Hemphill v. Allstate Insurance Company
ORDER GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT. Signed by District Judge Avern Cohn. (MVer)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
RICHARD RAYTJUAN HEMPHILL,
Case No. 16-13990
ALLSTATE INSURANCE COMPANY,
HON. AVERN COHN
ORDER GRANTING DEFENDANT’S MOTION FOR PARTIAL SUMMARY
JUDGMENT (Doc. 20)
This is a no-fault personal insurance protection (PIP) benefits case removed from
the Wayne County Circuit Court. Plaintiff Richard Hemphill (Hemphill) is suing
Defendant Allstate Insurance Company (Allstate) for benefits related to injuries he
sustained in a car accident. Hemphill’s complaint (Doc. 1) is in two counts:
Count I: Breach of Contract
Count II: Declaratory and Injunctive Relief
Hemphill asks for compensatory damages, interest, costs, and attorney fees, as well as
an injunction preventing Allstate from denying him no-fault benefits.
Now before the Court is Allstate’s motion for partial summary judgment on the
grounds of fraud (Doc. 20), to which Hemphill has responded (Doc. 17) and Allstate has
replied (Doc. 19). For the reasons that follow, the motion is GRANTED and Hemphill’s
claim for no-fault PIP benefits is DISMISSED. Though Allstate’s motion is for partial
summary judgment, this ruling disposes of the case.
On September 30, 2015, Hemphill was riding in the back seat of his friend Devon
Cartwright’s (Cartwright) car. Cartwright was driving; his girlfriend was sitting in the front
passenger seat. Cartwright lost control of the car while on the highway, weaving back
and forth and eventually striking the median. Soon after, Hemphill was transported by
ambulance to Henry Ford Hospital in Detroit.
Hospital records (Doc. 16, Ex. C) state that Hemphill denied losing
consciousness or hitting his head or neck in the accident. The records also state that
Hemphill did not exhibit back pain, arthralgias (joint pain), neck pain, neck stiffness,
dizziness, or headaches, but did exhibit lacerations on three fingers, tenderness in the
right shoulder, myalgias (muscle pain), and some blood abnormalities. Hemphill
complained of “pain to the right shoulder and right hand.” An x-ray taken of his right
shoulder displayed “a slight irregularity of the distal acromion, which is new from prior
radiographs in [May of 2015]. On repeat exam, patient reports no tenderness at this site
point . . . and when offered a sling, refused it.” An x-ray taken of his right hand was
Hemphill’s right hand was wrapped and he was given a prescription for Motrin.
Hospital records state that “[p]atient left AMA, reporting that he felt fine and wanted to
go, refusing monitoring and serial abdominal exams.”
On November 3, 2015, Hemphill signed an application for PIP benefits through
the Michigan Assigned Claims Plan (MACP).1 In the application he made the following
1. He suffered injuries to his neck, back, head, right arm, knees, and hands;
2. He received treatment for his injuries at Henry Ford Hospital and also from
Dr. Sam Hakki (Dr. Hakki);
3. Dr. Hakki was his primary care physician;
4. Medicare was his only form of health insurance;
5. He had no pre-existing health conditions (except that he was taking
medications for schizophrenia and bipolar disorder);
6. He received medical bills regarding injuries sustained in the accident;
7. He was not “contacted by a doctor’s office or other person about this claim;”
8. He prepared the application himself.
(Doc. 16, Ex. D).
In the PIP application, Hemphill also stated that neither he nor any relative
residing in his home owned any cars on the date of the accident, that he did not have
The Michigan Assigned Claims Plan is a means through which an uninsured individual
injured in a car accident may obtain PIP benefits. See M.C.L. § 500.3171 et seq.
car insurance, and that the driver of the car involved in the accident did not have car
insurance. As a result, the MACP assigned Hemphill an insurer through the Michigan
Automobile Insurance Placement Facility.2
The claim was assigned to Allstate, which sent a representative to meet with
Hemphill at his lawyer’s office on February 20, 2016. The claim representative’s
interview notes state in relevant part that:
1. Hemphill says he suffered injuries to his right hand, right thigh, neck, right
shoulder, and lower back;
2. Hemphill was treated by Dr. Hakki who worked at Orthopedics, PC
(Orthopedics), Kinetics Physical Therapy, PC (Kinetics), and Rose Physical
Therapy (Rose). Hemphill attended two sessions at Kinetics but later
switched to Rose, to which he was referred by a friend. Rose then referred
him to Orthopedics. Hemphill saw Dr. Hakki at Orthopedics “on one occasion”
but also “has been seeing Dr. Hakki for medical evaluations and anticipates
going there once a month to continue follow-up treatment”;
3. Hemphill was covered by both Medicaid and Medicare at the time of the
4. Hemphill had pre-existing lower back and shoulder problems;
The Michigan Automobile Insurance Placement Facility is the entity that assigns PIP
claims to insurers. See M.C.L. § 500.3171 et seq.
5. Hemphill was “confronted by two male individuals who arrived at his home
[and] advised him that he needed a medical evaluation because of his injuries
and recommended that he go to Kinetics Physical Therapy.”
(Doc. 17, Ex. 4). The notes do not contain information regarding Hemphill’s primary care
physician, whether Hemphill received medical bills, or who prepared the PIP application.
In his deposition, Hemphill testified to the following regarding the statements
recounted above, pp. 2-3 supra:
1. He hit his head during the accident, and immediately after the accident he
experienced head “ringing” and hand, neck, head, right shoulder, leg, and
lower back pain, and could barely walk. He told hospital staff that he was
experiencing head, neck, and back pain. He told hospital staff he was “fine
and wanted to go” only because they told him they could not do anything for
him because he had no health insurance. The hospital staff did not offer him a
sling for his shoulder;
2. He was treated by Dr. Hakki once at a location he did not remember. Starting
a few days after the accident he attended physical therapy at an unknown
location for two weeks until he switched to Rose. His girlfriend’s mother told
him about Rose and Dr. Sawka wrote him a prescription to go there. Before
attending Rose, he attended Orthopedics, which “somebody” (possibly his
girlfriend’s mother) told him about. He made no mention of Kinetics;
3. His primary care doctor is Dr. Sawka, who he has been seeing for his whole
4. He was covered by Medicaid and Medicare, both of which went into effect in
November 2015. He told Rose he had “health insurance” (did not specify
which) at the beginning of his treatment there in October 2015;
5. He received prior medical treatment for his shoulder, including treatment with
Dr. Sawka in August 2015 for a right shoulder tear. Prior to the accident, he
was taking his grandfather’s Norco for right shoulder pain;
6. He did not receive any medical bills for injuries regarding the accident (when
asked why he indicated on the application that he had received medical bills,
he answered “I don’t know”);
7. Someone solicited him for physical therapy treatment soon after the accident
and told him he could get money for his injuries. He did not view this as being
contacted regarding his PIP “claim”;
8. A staff member at his lawyer’s office completed the PIP application on his
behalf. His lawyer said this during the deposition; Hemphill agreed. When
asked why he did not notice that his social security number was written
incorrectly in the application, he answered “I guess I was like skimming
through it and I didn’t read it.”
(Doc. 16, Ex. B).
Summary judgment will be granted if the moving party demonstrates that there is
“no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). There is no genuine issue of material fact when
“the record taken as a whole could not lead a rational trier of fact to find for the
non-moving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986). The Court must decide “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party
must prevail as a matter of law.” In re Dollar Corp., 25 F.3d 1320, 1323 (6th Cir. 1994)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)). In doing so, the
Court “must view the evidence in the light most favorable to the non-moving party.”
Emp’rs Ins. of Wausau v. Petrol. Specialties, Inc., 69 F.3d 98, 101-02 (6th Cir. 1995).
The Michigan Insurance Code provides in relevant part:
A person who presents or causes to be presented an oral or written statement,
including computer-generated information, as part of or in support of a claim to
the Michigan automobile insurance placement facility for payment or another
benefit knowing that the statement contains false information concerning a fact or
thing material to the claim commits a fraudulent insurance act under section 4503
that is subject to the penalties imposed under section 4511. A claim that contains
or is supported by a fraudulent insurance act as described in this subsection is
ineligible for payment or benefits under the assigned claims plan.
Mich. Comp. Laws § 500.3173a(2). The provision regarding fraudulent insurance acts
reads as follows:
A fraudulent insurance act includes, but is not limited to, acts or omissions
committed by any person who knowingly, and with an intent to injure, defraud, or
(c) Presents or causes to be presented to or by any insurer, any oral or written
statement including computer-generated information as part of, or in support of, a
claim for payment or other benefit pursuant to an insurance policy, knowing that
the statement contains false information concerning any fact or thing material to
Mich. Comp. Laws § 500.4503(c).
Hemphill first argues that since the general definition of a fraudulent insurance
act in M.C.L. § 500.4503(c) requires an intent to defraud, Allstate must also show intent
to defraud to establish a violation of M.C.L. § 500.3173a(2). Hemphill is incorrect since
section 500.3173a(2) provides that a fraudulent insurance act occurs if a person
knowingly submits false information in an application for benefits. See Candler v. Farm
Bureau Mut. Ins. Co. of Michigan, No. 332998, 2017 WL 4798266, at *3 (Mich. Ct. App.
Oct. 24, 2017) (listing elements of a fraudulent insurance act under M.C.L. §
500.3173a(2)). Thus, the Court must only decide whether the evidence shows that
Hemphill undisputedly knew that he provided false information in his PIP application.
Allstate says that the statements at pp. 2-3 supra were false. Regarding the
second statement, Allstate says that although Hemphill said he received treatment from
Kinetics, Rose, and Orthopedics, Allstate has received medical bills for Hemphill from
the following providers:
Kinetics Physical Therapy, Crystal Clear Health Management, Tox Testing, Max
Rehab, Total Toxicology, Southfield Pain Management, Mercy Transportation,
Infiniti Labs, Accu Reference Lab, Bluebird Transportation, Greater Lakes ASC,
Meds Direct Pharmacy, Orthopedic P.C., and Rose Physical Therapy.
For other statements by Hemphill, Allstate points to his deposition testimony to
establish that he made false statements in his PIP application. Hemphill says that any
mistakes in his PIP application were “honest,” “minor,” and not material to his claim. He
also says that his disclosures at the claim interview, as well as his deposition testimony
and interrogatory answers, serve to “supplement” and “correct” his PIP application.
While some of the statements in Hemphill’s PIP application were of debatable
veracity, it is clear that others were plainly false. For example, Hemphill indicated that
Dr. Hakki was his primary care physician but later testified that Dr. Sawka had been his
primary care physician for many years. Hemphill said he had no pre-existing health
conditions except mental illnesses but later testified that he had received shoulder
treatments in the past. Hemphill said he had received medical bills but later testified that
he did not. Hemphill said he prepared the application himself; he later testified that his
lawyer prepared it for him. Also written incorrectly on the application was Hemphill’s
social security number.
Most of these false statements were material to Hemphill’s PIP claim. “A
statement is material if it is reasonably relevant to the insurer's investigation of a claim.”
Mina v. Gen. Star Indem. Co., 218 Mich. App. 678, 686 (1996), rev'd in part, 455 Mich.
866 (1997) (citing Dadurian v. Underwriters at Lloyd's, London, 787 F.2d 756, 759-60
(1st Cir. 1986)). While the identity of the application preparer may be less relevant,
Allstate asked for Hemphill’s social security number, health history, the identity of his
primary care physician, and whether he had received medical bills. This information was
material to an accurate assessment the nature of Hemphill’s injuries and the amount of
benefits he was entitled to.
Finally, there is no doubt that Hemphill made the false statements knowingly.
Though a third party apparently prepared the PIP application, Hemphill testified that he
had the opportunity to review it. The fact that he was “skimming through it” and “didn’t
read it” does not absolve him from liability for making false statements. Though M.C.L. §
500.3173a does not define the term “knowing,” the Michigan Court of Appeals has held
that “[t]he truth or falsity of a representation on an insurance policy should be examined
in the light of what the applicant knew or had reason to know at the time of his
application.” Lipsky v. Washington Nat. Ins. Co., 7 Mich. App. 632, 638 (1967)
(emphasis added). Michigan courts have also held that fraud in general can be
perpetrated by knowing or reckless actions. See Webb v. First of Michigan Corp., 195
Mich. App. 470, 473 (1992); McCartha v. State Farm Fire & Cas. Co., No. 326689, 2016
WL 4375659, at *8 (Mich. Ct. App. Aug. 16, 2016), appeal denied, 500 Mich. 947
(2017), reconsideration denied, 500 Mich. 1005 (2017). Hemphill knew who his primary
care physician was, whether he had pre-existing conditions, whether he had received
medical bills, and his correct social security number.
Hemphill’s deposition testimony and interrogatory answers do not “correct” his
PIP application; on the contrary, any discrepancies between his application and later
testimony bolster the fact that the statements made in the application were not true.
While Hemphill may have had the opportunity to correct minor mistakes during his claim
interview, he by no means corrected the misstatements.
Under M.C.L. § 500.3173a(2), Hemphill is not entitled to PIP benefits and Allstate
is entitled to summary judgment as to his claim.
UNITED STATES DISTRICT JUDGE
Dated: April 10, 2018
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