Consider Removing Your Next PIP Case To Federal Court

• Published date: 17 August 2021
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Trials & Appeals & Compensation, Personal Injury
• Law Firm: Collins Einhorn Farrell
• Author: Matthew S. LaBeau

Introduction

Throughout the course of litigation, there are certain facts and circumstances that favor one side or the other. The venue and presiding judge in a given matter can significantly impact the outcome. All too often, insurance carriers find themselves before a judge, or in a county, that is favorable to the plaintiff. Unlike the facts that develop through the case, the venue and presiding judge will remain static throughout the litigation. One way, though, to even the playing field in a first party no-fault case may be to remove the matter to federal court. In the right circumstances, removal can be beneficial in obtaining a favorable outcome for the carrier.

Why Consider Removal?

Removal of a claim to federal court may be an opportunity for an insurance carrier to even the playing field. When a matter is filed in state court, it is important to assess the venue where the case is pending. If the jurisdiction or judge is favorable, then removal of the matter may not be the best course of action. However, in an instance where the state court jury pool is considered to be adverse, a federal jury pool will pull from a wider geographical region and may provide a better opportunity to select a more favorable jury. In addition, the judge presiding over the state court action may, either by experience or reputation, be more likely to give the benefit of the doubt to the opposing side. Removal of the matter to federal court may provide an opportunity to draw a jurist who will be more favorable to your position.

The complexity of the issues involved in the case should also be considered. There are state court venues that have more knowledge of no-fault cases. If the case involves a matter of complex statutory interpretation, or a complicated coverage issue that is germane to cases under the No-Fault Act, a state court judge with experience in such matters may be beneficial to the defense. On the other hand, there are also state court venues where, regardless how experienced, the judges have congested dockets with limited time and resources to devote to each case. In that instance, a complex matter may be more appropriate in federal court, where more time and resources can be utilized to bring the matter to a favorable conclusion.

Another consideration is your opposing counsel. There are aggressive attorneys that masterfully utilize the broad discovery rules in the state of Michigan to their advantage. The Federal Rules of Civil Procedure are narrower and can be utilized to shield the insurance carrier from extensive and far reaching discovery. In addition, motion hearings in federal court are frequently only permitted by leave of the court, and are not on a weekly scheduled docket. Once again, this can potentially limit the outlay of defense costs as well as limiting discovery disputes since there could be a delay in the court's addressing of the issue.¹ Lastly, there are certain attorneys who are better known to judges and juries in a certain jurisdiction by way of routinely practicing in the venue and being otherwise well known in the community. Removal of a claim can neutralize the advantage opposing counsel may have by selecting a jurisdiction with a larger jury pool and appointed judge.

The Basics of Federal Jurisdiction

A case can be removed from state court to federal court if the case could originally have been filed in federal court.² As most of us recall from our civil procedure course in law school, there are two primary bases for federal court jurisdiction over a civil action: federal question and diversity. The Michigan No-Fault Insurance Act³ controls claims for personal injury protection benefits. Therefore, claims for such benefits do not involve a federal question. Accordingly, the primary basis to seek federal jurisdiction over a claim for no-fault benefits is by way of diversity.

In the instance of diversity jurisdiction, federal courts have original jurisdiction over all civil actions between citizens of different states if the amount in controversy exceeds $75,000.⁴ The general rule is that a corporation is deemed a citizen of the state in which it is incorporated and the state here it has it principal place of business.⁵

Diversity jurisdiction is broader for "any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which the action the insured is not joined as a party-defendant." In that instance, an insurer is also a...