VHS of Michigan v. Farm Bureau

July 21, 2026
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seva firm

VHS of Michigan v. Farm Bureau: Court of Appeals Holds That Failure to List Resident Relatives Renders a PIP Opt-Out Election Ineffective

By Pratheep Sevanthinathan, Esq. The Seva Law Firm

Case: VHS of Michigan, Inc. (d/b/a Detroit Medical Center) v. Farm Bureau General Insurance Co. of Michigan, No. 371189 (Mich. Ct. App. July 21, 2026) (Unpublished)

Court: Michigan Court of Appeals

Panel: Maldonado, P.J., and Riordan and Young, JJ.

Decision: Reversed and Remanded — Per Curiam

Lower Court: Wayne Circuit Court, Case No. 23-012338-NF

Read the full opinion here

  1. Introduction

The Michigan Court of Appeals has reversed a trial court decision that would have left an injured child without no-fault PIP coverage, holding that a named insured’s failure to list resident relatives and verify their qualified health coverage renders a PIP medical opt-out election ineffective under Michigan’s amended no-fault act. In VHS of Michigan v. Farm Bureau, the Court followed its recent decision in Northland Radiology, Inc. v. Allstate Fire & Casualty Insurance Co. (2026) and held that when an insured fails to meet all the statutory requirements for opting out of PIP medical coverage under MCL 500.3107d, the election is ineffective and the policy provides unlimited PIP coverage — not just for the named insured, but for all resident relatives. The decision is a significant reminder that insurance companies cannot accept incomplete opt-out paperwork and then disclaim coverage when a claim arises.

  1. Facts

In October 2022, a minor child known as IL was struck by a vehicle while crossing the street as a pedestrian. She sustained life-threatening injuries and was airlifted to Detroit Medical Center, where she was treated and fortunately discharged within a few days.

At the time of the accident, IL lived with her grandmother, Audrey Lusby, along with her mother, Ashley Lusby, and her uncle, ML — another minor. Ashley did not have a driver’s license or a car and did not have her own auto insurance policy.

Audrey had a no-fault auto insurance policy from Farm Bureau. When she renewed her policy in July 2022, she elected Option 6 — opting out of PIP medical coverage entirely. To do so, she signed a PIP Coverage Form certifying that she had coverage under Medicare Parts A and B, and that all resident relatives had qualified health coverage or were covered under another auto policy with PIP medical coverage. She also filled out a Qualified Health Coverage Verification Form, which asked her to list every resident relative and whether they had qualified health coverage. Audrey listed only herself — she did not list Ashley, IL, or ML.

In reality, the resident relatives had the following coverage: Ashley had Medicare and Medicaid, IL had Medicaid only, and ML had Medicaid only. Critically, Medicaid is not “qualified health coverage” under MCL 500.3107d(7)(b), which only recognizes other health or accident coverage meeting specific criteria or Medicare Parts A and B.

After the accident, Ashley applied for PIP benefits through the Michigan Assigned Claims Plan (MACP) on IL’s behalf, indicating that Farm Bureau had denied IL benefits. Detroit Medical Center then filed suit against Farm Bureau and the Michigan Automobile Insurance Placement Facility (MAIPF), seeking reimbursement for the medical services it provided to IL.

The trial court granted summary disposition to Farm Bureau, reasoning that Audrey made an effective election to opt out of PIP medical coverage as to herself, and because IL was not listed as a resident relative, she was not covered under the Farm Bureau policy. The trial court denied MAIPF’s motion, concluding that IL could seek benefits from the MACP as a pedestrian. MAIPF appealed.

  1. Issues

The central issue on appeal was whether Audrey made an effective election to opt out of PIP medical coverage under MCL 500.3107d when she failed to list her resident relatives on the verification form and failed to provide proof that they had qualified health coverage.

A secondary issue was the consequence of an ineffective election: does the policy then provide unlimited PIP coverage to the named insured’s resident relatives, or can the insurer still disclaim coverage?

  1. Holding

The Court of Appeals reversed the trial court, holding that Audrey’s opt-out election was ineffective because she failed to meet all the statutory requirements under MCL 500.3107d.

The Court walked through the five requirements to make a valid opt-out election, as outlined in Northland Radiology:

  1. The policy must have been issued or renewed after July 1, 2020;
  2. The applicant or named insured must be a “qualified person” (i.e., have Medicare Parts A and B);
  3. The applicant’s or named insured’s spouse and resident relatives must have “qualified health coverage” or be covered under another auto policy with PIP medical coverage;
  4. The election must be made on an approved form; and
  5. The applicant must provide the insurer evidence of qualified health coverage for all persons.

While Audrey met some of these requirements — the policy was renewed after July 1, 2020, she had Medicare Parts A and B, and she signed an approved form — she failed on the critical third and fifth requirements. Her resident relatives did not have qualified health coverage. IL and ML had only Medicaid, and Ashley had Medicare and Medicaid. Because Medicaid does not qualify as “qualified health coverage” under MCL 500.3107d(7)(b), the statutory prerequisites for opting out were not satisfied.

The Court rejected the trial court’s reasoning that Audrey’s election was effective “as to herself only.” Following Northland Radiology, the Court explained that under MCL 500.3107d(5), an opt-out election applies to the named insured, their spouse, resident relatives, and any other person who would have had a right to claim PIP benefits under the policy. The Legislature intended the same scope to apply when an election is ineffective — meaning an ineffective election cannot be effective for some people and ineffective for others.

Under MCL 500.3107d(4), when no effective election has been made, the policy is considered to provide personal protection benefits at the unlimited coverage level under MCL 500.3107c(1)(d). The Court held that this unlimited coverage applies to the entire policy — not to select individuals — and therefore IL was entitled to unlimited PIP medical benefits under the Farm Bureau policy.

Because IL was covered under the Farm Bureau policy, she was not entitled to recover from the MACP, and the trial court erred by denying MAIPF’s motion for summary disposition.

  1. Conclusion

The Court of Appeals reversed the trial court’s grant of summary disposition to Farm Bureau and its denial of summary disposition to MAIPF. The matter was remanded for further proceedings consistent with the opinion. Farm Bureau’s policy provides unlimited PIP medical coverage to IL, and MAIPF is not liable under the assigned claims plan.

  1. What Does This Mean for Our Clients?

This decision has important implications for anyone dealing with Michigan no-fault insurance, particularly families where the policyholder opted out of PIP medical coverage under the 2019 amendments to the no-fault act. Here is what you should know:

If a policyholder opted out of PIP medical coverage but did not list all household members on the verification form, the opt-out may be invalid. The statute requires that the named insured prove that all resident relatives have qualified health coverage before they can opt out. If the insured failed to list household members — or if those household members only had Medicaid — the election is ineffective and the policy provides unlimited PIP coverage.

Medicaid is not “qualified health coverage” for purposes of opting out of PIP benefits. The statute specifically defines qualified health coverage as either (1) other health or accident coverage that does not exclude motor vehicle injuries and has a deductible of $6,000 or less, or (2) Medicare Parts A and B. Medicaid does not fit either definition. If you or a family member in your household only has Medicaid and the policyholder opted out of PIP medical coverage, that opt-out may not be valid.

An invalid opt-out means unlimited PIP coverage — for everyone in the household. This is the most powerful aspect of the statute. When the opt-out fails, the policy does not revert to some reduced level of coverage. It provides unlimited PIP medical benefits under MCL 500.3107c(1)(d), and that coverage extends to the named insured, their spouse, and all resident relatives. Insurance companies cannot argue that the opt-out was effective as to some household members but not others.

Insurance companies have a responsibility to verify the information on opt-out forms. In this case, Audrey only listed herself on a form that asked her to list every resident relative. Farm Bureau accepted the incomplete form and issued the policy without PIP medical coverage. When a claim arose, Farm Bureau tried to deny coverage based on the very paperwork it accepted. This decision makes clear that insurers cannot have it both ways — they cannot accept incomplete opt-out forms and then use them to deny claims.

Pedestrians and other accident victims should not be forced into the assigned claims plan when a valid policy exists. IL was a child who was struck by a car while crossing the street. The trial court’s ruling would have pushed her into the MACP — a system designed as a last resort — even though her grandmother had an auto insurance policy. This decision corrects that outcome and ensures that the insurer that collected premiums is the one responsible for paying benefits.

If you or a family member has been injured in a motor vehicle accident and your insurance company is denying PIP benefits based on a coverage opt-out, contact The Seva Law Firm. We understand the complexities of Michigan’s amended no-fault act and can evaluate whether the opt-out election on your policy was properly made. Decisions like VHS of Michigan v. Farm Bureau demonstrate that there are strong legal arguments to challenge these denials.

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.