December 01, 2015
In Chiropractors Rehabilitation Group, P.C. v State Farm Mutual Auto. Ins. Co., ___ Mich App ___; ___ NW2d ___ (10/29/15), the Michigan Court of Appeals addressed the issue of whether healthcare providers that render medical treatment to individuals allegedly injured in motor vehicle accidents can receive reimbursement for medical expenses related to the treatment rendered from a no-fault insurer allegedly responsible for payment of PIP benefits under the no-fault act. In these consolidated appeals, the insurer argued it did not owe PIP benefits to the providers where the injured parties were not eligible for PIP benefits. The District Court in each case disagreed with the insurer – State Farm – and denied its motions for summary disposition.
The Court of Appeals addressed each case separately where the underlying facts as to each injured party were different. In one case, Raynard Jackson allegedly sustained injuries while a passenger in a vehicle owned and operated by Mohammed Abdullah and the vehicle was insured by State Farm. Incomplete and conflicting information on the police and medical reports left questions whether Jackson was actually injured. Jackson also failed to appear for two medical examinations, as well as failing to attend an EUO. State Farm refused to provide payment of PIP benefits to Jackson’s healthcare provider arguing that Jackson had failed to cooperate in the investigation of his claims and so was not eligible for coverage under its insurance policy. The District Court found questions of fact as to whether Jackson was eligible for coverage, and whether Jackson’s ineligibility would bar the provider’s claim.
In the second case, Ricky Johnson was allegedly injured while a passenger in a vehicle but, the traffic report noted another name for the passenger of that vehicle. Johnson failed to appear for three EUO’s. State Farm argued Johnson was not entitled to PIP benefits for failure to cooperate with its investigation of his claim. State Farm also argued that the language of the policy at issue required that Johnson submit to an EUO as a condition precedent to the recovery of benefits. The District Court denied State Farm’s motion for summary disposition finding that Johnson’s actions did not preclude a healthcare provider’s claim because a healthcare provider has a right to a separate cause of action.
On appeal, the Court of Appeals initially affirmed that healthcare providers have standing under the no-fault act to bring an action against an insurer to obtain PIP benefits. The Court of Appeals then agreed with State Farm’s general statement of the law – that a healthcare provider’s claims for PIP benefits are barred where an injured party in ineligible for benefits because they failed to provide reasonable proof of a compensable loss. The Court affirmed that a healthcare provider’s eligibility to recover medical expenses is dependent upon the injured party’s eligibility for no-fault benefits under the insurance policy.
The Court of Appeals disagreed with State Farm, however, that the healthcare providers’ claims in these cases could be barred at the present stage of the proceedings. The Court of Appeals did not agree that an injured party’s mere failure to appear for MEs or EUOs was sufficient to conclusively establish the injured party was prohibited from seeking PIP benefits. In neither case did the District Court enter an Order dismissing Jackson’s or Johnson’s case for failure to submit to an EUO or ME, although the Court was permitted to do so under MCL 500.3153. The Court of Appeals believed that instead, a suspension of benefits would be proper, and such a suspension would not be tantamount to dispositive evidence that an insured is not entitled to PIP benefits. The Court further affirmed that compliance with EUO provisions in an insurance policy cannot be a condition precedent to an insurer’s duty to pay no-fault benefits pursuant to the no-fault act.
Thus, the Court of Appeals found Jackson and Johnson provided medical records to the District Courts sufficient to establish a genuine issue of material fact regarding whether their claims were causally connected to injuries sustained in the motor vehicle accidents, and whether the providers proffered reasonable proof of the fact and of the amount of loss sustained so that State Farm was required to pay PIP benefits to the providers. The Court of Appeals held that Jackson’s and Johnson’s failure to appear for MEs and EUOs did not establish that State Farm was entitled to summary disposition as a matter of law.
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