A disputed $11,797 neck-surgery bill cost Auto-Owners more than $315,000 - most of it attorney fees.
A small no-fault bill turned into a large judgment for Auto-Owners Insurance Company. On June 11, 2026, the Michigan Court of Appeals affirmed an award covering $11,797.65 in overdue benefits and $288,090.00 in attorney fees, for a total judgment of $315,605.35.
The story began on January 21, 2021, when Kerry Lynn Zielinski was rear-ended at a red light. She turned to her insurer, Auto-Owners, for personal protection insurance (PIP) benefits - the no-fault coverage Michigan drivers carry for their own injuries - to pay for neck surgery in February 2022.
Her medical history was complicated. The court noted a "lengthy, complicated, pre-accident medical history," and Auto-Owners conceded on appeal that she had "at least 116 surgeries since 2009 and no less than 19 spinal surgeries." That gave the insurer a real question: was the surgery treating a new injury, or an existing condition?
But timing undercut the defense. Auto-Owners received the surgery bill in April 2022. In July 2022, it told Medicare in a letter that Zielinski had injured her neck in the crash and was treated for it, and it sent a near-identical letter in September. Only in October 2022 did it engage Dr. Steven Kalkanis, who reviewed her records without examining her and found "simply no evidence" of accident-related injury. The insurer denied the bills in November 2022.
A jury found the neck-surgery bill reasonable, necessary, and overdue, while rejecting a separate back-surgery bill. Under Michigan's no-fault act, that opened the door to attorney fees, which apply when an insurer "unreasonably refused to pay the claim or unreasonably delayed in making proper payment."
The appeals court focused on the clock. Once benefits are overdue, the law presumes the refusal was unreasonable, and the insurer must justify it. Auto-Owners leaned on Kalkanis's review, but the court said it came three months too late and "does not retroactively create a factual uncertainty that clearly did not exist as early as July 2022." What counts is what the insurer knew when payment was due.
The fee figure is what carriers will notice. The trial court set a $750 hourly rate for the lead attorneys, drawing on State Bar of Michigan survey data, and observed that "very few" attorneys would try a case involving 19 pre-incident spine surgeries and a $50,000 insurance cap. It described the insurer's claims adjusters as "cavalier" and said it had "literally begged" defense counsel to settle within that $50,000 policy cap.
Auto-Owners also sought a new trial, arguing that plaintiff's counsel had improperly told the jury the other driver was drunk. The court agreed the references were erroneous, because the other driver's possible intoxication was irrelevant to the PIP questions, but it found the error harmless, pointing to a split verdict and the trial court's curative instructions. The other driver, Charles E. Watkins, had settled with Zielinski before trial and was not part of the PIP case.
The court also rejected the argument that the lawyers had to keep contemporaneous time records, finding that Michigan law requires detailed billing but not real-time logging.
The lesson for insurers is about sequence. An IME or record review only helps if it comes before the insurer takes a position. Once Auto-Owners told Medicare the injury was related, a later opinion could not turn back the clock.
