December 19, 2016
In a recent decision, St. John Macomb Oakland Hospital v State Farm Mutual Automobile Insurance Company (for publication, Docket No. 329056, 12/08/2016), the Michigan Court of Appeals determined that a medical provider need not appeal a health insurer’s denial of payment of medical bills before seeking payment of those bills by the insured’s no-fault automobile insurance provider.
On December 9, 2011, insured, Nuo Dusaj, sustained a closed head injury in a motor vehicle accident. His policy of insurance with State Farm was coordinated as to health insurance, and provided for a reduction in benefits by an amount “paid or payable” by his health insurance. Dusaj maintained a policy of health insurance with Blue Cross Blue Shield of Michigan.
Plaintiff admitted Dusaj into a partial day hospitalization program for closed head injuries, on recommendation of Dusaj’s physician, and submitted its claim for payment of incurred expenses to Blue Cross. Shortly thereafter, Magellan Behavioral of Michigan, Inc. (on behalf of Blue Cross), advised Dusaj that the treatment was not medically necessary and was therefore unauthorized. Magellan provided Plaintiff and Dusaj with information on how and when to appeal its decision.
A representative for Plaintiff then requested a similar letter from Magellan pertaining to an earlier partial hospitalization admission so that Plaintiff could request payment by State Farm. When State Farm failed to pay, Plaintiff filed suit. State Farm then filed a motion for summary disposition. It argued that Plaintiff failed to “make reasonable efforts” to obtain payment from Dusaj’s health insurer, and further failed to provide evidence regarding its submissions and whether it appealed Magellan’s decision. Plaintiff responded that its correspondence to Magellan requesting the denial letter demonstrated “reasonable” efforts. The Court denied State Farm’s motion on the basis that a genuine issue of material fact existed.
State Farm filed a motion for reconsideration on the basis that Plaintiff failed to submit evidence that it made reasonable efforts to obtain payment, and that the Court improperly shifted the burden onto State Farm to demonstrate that Blue Cross was obligated to pay Plaintiff’s invoice. The Court agreed and dismissed Plaintiff’s case. Plaintiff appealed, arguing that the trial court abused its discretion, and that Plaintiff was not required to appeal the denial of benefits.
On appeal, the Court of Appeals noted MCL 500.3109a allows individuals to coordinate their policies of no-fault insurance pertaining to health insurance for a reduced premium. When coordinated, the health insurer becomes primarily liable for payment of medical expenses. Farm Bureau Gen. Ins. Co. v Blue Cross Blue Shield of Mich, 314 Mich App 12, 21 (2015). The no-fault insurer is therefore not liable for expenses the health insurer is required to pay or provide. Tousignant v Allstate Ins. Co., 444 Mich 301, 303 (1993). Under Tousignant, the injured person is obligated to take reasonable steps to obtain payments. Tousignant, 444 Mich at 312.
The Court of Appeals determined that Plaintiff made reasonable efforts to obtain payment from Blue Cross where it submitted its claim and followed the proper procedure in filing the claim. The Court found no requirement that Plaintiff appeal, or participate in protracted litigation to resolve Blue Cross’s denial before seeking payment from State Farm. The purpose of MCL 500.3109a is to prevent duplicative recovery. Because Plaintiff would not receive benefits from two sources in this case, as Blue Cross/Magellan denied Plaintiff’s claim, the trial court erred in granting State Farm’s Motion for Reconsideration and dismissing Plaintiff’s claims.
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