In the wake of Covenant Med Ctr, Inc. v State Farm Mut Auto Ins Co, 500 Mich 191; 895 NW2d 490 (2017), the Michigan Department of Insurance and Financial Services issued Bulletin 2018-13-INS on June 6, 2018. It supersedes the infamous Bulletin #92-3 (October 23, 1992) that addresses a PIP insurer’s ostensible “duty to defend” its [1st party claimant] insured in a collection action brought by a healthcare provider. In our view, contrary to the premise of this bulletin (just like the 1992 bulletin) — a no-fault insurer has no contractual “duty to defend” a 1st-party PIP claimant in a collection suit brought by a healthcare provider. The new bulletin does seem to clarify the particular circumstance where it believes there is a “duty to defend”. That is when there is no dispute that the service was reasonably necessary for the person’s care, recovery or rehabilitation and the only dispute is whether the charges are reasonable.
Certainly the bulletin is not case law and does not have the force of law to create a legal duty to defend where one does not exist. However, the question becomes whether, as a practical matter, is it best for the insurer to offer a “defense” in such situations? We believe the answer is yes and are currently defending such a case. In this particular case, there are other defenses which are being pursued. If your insured is sued by a provider under these circumstances, it is entirely possible that, in addition to the “reasonable charge” defense, there may be other, more compelling defenses. Please feel free to contact us if you receive requests to defend your insureds in cases such as this so that we can help guide you to the best conclusion.
_________________________________________________________________________________________
Check out our News & Events page to see what’s happening at GLM and find out about our upcoming seminars.
_________________________________________________________________________________________
Sarah Nadeau, Editor of the Law Fax Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com
