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

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

[From time-to-time, Smith & Johnson, Attorneys, P.C.’s law partner, L. Page Graves, has been a featured speaker at the joint State Bar of Michigan’s and Institute of Continuing Legal Education’s Upper Michigan Legal Institute where he reviews and discusses the latest appellate cases in Michigan’s No-Fault Jurisprudence.  Below is a copy of the materials hand-out for this year’s upcoming conference in June of 2017].

I.  2015-2016 Cases Update 

Covenant Med Ctr v State Farm Mut Auto Ins Co, 313 Mich App 50 (2015)(holding that when a no-fault insurer has received written notice of a medical provider claim, the insurer does not discharge its liability to the provider by paying the benefit to the claimant instead).  S Ct decision is pending.

Chiropractors Rehabilitation Group, PC v State Farm Mut Auto Ins Co, 313 Mich App 113 (2015)(holding that failure by an injured claimant to attend a medical exam allows a no-fault insurer to suspend benefits but it is not an irrevocable bar to PIP benefit eligibility; rather, eligibility is suspended until such time there has been compliance with the request).  Leave to appeal to S Ct held in abeyance pending decision in Covenant.

Bronson Health Care Group, Inc v Titan Ins Co, 314 Mich App 577 (2016)(holding that MACP assigned insurer’s own investigation of benefit eligibility does not toll application of when insurer received “reasonable proof” per MCL 500.3142 or Williams v AAA Michigan, 250 Mich App 249, 267 (2002)).  S Ct decision on whether to grant or deny application for leave is pending.

Spectrum Health Hospitals v Westfield Ins Co, 498 Mich 969 (2016)(quickly, the facts in Spectrum are that the injured claimant was changing a tire when the jack was jarred, causing the vehicle to drop onto the person changing the tire.  Westfield stipulated to entry of judgment, including interest and no-fault fees because it agreed that Miller v Auto-Owners Ins Co, 411 Mich 633 (1981)(holding that performing maintenance on a parked vehicle under §3105 trumped §3106) was controlling arguing instead, Miller was wrongly decided and should be overturned).  S Ct decision following MOA to grant application or take other action is pending.

Perkovic v Zurich American Ins Co, 312 Mich App 244 (2015)(holding that a medical bill and corresponding medical record sent by a medical provider to a no-fault insurer seeking payment does not constitute written notice of a no-fault claim on the injured person’s “behalf” under MCL 500.3145(1)).  S Ct decision is pending.

Shinn v State of Michigan Secretary of State Assigned Claims Facility, 314 Mich App 765 (2016)(holding that a person who is injured while occupying an uninsured vehicle that is not operable may recover no-fault PIP benefits).   Application for leave to appeal to the S Ct was denied on 11-23-16; a decision on a Motion for Reconsideration is pending.

Titan Ins Co v American Country Ins Co, 312 Mich App 291 (2015)(holding that MCL 500.3114(1) and (4) are fallback priority sections when the exceptions of (2), (3) and (5) do not yield an identifiable, liable priority no-fault insurer).  Motion for Reconsideration denied on 09-06-16; no further action pending.  Decision is final.

Farm Bureau Gen Ins Co of MI v Blue Cross/Blue Shield, et al, 314 Mich App 12 (2016)(holding that where medical service provider participating agreement with health insurer obligates facility to accept payment in full for charges otherwise not covered, facility may not thereafter balance bill no-fault).  No pending actions currently appear on the docket sheet.  Decision is final.

Walega v State Farm Mut Auto Ins Co, 312 Mich App 259 (2015)(holding that the “transportation function,” per MCL 500.3105, was satisfied by the particular facts at bar).  No pending actions currently appear on the docket sheet.  Decision is final.

Jesperson v Auto Club Ins Ass’n, 499 Mich 29 (2016)(holding that per MCL 500.3145(1), a PIP action may be brought within 1 year of the last PIP benefit paid by the insurer, even if written notice of the claim has not been submitted by the injured person).  Decision is final.

Garrett v Washington, 314 Mich App 436 (2016)(holding that, but for Adam v Bell, 311 Mich App 528 (2015), resolution of a PIP action on the merits would act as res judicata of a UM/UIM claim not included; Adam held the opposite).  Request for Conflict Panel  denied.  No pending actions currently appear on the docket sheet.  Decision is final.

Measel v Auto Club Ins Co, 314 Mich App 320 (2016)(holding that no-fault PIP reimbursement for chiropractic care under MCL 500.3107(1)(a) is limited to direct treatment to the spine, only).  No pending actions currently appear on the docket sheet. Decision is final.

II.  Medical Service Provider Claims

Grace Transportation, Inc, et al v State Farm Mut Auto Ins Co, ___ Mich App ___ (2016)(Docket No. 327915)(holding that dismissal with prejudice of individual injured insured’s PIP claim for discovery abuses, serves to bar a provider’s derivative claim, too).  No pending actions currently appear on the docket sheet; so for now, the decision is final.

In Grace Transportation, the providers intervened in their patients’ PIP action.  The individual plaintiffs failed to comply with discovery orders and did not attend repeatedly scheduled depositions.  State Farm moved for dismissal as a proper sanction for the discovery abuses.  The trial court granted that motion; thereafter, State Farm moved for dismissal of the medical providers’ PIP claims, too, given that their claims were derivative of the underlying plaintiffs, now dismissed.  The Ct App affirmed holding that whether a person is substantively eligible for PIP benefits is not germane to the basic holding that a provider’s claim is derivative of the insured.  Since the insureds were dismissed, the providers must be dismissed, too.

DMC Surgical Hosp v Sentinel Ins Co, Unpublished per curiam opinion of the Court of Appeals (dated 10-13-16, Docket No. 328005)(holding that patient’s action and then settlement of his Uninsured Motorist benefit claim against Sentinel did not act as res judicata against DMC’s no-fault PIP benefit claim).  Cf, supra, Adams/Garrett.  Sentinel has filed an application for leave to appeal; a decision by the S Ct whether to grant or deny the application is pending.

Although an unpublished decision, DMC is significant for two reasons.  First, last year we had the conflicting decision of Garrett that involved a settled claim for PIP that did not act as res judicata against insured’s later-filed UM action.  The Ct of App would have held it did but for Adam which previously held it did not because there was no privy of action or similar elements of action (tort v. no-fault).  Here, in DMC, the provider’s patient filed his own UM claim and settled it.  Separately, DMC filed its own PIP action.  Relying on and agreeing with the analysis in Adam, albeit in the reverse, the Ct of App held that DMC’s PIP claim was not barred by res judicata following patient’s settlement of his UM claim.  A PIP claim is for economic loss (medical, wage and replacement services); a UM claim is for non-economic tort damages (injury; disfigurement; death, etc.).  And the second reason why this case is important to follow is the pending outcome in Covenant, supra.

III.  Innocent Third-Party Rule

Bazzi, et al v Sentinel Ins Co, et al, ___ Mich App ___ (2016)(Docket No. 320518)(holding that the S Ct’s opinion in Titan Ins Co v Hyten, 491 Mich 547 (2012) extends to innocent third-party claims for statutory/mandatory no-fault benefits).  Bazzi has filed an application for leave to appeal; a decision by the S Ct whether to grant or deny the application is pending.

In Bazzi, a motor vehicle crash occurred and Bazzi was injured.  Bazzi had nothing to do with ownership of the involved vehicle or his families’ procurement of insurance on the vehicle, itself.  Bazzi sought statutorily mandated PIP benefits from Sentinel, which denied the claim asserting the Bazzi’s family fraudulently applied for the insurance by placing the policy in the name of one family instead of the actual primary driver of the vehicle, in order to obtain cheaper coverage.  As such, Sentinel sought to void the policy based upon fraud.

Rather recently, our S Ct decided Hyten, supra, which involved an innocent third-party’s claim for (contractually-based excess liability coverage) non-economic tort damages arising out of a motor vehicle accident.  The liability insurer, Titan, filed a declaratory action seeking to rescind the liability policy and its contractual duty to indemnify its insured, who Titan alleged procured the auto policy based upon fraud in the application.  Factually important, however, was Titan’s acknowledgement that it was only seeking to rescind the contractually-based excess coverage and not the mandated coverage per statute.  In this regard, the court in Hyten, noted:

Fn 2  Titan did not seek to completely avoid liability under the insurance policy.  Rather, Titan sought a declaration that it was not obligated to indemnify Hyten for any amounts above the minimum coverage limits required by the financial responsibility act ($20,000 per person/$40,000 per occurrence), MCL 257.501 et seq., for which Titan acknowledged responsibility.”  Id, p 574 (emphasis in original).

For decades, Michigan jurisprudence prevented an insurer from rescinding an indemnity policy against tort damage claims by injured persons where the alleged fraud was “easily ascertainable”  — meaning that by a basic review of the application, fraudulent misrepresentations by the applicant could be easily ascertained (e.g., whether the applicant actually held a valid operator’s license).  The S Ct in Hyten noted that Michigan’s current jurisprudence came from a Ct of App decision in State Farm Mut Auto Ins Co v Kurylowicz, 67 Mich App 568 (1978)(with essentially the same facts), where that court ignored as distinguishing inapplicable a prior S Ct opinion in Keys v Pace, 358 Mich 74 (1959)(with essentially the same facts and which held rescission was permissible because of fraud despite the impact to an innocent third-party’s claim) because the no-fault act had been since been enacted and its implication of public policy favoring the protection of injured individuals.  The S Ct in Hyten rejected the reasoning of Kurylowicz’s reliance on public policy as opposed to the controlling common law was in error; it also reiterated the court’s policy of strict construction noting that nothing in the no-fault act speaks to the “easily ascertainable rule” when fraud has been committed by an applicant.  Therefore, the court overruled Kurylowicz and restored the common law back to Keys, permitting the rescission.

The Hyten court’s ruling, however, was expressly limited by two very important caveats.  Specifically, at page 553 or the beginning of the court’s review of controlling case law, it made the following observations relative to auto insurance contracts:

(1) Per Rory v Continental Ins Co, 473 Mich 457 (2005), “when a provision in an insurance policy is not mandated by statute, the rights and limitations of the coverage are entirely contractual and construed without reference to the statute.”  Id, p 465-466;

(2) Conversely, per Rohlman v Hawkeye-Security Ins Co, 442 Mich 520 (1993), “when a provision in the insurance policy is mandated by statute, the rights and limitations of the coverage are governed by that statute.”  Id, p 524-525.

Because of these two controlling principles, the court in Hyten’s holding was limited to the Rory rule because the contract issue in dispute in Hyten was about contractually-based excess liability coverage not mandated by statute.  In this regard, the court stated the following about its holding:

Should Titan prevail on its assertion of actionable fraud, it may avail itself of a traditional legal or equitable remedy to avoid liability under the insurance policy, notwithstanding that the fraud may have been easily ascertainable.  However, as discussed earlier in this opinion, the remedies available to Titan may be limited by statuteRohlman, 442 Mich. At 525.”  (emphasis added)(citing fn 17, “For example, MCL 500.3009(1) provides the policy coverage minimums for all motor vehicle liability insurance policies.”).

With this backdrop, the court in Bazzi was asked by Sentinel to decide whether the Hyten rule should be extended to rescind a policy where an innocent third-party was claiming statutorily mandated PIP benefits.  The court in Bazzi rejected the argued distinction between labeling the Rory rule (coverage not mandated by statute) versus the Rohlman rule (coverage mandated by statute) as the “easily ascertainable rule” versus the “innocent third-party rule”, viewing both factual scenarios to be one-of-the-same in that there was fraud in the application for the insurance to which the insurer seeks to rescind, even though it affects a third-party (who had no involvement with the fraud) making a claim.  Back to the question before it was simply whether to extend the Hyten/Rory rule to — while ignoring the Rohlman rule acknowledged by Hyten –- PIP claims mandated by statute.  The court held that Hyten does extend to statutorily mandated PIP benefits because nothing in the no-fault act prohibits an insurer from availing itself from common law defenses regarding the formation of the original contract of insurance.  Thus, the court in Bazzi reasoned the mandated versus not mandated distinction was equally a non-unimportant.

The Bazzi case was decided by a vote of 2-1, with Judge Beckering authoring a 19 page treatise in opposition to the majority opinion, detailing Michigan’s jurisprudence relative to the two distinct rules.

Southeast Michigan Surgical Hospital LLC v Allstate, ___ Mich App ___ (2016)(Docket No. 323425)(holding that Bazzi applied, by derivative extension of patient’s PIP claim to a medical provider’s claim for PIP benefits, too).  Request for Conflict Panel, in light of Bazzi, supra, denied on 08-31-16; Motion for Reconsideration denied on 10-12-16; SMSH has filed an application for leave to appeal; a decision by the S Ct whether to grant or deny the application is pending.

In SMSH, the provider’s patient sustained injuries in an MVA.  The patient was an occupant of a vehicle insured by Allstate.  SMSH filed an action for the non-payment of PIP expenses incurred by its patient.  Allstate denied the claim arguing that the insurance was fraudulently procured and sought to rescind the policy.  SMSH’s patient had nothing to do with the alleged fraud, i.e., was an innocent third-party.  The court held that it was bound by MCR 7.215(J)(1) to follow the newly published rule in Bazzi, supra.  But for the procedural rule compelling this outcome, the panel in SMSH would decline that new extension of Hyten to statutorily mandated PIP benefits and adopted Judge Beckering’s dissent in Bazzi in its entirety, in support of its reasoning.

IV.  Survivor’s Loss Benefits

Scugoza v Metropolitan Direct Property & Casualty Ins Co, ___ Mich App ___ (2016)(Docket No. 327076)(holding that social security retirement benefits constitute “tangible things of economic value” as contemplated by PIP survivor’s loss under MCL 500.3108).  Metropolitan has filed an application for leave to appeal; a decision by the S Ct whether to grant or deny the application is pending.

Mr. Scugoza died in an MVA.  At the time of his death, he was eligible for and was receiving Social Security retirement benefits.  Mr. Scugoza was survived by his wife who was his dependent.  Mrs. Scugoza applied for no-fault survivor’s loss benefits.  Unclear from the opinion is whether her claim was denied outright or in part; rather, it mentions that suit was commenced over the proper calculation of the PIP benefits.  In any event, the question before the court was whether Social Security retirement benefits constitute “tangible things of economic value” as contemplated by PIP survivor’s loss under MCL 500.3108.  Because that phrase is not defined by the no-fault act, resort to dictionary definitions was employed and supported the notion that such includes “something that is capable of being valued or having its worth ascertained.”  (emphasis in original).  The court also cited with approval, the seminal § 3108 case in Miller v State Farm Mut Auto Ins Co, 410 Mich 538 (1981), which held the phrase was to be liberally construed to include “‘consideration of all demonstrable contributions that would have been made to the dependents by the deceased but for his death. . . .’ [Id. At 550.]”  Given the forgoing, the court in Scugoza reasoned that (a) because retirement benefits function as financial support to recipients; (b) because those benefits cease (or are recalculated to a lesser amount for surviving spouse upon death); and because Mrs. Scugoza was dependent upon that support, it therefore was to be included in the calculation of § 3108 benefits.  Notably not before the court — which it pointed out -– was whether or not retirement benefits are even to be considered a set-off or how such would be calculated under § 3109 per Wood v Auto-Owners Ins Co, 469 Mich 401 (2003).

V.  One-Year-Back-Rule

 Henry Ford Macomb v Famers Ins Exchange, ___ Mich App ___ (2016)(Docket No. 327572)(holding that MCR 1.108(1), which regulates the computation of time applies to calculating the one-year-back-rule under MCL 500.3145(1)).  Farmers has filed an application for leave to appeal; a decision by the S Ct whether to grant or deny the application is pending.

The plaintiff hospital treated an MVA patient from August 2, 2103, through August 5, 2013.  The patient was insured by the defendant and the general written notice requirement of the possible no-fault PIP claim was submitted with one-year of the MVA.  Farmers had not paid plaintiff yet, however, and therefore, the hospital filed its no-fault claim on Monday, August 4, 2014.  August 2, 2014, fell on a Saturday.  Farmers paid part of the claim for August 4 and 5, 2013, but not the bulk of the charges incurred by its insured the previous two days (August 2 and 3, 2013) arguing that the second part of § 3145(1) limiting the recovery of PIP benefits to within one-year of filing suit, limited that part of plaintiff’s claim.  The court held that MCR 1.108(1), which regulates the computation of time, governed the outcome.  Specifically, the rule states in pertinent part that when computing a period of time (prescribed by statute, for example),

The last day of the period is included, unless it is a Saturday, Sunday, legal holiday, or day on which the court is closed pursuant to court order ; in that event the period runs until the end of the next day that is not a Saturday. . . [etc.].”

Therefore, plaintiff’s filing of its action on Monday, August 4, 2014, extended the computation of “1 year” under the one-year-back-rule of § 3145(1).  As a result, it was permitted to recover those expenses incurred by its patient on August 2 and 3, or 2013.  The defendant argued that application of the rule acted as a “tolling” provision of § 3145(1), prohibited by Cameron v Auto Club Ins Ass’n, 476 Mich 55 (2006) and Joseph v Auto Club Ins Ass’n, 491 Mich 200 (2012).  Rejecting the defendant’s argument, the court observed that nothing in the plain language of MCR 1.108(1) limits its applications to “statutes of limitations”, whatsoever.

VI.  Unlawful Taking v. Unlawful Use

 Monaco v Home-Owners Ins Co, ___ Mich App ___ (2016)(Docket no. 329214)(holding that § 3113(a) does not bar an unlicensed motorist’s claim for PIP when the vehicle was taken lawfully, albeit then used unlawfully).  HOIC has filed an application for leave to appeal; a decision by the S Ct whether to grant or deny the application is pending.

In Monaco, a 15-year-old child drove a car and crashed, suffering injuries.  The child had an operator’s permit and was given permission to use her Mom’s car, without being accompanied by a parent, legal guardian or a licensed driver 21 or older, per MCL 257.310e(4).  HOIC denied the PIP claim, arguing § 3113(a) applied because the child “used“ the car that she had “taken unlawfully”.   Rather recently, the S Ct had decided Spectrum Health Hosp v Farm Bureau Ins Co of Mich, 492 Mich 503 (2012), which involved application of § 3113(a) in the context of persons taking a car with no intent to steal, like a family member joyriding, in violation of MCL 750.413.  The court in Spectrum held that for purposes of construing the phrase “taken unlawfully”, the focus is on whether the person “gains possession of the vehicle contrary to Michigan law” regardless of the existence of or lack of larcenous intent.  Id, pp 517-518.  Applying this rule, the court in Spectrum held that the family joyriders had taken the car unlawfully, reasoning that “for purposes of § 3113(a), a vehicle is ‘unlawfully taken’ if it is taken without the authority of its owner. . . .”  More important to the ultimate result reached in Monaco, was the Spectrum court’s explanation that “unlawful use” was irrelevant to the question of “taken unlawfully”; that is because “unlawful use” only comes into play where a persona has taken a car unlawfully -– as § 3113(a) provides –- “unless the person reasonably believed that he or she was entitled to take and use the vehicle.”  Thus, given that Monaco was given permission to lawfully take her Mom’s car, she did not violate § 3113(a) because the second part of the sentence, unlawful use is inapplicable because that only applies to someone who took a vehicle unlawfully, reasonably believing he or she could take and use the vehicle.  Monaco’s unlawful use of the vehicle without proper supervision, was therefore, irrelevant.

VII.  Coordinated Coverage

St. John Macomb Oakland Hospital v State Farm Mut Auto Ins Co, ___ Mich App ___ (2016)(Docket No. 329056)(holding that a person is not required to appeal a health insurer’s medical necessity determination in order to establish that “reasonable efforts” were made to obtain payment from the health insurer).  No pending actions currently appear on the docket sheet; so for now, the decision is final.

In SJMOH, the injured patient had coordinated coverage.  The plaintiff facility submitted its billing claim to BC/BSM which, through its review company, determined the treatment being provided was not medically necessary.  BC/BSM’s denial letter outlined a series of timelines and steps a person could take to appeal the original determination.  SJMOH did not appeal BC/BSM’s determination but instead, submitted its claim to the defendant, as the secondary insurer under § 3109a.  State Farm denied the claim arguing that SJMOH, by not appealing the determination, failed to make “reasonable efforts” in obtaining payment from the health insurer.  The court in SJMOH reviewed the S Ct opinion in Tousignant v Allstate Ins Co, 444 Mich 301 (1993), which held that “the injured person is obligated to use reasonable efforts to obtain payments that are available.”  In Tousignant, the plaintiff sought treatment outside of her HMO without a referral and without first trying to obtain the same treatment within her HMO.  Consequently, the court in Tousignant held the plaintiff failed to use “reasonable efforts” to obtain payment from her health insurer and thus, relieving her no-fault insurer from secondary responsibility under § 3109a.  Based upon the foregoing, the court in SJMOH reasoned that the plaintiff health facility did make reasonable efforts because it first sought payment from BC/BSM.  It further observed that nothing in § 3109a or Tousignant mandates that a person must appeal an unfavorable determination to constitute “reasonable efforts”.  Rather, the court held further that per Adanalic v Harco Nat’l Ins Co, 309 Mich App 173 (2015(a case dispute between which insurer, worker’s compensation or no-fault, was primary) recognized that “a plaintiff does not need to engage in the potentially lengthy and costly effort of challenging a medical necessity determination in order to obtain health insurance benefits before proceeding to obtain payment from the no-fault insurer.”

VIII.  Sunlight on MCCA

CPAN v MCCA, ___ Mich App ___ (2016)(Docket No. 314310)(holding that the MCCA is not a public body subject to the Freedom of Information Act, MCL 15.231 et seq.).  CPAN has filed an application for leave to appeal; a decision by the S Ct whether to grant or deny the application is pending.

            In CPAN (a large association of medical providers and public policy groups) sought financial records of the MCCA.  The basic reasoning for CPAN’s request was to investigate and fact-check the repeated assertions by the MCCA (and auto insurance industry) to the Legislature that “claims were out-of-control” and therefore, “reforms are necessary”.   The MCCA, however, refused to disclose its financial records.  And to date, the Ct of App has (now) twice held that the MCCA is not subject to FOIA.


With summer tourism in full swing here in Northern Michigan, particularly with the upcoming Cherry Festival and 4th of July festivities in all our harbor towns and area inland lake communities, it is never too late or too redundant to advocate against drunk driving.  It affects us all.  The risks are immeasurable and sadly, in some instances, irreplaceable.  But there really is a simple solution: call a cab if you have been drinking.  There are ample resources in the region to accommodate and get you back home (or to your hotel) safely.   The reality is, however, these next two weeks prove to be one of the more active statistical drunk driving arrest periods in Northern Michigan.  Whether you have been injured by a drunk driver or you have been arrested for drunk driving, our experienced trial attorneys here at Smith & Johnson, Attorneys, P.C., can help.  Please call us at 1-866-946-0700.

Authored by L. Page Graves

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

UBER & Michigan No-Fault Insurance Risks

Before getting into an “Uber” car in Michigan, or for that matter becoming an Uber driver in Michigan, it would be prudent to thoroughly investigate the idea before proceeding with either plan.  There are several inherent insurance related risks associated with doing so when it comes to no-fault insurance coverage for your medical bills, wage loss and, if necessary, your suffering.  The first question you should ask the Uber driver is whether he or she is commercially insured under a business policy of no-fault insurance authorized to operate his or her specific automobile to transport individuals for hire?  And, whether the actual motor vehicle being operated is specifically scheduled on that Michigan no-fault policy of insurance?  If neither, the ramifications can be irreparable if an accident were to occur.  Generally, a personal auto no-fault policy will specifically exclude from coverage for liability and medical, a person who is operating a scheduled vehicle that is being used — at the time of the wreck — “to transport a person for hire.”  Pull your own auto policy and read it; most likely, that exactly worded exclusion is the first listed in the policy.  Thus, if the Uber driver has simply insured his or her car under a personal policy without informing their insurer that he or she, from time to time, operates as an Uber driver and then, when the whim of the moment stirs him or her to offer up an Uber ride, there will ultimately be no insurance coverage on that vehicle that will indemnify any loss the Uber driver causes/creates.  The insurer will deny coverage and will litigate to the end, to enforce the exclusion.  Thus, again, the ramifications can be irreparable to the injured passenger.  First, the injured passenger will have to look to his or her own no-fault policy for medical bills and wage loss.  See MCL 500.3114(2)(e) and MCL 500.3114(1).  But if that injured person does not have insurance of his or her own, or is  otherwise not married to a spouse who is insured or is not domiciled with a resident relative who has no-fault insurance, then — if the Uber driver is properly insured, only then does the injured passenger then look to the Uber driver’s no-fault policy for PIP benefits.  MCL 500.3114(2)(e).  But in the event the Uber driver is not properly insured, then, as a last resort, the injured passenger must seek benefits through the Michigan Assigned Claims Plan.  See MCL 500.3172(1). Second, if the Uber driver is not properly insured, then the injured passenger will also have no collectible recourse directly against the Uber driver for personal injury damages suffered.  And but for purchasing your own Uninsured Motorist Benefit coverage under your own no-fault policy, there may be no non-economic recovery for injury suffered at all.  Meanwhile, the Uber driver who does not specifically and properly insure the vehicle  is completely uninsured for not only the liability that he or she created to his or her passenger, but he or she also is barred from no-fault medical and wage loss PIP benefit eligibility because he or she is operating an owned motor vehicle that is excluded from coverage at that instance of business operation.  See MCL 500.3113(b). Unlike the injured passenger, the Uber driver would also be excluded from the safety-net under the Michigan Assigned Claims Plan, too.  See MCL 500.3173.

Authored by L. Page Graves

The Michigan Court of Appeals issued a published decision affirming the basic rule that an injured claimant’s generic notice of injury constitutes sufficient notice to a liable no-fault insurer.  The case is Dillon v State Farm Mut Auto In Co, ___ Mich App ___ (May 3, 2016)(Docket No. 324902).  When Ms. Dillon was injured in a car crash, her immediate pain symptoms were localized in her low back and left shoulder.  And these were the generic injuries reported to State Farm within one-year of the crash.  MCL 500.3145 requires written notice of a claim for no-fault benefits within one-year of the crash and in that notice, the claimant is to “indicate in ordinary language . . . the . . . nature of his injury.”  After a year had passed, Ms. Dillon began experience symptoms in her left hip and began medical treatment.  State Farm refused to pay arguing it was not notified of this particular body part/injury within one-year, citing MCL 500.3145.  The Michigan Court of Appeals held that “the notice of loss does not need to identify the specific injury.”  Applying the Michigan Supreme Court’s standards of plain text construction, the court referenced Merriam-Webster’s Dictionary which defines the  term “nature” as to be “a kind of class”  as opposed to specifics.  Accordingly, the court reasoned that since Ms. Dillon notified State Farm that she was injured in the crash within one year, her generic notice of injury satisfies statutory notice for no-fault PIP benefits.

Authored by L. Page Graves

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

 Jesperson v Auto Club Ins Ass’n, ___ Mich ___ (2016)(Docket No. 150332, dated March 21, 2016).  In Jesperson, the injured person never submitted to the liable no-fault insurer, written notice of his no-fault PIP claim.  Notwithstanding the foregoing, more than a year after the accident, ACIA began paying PIP benefits for Jesperson and then after a period of time, terminated his benefits.  Jesperson filed suit and ACIA (a/k/a AAA Michigan) defended the claim per MCL 500.3145(1), citing the introductory sentence that says “An action for recovery of personal protection insurance benefits payable under this chapter for accidental bodily injury may not be commenced later than 1 year after the date of the accident causing the injury unless written notice of injury as provided here has been given to the insurer within 1 year after the accident or unless the insurer has previously made a payment or personal protection benefits for the injury.”  ACIA reasoned that because Jesperson never filed written notice within 1 year of his injury, his claim was barred.  In a unanimous opinion authored by Justice McCormick, the Court disagreed with ACIA’s interpretation of the statute, reasoning that the article “or” chosen by the Legislature modified the sentence into two (2) independent exceptions to the general rule.  An action may be brought if (1) the claimant files written notice within a year (a/k/a the “notice” exception); or (2) if the insurer pays a PIP benefit at any time before the action was commenced (a/k/a the “payment” exception).  PIP benefits have been ordered to be restored to Mr. Jesperson.

Authored by L. Page Graves

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