In Fremont Insurance Company v Lighthouse Outpatient Center, the Court held that PIP benefits are both statutory and contractual rights that vest at the time of an accident, and healthcare providers cannot require insurance companies to pay the post-2019 amendment fee schedule prices. The Michigan Court of Appeals affirmed this holding.
Valerie Wasserman was insured under a no-fault insurance policy issued by Fremont when she sustained accidental bodily injuries in a motor vehicle accident on September 26, 2018. In April 2023, Wasserman received accident-related services from Lighthouse Outpatient Center and billed Fremont for the services. Fremont issued payment pursuant to the “reasonable and customary” charge provisions of the no-fault act, as these provisions existed at the date of the accident rather than paying pursuant to the post-2019 amendment fee schedule.
Lighthouse filed an Auto Insurance Utilization Review Provider Appeal Request with the Department of Insurance and Financial Services claiming that it had been underpaid and was entitled to be paid consistent with post-amendment fee schedules effective June 11, 2019. DIFS held that “for dates of service after July 1, 2021, MCL 500.3157 governs the appropriate cost of treatment.” This holding meant that reimbursement rates would be calculated under the post-amendment fee schedule. Defendant Fremont filed a petition for judicial review arguing that DIFS was erroneous as a matter of law because the amended subsections of the no-fault act do not apply to accidents that occurred before June 11, 2019.
In March of 2024, Newaygo Circuit Court issued an opinion reversing the DIFS decision. The court relied upon Andary v USAA Cas Ins Co in which the Michigan Supreme Court held that the scope of available PIP benefits under an insurance policy vests at the time of the injury, which is also the time when an insurer’s legal obligation to pay PIP benefits for all reasonable and necessary medical expenses is triggered. In other words, an insureds’ rights under an insurance policy vested at the time of the automobile accident causing their injury. Andary at 244. Therefore, the Fremont court held that DIFS’ ruling, that post-amendment fee schedules apply for dates of service after July 1, 2021, was erroneous.
Lighthouse appealed the Circuit Court’s opinion as a matter of right, arguing that the matter should be remanded to DIFS for further proceedings. Lighthouse had expressly agreed with the Circuit Court’s decision that the pre-amendment “reasonably and customary” methodology applies in this case. But while one of the three judges, only partially concurring with the majority opinion, would have held Lighthouse not to be an aggrieved party and that the issue thus was not properly before the Court, the two-member majority affirmed the circuit court’s decision in a published, and thus binding, opinion.
Fremont further argued on appeal that since Lighthouse never disputed Fremont’s reasonable and customary charge determination prior to the appeal, Lighthouse did not preserve that argument. On this point the three judges on the Court of Appeals panel unanimously agreed.
The Court of Appeals thus affirmed that the insurance policies and the no-fault statutes that existed when the insureds in that case were injured controlled their entitlement to PIP benefits, not the amended provisions enacted by 2019 PA 21 and 2019 PA 22. Further, the reasoning in Andary is not limited to merely reimbursement issues arising under MCL 500.3157(7) and (10), but instead applies to the entirety of MCL 3157, as amended.
An important decision for the on-fault insurance industry, in which Garan’s Dan Saylor represented the prevailing insurer, Fremont Insurance Company.
