In the recent opinion in Canty v Mason, __ Mich __ (issued July 27, 2026), the Michigan Supreme Court clarified two important questions arising from the 2019 no-fault reforms: whether a Medicare beneficiary who has opted out of PIP coverage must mitigate damages by seeking payment from Medicare; and whether the fee-schedule limitations in MCL 500.3157 apply when that same individual pursues medical expenses in a third-party tort action under MCL 500.3135(3)(c). The Court answered the first question yes and the second no, affirming the Court of Appeals in part and reversing in part.
Canty claimed injuries after being rear ended by Mason. Although Canty carried no-fault insurance, he had validly elected under MCL 500.3107d not to maintain personal protection insurance coverage for allowable expenses because he was insured with Medicare Parts A and B. Rather than looking to a no-fault insurer, he sued Mason in tort and sought to recover his medical bills as “allowable expenses” under the expanded tort remedy created by the 2019 amendments that allow for recovery of excess economic losses (which includes PIP benefits when the plaintiff has elected capped allowable expense coverage or opted out of allowable expenses entirely). Several of the providers who treated him accepted Medicare, yet none billed Medicare or charged Medicare rates. Canty instead presented the full billed amounts as damages.
Mason moved for partial summary disposition, arguing that Canty had a duty to mitigate by submitting the claims to Medicare and that any recovery was capped by the reimbursement limitations in MCL 500.3157 (commonly referred to as the fee schedule). The trial court denied the motion. On interlocutory appeal, a split Court of Appeals panel held that both the mitigation duty and the fee schedules applied. Canty sought leave in the Supreme Court, which issued this opinion on the application.
The Supreme Court first addressed mitigation. The common-law duty to minimize damages, the Court explained, was not abrogated by the no-fault act. A plaintiff must still make reasonable efforts to mitigate under the circumstances, and failure to do so is an affirmative defense on which the defendant carries the burden. The statutory phrase “without limit” in MCL 500.3135(3)(c) does not erase the requirement that charges be reasonable and necessary under MCL 500.3107(1)(a); it simply means the opted-out plaintiff may recover from the first dollar rather than only amounts exceeding the ordinary PIP caps. Under the circumstances of this case, reasonable mitigation includes seeking payment from Medicare for treatment rendered by Medicare-participating providers. The Court therefore affirmed the Court of Appeals on that point, while noting that the trier of fact remains free to evaluate the reasonableness of any decision to obtain care from non-Medicare providers.
The Court reached the opposite conclusion on the question of whether a plaintiff’s excess PIP medical claims are subject to the fee schedule. While the Court of Appeals concluded that prefatory language in MCL 500.3107(1) — “subject to the exceptions and limitations in this chapter” — incorporated the fee schedule into an excess PIP claim, the Supreme Court disagreed and held that MCL 500.3135(3)(c) incorporates the definition of allowable expenses from sections 3107 to 3110 only. The prefatory language does not drag the entire no-fault act, including the Medicare-based caps in MCL 500.3157, into a tort claim for excess PIP claims. The Court believed such a reading would render surplusage the Legislature’s deliberate choice to specify a narrow range of statutes. Moreover, the Court believed both the structure of MCL 500.3107 (which governs when personal protection insurance benefits are payable) and the text of MCL 500.3157 itself (limited to treatment covered by personal protection insurance) confirm that the fee schedules were intended for PIP claims, not tort damages. The Court of Appeals was therefore reversed on this issue.
The practical upshot is clear. Plaintiffs who have opted out of PIP because of Medicare coverage must still mitigate by presenting claims to Medicare for services from participating providers; defendants should plead and develop that defense.
At the same time, the statutory fee schedules in MCL 500.3157 do not automatically cap the tort recovery. Charges remain subject only to the reasonableness and necessity standards of MCL 500.3107(1)(a). And case law has held that rates paid by third-party sources such as health insurance, Medicaid, and Medicare can be a relevant consideration as to whether a provider’s charges are reasonable. See e.g. Spectrum Health Hospitals v Farm Bureau Mut Ins Co, 333 Mich App 457 (2020), lv den 507 Mich 999 (2021). Applying that same logic, an argument might be made that the trier of fact should also be allowed to consider the fee schedule (as the legislature determined those rates to be reasonable).
