In turn, Bronson sought to recover the PIP benefits from State Auto.

State Auto denied coverage on the ground that Mr. Caballero was an excluded operator under the policy.

Bronson sued State Auto to recover PIP benefits, arguing that the named driver exclusion did not specify that PIP benefits would not apply if Mr. Caballero operated a covered motor vehicle but that it only stated that certain other types of benefits would not apply.

The trial court granted summary disposition to State Auto, concluding that the policy as a whole reflected an intent to exclude PIP benefits when Mr. Caballero, an excluded driver, was driving a covered vehicle.

Bronson appealed.

The Appellate Court's Decision

The appellate court affirmed.

In its decision, the appellate court explained that because PIP benefits were mandated by the state's no-fault law, a claimant's entitlement to PIP benefits was based in statute, not in contract. The appellate court added that because of the statutorily-mandated nature of PIP benefits, the no-fault law required an insurer, in order to issue a policy consistent with the no-fault law, to provide PIP benefits to a "named insured" and to his or her spouse and household relatives.

The appellate court added, however, that Michigan law also provided that a person was not entitled to be paid PIP benefits for accidental bodily injury if at the time of the accident "the person was operating a motor vehicle or motorcycle as to which he or she was named as an excluded operator."

Thus, the appellate court reasoned, the no-fault law provided a mechanism by which a person could be statutorily excluded from entitlement to PIP benefits notwithstanding that he or she might otherwise have been entitled to them.

The appellate court then found that when Ms. Caballero purchased the policy from State Auto, she signed four endorsements, each entitled "Named Driver Exclusion Endorsement," one for each of four persons who were identified on those endorsements as a "Person Excluded" – and that one of those persons was Mr. Caballero.

The appellate court was not persuaded by Bronson's contention that Mr. Caballero was nevertheless entitled to PIP benefits because the endorsement did not specifically list PIP benefits as among the benefits that would not apply when an otherwise covered motor vehicle was operated by an excluded operator but, instead, only identified "Liability, Uninsured Motorists, and Physical Damage" as benefits that would not apply when the vehicle was operated by an excluded operator.

The appellate court decided that this argument failed because PIP benefits were not contract-based but instead were "statutorily mandated." Therefore, it concluded, they were "not subject to contractual exclusion" and a contractual exclusion of PIP benefits "would have been unenforceable."

With respect to PIP benefits, the appellate court concluded, the import of the endorsement was not in the listing of inapplicable coverages (relating to the operation of a vehicle by an excluded operator), but rather in the identification of Mr. Caballero as an excluded operator. Accordingly, it concluded, the fact that the endorsement did not include language specifically excluding PIP benefits was "immaterial" because as a matter of statutory law Mr. Caballero was not entitled to PIP benefits.

The case is Bronson Health Care Group, Inc. v. State Auto Property and Casualty Ins. Co., No. 345332 (Mich. Ct. App. Nov. 7, 2019). Attorneys involved include: For BRONSON HEALTH CARE GROUP INC, Plaintiff-Appellant: CHRISTOPHER J. SCHNEIDER. For STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY, STATE AUTOMOBILE MUTUAL INSURANCE COMPANY, Defendants-Appellees: DANIEL S. SAYLOR.