuca for the period of February 15, 2012 through October 31, 2013. At some point, Amica stopped paying.

         B. Procedural History

         DeLuca and EDS sued Amica in state court seeking to recover guardianship, conservatory, and trustee expenses, as well as expenses associated with residential and attendant care services supplied to Rudd.

         Amica removed the case to federal court based on diversity jurisdiction and filed a counterclaim seeking to recoup the funds that it claims have been erroneously paid to EDS. In seeking this recoupment, Amica says that Rudd did not in fact suffer a traumatic brain injury or that her injuries are not related to the accident. Amica's counterclaim asserts the following claims: mistake of fact (Count I); unjust enrichment (Count II) against EDS; and breach of fiduciary duty (Count III) against both DeLuca and EDS.

         EDS filed a motion for summary judgment on Amica's counterclaims, contending that (1) Amica does not have standing and/or is not the real party in interest to pursue these claims since it has been reimbursed for any payments exceeding $300, 000 by the Michigan Catastrophic Claims Association, and (2) Amica's claims are barred by res judicata of prior litigation between Rudd and Amica. The Court has denied EDS's motion for summary judgment on Amica's counterclaims. (Doc. 31).

         Since then, the parties have engaged in discovery which has been contentious. During discovery, Amica says it became aware that EDS is not a licensed care facility. Amica said that this information provided it with a plausible defense to non-payment. Amica moved to amend its answer to add this as an affirmative defense and amend its counterclaim based on EDS not being a licensed adult foster care facility. (Doc. 43). The Court granted the motion. (Doc. 47).

         Thereafter, Amica filed a motion for summary judgment based on its amended answer and counterclaim, i.e. that EDS is not a licensed “adult foster care facility” as required under the Adult Foster Care Facility Licensing Act, M.C.L. § 400.701 and is therefore not entitled to payment of PIP benefits for the “adult foster case services” it provided. (Doc. 52).

         Amica has also filed a motion to dismiss on the grounds that EDS, as a service provider, is not entitled to seek benefits on behalf of Rudd. (Doc. 55) The motion was essentially based on the Michigan Supreme Court's decision in Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191 (2017) which held that medical service providers, such as EDS, have no statutory cause ...

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