August 20, 2026
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seva firm
Dempster v. State Farm: Court Affirms Attorney Fees After Unreasonable Termination of Work-Loss Benefits
By Pratheep Sevanthinathan, Esq. The Seva Law Firm
Case: Johnthan Dempster v. State Farm Mutual Automobile Insurance Company, Nos. 374546 and 375033 (Mich. Ct. App. Aug. 20, 2026) (Unpublished)
Court: Michigan Court of Appeals
Panel: Cameron, P.J., and Maldonado and Wallace, JJ.
Decision: Affirmed — Per Curiam
Lower Court: Wayne Circuit Court, Case No. 23-001880-NI
1. Introduction
In Dempster v. State Farm, the Michigan Court of Appeals affirmed a $60,291.71 attorney-fee award against State Farm after a jury found that the insurer owed $149,630 in no-fault work-loss benefits. The Court held that State Farm did not overcome the presumption that its refusal to pay was unreasonable. Its decision to terminate benefits rested largely on a retained expert’s report containing an inaccuracy and an unsupported assumption, while a later medical opinion could not retroactively justify the earlier cutoff. The opinion is an important reminder that an insurer evaluates and terminates each category of PIP benefits at its own risk.
2. Facts
Johnthan Dempster was struck on the passenger side of his vehicle in September 2021 after another driver failed to stop at a Detroit stop sign. He sought urgent care the next day for wrist and lower-back pain, and later imaging showed three herniated discs. Before the crash, Dempster worked as a truck driver. His injuries and narcotic pain medication prevented him from returning to that work.
State Farm initially accepted that his early treatment was reasonable and necessary. It later conducted surveillance showing Dempster performing ordinary activities such as walking, driving, and briefly vacuuming his vehicle. State Farm also obtained an examination from neurosurgeon Dr. Jayant Jagannathan, who attributed Dempster’s condition to chronic degeneration rather than the crash. On August 10, 2022, State Farm stopped further medical and wage-loss payments.
State Farm obtained a second examination from Dr. Christopher Schoenherr in December 2022—four months after terminating benefits. Dempster sued, and a jury found that the crash caused an accidental bodily injury and work loss. It awarded $149,630 in work-loss benefits and $17,955.60 in penalty interest, although it did not award additional allowable medical expenses. The trial court then awarded $60,291.71 in attorney fees under MCL 500.3148.
3. Issues
The issue was whether State Farm’s refusal to continue paying work-loss benefits was reasonable because it allegedly arose from a bona fide factual dispute concerning whether Dempster’s ongoing condition was caused by the crash or by preexisting degeneration.
The Court also had to decide whether State Farm could rely on an expert opinion obtained after it terminated benefits, and whether the jury’s refusal to award medical expenses established that terminating all PIP benefits had been reasonable.
4. Holding
The Court of Appeals affirmed. Under MCL 500.3148(1), a claimant may recover attorney fees when overdue PIP benefits were unreasonably refused or delayed. Once Dempster established that benefits were overdue, a rebuttable presumption of unreasonableness arose, and State Farm bore the burden of justifying its refusal.
Reasonableness had to be judged using the information State Farm possessed in August 2022. It therefore could not rely on Dr. Schoenherr’s December 2022 opinion to justify the earlier termination.
The remaining evidence did not overcome the presumption. The surveillance depicted only brief, ordinary activities and did not show that Dempster could return to truck driving. Dr. Jagannathan had not reviewed the actual diagnostic images and treated “disc bulging” in older records as synonymous with later “disc herniation.” His report also incorrectly stated that Dempster waited several days to seek care when he went to urgent care the next day. Those problems should have caused State Farm to pause before cutting off benefits, particularly in light of the treating physician’s opinion that trauma from the crash likely caused the herniations.
Although an insurer need not reconcile every conflicting medical opinion, it acts at its own risk when terminating benefits in the face of conflicting reports. The jury’s decision not to award medical expenses did not change the analysis because allowable expenses and work-loss benefits are distinct categories of PIP benefits.
5. Conclusion
The Court affirmed the finding that State Farm unreasonably withheld work-loss benefits and upheld the $60,291.71 attorney-fee award. A later-acquired medical opinion could not supply a post hoc justification, weak surveillance did not establish an ability to resume demanding employment, and the denial of one category of PIP benefits did not validate the termination of another.
6. What Does This Mean for Our Clients?
An insurer’s cutoff must be reasonable when it occurs. Evidence obtained months later cannot retroactively justify an earlier decision to stop paying benefits.
Ordinary daily activity is not the same as an ability to work. Walking, driving, or doing a brief household task does not necessarily show that an injured person can return to a physically demanding job.
Insurer medical examinations must be carefully tested. Inaccuracies, incomplete record review, and unsupported medical assumptions can undermine an insurer’s claim that a cutoff was reasonable.
Each PIP benefit must be evaluated separately. A dispute over medical expenses does not automatically permit an insurer to deny wage loss, attendant care, or another distinct benefit.
If your no-fault insurer has stopped paying wage loss or other PIP benefits based on surveillance or an insurance medical examination, contact The Seva Law Firm. We examine the evidence the insurer actually possessed when it made the cutoff decision and fight for the benefits and statutory penalties our clients are owed.
Pratheep Sevanthinathan is the owner and managing attorney of The Seva Law Firm, located at 100 W. Big Beaver Rd, Suite 500, Troy, MI 48084. He can be reached at (248) 385-5704.
This article is for informational purposes only and does not constitute legal advice. Every case is different, and past results do not guarantee future outcomes.
In Dempster v. State Farm, the Michigan Court of Appeals upheld $60,291.71 in attorney fees after State Farm unreasonably stopped paying no-fault work-loss benefits. A jury awarded the injured truck driver $149,630 in wage loss plus penalty interest.
State Farm relied on surveillance showing ordinary activities and a retained doctor’s report that contained an inaccurate treatment timeline and assumptions based on reports rather than the actual scans. A second medical opinion obtained months after the cutoff could not retroactively justify it. The Court stressed that reasonableness is judged using the information the insurer had when it stopped payment.
The jury’s refusal to award medical expenses did not excuse the wage-loss denial: medical expenses and work loss are separate PIP categories. Insurers need a reasonable basis for each benefit they terminate.
If your insurer stopped wage loss or other PIP benefits based on surveillance or an insurance medical exam, call The Seva Law Firm at (248) 385-5704. We fight unreasonable no-fault cutoffs.