Spectrum Health Hospitals d/b/a Spectrum Health and Corewell Health, and Spectrum Health Primary Care Partners v. Auto-Owners Insurance Company

Summary

The Michigan Court of Appeals affirmed an order awarding Spectrum Health Hospitals and related plaintiffs unpaid no-fault medical benefits, penalty interest, and attorney fees against Auto-Owners Insurance Company. The court held that Auto-Owners unreasonably delayed payment while investigating the injured person's insurance coverage and that the circuit court retained subject-matter jurisdiction based on the amount in controversy alleged in the pleadings. The opinion is unpublished.

Holdings

1. An insurer's payments are overdue when not made within 30 days after the insurer receives reasonable proof of the fact and amount of loss, and an insurer's continued investigation into eligibility after receiving such proof does not provide additional time to avoid attorney fees. Because Auto-Owners's payments were overdue and its delay was not justified by a legitimate factual uncertainty, the award of attorney fees was proper.
2. Subject-matter jurisdiction is determined by the amount in controversy alleged in the pleadings, excluding fees, costs, and interest, absent bad faith. Payments made after filing do not retroactively eliminate circuit-court jurisdiction when the original claim was pleaded in good faith and exceeded $25,000.

Questions Presented

1. Whether the circuit court properly awarded attorney fees under MCL 500.3148(1) after finding that Auto-Owners unreasonably delayed payment of no-fault benefits.
2. Whether the circuit court had subject-matter jurisdiction when plaintiffs initially pleaded damages exceeding $25,000 but payments made during the litigation reduced the remaining amount below the circuit court's jurisdictional threshold.

Disposition

affirmed