The Michigan Supreme Court recently approved the use of an Examination Under Oath ("EUO") in a no-fault case. Cruz v State Farm, 466 Mich 588; 648 NW2d 591 (2002). However, an insured's failure to submit to an EUO cannot provide the sole basis for a denial of PIP benefits.
In the Cruz case, the plaintiff made a claim both for no-fault PIP benefits and for uninsured motorist (UM) benefits. His State Farm policy included a provision requiring him to submit to an EUO as often as reasonably asked. State Farm requested an EUO several times, but the plaintiff refused. Although State Farm admitted that the insured provided reasonable proof of the fact and amount of the loss, it denied the claim for both PIP and UM benefits because the insured would not undergo an EUO.
On appeal, the Michigan Court of Appeals found that State Farm's request for the EUO as to PIP benefits was unenforceable. Cruz v State Farm, 241 Mich App 155 (2000). Specifically, the Court of Appeals found that the No Fault Act does not provide for an EUO, but it does provide ample other means to gather information. However, the Court of Appeals agreed that State Farm was entitled to deny the claim for UM benefits based on the plaintiff's refusal to submit to an EOU because UM coverage is optional and the policy was neither ambiguous nor contrary to public policy.
The Michigan Supreme Court found the Court of Appeals erred concerning the PIP benefits aspect. Specifically, it held that EUO’s or other discovery tools contained in policies are only precluded if they conflict with the No Fault Act. In this case, the EUO helped facilitate the goals of the Act. Despite this fact, however, the Supreme Court concluded that State Farm could not consider an EUO to be a condition precedent to the insurer’s duty to pay PIP benefits. The Court did not address the UM coverage issue.
Thus, an insurer may use an EUO to obtain information on a PIP claim without running afoul of the No Fault Act. If an insured does not provide reasonable documentation of the fact and amount of the loss, his or her refusal to submit to an EUO could provide a basis for denying the claim. Scheduling an EUO can help an insurer document its reasonable efforts to obtain information related to the fact and amount of a PIP claim.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.