Michigan Court of Appeals Finds Fraud Provision in Policy Triggered Even Though the Plaintiff Later Admitted to Fraud

In a recent unpublished opinion, the Michigan Court of Appeals affirmed summary disposition for the defendant insurer where the claimant misrepresented her abilities at her deposition, but later admitted that she had lied.

In Marija Sabados v State Farm Mut Auto Ins Co., the plaintiff filed suit to recover no-fault PIP benefits from the defendant insurer for injuries she allegedly sustained in a motor vehicle accident. The plaintiff submitted replacement service forms reflecting that she required assistance driving. She then testified at her deposition that she could not drive, and had not driven, since the accident. When confronted later in her deposition with possible video of her driving, the plaintiff admitted that she could drive and had driven to her deposition.

State Farm moved for summary disposition, arguing that the plaintiff’s claims were barred under the fraud provision of the insurance policy as a result of misrepresentations she made regarding her accident-related injuries. The trial court granted the insurer’s motion for summary disposition.

On appeal, the Court of Appeals held that the factors set forth in Bahri v IDS Property Casualty Ins Co govern what constitutes a material misrepresentation under the fraud provision of an insurance policy. The court found that the Bahri factors were satisfied because the plaintiff misrepresented her ability to drive following the accident. The court reasoned that the misrepresentation was material because it related to the extent of the plaintiff’s injuries and because she had presented claims for assistance with driving.

The court held that the representations were clearly false, as she later admitted in her deposition that she had lied about her ability to drive. The plaintiff also knew her testimony was false because she admitted to driving to her deposition. Because she testified to her inability to drive and submitted replacement service forms reflecting her alleged inability to drive, the court held that the plaintiff intended for the defendant insurer to rely upon her misrepresentations.

The plaintiff argued on appeal that although she lied about her ability to drive, she had permission from her doctor to drive to her deposition. The Court of Appeals found the plaintiff’s argument regarding permission irrelevant to the question of whether she misrepresented her ability to drive in her deposition testimony.

Though unpublished, this case will bolster the ability of no-fault insurance carriers to enforce the fraud provisions in their insurance policies in defending against fraudulent claims.

Danielle DePriest is dedicated to effectively and efficiently achieving the best possible results in the insurance defense cases she handles.

Danielle’s interest in public policy led her to the practice of law. She earned a Bachelor of Arts from the University of Michigan’s Gerald R. Ford School of Public Policy, and served as Vice Chair of American Movement for Israel and Chair of the Programming Board for Michigan Hillel.