July 30, 2025
Asia Davis was severely injured while a passenger in a motor vehicle accident. She spent over a month receiving in-patient treatment at the Detroit Medical Center (“DMC”). She then spent several more weeks receiving in-patient treatment in a rehabilitation center before being discharged home, where she continued to receive in-home attendant care. Within one year after her accident the charges for Davis’s treatment were already substantial – and continuing. DMC’s invoice for Davis’s hospitalization totaled $733,974.88. The bills submitted by other medical care providers, such as the in-patient rehabilitation facility, already totaled hundreds of thousands – and were likely to keep amassing. Added to this were the charges for Davis’s in-home attendant care, which Davis would apparently continue to need indefinitely. Moreover, Medicaid already claimed a lien of $111,600.80 for the medical bills it had paid on Davis’s behalf by that point.
Davis neither maintained a policy of no-fault insurance nor resided with any relative who did. And, as if her severe injuries alone were not bad enough, unfortunately for Davis her accident occurred after the June 11, 2019, amendments to the no-fault act. The revised “priority” rules set forth in those amendments dictated that Davis “shall claim [PIP] benefits under the assigned claims plan” (i.e., the “MACP”), MCL 500.3114(4), rather than the no-fault insurer of the vehicle in which she was a passenger. And, another provision of the amended no-fault act limited the “allowable expense” PIP benefits (i.e., payment for medical care, attendant care, etc.) that Davis could receive under the MACP to no more than $250,000. MCL 500.3172(7)(a); MCL 500.3107c(1)(b).
Because the available allowable expense PIP benefits were far less than Davis’ medical and attendant care bills, a dispute naturally arose as to how the $250,000 in PIP benefits would be apportioned between the DMC, Davis’s other medical care providers, Davis’s attendant care provider, and Davis herself. Thus, Davis ultimately filed a first-party lawsuit seeking recovery of PIP benefits from Allstate Insurance Company (“Allstate”), which was the insurer to which the MACP had assigned Davis’s PIP claim. Davis also brought a third-party lawsuit against the driver of the other vehicle involved in her accident, against whom Davis brought a tort claim seeking recovery of “[d]amages for allowable expenses . . , including all future allowable expenses . . , in excess of any applicable limit[,]” such as the $250,000 limit. MCL 500.3135(3)(c). The DMC then filed its own first-party lawsuit seeking recovery of PIP benefits from Allstate. The Circuit Court ultimately consolidated these actions into one lawsuit.
Faced with claims for allowable expense PIP benefits far exceeding the $250,000 limit of its liability, Allstate filed a motion asking the Circuit Court to declare to whom Allstate was required to pay the $250,000 pursuant to a provision of the no-fault act stating that “[i]f there is doubt about . . . the proper apportionment among the persons entitled to the benefits,” then “the insurer . . . may apply to the circuit court for an appropriate order” that “designate[s] the payees and make[s] an equitable apportionment, taking into account the relationship of the payees to the injured person and other factors as the court considers appropriate.” MCL 500.3112.
After conducting two hearings, the Circuit Court issued several orders in which it ultimately ruled that the DMC was entitled to virtually the entire $250,000 in allowable expense PIP benefits available from Allstate, reasoning that Davis had received treatment from the DMC first. The Circuit Court then determined that because her medical bills far exceeded the allowable expense PIP benefits available to her, Davis qualified as “medically indigent,” MCL 400.105(1), under Michigan’s Social Welfare Act (“SWA”) once the $250,000 in available allowable expense PIP benefits were exhausted. MCL 400.1 et seq. Based on this determination, the Circuit Court ruled that Medicaid was only entitled to reimbursement of $300 (to be paid by the DMC out of the $250,000) rather than the $111,600.80 amount of its lien. The Circuit Court then held that Davis would have to seek recovery for the remainder of her medical bills (including the balance of the DMC’s bills, the bills from her other medical care providers, and the charges for her attendant care), as well as the balance of the Medicaid lien, from the other driver in her third-party tort lawsuit.
However, in the unpublished decision of Davis v English, the Court of Appeals held that the Circuit Court’s orders do not qualify as an “equitable apportionment” under the no-fault act. The Court of Appeals thus vacated the Circuit Court’s orders and remanded the matter back to the Circuit Court for reconsideration.
First, the Court of Appeals held that the Circuit Court had committed an error of law by holding that Medicaid was only entitled to reimbursement of $300. Specifically, citing to its recently-issued published (and therefore binding) decision in Mich Head & Spine Inst PC v Nationwide Mut Fire Ins Co, the Court noted that Davis would only qualify as “medically indigent” (and therefore only be entitled to receive Medicaid benefits under the SWA) if “payment for [her medical care wa]s not available through the legal obligation of a public or private contractor to pay or provide for the care without regard to [her] income or resources[.]” Id. Because, at the time she received treatment from the DMC, payment for Davis’s treatment was available through the legal obligation imposed by the no-fault act upon the MACP, Davis did not qualify as “medically indigent” under the SWA. Thus, technically, Medicaid should not have paid any of the DMC’s charges. Accordingly, the Davis Court held that “a solid argument was made to the trial court that the [entire $111,600.80] Medicaid lien should have been elevated in priority above the DMC claim [rather than the DMC being awarded] the entire $250,000 in first-party benefits for allowable expenses[.]” Davis at 3.
Second, again citing to its recent decision in Mich Head & Spine, the Court of Appeals held that the Circuit Court committed another error of law by concluding that “equitable apportionment” necessitated that the DMC be paid first because the DMC had treated Davis first. Specifically, in Mich Head & Spine the Court of Appeals held that the phrase “equitable apportionment” in the no-fault act “neither mandates nor prohibits distribution of benefits on a [“first in, first out,” i.e.,] FIFO basis.” Mich Head & Spine at 6. Rather, while a Circuit Court may determine that payment of allowable expense PIP benefits on a FIFO basis constitutes an “equitable apportionment” based upon the specific facts of the case, the no-fault act requires the Circuit Court to “tak[e] into account the relationship of the payees to the injured person and other factors that the court considers appropriate.” MCL 500.3112. And, as part of the “other factors that the court considers appropriate[,]” the Circuit Court “may consider a claimant’s ongoing needs as part of its equitable analysis.” Mich Head & Spine at 7. In other words, in addition to considering that a particular medical care provider rendered treatment to an injured person before other medical care providers, the Circuit Court may also consider that the injured person will require future care from other providers; such as, in Davis’s case, the fact that Davis would need ongoing medical treatment and attendant care.