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Volume XXVIII, No. 18, May 31, 2016        

From the Law Offices of Garan Lucow Miller, P.C.

From the Editor: Sarah Nadeau

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SUPREME COURT GRANTS INSURER’S APPEAL
IN THE COVENANT MEDICAL “APPORTIONMENT” CASE
* * * And Will Decide Whether Medical Providers Lack Standing to Sue for PIP Benefits * * *

By Daniel Saylor

The Michigan Supreme Court has decided to hear one of the most significant no-fault appellate cases in years.  In an Order issued Friday, May 27, 2016, the Court announced that it will decide State Farm’s appeal in Covenant Medical Center, Inc v State Farm Mut Auto Ins Co, __ Mich App __ (2015).  The Court of Appeals’ decision in the case, issued October 22, 2015, immediately and very substantially altered no-fault litigation and claim procedures by forcing trial courts to hold “apportionment hearings” in virtually all PIP settlements.

The hearings mandated by Covenant Medical generally have required the participation of all persons claiming entitlement to payment, including not only the injured claimant but all his or her healthcare and service providers, as well.  Consequently, litigants and trial judges alike have been scrambling to find solutions to countless thorny issues in the months following the court’s ruling.

State Farm applied for leave to appeal to the Supreme Court  contending that the mandatory “apportionment” procedures as announced by the Court of Appeals are legally insupportable.  Additional briefs were submitted to the Court by the Auto Club Insurance Association, the Insurance Institute of Michigan, and the Michigan Insurance Coalition, all of whom took it step further.  The “amici curiae” (friend of the court) briefs argued not only that the new apportionment procedures themselves are unfounded, but that the entire premise that a healthcare provider has a right to sue an injured person’s no-fault insurer for payment of benefits is itself a fiction.  The Supreme Court thus was urged to grant review in Covenant Medical to decide both the propriety of the “apportionment” mechanism imposed by the Court of Appeals and the ruling’s underlying premise–that healthcare providers have the right to sue PIP insurers for benefits in the first place.

The Supreme Court’s Order granting the application for leave to appeal, in its entirety, states as follows:

On order of the Court, the application for leave to appeal the October 22, 2015 judgment of the Court of Appeals is considered, and it is GRANTED.  The parties shall include among the issues to be briefed: (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.

Persons or groups interested in the determination of the issues presented in this case may move the Court for permission to file briefs amicus curiae.

(Covenant Medical, Supreme Court Order No. 152758, May 27, 2016).

Extensive briefing by the parties and numerous amici curiae will be submitted to the Court through the summer and fall, after which the Court likely will hear arguments in the case late this year.