Court Of Appeals Affirms No-Fault Attorney Fees Award And Rejects Insurer’s After-The-Fact Defense
Zielinksi v Auto-Owners Insurance Company
Opinion Published: June 11, 2026 (Bazzi, P.J., and Rick and Maldonado, JJ.)
Docket No. 371692
Wayne County Circuit Court
Holding: An insurer is not entitled to a new trial based on opposing counsel’s improper, unpreserved references to a third party’s drunkenness where the jury’s verdict was supported by the evidence and curative jury instructions mitigated any prejudice. Additionally, the trial court did not abuse its discretion in awarding no-fault attorney fees under MCL 500.3148(1) where the insurer’s own pre-denial acknowledgment of the injury to Medicare established that its later refusal to pay was unreasonable, and a later record review could not retroactively manufacture factual uncertainty. Finally, Michigan law does not require contemporaneous timekeeping to support an attorney-fee award. The judgment was affirmed.
Facts: In January 2021, Plaintiff was rear-ended at a red light by another driver and pushed into the vehicle ahead of her. She was transported to the emergency room and, the next day, reported a neck injury, whiplash, and a concussion to Defendant, her no-fault insurer. Plaintiff had an extensive pre-accident medical history, including 19 prior spinal surgeries, and one of her physicians described her spine as unusually fragile.
Plaintiff’s treating physician opined that her post-accident neck pain and cervical myelopathy were related to the accident and that a February 2022 neck surgery was necessary to treat those injuries. Plaintiff sued for unpaid PIP benefits in January 2022. In April 2022, Defendant received the bill for the neck surgery. In July and September 2022 letters to Medicare, Defendant acknowledged that Plaintiff had injured her neck in the accident and was treated for that injury. Defendant later engaged a doctor to conduct a record review, who concluded in October 2022 that there was no evidence of injury attributable to the accident. In November 2023, Defendant denied the bills for both the neck surgery and a later back surgery.
At a two-day trial, the jury found that Plaintiff sustained an accidental bodily injury, that the neck-surgery bill was a reasonable and necessary allowable expense that was overdue, but that the later back-surgery bill was not an allowable expense. The trial court awarded overdue benefits, penalty and pre-judgment interest, taxable costs, and $288,090 in attorney fees at a $750 hourly rate for the primary attorneys. Defendant moved for a new trial, arguing for the first time that Plaintiff’s counsel had improperly told the jury the other driver was drunk. The trial court denied the motion. Defendant appealed.
Key Appellate Rulings:
Counsel’s reference to inadmissible, irrelevant evidence is error, but an unpreserved claim of attorney misconduct warrants a new trial only where it may have denied a party a fair trial.
References to the other driver’s intoxication were error because that fact was irrelevant to the issues the jury had to decide—injury causation, allowable expense, and whether benefits were overdue. Because Defendant did not object or request a curative instruction, the issue was unpreserved and reviewed under the framework asking whether the error was harmless and, if not, whether it played too large a part in the result. The verdict was supported by the evidence and the jury’s split decision—awarding one bill while rejecting another—showed dispassionate review rather than prejudice. Curative instructions directing the jury to set aside sympathy and bias are presumed to cure most errors and did so here.
An insurer’s refusal to pay PIP benefits is presumed unreasonable once benefits are overdue, and the insurer bears the burden of justifying the refusal based on circumstances existing when payment was due.
Once benefits are overdue under MCL 500.3142(2), a rebuttable presumption of unreasonableness arises and the insurer must show the refusal stemmed from a legitimate question of statutory construction, constitutional law, or factual uncertainty, judged as of the time the payment decision was made. Although Plaintiff’s complex medical history could create legitimate uncertainty, Defendant’s own letters to Medicare acknowledged the neck injury was related to the accident before the bill became overdue. A record review conducted months later could not retroactively create a factual uncertainty that did not exist when the obligation to pay arose.
A reasonable hourly rate is established under the Pirgu framework using local rate data and the enumerated factors, and the trial court’s assessment is reviewed deferentially.
The trial court properly relied on the State Bar’s Economics of Law Practice survey, selected a rate between the 75th and 95th percentiles, and worked through the Pirgu factors—including the experience and reputation of counsel, the factual, medical, and legal complexity of the case, the results obtained, the expenses incurred, the professional relationship, the preclusion of other work, time limitations from adjournments, and the contingent nature of the fee. The resulting $750 rate was within the range of reasonable and principled outcomes.
Michigan law requires detailed billing records to support a fee award but does not require that time be kept contemporaneously.
A fee applicant must submit detailed billing records that the court examines and the opposing party may contest for reasonableness, supported here by affidavits, testimony, invoices, and spreadsheets. The trial court struck duplicative and excessive hours, as well as hours related to settled claims outside the PIP litigation. Neither Augustine nor any other authority requires that timekeeping be contemporaneous, so the post-trial compilation of hours did not support denying the award.
