Medical Providers’ Collection Lawsuits Against Michigan No-Fault Auto Insurers Remains Valid With A Patient Assignment

On May 8, 2018, the Michigan Court of Appeals issued a binding decision in Shah, et al v State Farm Ins Co, ___ Mich App ___ (2018).  This is the first post Covenant v State Farm Ins Co, case that has decided a substantive issue born out of Covenant, itself.  As a reminder, our Supreme Court held in Covenant that medical providers did not have an independent statutory right to bring a lawsuit to collect unpaid medical bills against a responsible no-fault insurer.  The court, however, made clear in its ruling that its decision did not prohibit other legal theories, e.g., by way of an assignment from the patient/insured.  In fact, it was State Farm’s appellate counsel that advocated to the Supreme Court that such an action would still be viable, were it to rule in State Farm’s favor disavowing the independent statutory theory.  Following Covenant, medical providers began initiating their collection lawsuits pursuant to assignment.  And predictably, State Farm and its brethren no-fault insurers immediately defended the claims arguing that their insurance policies did not allow their insureds to assign their rights under the no-fault policy.  Well, the answer to that question has now been decided in favor of the insured and his/her medical provider: Yes she can, thus permitting the medical provider to sue the no-fault insurer and collect the unpaid medical bill the insurer should have paid in the first place.  The reasoning of the court in Shah is that the anti-assignment clauses only pertain to pre-loss risk that the insurer clearly did not bargain for.  On the other hand, once the loss has occurred, that risk was bargained for; all that remains is who the payee is; and the insured may assign the right to that owed benefit.  This has been the common law in Michigan for over 100 years, without rebuke.  See, e.g., Roger Williams Ins Co v Carrington, 43 Mich 252 (1880).  So until our Supreme Court says otherwise, medical providers’ collection lawsuits against no-fault insurers remains valid with a patient assignment.  Individual insured/injured persons and medical providers with questions about the Shah decision or how to draft a proper assignment compliant with the no-fault law are free to contact Smith & Johnson, Attorneys, P.C.

Authored by L. Page Graves

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The New Era of Medical Provider No-fault Litigation

So if you have not heard, the auto no-fault insurance law has changed in Michigan for medical providers.  After nearly 40 years of permissible statutory action under the no-fault act, the Michigan Supreme Court abruptly changed the law for medical providers.  The case that changed the law is Covenant v State Farm (here).  Simply, the court held there is no “statutory right” of action by a medical provider against a no-fault insurer.  That is it; the Supreme Court in Covenant did not eliminate any other legal form or right of action available to medical providers.  Notwithstanding the foregoing, considerable hand-wringing analysis and unnecessary worry has been discussed and written about the new era of medical provider no-fault litigation.  This article will avoid that useless hyperbole and get to the point for medical providers: get your insurance billing assignment from your patient after treatment and you are good to go.  Per 3143 of the no-fault act, only assignments of future benefits is prohibited.  Neither that section nor the act itself, prohibits the assignment of past or presently due benefits.  And the Supreme Court in Covenant even expressly acknowledged this very point of law in footnote 40 of its opinion.  So, with an assignment of past or presently due benefits, a medical provider may file suit against a no-fault insurer for unpaid charges incurred by the patient.  Careful drafting of the assignment is recommended so as to not create unnecessary parsing of words by the auto insurer and/or courts.  And while mechanically awkward or not typical of medical office management, again, have your patient sign the insurance billing form on the way out the door, after treatment.  You are flipping your paperwork/intake process; or, you are simply adding the billing part of the paperwork to the end of the visit.  This is critical because, otherwise, the no-fault insurer will accuse you of violating section 3143, i.e., obtaining an assignment before treatment — they will argue — is an assignment of future benefits.  Destroy this argument against payment by obtaining your assignment after treatment.

For more questions and/or assistance in drafting no-fault assignments for billing no-fault, medical providers are welcome to contact Smith & Johnson, Attorneys, P.C.

Authored by L. Page Graves

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No-Fault Medical Provider Actions Now At Potential Risk

On May 27, 2016, the Michigan Supreme Court has effectively signaled a complete 180 from its stated opinion exactly one-year ago, despite no change in the Court’s current composition of justices.  Last May 28, 2015, the Michigan Supreme Court denied an application to appeal a decision issued by the Michigan Court of Appeals, in Wyoming Chiropractic Health Clinic, PC v Auto-Owners Ins Co, 308 Mich App 389 (2014).  In that case, Auto-Owners challenged whether a medical provider had standing to bring a direct action to collect medical charges incurred by injured insureds, arising out of a motor vehicle accident.  In that published/binding opinion, the Michigan Court of Appeals ruled affirmatively that medical providers do have standing under the no-fault act, particularly section 3112, consistent with long-standing Michigan no-fault jurisprudence dating as far back as 1982 in Lansing Gen Hosp Osteopathic v Gomez, et al, 114 Mich App 814 (1982).  And so, a year ago the Michigan Supreme Court denied Auto-Owner’s application stating it was “not persuaded that the question presented should be reviewed by this Court.”  (S. Ct. Order 150868).  In other words, by denying leave on that specific question raised by Auto-Owners, the Michigan Supreme Court said “no,” having been satisfied with the Michigan Court of Appeals’ ruling on the precise issue.  Now, fast forward to May 27, 2016: in another published opinion by the Michigan Court of Appeals, Covenant Med Ctr v State Farm Mut Auto Ins Co, 313 Mich App 50 (2015), the medical provider brought a direct action to collect unpaid no-fault benefits for charges incurred by an injured insured.  The only dispute in Covenant was whether State Farm was liable even though it had settled a claim with the insured that did not include Covenant’s charges, of which State Farm was on notice of.  Basically, State Farm tried to pull a fast one on Covenant by settling with the insured and then sticking both the insured and Covenant with the bill based upon the release agreement.  The Michigan Court of Appeals said not so and enforced liability against State Farm to pay the Covenant charges.  State Farm filed an application to appeal this decision and on May 27, 2016, the Michigan Supreme Court granted it and directed the parties to address three issues: “(1) whether a healthcare provider has an independent or derivative claim against a no-fault insurer for no-fault benefits; (2) whether a healthcare provider constitutes ‘some other person’ within the meaning of the second sentence of MCL 500.3112; and (3) the extent to which a hearing is required by MCL 500.3112.”  (S. Ct. Order 152758).  Thus, a clear signal that the Michigan Supreme Court may just pull a 180 and now rule that a medical provider does not have standing to bring a direct action, contrary to long-standing Michigan no-fault jurisprudence.  This would constitute a radical change in the law.  And, it would create great detriment to medical providers, particularly hospital systems that must treat anyone who is presented at their door.  Realize what this is all about: it is the unrelenting push by the no-fault insurance industry to shift the burden of medical care expenses to the taxpayers, i.e., Medicaid and/or Medicare.  The auto-insurers want to keep their billions in premiums while avoiding paying claims and instead, stick that burden to the body public.  Medical associations like the Michigan Health & Hospital Association (MHA), with considerable governmental influence and knowledge of facts (including taxpayer-funded liabilities v private insurance), should file motions for leave to participate as Amicus Curiae, in support of the medical provider direct action.  Given this potential risk ahead for medical providers, it may be most prudent to bring action on stale accounts immediately before the Michigan Supreme Court potentially rules that such a claim may not be had; given the drastic change in the law, while uncertain, it would appear to be a ruling that should not apply retroactively to pending claims or those filed before the court actually issues its decision which likely will come either at the end of 2016, but more likely in 2017.  Medical providers with no-fault questions, generally, or about this particular topic are welcomed to call Smith & Johnson, Attorneys, P.C., to discuss the no-fault landscape and how to recover unpaid charges.

Authored by L. Page Graves

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Medical Service Providers’ Coordination of Primary Health v. No-fault Coverages

Medical service providers must carefully adhere to the procedures and administrative guidelines set forth in participating provider agreements with primary health insurers.  Failure to do so will prove fatal to any secondary no-fault claim.  That is exactly what happened to a medical provider in a recent ruling issued by the Michigan Court of Appeals, entitled Farm Bureau Gen Ins Co of MI v Blue Cross/Blue Shield, et al, ___ Mich App ___ (2016)(Docket No. 322423, dated January 7, 2016).  In Farm Bureau v Blue Cross, the injured patient had coordinated no-fault coverage with BC/BM, being primary.  She was admitted into a Spectrum rehabilitation care facility.  Spectrum and BC/BM had a participating provider agreement which details the process in which claims are considered, appealed and/or waived, etc.  Per the agreement, Spectrum requested pre-authorization for care and was granted only 14 days of coverage.  Per the agreement, Spectrum was required to appeal the decision if it sought more days of coverage; or, obtain in writing from its patient, that its patient would agree to be financially responsible for charges incurred beyond the 14 days approved by BC/BM.  If it did neither, then the agreement provided further that Spectrum “assumes full financial responsibility for the denied claims.”   Spectrum neither appealed nor sought written acknowledgment from its patient.  And, it continued to treat the patient beyond the 14 days.  Spectrum then billed the patient’s auto no-fault insurer, Farm Bureau for the unpaid charges not otherwise covered by BC/BM.  Farm Bureau paid the claim under protest and filed the instant declaratory action.  The court held that Spectrum assumed liability for the expenses beyond the 14 days approved by BC/BM, per the language of the provider agreement.  Even though the plain language of the BC/BM was all that was necessary to decide this case, the court nevertheless engaged in a no-fault jurisprudence discussion about coordination of coverage under MCL 500.3109a and when a charged is deemed “incurred”, as contemplated by MCL 500.3107(1)(a). Relying on Proudfoot v State Farm Mut Auto Ins Co, 469 Mich 476 (2003), the court reiterated that to “’incur’ means [t]o become liable or subject to, [especially] one’s own actions.  When an insured has no legal responsibility for disputed costs, those expenses are not ‘incurred’ by the insured within the meaning of MCL 500.3107(1)(a) and they are not subject to payment by the no-fault insurer.”  Thus, in addition to the BC/BM provider agreement being controlling, the Court held further that Spectrum’s insured had not incurred charges under MCL 500.3107(1)(a), during the period after the initial 14 days; as such, Farm Bureau was not liable and consequently, was entitled to a refund.

Authored by L. Page Graves

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Chiropractic Care Reimbursement Restricted by No-Fault Act

On February 9, 2016, the Michigan Court of Appeals issued a Published Opinion that restricts certain reimbursements for chiropractic care under the no-fault act.  The case is Measel v Auto Club Ins Co.  The basic facts are that Ms. Measal was injured (neck, upper back and arm) in a motor vehicle crash.  As part of her medical treatment, she received ultrasound therapy (neck and upper back) and massage therapy (arm) from a chiropractor’s office.  AAA of Michigan refused to pay for the care arguing that neither modality of service was reimbursable under the no-fault act; this lawsuit followed.  Per MCL 500.3107b(b), chiropractic care is reimbursable provided the nature and extent of the services provided “was included in the definition of practice of chiropractic under” MCL 333.16401, as of January 1, 2009.  In short and analyzing the definitions of the statute, on their own plain terms, the Court of Appeals concluded that, generally, ultrasound therapy and massage therapy “fell within the current definition of ‘practice of chiropractic’ under MCL 333.16401” and therefore, held “each of these services is ‘[a] practice of chiropractic service’ for purposes of MCL 500.3107b(b).”  But that holding was not the end of the Court’s review and analysis.  It then considered AAA’s alternative argument that because an assistant and not the actual chiropractor provided the service, the care was rendered unlawfully and thus, excluded from no-fault reimbursement, regardless.  Turning to the Public Health Code and its definition of “supervision” under MCL 333.16215 , the Court concluded further that the care was lawfully rendered under the supervision of the chiropractor and thus, not barred under the no-fault act.  But that holding, also, was not the end of the Court’s review and analysis.  Finally, the Court turned to the testimony and records of the chiropractor who stated/documented that when performing the ultrasound and massage therapy on Ms. Measal, her entire neck and upper back and “‘whole arm ‘” were treated.  While ultrasound and massage therapy are, generally , reimbursable under the no-fault act, in this case, they were deemed not reimbursable because, as the Court of Appeals reasoned, “they involved treatment to areas other than Measel’s spine.”  The Court reached its conclusion by relying on an old case, Hoffman v Auto Club Ins Ass’n, 211 Mich App 55 (1995), which basically held that chiropractic care was limited to treating the “spine” only.  Because Ms. Measal received ultrasound and massage therapy to not only her spine, but to her connective tissues and “whole arm”, the Court concluded that the chiropractor rendered care beyond the spine and thus, outside the definition “‘practice of chiropractic’ under MCL 333.16401.” (And “Yes,” you read that correctly in case you are scratching your head right now.).  The resulting consequence of this opinion is that even though Ms. Measal faithfully paid auto insurance premiums for the rare chance she may get hurt in an auto accident and require medical care, her own insurer turned against her and fought to deny payment and actually succeeded leaving Ms. Measal personally liable and in debt for the chiropractic expenses.  (And “Yes,” you read that correctly, too, in case you are scratching your head again right now.).

Authored by L. Page Graves

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Medical Provider No-Fault Rights Strengthened Again

Since last week’s blog post, the Michigan Court of Appeals issued yet another published decision strengthening a medical provider’s independent standing to pursue no-fault benefits.  The case is Chiropractors Rehabilitation Group v State Farm Mut Ins Co, found here.   As has been the insurance industry’s repeated attack, State Farm challenged the standing of a medical provider to bring its own, independent no-fault claim.  And once again, the Court of Appeals rejected the attack relying on the express language of section 3112, which states, in pertinent part, that “[p]ersonal protection insurance benefits are payable to or for the benefit of an injured person. . . .” (Emphasis supplied).  The Court further relied on its previously published and binding decisions, including last week’s Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, found here.  The import of these decisions is clear: Medical Providers should aggressively pursue no-fault insurance recovery and ignore an insurer’s games in delaying and denying proper payment.  For a more informative discussion on how to build a successful medical provider auto insurance litigation campaign, please contact us for a free consultation.  Members of our team of no-fault insurance lawyers have been handling direct medical provider no-fault claims for over 15 years.

Authored by L. Page Graves

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Medical Provider Rights Strengthened In Michigan’s No-Fault Law

The Michigan Court of Appeals has strengthened medical service providers’ rights under the Michigan No-Fault Act.  On October 22, 2015, the court published a recent decision which upheld Covenant Medical Center’s claim against State Farm.  Specifically, Covenant had notified State Farm of its billings and its claim for payment.  Unbeknownst to Covenant, State Farm then negotiated a settlement with the patient.  When Covenant filed its lawsuit to collect, State Farm attempted to avoid liability because the insured patient had released State Farm from any liability.  In rejecting State Farm’s disingenuous ploy to avoid liability, the court relied upon the plain language of the no-fault statute, section 3112, which makes plainly clear that when the insurer has written “notice of the claim of some other person”, the insurer’s liability is not extinguished.  Critical to the court’s holding and application of the statute was the fact that Covenant’s written notice preceded State Farm’s settlement with its insured.  The case is titled Covenant Medical Center v State Farm and can be found here.  For more information about this case and how it can either help or harm medical service providers, please contact us for a free consultation, in that regard.

Authored by L. Page Graves

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Auto No-Fault Insurance Claims by Medical Providers

Medical service providers have legal standing to independently bring and enforce auto no-fault insurance claims. Recently, however, auto no-fault insurers have tried to challenge and prevent medical providers from bringing legal action directly against the insurer. In Wyoming Chiropractic Health Clinic, P.C. v Auto-Owners Ins Co, __ Mich App __ (2014)(a unanimous published opinion) the Michigan Court of Appeals soundly rejected the insurance industry’s unfounded attack. The insurance industry filed a request to appeal with the Michigan Supreme Court. In an Order dated May 28, 2015, the Michigan Supreme Court denied the request, which means that the Court of Appeals’ interpretation of the law was (and has been for decades on this precise subject) correct. For more information about assessing and enforcing medical service provider no-fault claims, contact Smith & Johnson, Attorneys, P.C., for a free consultation.

Authored by L. Page Graves

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No-Fault Insurance Medical Service Providers Beware

No-fault insurance medical service providers must be aware and cautious of the status of a patient’s no-fault PIP claim. Particularly, if the patient has filed a lawsuit and the medical provider has elected not to intervene or file its own, joint action. That is because if the patient ultimately settles his/her PIP claim for future care and signs a release, that will forever bar the medical service provider from claiming payment for services for future care. That is exactly what happened to a medical provider who attempted to collect unpaid charges after the patient released future PIP benefits, in Michigan Head & Spine Institute, P.C., v. State Farm Mut Auto Ins Co, ___ Mich ___ (2013), released on February 12, 2013. See opinion here.

Authored by L. Page Graves

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IMPORTANT NO-FAULT UPDATE FOR MEDICAL SERVICE PROVIDERS AND MVA VICTIMS WHO ARE MINORS AND/OR SUSTAIN TRAUMATIC BRAIN INJURY

Yesterday, the Michigan Supreme Court did away with the long-held rule of protecting minors and the infirm in no-fault claims.   This legal issue has literally been a political ping-pong match with the balance of the court changing so much since 1999.   Since 1973 — when the no-fault act was enacted — it had always been the rule to protect this class of persons.

In 2006, however, AAA of Michigan got its request granted when the new court created a new rule that no longer protected minors and the infirm.  This directly impacted medical providers because their unpaid claims approaching one year were now at risk.  If not paid or a lawsuit filed, those unpaid claims became barred under no-fault.  Resorting to Medicare or Medicaid or writing off as bad debt were the only remaining options.

The old no-fault law protecting this class of persons was restored in 2010 when the U of M Hospital challenged the new rule.  But now the political ping pong has been hit back in Joseph v ACIA .  Once again, children, the infirm and their medical service providers must adhere to the one-year-back-rule for no-fault claims.

Authored by L. Page Graves

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