Gemmell v. Encompass Indemnity Co.

          ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

          TERRENCE G. BERG UNITED STATES DISTRICT JUDGE

         Plaintiff Kathleen Gemmell seeks recovery from her insurance company, Defendant Encompass Indemnity Company, for injuries she says she sustained when the suspension fell out of her car while she was driving in Madison Heights, Michigan. She is suing, under Michigan's No-Fault Act, Mich. Comp. Laws § 500.3101 et seq., for personal protection insurance (“PIP”) benefits to pay medical bills, lost wages, attendant care benefits, and other expenses she and her husband incurred because of the accident. Encompass in turn contends that in order to obtain no-fault benefits Plaintiff made material misrepresentations regarding the nature and cause of her injuries, as well as attendant care and replacement services purportedly performed by her husband, Gary Gemmell. According to Encompass, these alleged misrepresentations trigger a fraud exclusion in the insurance policy, releasing Encompass from any obligation to pay Plaintiff's claims. The parties are now before the Court on Encompass's motion for summary judgment. Based on evidence presented in the parties' briefs and during the parties' June 17, 2019 oral arguments in this matter, the Court has determined that genuine disputes of material fact remain, making summary judgment inappropriate at this time.

         BACKGROUND

         Encompass issued policy number 281976536 to Gary Gemmell and Kathleen Gemmell. That policy, which was in effect from June 22, 2017 through June 22, 2018, provided home insurance, car insurance, and personal umbrella coverage to Plaintiff and her husband. It also contained several coverage exclusions including one titled “Concealment or Fraud, ” which placed the following limitation on coverage: “[t]his insurance is based on your honest cooperation with us, so the information you gave to us must be correct to the best of your knowledge. Therefore:

(a) . . . we do not provide coverage to one or more covered persons, who whether before or after a loss, has:

(1) Concealed or misrepresented any material fact or circumstance; or

(2) Engaged in fraudulent conduct; or

(3) Made false statements relating to his insurance; whether as to eligibility or claim entitlement.

ECF No. 19-10 PageID.315.

         Plaintiff is a 63-year-old home-healthcare attendant. She claims that the single-car accident caused “[a]ggravation of existing pelvis fracture, addition of new pelvis fractures, back pain, head injury, anxiety, neck pain, ” and a “new fracture in [her] low back, ” rendering her unable to work from September 22, 2017 through February 27, 2018. ECF No. 19-11 PageID.400-01; ECF No. 21-1 PageID.501. At the time of the accident Plaintiff had, for several years, worked as a caregiver to her mother's elderly friend, who Plaintiff calls her “aunt.” ECF No. 19-1 PageID.104 (Plaintiff's Dep.). She was paid for these services through her aunt's trust, the Sylvia Higison Trust, at a rate of $17 per hour. ECF No. 19-1 PageID.105; ECF No. 19-11 PageID.397. Plaintiff's husband happens to be the trustee of the Sylvia Higison Trust. ECF No. 19-11 PageID.397.

         In addition to the physical injuries she claims to have sustained in the car accident, Plaintiff avers that the debilitating nature of her injuries necessitated that her husband provide attendant care and replacement services for her each day from September 22, 2017, the day after the accident, through December 31, 2017. ECF No. 19-11 PageID.390-92; ECF No. 21-1 PageID.552-55. The claimed attendant care services included “bathing, lifting, fetching, carrying, cooking, and performance of activities for patient that avoid any prolonged standing or use of staircase.” ECF No. 19-11 PageID.379-390. Plaintiff's husband signed a sworn statement attesting that he performed these services for at least four hours each day. ECF No. 19-11 PageID.391; ECF No. 21-1 PageID.555. He also stated that he spent at least 2.5 hours each day during this same September 22, 2017 through December 31, 2017 period performing replacement services. ECF No. 19-11 PageID.411; ECF No. 21-1 PageID.531-34. These replacement services, which were compensable at a rate of $20 per day under the policy, included washing dishes, cleaning, preparing meals, taking out the garbage, gardening, and picking fruits and vegetables. ECF No. 19-11 PageID.402.

         Encompass contends Plaintiff's claimed injuries in fact predate the car accident and that she fraudulently attributed them to the accident to obtain no-fault benefits. Encompass further questions Plaintiff's assertion that her husband performed extensive attendant and replacement services in the wake of the accident. To cast doubt on the veracity of her claims for these services, Encompass highlights Plaintiff's statements to medical providers suggesting that she and her husband were not living together, or at least were not on amicable terms, during the months he supposedly provided these services.

         The central question before the Court at this juncture is whether the undisputed material facts show that Plaintiff's actions implicate the fraud exclusion in her insurance policy and, if so, whether violation of that exclusion ...