Michigan Court Of Appeals Clarifies PIP Priority When Higher Coverage Is Capped
Mary Free Bed Rehabilitation Hospital v. Esurance Property & Casualty Insurance Co. and USAA
Opinion Published: March 2, 2026 (Cameron, P.J., Korobkin, and Bazzi, JJ.)
COA Docket No. 370846
Kent County Circuit Court
Holding: The no‑fault act permits an injured motorcyclist—or their medical provider—to continue down the statutory order of priority under MCL 500.3114(5) once a higher‑priority insurer's capped benefits have been exhausted. Therefore, Mary Free Bed may seek additional PIP benefits from USAA, the lower‑priority insurer whose policy provided unlimited coverage, once Esurance’s limits are exhausted. Affirmed in part, reversed in part, and remanded.
Facts: In November 2020, motorcyclist Aaron Slade was catastrophically injured when he struck a vehicle driven by Haley Tanner in Muskegon. Mary Free Bed Rehabilitation Hospital provided more than $1.18 million in medical services. Tanner’s Esurance policy carried a purported $250,000 PIP medical‑benefits cap, while Slade was an insured under his parents’ USAA policy, which offered unlimited PIP coverage.
Esurance paid $113,307.30 before declaring its limit exhausted. Mary Free Bed then sought payment from USAA, which declined on the basis that Esurance was first in priority under MCL 500.3114(5). Litigation followed, and the trial court granted summary disposition to both insurers finding Esurance’s limit valid and concluding that the no‑fault act barred recovery from USAA.
The Court agreed that Esurance’s $250,000 limit applied. Although Esurance could not show an “effective selection” of coverage under MCL 500.3107c(1), it presented sufficient evidence—through declarations pages and proof of premium payments—to benefit from the statutory presumption that Tanner’s premiums accurately reflected the limited‑coverage option. The Court rejected the trial court’s interpretation barring recovery from a lower‑priority insurer.
Key Appellate Holding: Reading the amended no‑fault statutory scheme as a whole, the panel held that when a higher‑priority policy’s benefits are exhausted, nothing in MCL 500.3114(5) prevents an injured motorcyclist or provider from seeking payment from insurers listed later in the priority sequence—particularly when those policies offer higher or unlimited benefits.
The Court emphasized that this reading aligns with the Legislature’s 2019 coverage‑choice amendments, avoids rendering related provisions surplusage, and maintains fidelity to the act’s remedial purpose of ensuring adequate and prompt reimbursement for accident‑related medical care.
