No Fault Report

By Ronald M. Sangster Jr., rsangster@sangster-law.com

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Supreme Court Releases Opinion in Covenant Medical Center v State Farm: The End of Medical-Provider Suits?

On Thursday, May, 25, 2017, the Michigan Supreme Court released its long-awaited decision in Covenant Medical Center v State Farm, Docket Number 152758. In a 5-1 decision authored by Justice Brian Zahra (with Justice Richard Bernstein dissenting and newly-appointed Justice Kurtis Wilder not participating), the Michigan Supreme Court ruled that medical providers do not have an independent, statutory right to file suit against a no-fault insurance carrier to recover payment of medical expenses incurred by their patients. However, as discussed more fully below, the Michigan Supreme Court left open the possibility that medical providers could still file suit against no-fault insurers under other alternative theories. These include an allegation that the provider is a third-party beneficiary under the insurance contract between the insurer and the insured, or where the insured executes an assignment of benefits to the medical providers. However, a medical provider may face significant obstacles under either of these theories. As matters now stand, however, we can expect to see a dramatic decrease in the number of provider suits that are filed in this state. On the other hand, though, attorneys representing the injured claimants will probably be demanding higher settlements when resolving PIP claims in order to satisfy the demands of medical providers (who are essentially reduced to the status of lien holders) because, as noted by the Michigan Supreme Court in the majority opinion, “a provider that furnishes healthcare services to a person for injuries sustained in a motor vehicle accident may seek payment from the injured person for the provider’s reasonable charges”—they simply cannot sue the no-fault insurer, subject to the exceptions discussed more fully below.

Underlying Facts And Lower Court Rulings

The underlying facts are relatively straight forward. State Farm’s insured, Jack Stockford, was involved in a motor-vehicle accident on June 20, 2011. He received medical treatment at Covenant Medical Center in Saginaw on July 3, 2012, August 2, 2012, and October 9, 2012, and incurred medical expenses totaling just under $44,000.00. State Farm denied coverage and refused to pay the medical expenses at issue. Stockford subsequently filed suit against State Farm in the Saginaw County Circuit Court and ultimately settled with State Farm for $59,000.00. As part of the settlement, Stockford executed a release which included all no-fault claims, including the medical expenses at issue, incurred through January 10, 2013.

Covenant Medical Center, which is based in Saginaw, filed suit in the Kent County Circuit Court (Grand Rapids) to recover payment of the medical expenses at issue, which probably explains why it had no knowledge of the Saginaw County Circuit Court litigation between Stockford and State Farm. The matter was later transferred to the Saginaw County Circuit Court. State Farm raised the release executed by Stockford as a defense to the claim—an argument that was accepted by the Saginaw County Circuit Court when it granted State Farm’s motion for summary disposition.

Covenant Medical Center appealed to the Michigan Court of Appeals. In a published decision, the Court of Appeals reversed the decision of the Saginaw County Circuit Court and essentially ruled that State Farm would need to pay twice for the same medical expenses incurred by Stockford. In support of its holding, the Court of Appeals relied on the second sentence of MCL 500.3112, which provides:

Payment by an insurer in good faith of personal protection insurance benefits, to or for the benefit of a person who it believes is entitled to the benefits, discharges the insurer's liability to the extent of the payments unless the insurer has been notified in writing of the claim of some other person.

According to the Michigan Court of Appeals, the fact that Covenant Medical Center had submitted its medical expenses directly to State Farm constituted “the claim of some other person,” which State Farm was not free to ignore. Therefore, the Court of Appeals ruled that this provision “requires that the insurer apply to the Circuit Court for an appropriate Order directing how the no-fault benefits should be allocated.” This ruling, of course, gave rise to the numerous “Covenant Motions” that have been clogging the circuit courts’ motion dockets since the decision was released.

Analysis

In its opinion, the Supreme Court began its analysis by noting that there is nothing in the statutory text of the No-Fault Insurance Act which provides for an independent cause of action by a healthcare provider against a no-fault insurer. The Court went to some lengths to analyze various sections of the Act, including MCL 500.3105(1) (dealing with the circumstances which give rise to a claim for no-fault benefits, otherwise referred to as the “gateway provision”), MCL 500.3107(1)(a) (defining what are “allowable expenses”), MCL 500.3157 (dealing with a healthcare provider’s obligation to charge “a reasonable amount for products, services and accommodations rendered”, with a proviso that “the charge shall not exceed the amount the person or institution customarily charges for like products, services and accommodations in cases not involving insurance”), and MCL 500.3158(2) (regarding a medical provider’s obligation to submit medical records and billing records to a no-fault insurer). In the the Supreme Court’s opinion, none of these statutory sections supported a healthcare provider’s independent right to file suit against a no-fault insurer.

As a result, the Michigan Supreme Court overruled decades of decisions from the Court of Appeals that had granted medical providers an independent cause of action against no-fault insurers, including Wyoming Chiropractic Health Clinic v Auto-Owners Ins Co, 308 Mich App 389 (2014), Michigan Head & Spine, PC v State Farm Mut’l Auto Ins Co, 299 Mich App 442 (2013); Regents of the Univ of Michigan v State Farm Mut’l Ins Co, 250 Mich App 719 (2002) and Lakeland Neurocare Ctrs v State Farm Mut’l Auto Ins Co, 250 Mich App 35 (2002). In its opinion, the Supreme Court noted that in the earlier cases, the Court of Appeals simply did not engage in a rigorous analysis of the statutory text, because the insurer did not actually contest the issue. Under MCR 7.215(J)(1), subsequent panels of the Court of Appeals were bound to follow these erroneous decisions. The Supreme Court, of course, was not so bound.

The Court Rejects Reliance On MCL 500.3112 As A Basis For Medical-Provider Suits

Not surprisingly, the Court devoted most of its analysis to the proper interpretation of MCL 500.3112. Due to the importance of this analysis, the entire text of MCL 500.3112 is excerpted below:

Personal protection insurance benefits are payable to or for the benefit of an injured person or, in case of his death, to or for the benefit of his dependents. Payment by an insurer in good faith of personal protection insurance benefits, to or for the benefit of a person who it believes is entitled to the benefits, discharges the insurer's liability to the extent of the payments unless the insurer has been notified in writing of the claim of some other person. If there is doubt about the proper person to receive the benefits or the proper apportionment among the persons entitled thereto, the insurer, the claimant or any other interested person may apply to the circuit court for an appropriate order. The court may designate the payees and make an equitable apportionment, taking into account the relationship of the payees to the injured person and other factors as the court considers appropriate. In the absence of a court order directing otherwise the insurer may pay:

(a) To the dependents of the injured person, the personal protection insurance benefits accrued before his death without appointment of an administrator or executor.

(b) To the surviving spouse, the personal protection insurance benefits due any dependent children living with the spouse.

The Court noted that “the foundation of any opinion interpreting a statutory provision is the parsing of the words of the pertinent act or statute under review.” Covenant Medical Center, slip op at 7. Accordingly, the Court carefully dissected all five sentences in MCL 500.3112 and concluded that reading the statute as a whole, there was nothing in that statute which provided a healthcare provider with an independent cause of action against a no-fault insurer. In discussing each sentence, the Supreme Court issued some significant rulings that will undoubtedly impact an insurer’s handling of medical-provider claims.

With regard to the first sentence, the Supreme Court noted that it simply sets forth who may receive payment of no-fault benefits, at the option of the insurer. Utilizing the dictionary definition of the term “payable,” defined as benefits that “may, can, or must be paid,” the Supreme Court ruled that “PIP benefits, which are paid by the insurer, ‘may, can, or must be paid’ either (1) to the injured person or (2) for the benefit of the injured person.” Id. at 16.

Obviously, “for the benefit of the injured person” means that an insurer is free to issue payment directly to the medical provider, which will discharge its obligation to pay benefits under the statute. The Supreme Court noted that simply because the insurer has a choice as to how a medical expense will be paid does not mean that a third-party, such as a healthcare provider, “has a statutory entitlement to that method of payment.” To put it in another way, it appears that the no-fault insurer has complete discretion as to how medical expenses can be paid. It is apparently free to ignore a plaintiff’s attorney claim of a charging lien on payment of an undisputed medical expense, or it could issue payment to the injured claimant and his or her attorney.

With regard to the second sentence of MCL 500.3112, regarding discharge of an insurer’s liability “unless the insurer has been notified in writing of the claim of some other person,” the Court rejected the healthcare provider’s argument that it qualifies as “some other person” for purposes of this section. Although not necessary for its decision, the Supreme Court strongly implied that this sentence “is likely applicable primarily to dependents and survivors given that the end of the statute pertains to the allocation of benefits to those groups of persons.” Id. at 18 n 32.

With regard to the third sentence, the Supreme Court clearly rejected the “apportionment theory” that was at issue in the numerous “Covenant motions” that have taken place since the Court of Appeals issued its decision. In this regard, the Court rejected the notion that medical expenses can be “apportioned” between the injured Claimant and a medical provider. Instead, the medical provider is a creditor, and the insured person is the debtor:

This sentence merely provides a procedure for resolving doubts about which persons are entitled to benefits; it does not itself confer a right or entitlement on any person, including a healthcare provider, to sue a no-fault insurer. And the sentence’s reference to “apportionment” cannot logically pertain to allowable expenses like the reasonable charges incurred for healthcare services, because an injured person owes the provider, and is entitled to PIP benefits for, the entirety of those allowable expenses under MCL 500.3107(1)(a), not an apportioned amount. [Id. at 18-19.]

In an important footnote, the Supreme Court again noted that the third sentence of MCL 500.3112 would “primarily pertain to dependent and survivor benefits” and then proceeded to describe situations where there could be competing claims of “dependency” under a survivor’s loss claim pursuant to MCL 500.3110. Id. at 19 n 34.

The Supreme Court likewise rejected any reliance on the 4th and 5th sentences of MCL 500.3112 and noted that those two sentences, like the preceding two sentences, were intended to deal with survivor’s loss claims—not claims for the healthcare provider’s medical expenses.

To sum up, then, the Supreme Court rejected the idea that simply because the insurer has a choice as to how it will satisfy its obligations to pay no-fault benefits, “it does not establish a concomitant claim enforceable by an insured’s benefactors.” Id. at 20. The Supreme Court went on to explain:

By permitting insurers to directly pay healthcare providers on an injured person’s behalf, MCL 500.3112 allows the insurer to eliminate the insured as a conduit in the payment process, relieving the insured from having to redirect to the healthcare provider payment received from the insurer. It is not surplusage for the statute to expressly permit an insurer to directly pay the insured’s healthcare bills in order to discharge its obligation to its insured. The fact that the statute grants that permission does not create a right in the providers to sue the insurer for payment. [Id. at 20-21, fn 36 (emphasis added).]

Simply put, although a healthcare provider has no statutory right to file suit against a no-fault insurer, it does not mean that all medical-provider suits must be dismissed. Rather, the Supreme Court held open the possibility that alternative causes of action may exist which would allow a healthcare provider to nonetheless maintain a cause of action against a no-fault insurer, based on one or more of the following circumstances.

Alternative Theory Number I –“Balance Bills”

Since the early 1990s, no-fault insurers have been utilizing third-party, medical-expense auditing companies such as ReviewWorks, Corvel, Mitchell, Rising Medical Solutions and the like to review and audit medical expenses for “reasonableness.” These audits result in the insurer paying less than the amount charged by the provider. In many cases, the provider simply writes off the balance. However, the healthcare provider is not obligated to do so. It is permitted to file suit against the insured, or to initiate collection actions against the insured for payment of any remaining balance, and if it does, the no-fault insurer is obligated to fully defend and indemnify the insured in a claim for a “balance bill” payment under Insurance Commissioner Bulletin 92-3.

In the seminal case of LaMothe v ACIA, 214 Mich App 577; 543 NW2d 42 (1995), the insured sued AAA over the fear that it would be responsible for payment of those “balance bills” that were incurred because AAA refused to pay the full amount of medical expenses charged by the provider. In compliance with Insurance Commission Bulletin 92-3, the insurer agreed to “defend and indemnify the insured from liability,” and even went so far as to issue a letter to the insured’s attorney, which was excerpted by the Supreme Court in Covenant in footnote 18:

The Court of Appeals quoted a letter that the insured sent the insured’s attorney, which stated in part that “if any of the medical providers bring a claim against [the insured], [the insurer] will defend and indemnify him. In fact, [the insurer] will waive any technical defects and allow the provider to sue the [insurer] directly so that [the insured] won’t even have to be a party to the litigation. [Id. at 8 n 18.]

Because the no-fault insurer had agreed to “fully defend and indemnify the insured from liability” in cases involving balance bills, and had indicated that it would waive “any technical defects” to allow a direct action against the insurer, the insured’s lawsuit had to be dismissed.

In the author’s opinion, the insurance company has two ways to handle any “balance bill” lawsuits. First, it can allow its insured to be sued by the healthcare provider, but consistent with its obligations under Insurance Commissioner Bulletin 92-3, it must “fully defend and indemnify the insured” in that lawsuit. In this regard, the insurer needs to consider the ramifications of having its insured be sued by a healthcare provider who is not satisfied with the reductions being taken on its bills. The prospect of having the insured or the claimant being sued by a provider over an insurer’s decision to pay less than the amount charged seems to be, in the opinion of the author, rather troublesome.

Therefore, in the author’s opinion, the better way to approach these “balance bill” claims is to advise the provider that the insurer will “waive any technical defects” (namely, the holding in Covenant) and permit the healthcare provider to sue the insurer directly over the “balance bill.” Either way, the insurer is still going to be obligated to defend any reductions taken pursuant to these third-party, medical-expense audits. The only difference is that the insurer gets to choose the method of defense. Either it defends itself in a direct action by the healthcare provider that it has consented to, or it defends the insured in a lawsuit over a “balance bill.”

Alternative Theory Number II – Third-Party Beneficiary Theories

A typical medical-provider suit contains the allegation that the insurer was in violation of the Michigan No-Fault Insurance Act when it refused to pay the medical provider’s medical expenses. This cause of action, of course, is no longer permissible under the Supreme Court’s decision in Covenant, unless the insurer consents, as in the case of “balance bills.”

However, many healthcare provider complaints assert that the provider is a so-called “third-party beneficiary” under the insurance contract between the insured and the insurer. In an important footnote, the Supreme Court made it clear that it was not addressing any potential liability under a “third-party beneficiary” theory, although it did emphasize that such causes of action are necessarily dependent on the actual insurance policy language:

We conclude today only that a healthcare provider possesses no statutory right to sue a no-fault insurer. While defendant argues that a provider likewise possesses no contractual right to sue a no-fault insurer given that healthcare providers are incidental rather than intended beneficiaries of a contract between the insured and the insurer, this Court declines to make such a blanket assertion. That determination rests on the specific terms of the contract between the relevant parties.

See Schmalfeldt v North Pointe Ins Co, 469 Mich 422, 428; 670 NW2d 651 (2003) (“A person is a third-party beneficiary of a contract only when that contract establishes that a promisor has undertaken a promise ‘directly’ to or for that person.” (Citations omitted; emphasis added). This court need not consider whether Plaintiff possesses a contractual right to sue Defendant in this instant case because Plaintiff did not allege any contractual basis for relief in its Complaint. [Id. at 24, fn 39.]

In other words, we need to examine the individual insurance contracts at issue to determine whether or not a medical provider is an “intended beneficiary,” not an “incidental beneficiary” of the contract between the insured and the insurer.

The Schmalfeldt decision gives us some guidance. In Schmalfeldt, the plaintiff was playing pool at a bar when he was struck by another bar patron. As a result of his dental injuries, he asked the owner of the bar to pay his dental expenses, totaling just under $2,000.00. The bar owner refused. Schmalfeldt then filed suit against North Pointe Insurance Company, which had issued a commercial-liability-insurance policy to the owner of the bar. This policy contained a medical payments provision, where North Pointe agreed to pay up to $5,000.00 for medical expenses incurred as a result of a bodily injury caused by an accident so long as the injury occurred on or next to the insured’s premises or because of the insured’s operations. North Pointe refused to pay the medical expenses without a request from the bar owner. When the bar owner refused, Schmalfeldt filed a direct lawsuit against North Pointe.

The Supreme Court initially examined Michigan’s Third-Party Beneficiary Statute, MCL 600.1405, which provides:

Any person for whose benefit a promise is made by way of contract, as hereinafter defined, has the same right to enforce said promise that he would have had if the said promise had been made directly to him as the promisee.

(1) A promise shall be construed to have been made for the benefit of a person whenever the promisor of said promise has undertaken to give or to do or refrain from doing something directly to or for said person. [Schmalfeldt, 469 Mich at 427 (emphasis added).]

The Supreme Court then examined the terms of the North Pointe Insurance Company contract, regarding its medical payments coverage:

COVERAGE C MEDICAL PAYMENTS

1. Insuring Agreement.

a. We will pay medical expenses as described below for bodily injury caused by an accident:

(1) On premises you own or rent;

(2) On ways next to premises you own or rent; or

(3) Because of your operations;

Provided that:

The accident takes place in the ‘coverage territory’ and during the policy period;

The expenses are incurred and reported to us within one year of the date of the accident; and

The injured person submits to examination, at our expense, by physicians of our choice as often as we reasonably require.”

b. We will make these payments regardless of fault. These payments will not exceed the applicable limit of insurance . . . .” [Id.]

In light of the policy language, the Michigan Supreme Court concluded that Schmalfeldt was, at best, an incidental beneficiary, not an intended beneficiary under the insurance contract. As noted by the Supreme Court:

Nothing in the insurance policy specifically designates Schmalfeldt, or the class of business patrons of the insured of which he was one, as an intended third-party beneficiary of the medical benefits provision. At best, the policy recognizes the possibility of some incidental benefit to members of the public at large, but such a class is too broad to qualify for third-party status under the statute.

Only intended beneficiaries, not incidental beneficiaries, may enforce a contract under 1405. [Citation omitted]. Here, the contract primarily benefits the contracting parties because it defines and limits the circumstances under which the policy will cover medical expenses without a determination of fault. This agreement is between the contracting parties, and Schmalfeldt is only an incidental beneficiary without a right to sue for contract benefits. For this reason, North Pointe is entitled to summary disposition. [Schmalfeldt, 469 Mich at 429.]

Obviously, each insurer will need to examine the terms of its contract to determine whether or not medical providers are intended beneficiaries, or only incidental beneficiaries, under the contract.

A special note on Michigan Assigned Claims Plan cases is in order at this point. In cases involving MACP claimants, there is, of course, no insurance contract to deal with. Therefore, a healthcare provider who asserts rights as a “third-party beneficiary” under a non-existent contract should immediately be the subject of a motion for summary disposition.

Alternative Theory III – Assignments

The issue of assignments came up rather frequently during oral argument before the Michigan Supreme Court on December 7, 2016. Although the author expected the Supreme Court to discuss the issue of assignments in some detail, the Court instead relegated its discussion of this issue to a footnote found on page 24 of the slip opinion. After reiterating that a healthcare provider can always seek payment from the injured person for the provider’s reasonable charges, the Court noted:

Moreover, our conclusion today is not intended to alter an insured’s ability to assign his or her right to past or presently due benefits to a healthcare provider. See MCL 500.3143; Professional Rehab Assoc v State Farm Mut’l Auto Ins Co, 228 Mich App 167, 172; 577 NW2d 909 (1998) (Noting that only the assignment of future benefits is prohibited by MCL 500.3143.) [Covenant, Slip op at 24, fn 40.]

With this caveat in mind, let us examine how this may play out in the course of a typical lawsuit.

Scenario #1: Insured Executes Assignment to a Medical Provider Prior to Settlement of a PIP Lawsuit.

Michigan courts have held that in order to create an assignment of benefits, there are no “magic words” that need to be invoked. However, in order to have a valid assignment, “the assignor must manifest an intent to transfer and must not retain any control or any power of revocation.” Burkhardt v Bailey, 260 Mich App 636; 680 NW2d 453 (2004). Further, the assignee acquires no greater rights than the assignor had, and is subject to the same defenses. Professional Rehab Assoc v State Farm, 228 Mich App 167, 177; 577 NW2d 909 (1998).

Under this scenario, the injured claimant no longer has a right to claim medical expenses incurred with any provider to whom he has executed an assignment. Such claims should not be part of the claimant’s lawsuit, and the only entity that has a right to collect under the assignment is the medical provider.

Scenario #2: The Claimant Settles his Claim for Medical Expenses Through a Specific Date, but After the Settlement, the Provider Seeks to Obtain an Assignment for Medical Expenses Incurred Prior to the Settlement

Under this scenario, a medical provider would not have a valid cause of action, for the simple reason that the assignor had nothing to assign to the provider. Rather, the assignor’s claims for medical expenses extinguished when the Release was signed. This scenario illustrates why it is absolutely necessary to determine precisely when an assignment was executed, and how the date of the assignment impacts on the terms of the Release.

Scenario #3: Impact of MCL 500.3143 – The Prohibition Against an Assignment of Future No-Fault Benefits

Although there have only been a couple of cases interpreting this statute, the author anticipates that there will be much more litigation as no‑fault insurers examine assignments executed by their insureds to determine whether or not the insureds were assigning future benefits to the provider.

In Aetna Casualty Ins Co v Starkey, 116 Mich App 640 (1982), the insured executed an assignment prior to receiving medical treatment. The assignment purported to assign “any insurance benefits from Aetna which would become due and payable,” or “any benefits which would become payable.” The Court of Appeals noted that by virtue of this language, the assignment was referencing future no‑fault benefits. Therefore, under MCL 500.3143, this assignment was void.

By contrast, in Professional Rehab Assoc v State Farm, 228 Mich App 167, 173 (1998), the assignment provided for:

All of Clifford Lay’s rights to be reimbursed or to have counseling services expenses paid by State Farm Mutual Automobile Insurance Company and any other insurer or self-insurer for services provided by Professional Rehabilitation Associates in connection with injuries to Clifford Lay arising out of an automobile accident.

The Court of Appeals found that this language was ambiguous because it denoted both past and future benefits. The Court noted that to the extent that this assignment pertained to benefits previously incurred, the assignment was valid. However, to the extent that it pertained to future benefits, the assignment was void. The Court went on to note that, “the failure of a distinct part of a contract does not void valid, severable provisions” and “the primary consideration in determining whether a contractual provision is severable is the intent of the parties.” Professional Rehabilitation, 228 Mich App at 174. When examining the date that the assignment was executed and the dates of service in question, the Court of Appeals noted that the assignment was executed after State Farm had already denied payment of the medical expenses at issue. Therefore, this was an assignment of past due benefits, which was not barred by MCL 500.3143. As a result, the provider could still maintain the cause of action against the no‑fault insurer. This case illustrates why it is vitally important to obtain copies of the actual assignments and determine what date they were executed, and precisely which medical expenses the assignment was intended to encompass.

Scenario #4: The Insurance Policy Contains an Anti-Assignment Clause

Many insurance company policies contain an anti-assignment clause, which prohibits the insured from assigning a claim under the policy without the insurer’s consent. Most of our insureds have never read the policy and thus may be unaware of the presence of the anti-assignment clause in the policy.

As more and more providers are expected to rely on assignments in order to further their cause of action against a no‑fault insurer, it is incumbent upon the claims professionals and defense counsel to carefully examine the terms of the applicable insurance policy to see whether it contains an anti‑assignment clause. Given the fact that the current Michigan Supreme Court is inclined to enforce contracts as written, unless they violate public policy, the author is of the opinion that such anti-assignment clauses will be enforced by the Courts.

This caveat does not apply, of course, to MACP insurers, because once again there is simply no insurance contract at issue between the parties. Instead, the right to benefits is derived solely by statute.

Another interesting issue arises with regard to “strangers to the insurance contract.” I am referring to motorcyclists, pedestrians who have no insurance of their own in the household, or employees occupying employer-furnished vehicles, and passengers in another person’s automobile who do not have insurance of their own in the household. Are these individuals and their providers bound by any such anti-assignment clauses in the insurance contract? Based upon the recent Court of Appeals’ decision in Shelton v Auto-Owners Ins Co, _ Mich App _ (2017) (Court of Appeals Docket No. 328473, rel’d 2/14/2017) and as discussed in my last article, the answer appears to be no. In Shelton, the Court of Appeals held that a “stranger to the contract,” whose benefits are derived based solely by statute, are not bound by the anti-fraud provisions in an insurance contract. If such “strangers to the contract” are not bound by the anti-fraud clauses in the policy, by analogy they would not be bound any anti-assignment clauses in that same policy.

CONCLUSION

What will be the practical effects of Covenant? First, there will be no more “Covenant motions” being heard in the circuit court. Plaintiff’s attorneys will no longer be obligated to show how a settlement will be apportioned between the various providers.

Second, the author expects to see a sizable amount of provider suits being dismissed on motions for summary disposition pursuant to MCR 2.116(C)(8), for failure to state a cause of action upon which relief can be granted. When responding to such motions, it will be incumbent upon the provider to show that there was a valid assignment of benefits executed by the insured, at which point the burden will shift back to the insurer to determine if such an assignment is barred by any anti-assignment clause in the insurance policy or by MCL 500.3143.

Third, it will be incumbent upon counsel on both sides of the aisle to quickly obtain copies of any assignments that were executed by the insured and to determine whether or not the assignment pertains to past due benefits or future benefits, in order to ascertain whether or not the provider has a right to maintain its cause of action against the no‑fault insurer. Simply because the provider asserts that there is an assignment, in a form medical provider complaint, does not necessarily mean that it is so. Absent an assignment, the provider simply has no cause of action against the no‑fault insurer.

Finally, given the Michigan Supreme Court’s repeated statements that the healthcare provider’s remedy, to collect an unpaid medical expense is to sue the patient, the author wonders how many medical providers would actually be willing to sue their patients? What about situations where the attorney refers their client to a particular medical provider, which proceeds to rack up five or even six figure medical expenses for questionable or even fraudulent medical treatment? Obviously, the attorney referrals to these dubious providers were made with the implicit understanding that the provider would not be suing its patient (and the referring attorney’s client) to collect an unpaid medical expense, but would be suing the no‑fault insurer directly. With the focus now shifting back to the healthcare provider and the patient being placed in an adversarial position regarding payment of the medical expenses, brought about as a result of an attorney referral, the author cannot help but wonder if perhaps an unintended benefit of the Michigan Supreme Court’s decision will be to cut back on the number of questionable or downright fraudulent no‑fault medical expense claims that, unfortunately, continue to plague the no‑fault system.

Categories: Volume 8-1

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