August 08, 2019
Before the recent amendments to Michigan’s no-fault act, a health care provider did not have an independent, statutory right to file a lawsuit against a no-fault car insurance carrier to recover the payment of medical expenses incurred by their patient. Covenant Med Ctr v State Farm, 500 Mich 191 (2017). As such, health care providers had to obtain assignments from their patients in order to file such a lawsuit.
Under the recent changes to the no-fault act, the Legislature amended MCL 500.3112 to effectively negate the Michigan Supreme Court’s decision in Covenant by expressly providing that a health care provider may assert a direct cause of action against an insurer or under the Assigned Claims Plan for overdue benefits. The amendment, which became effective on June 11, 2019, adds the following language to MCL 500.3112:
A health care provider listed in section 3157 may make a claim and assert a direct cause of action against an insurer, or under the assigned claims plan under sections 3171 to 3175, to recover overdue benefits payable for charges for products, services, or accommodations provided to an injured person.
As a practical matter, a provider no longer has to obtain an assignment from an injured party for treatment rendered on or after June 11, 2019. For example, a MRI facility that takes diagnostic imaging of a patient on June 10, 2019, will still need to obtain an assignment from the patient. However, if the facility takes diagnostic imaging on June 12, 2019, it no longer needs to obtain an assignment and may pursue a direct cause of action against an insurer for “overdue” benefits.
The amended act retains the prior language of MCL 500.3112 stating that the “[p]ayment by an insurer in good faith of personal protection insurance benefits, to or for the benefit of a person who it believes is entitled to the benefits, discharges the insurer’s liability to the extent of the payments unless the insurer has been notified in writing of the claim of some other person.” As a provider now has a direct cause of action against an insurer, “written notice of a claim” occurs when an insurer receives a bill from a provider for a date of service occurring on or after June 11, 2019.
A claims representative should be cognizant of the changes to section 3112 when entering into a settlement with the injured party. While the amended act gives a provider a statutory right to make a claim, there are no protections for an insurer that issues a payment for no-fault benefits. For instance, can an insurer enter into a “good faith” settlement with an injured party that includes provider bills when the insurer has received the bills and thus has written notice of the provider’s claim? Who has the right to collect the provider bills?
The amended act left in place the provision of section 3112 that states an insurer “may apply to the circuit court for an appropriate order” where the payees are disputed. Thus, were there is a dispute regarding the proper payee, an insurer should file a “3112 motion” for an appropriate order from the Court.
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