July 21, 2017
Volume XXIX, No. 17

 

COURT OF APPEALS DISMISSES INTERVENING PROVIDER CLAIMS
BASED UPON COVENANT WHERE UNDERLYING CLAIM WAS
DISMISSED WITH PREJUDICE FOR DISCOVERY VIOLATION

 By Eric J. Smith

Michigan’s post-Covenant landscape continues to evolve. In a newly-released decision, the Michigan Court of Appeals applied the holding in Covenant to dismiss the claims of intervening medical providers where the underlying plaintiff’s claim was dismissed with prejudice. The plaintiff’s claim was dismissed due to the plaintiff’s failure to comply with discovery.

Eubanks and Garrett, et al. v State Farm Mutual Automobile Insurance Company, involved a claim for no-fault benefits stemming from a July 8, 2013 motor vehicle accident. The plaintiff, George Eubanks, was a passenger in a car that was struck by a hit-and-run driver and allegedly sustained injuries during the crash. Eubanks did not have auto insurance, nor was the car in which he was a passenger insured. Eubanks applied for personal protection insurance (PIP) benefits with the Michigan Assigned Claims Plan, and the claim was assigned to State Farm. Eubanks, along with his fellow passenger Patrick Garrett, sued State Farm in the Wayne County Circuit Court claiming unpaid no-fault benefits.

While the action was pending, the trial court permitted medical service providers Get Well Medical Transport, Advanced Care Rehab, and Sinai Diagnostic Group, to intervene in the action. After the plaintiff failed to comply with discovery and failed to appear, the trial court entered an order dismissing plaintiff’s claim with prejudice. State Farm then moved for summary disposition of the intervening providers’ claims, arguing that the providers’ claims were derivative of plaintiff’s claim and that the dismissal with prejudice of plaintiff’s claim required the dismissal of the providers’. The trial court denied State Farm’s motion for summary disposition, concluding that the intervening providers’ claims were not extinguished by the dismissal of plaintiff’s claim. State Farm appealed the decision.

On appeal, State Farm contended that the trial court erred by failing to grant its motion for summary disposition of intervening providers’ claims. State Farm argued that because plaintiff’s claim for PIP benefits was dismissed with prejudice by the trial court, the intervening providers’ derivative claims must also precluded.

The Eubanks panel began its analysis by noting that “pursuant to MCL 500.3112, ‘[p]ersonal 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.’ Before Covenant, Michigan’s higher courts recognized that the language of MCL 500.3112 permitted a healthcare provider who had provided services to an insured to maintain a direct cause of action against an insurer to recover PIP benefits under this state’s no-fault act. Covenant changed that analysis.

Citing Covenant, the Eubanks Court noted that although MCL 500.3112 “allows no-fault insurers to directly pay healthcare providers for the benefit of an injured person,” nonetheless “healthcare providers do not possess a statutory cause of action against no-fault insurers for recovery of personal protection insurance benefits under the no-fault act.” The panel then noted that no other provision of the no-fault act grants a statutory cause of action to healthcare providers for the recovery of personal protection benefits from an insurer. [Opinion, at 3]. Based upon the Covenant decision, the Eubanks Court reversed the trial court, holding that the intervening plaintiffs in its case have no statutory cause of action against State Farm.

It seems clear from the Eubanks decision that the viability of an intervening medical provider’s claim post-Covenant will depend upon other factors such as the existence of a valid assignment of rights or acceptance by the court of the third-party beneficiary argument that is being advanced in recently-filed provider claims. Absent an assignment or contractual basis for the claim, it seems clear from Eubanks that intervening providers lack legal standing to bring their claims.

Eric is an Associate in our Troy Office.

He can be reached at 248.952.6458 or esmith@garanlucow.com

CONGRATULATIONS TO MEGAN CAVANAGH

Megan Cavanagh of our Appellate Department in the Detroit office has been selected as one of
Michigan’s Women in the Law by Michigan Lawyers Weekly.

Megan along with other recipients who have made meaningful and inspiring contributions to the legal community will be honored at an awards luncheon on September 7, 2017, at the Marriott in Troy.

Congratulations Megan!

SEMINARS

BASICS OF MICHIGAN AUTOMOBILE
NO-FAULT INSURANCE LAW COURSE

Garan Lucow Miller, P.C. is pleased again to offer this in-depth, educational course to our clients. It will be taught each Tuesday evening, from September 19, 2017 through November 21, 2017, from 6:00 p.m. to 8:00 p.m.

This year the 9 week course will take place at the Crowne Plaza Hotel, 925 South Creyts Road, Lansing, MI 48917

The cost of the 9 week course is $350.00 per person, with a discount of $50.00 per person for more than 2 registrants from the same company.

Please contact Eileen Carty to register at ecarty@garanlucow.com or (248) 641-7600.

GARAN LUCOW MILLER, P.C.
IS OFFERING

FRAUD AWARENESS TRAINING CAMP

This complimentary Fraud Awareness Training Camp will introduce claims professionals to practical aspects of identifying and litigating fraud in claims. Attendees will also learn Michigan law as it applies to fraud in claims.

Please contact Eileen Carty at ecarty@garanlucow.com or (248) 641-7600, to schedule a complimentary in-house presentation.

SAVE THE DATE

TROY BREAKFAST SEMINAR

The TROY BREAKFAST SEMINAR will take place on Friday, September 8, at the Marriott in Troy. This is a complimentary seminar for our clients. Agenda will be posted soon.

SAVE THE DATE

RIVALRY SEMINAR

The RIVALRY SEMINAR will take place on Friday, October 6th, at Weber’s Inn, in Ann Arbor.  This is a complimentary seminar for our clients. An Agenda will be posted soon.

“OPEN HOUSE AT THE BIG HOUSE”

Garan Lucow Miller invites you to attend our Open House at The Big House to help us celebrate the opening of our newly relocated Ann Arbor office on Friday, October 6, 2017, beginning at 2:00 p.m.

The Open House at The Big House will take place at Garan Lucow Miller’s new Ann Arbor office overlooking Michigan Stadium (a/k/a, “The Big House”), located on the Fifth Floor of the historic First National Building, 201 S. Main Street, Ann Arbor, MI 48104, immediately following our Rivalry Seminar.

  • Food provided by Ann Arbor’s famous Zingerman’s Delicatessen!
  • Beverages provided by Ann Arbor microbrewery Grizzly Peak Brewing!
  • Parking validated!
  • Both Rivalry Seminar attendees and non-attendees are invited!
  • Wolverine and Spartan fans alike are invited!
  • Highlights of historic matchups between Michigan and Michigan State will be played!

Come and help us celebrate by mingling, eating, drinking, and, of course, trash-talking the other team!

For inquires, upcoming seminars, or in-house seminar requests please contact Eileen Carty at ecarty@garanlucow.com

Sarah Nadeau, Editor of the Law Fax Publication,

is a Shareholder in our Detroit Office.

Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com

 

garanlucow.com