Articles & Publications 05.03.24

Hidden Costs of Unlimited Care? Why No-Fault Insurance Contracts Should Include Attendant Care Limits

The Smejkal v Beck Decision

In Smejkal v Beck, ___NW2d___; 2024 Mich. App. LEXIS 3019, (Ct App, Apr. 18, 2024), Terry Smejkal renewed his automobile insurance policy with Home-Owners Insurance Company on August 11, 2020 (after the 2019 amendments to the no-fault act became effective) and the policy was effective from September 16, 2020 to March 16, 2021. The policy reflected that, for the category of “Allowable Expenses (Medical),” Terry selected “Unlimited person Primary” and the policy explicitly listed attendant care as being included under the umbrella of allowable expenses. The plaintiffs (Terry and Brandon Smejkal) were subsequently involved in an automobile accident in December 2022, after which they required attendant care for 24 hours per day. The plaintiffs sued Home-Owners to recover the cost of the care and Terry estimated he incurred $157,584 in attendant care expenses. Home-Owners subsequently moved for partial summary disposition as it related to the attendant care claim, arguing that the 2019 amendments to the no-fault act capped the plaintiffs’ attendant care at eight hours per day, or 56 hours each week, pursuant to MCL 500.3157(10). The trial court agreed with Home-Owners and granted partial summary disposition.

On the plaintiffs’ appeal, the Court of Appeals began by noting that an unambiguous statute must be applied as written and that the terms of a contract must be enforced as written where there is no ambiguity. The Court then analyzed MCL 500.3157(10) which in essence mandates that an insurer is only required to pay benefits for attendant care up to eight hours per day or 56 hours each week if the attendant care is provided directly or indirectly by an individual related to the injured person, an individual domiciled in the injured person’s household, or an individual with whom the injured person had a business or social relationship with before the injury. The Court then referred to MCL 500.3157(11) which permits insurers to contract to pay attendant care benefits for more than the hourly limitation in MCL 500.3157(10).

Notably, Michigan case law has consistently held that attendant care benefits are an allowable expense for purposes of the no-fault act. In line with that precedent and applying the dictionary definition of “unlimited” because the actual policy did not define the word “unlimited,” the Smejkal court concluded that by selecting unlimited allowable expense coverage, Terry essentially selected allowable expenses that were boundless, infinite, and not subject to any exceptions and given the policy explicitly listed attendant care as being included under the umbrella of allowable expenses, one could argue that such “boundless” and “infinite” coverage necessarily included the number of attendant care hours because there were no exceptions listed under the policy.

Implications and Best Practices Moving Forward

The Smejkal opinion emphasizes the customary importance of explicitly including unambiguous contractual/policy terms, definitions, limitations, exceptions, exclusions, etc. In reviewing the opinion, it can be ascertained that the court essentially takes the position that insurance carriers be more explicit in including any provisions/limitations in their policies. Reliance on statutory authority alone may not be sufficient particularly for limiting coverage for PIP benefits, as is evident in the Smejkal opinion. Given the ruling in Smejkal, we recommend that when an insured opts for unlimited allowable expenses coverage, insurance carriers specifically and explicitly include language indicating that attendant care benefits are capped at the statutory maximum hours (i.e., 8 hours per day or 56 hours per week) if they have been directly or indirectly provided by an individual related to the injured person, an individual domiciled in the injured person’s household, or an individual with whom the injured person had a business or social relationship with before the injury.

Further, even though courts have consistently held that attendant care benefits are an allowable expense for purposes of the no-fault act, it may be best practice for carriers to identify attendant care coverage (where applicable) on the declarations page and explicitly indicate that the coverage is capped at the statutory maximum hours.