Jacobs and Diemer’s appellate team successfully persuaded the Michigan Court of Appeals to exercise interlocutory review and reverse a trial court’s failure to enforce a policyholder’s choice to opt out of first-party PIP coverage.

The case centered on the policyholder’s elections made on an electronic insurance application. The policyholder expressly opted himself and certain family members out of PIP medical expense coverage, initialing the corresponding option and certifying the application with his electronic signature. Although our client, the insurer, required the policyholder to provide proof of qualified health coverage (QHC), statutory reforms at the time provided a grace period to allow applicants to submit the necessary documentation.

Two months after the policyholder applied for insurance, his spouse was injured in an auto accident while driving his vehicle. Not until two months after the accident did the insurer receive the QHC proof. The insurer then sent a letter to the policyholder’s spouse explaining that the policy on the vehicle did not cover allowable expenses, including medical bills resulting from her accident.

The spouse then sued the insurer, claiming the policyholder could not have opted out of PIP coverage for allowable expenses when he purchased the policy because the insurer did not receive proof of the QHC until two months after the accident. The insurer moved for summary disposition, arguing that there was no genuine issue of material fact that the policyholder opted out of PIP coverage at the time of application. The trial court denied the motion.

In a first-of-its-kind decision, the Michigan Court of Appeals agreed that a policyholder’s decision to decline PIP coverage due to the existence of qualified health coverage was enforceable to foreclose any potential first-party liability for the insurer under recent no-fault law reforms. Finding that the policyholder properly opted out of PIP coverage for allowable expenses, the appellate court held that his spouse was not entitled to coverage under the policy and reversed and remanded the case.