June 08, 2015
Very recently the Michigan Court of Appeals addressed the issue of how far the “arising out of” standard, as found in the Michigan No Fault Act, reaches and whether it would cover the costs of negligent treatment when that treatment was rendered as a result of an automobile accident. The Court of Appeals found this type of claim was beyond the scope of what was covered by the No Fault Act.
In Campbell v Home Owners, (Unpub. COA No. 320775, 5/19/15), Mr. Campbell was involved in an accident in 2009 and claimed back injuries. As a part of his treatment from these injuries he underwent epidural steroid injections in 2012. The steroid was contaminated and Mr. Campbell contracted fungal meningitis. This resulted in the need for additional therapies and treatment which of course brought additional costs and expenses. He submitted the expenses to Home Owners, his No Fault carrier, and the claims were denied as not arising out of the accident.
Mr. Campbell’s argument was quite simple and succinct. He suffered a back injury from the accident, this treatment was related to that injury, and therefore the adverse consequences of the treatment should be covered. In essence, Mr. Campbell argued that but for the accident he would have never undergone the treatment and would never have suffered the consequences of the contamination of the drug.
As we know, the No Fault Act says that an insurer is responsible for “accidental bodily injury arising out of the ownership, operation or use of a motor vehicle as a motor vehicle.” The Campbell Court interpreted this provision, stating: “The insurer is only responsible for injuries that are caused by the operation or use of the vehicle.” Thus, the Campbell Court rejected Mr. Campbell’s argument. The Court found the treatment was not related to the injuries in the accident but was instead related to the intervening negligence of the drug manufacturer. The Court found the infection was “too remote” from the accident to make a causal connection.
This decision could have significant implications in No Fault claims. While in the past courts have endorsed the concept of subsequent events curtailing or limiting claims for No Fault benefits, these subsequent events have traditionally been totally separate and distinct from any automobile accident related care or treatment. Here, there was no doubt the injection was related to the accident but since the resulting treatment was necessitated by the “intervening negligence” in the administration of the contaminated steroid, there was no coverage. This clearly raises the specter of how far the courts will go in disallowing recovery for treatment that is necessitated by injuries caused by negligent treatment rather than injuries directly caused by an automobile accident.
It is this author’s opinion that in order to succeed in limiting the type of treatment that stems from an automobile accident, there would have to be a clear showing that the treatment related to not just failed methods, but methods that breached a medical standard of care. For example, the fact that steroid injections did not work, requiring the patient to undergo more treatment, would not be enough to limit an insurer’s responsibility to pay No Fault benefits. The insurer would have to show the treatment being sought related to a negligent act of the health care provider or a third-party. This would involve the need for expert testimony and quite frankly may get quite extensive and expensive. If you have a claim where an insured has, on their own, brought a claim against a health care provider claiming negligence of some sort, this might be the opportunity to use this defense and escape liability from the insured’s claim for No-Fault benefits related to the negligent act.
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A NO-FAULT INSURER’S UNCOORDINATED POLICY RESULTS IN ITS PRIMARY LIABILITY FOR MEDICAL EXPENSES AND A DOUBLE RECOVERY FOR ITS INSURED
By Melissa N. Mead
In a recent, unpublished decision, Holmes v Farm Bureau General Insurance Company, et al, (Docket No. 320723, 05/19/15), the Michigan Court of Appeals held that where an individual is insured under an uncoordinated policy of no-fault insurance which provides for primary medical coverage, that individual maintains a private cause of action to seek reimbursement for accident-related medical expenses previously paid by Medicare.
Holmes sustained injuries in a motor vehicle accident in which Defendant, Jeremy Flechsig, was at fault. At the time of the accident, Farm Bureau insured Holmes under a policy that provided primary medical coverage. Farm Bureau did not pay for any of Holmes’ medical expenses; rather, Medicare and Holmes’ Medicare AARP Supplemental Insurance covered those expenses.
Farm Bureau moved for partial summary disposition with respect to the medical expenses on the basis that Medicare and the Medicare AARP Supplement paid said expenses. Holmes responded that she was entitled to receipt of those benefits, because the prior payment did not eliminate Farm Bureau’s liability. Holmes further argued that federal law provides a private cause of action where Medicare paid expenses for which a no-fault insurer was liable. The trial court disagreed and granted Farm Bureau’s motion, finding that Holmes’ medical coverage under her policy was coordinated and not primary, and that even if Farm Bureau were the primary insurer, Holmes did not maintain a private cause of action to seek reimbursement for expenses paid by Medicare.
Holmes appealed the trial court’s determination and argued that Farm Bureau issued an uncoordinated policy, and consequently was the primary insurer with respect to medical benefits. She also argued that she was entitled to recover benefits from Farm Bureau, notwithstanding those paid by Medicare, and that 42 USC 1395y(b)(3)(A) create a private cause of action enabling her to sue for recovery of expenses paid by Medicare on her behalf.
Under MCL 500.3109a, individuals with existing health care coverage are entitled to choose between coordinated and uncoordinated insurance. When the coverage is uncoordinated, the no-fault insurer has primary coverage in the event of a claim. If both the no-fault policy and health insurance policy are uncoordinated, an individual may be entitled to double-recovery in certain circumstances; but, where the no-fault policy is primary and the medical coverage is coordinated, the insured must look only to the no-fault insurer for coverage. As a matter of law, Medicare will not provide primary coverage when a primary payer, such as no-fault insurance, exists. 42 USC 1395y(b)(2)(A)(ii).
The Michigan Court of Appeals, on review of the policy language, determined that Farm Bureau agreed to provide Holmes with uncoordinated coverage, and thus, was primarily responsible for her medical expenses. In particular, the policy specifically stated that Medicare or Medicaid could not be coordinated and that automobile insurance benefits must be primary. Additionally, the Policy Change Declarations page of the policy indicated that the policy was primary for medical payments. Consistent with 42 USC 1395y(b)(2)(A)(ii), Farm Bureau was primarily responsible for Holmes’ medical expenses.
Under 42 USC 1395y(b)(2)(B), Medicare may make payments on an insured’s behalf, with the caveat that such payments must be reimbursed if a primary plan has or had responsibility to make those payments. Moreover, 42 USC 1395y(b)(3)(A) provides private citizens with the express right to sue a primary payer to recover funds paid by Medicare on his or her behalf. Because the policy of no-fault insurance was primary and based upon a contract, the Michigan Court of Appeals determined that Holmes maintained a private cause of action and was entitled to recovery of medical expenses previously paid by Medicare.
The Michigan Court of Appeals determined that because Farm Bureau failed to pay the accident-related medical expenses for which is was primarily liable; Holmes was entitled to a double recovery of those medical expenses. To prevent an insured from obtaining this duplicate recovery, a no-fault insurer with an uncoordinated policy must be sure to pay all medical expenses for which it is liable.
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WINDY CITY SEMINAR
The 2015 Windy city Seminar will take place on Thursday, June 18, at the Chicago Marriott Schaumburg.
Please join us for a complimentary full day seminar, lunch will be included, also 6 Illinois Continuing Education Credits will be offered.
To register please contact Eileen Carty at: ecarty@garanlucow.com or 800-875-7600.
Seminar Agenda:
8:30 – 8:55 a.m. Continental Breakfast and Registration.
8:55 – 9:00 a.m. Welcome and Introduction.
Speaker: David A. Couch, Esq.
9:00 – 10:00 a.m. Illinois First Party and Third Party Auto Law Updates.
Speaker: Jennifer E. Davis, Esq.
10:00 – 10:15 a.m. Illinois Premises Liability Law Updates.
Speaker: David A. Couch, Esq.
10:15 – 10:30 a.m. Illinois Premises Liability Law Comparison With Adjacent State Laws.
Speaker: David A. Couch, Esq.
10:30 – 10:45 a.m. Break
10:45 – 11:30 a.m. Michigan First Party Auto Law Updates and Comparison with Illinois and Indiana Law.
Speaker: John W. Whitman, Esq.
11:30 – 12:00 noon Michigan Third Party Auto Law Updates and Comparison with Illinois Law.
Speaker: David A. Couch, Esq.
12:00 – 12:15 p.m. Question and Answer Session.
12:15 – 12:30 p.m. Examination on Illinois Law Topics and Comparison with Adjacent State Laws.
12:30 – 1:00 p.m. Lunch provided at the Chicago Marriott Schaumburg
1:00 – 4:00 p.m. Trial and Deposition Boot Camp.
Presenters: John W. Whitman, Jennifer E. Davis, and David A. Couch
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GLM DETROIT IS MOVING!
The new address for our Detroit office will be:
1155 Brewery Park Blvd.
Suite 200
Detroit, MI 48207
The new office space is known as Brewery Park and is at the site of the old Stroh Brewery (now Crain Communications).
We will be in our new location on Monday, June 29th, 2015. All contact information for Detroit office employees will remain the same. (Phone numbers and email address(es) will not change.)
The firm has long been committed to educating its clients in various areas of the law. The new property, which is only a few blocks from our current location, will include a high-tech instructive classroom and space to have Webinars and connect digitally with clients across the country which will enable us to take educating our clients to another level.
To Register for your company’s individually tailored seminar please contact John Gillooly at 313.446.1530 or jgillooly@garanlucow.com
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