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May 13, 2020
In 2019, the Legislature changed portions of the no-fault act, specifically MCL 500.3112, adding a provision allowing health care providers to make a claim and assert a direct cause of action against an insurer to recover payment for services rendered to patients injured in auto accidents. Despite the changes to MCL 500.3112, a number of provider claims arising under the pre-amended act (that is, generally, claims with dates of loss prior to June 11, 2019 when the change took effect) continue to travel through our courts. And many of these claims involve this question: if a medical provider’s insured patient files and settles a lawsuit against their no-fault carrier for PIP benefits arising from an accident, can the provider arrive late to the party, assignment of benefits from its patient in hand, and recover payment for its accident-related services directly from the insurer? In its recent opinion in Physiatry and Rehab Assocs v Westfield Ins Co, (Unpublished per curiam opinion of the Court of Appeals, issued April 23, 2020 (Docket No. 349465), the Court of Appeals had the opportunity to weigh in on this question and said, if the timing is right, no.
In the case, litigated on appeal by Garan Lucow Miller’s Christian Huffman, the plaintiff medical provider sought payment from the defendant insurer, Westfield, for services the plaintiff rendered to its patient and the defendant’s insured, Mohammed Alhalemi, in connection with an auto accident. Under the laws then in effect, the plaintiff medical provider lacked a cause of action without a valid assignment of benefits and therefore, it relied upon an assignment executed by Mr. Alhalemi on March 22, 2018, to support its claim. However, several months later in June 2018, Westfield and Mr. Alhalemi settled litigation that had already been pending between them when the assignment was executed. The settlement included Mr. Alhalemi’s release of “any and all past, present and future claims and demands for no-fault [PIP] benefits” arising from the accident. There was no evidence that Westfield had notice of the assignment when it settled with Mr. Alhalemi.
The Court of Appeals affirmed the Oakland Circuit Court’s order granting summary disposition to Westfield, finding that the plain language of the Alhalemi-Westfield release included plaintiff’s services (which fall within the category of “any and all” PIP benefits). Moreover, the Court highlighted MCL 500.3112’s instruction permitting an insurer to discharge its liability for a PIP claim by issuing good faith payment for the claim “unless the insurer has been notified in writing of a claim of some…person” other than the person paid. Because there was “no evidence that a written copy of the assignment was ever provided to [Westfield] before the settlement agreement was entered into,” the Court concluded that MCL 500.3112 shielded Westfield and barred the plaintiff’s claim noting the plaintiff “would have to have provided [Westfield] with a copy of the assignment of benefits before [Westfield] entered into the settlement agreement” in order to hold Westfield liable notwithstanding its prior settlement with Mr. Alhalemi.
The Court’s holding in this regard is significant because it confirms that MCL 500.3112’s use of the phrase “noti[ce] in writing of the claim of some other person” means, in the provider context, a provider must provide notice of the insured’s assignment of benefits to the insurer, rather than simply notice that the provider rendered services to the insured as providers frequently argue. This interpretation of the statute is sound because a provider lacks a “claim” until it has an assignment of benefits from its patient. Although the opinion is unpublished, it will hold at least persuasive weight to assist insurer-defendants in litigating and obtaining dismissal of similar claims, where providers commence their own lawsuits before providing copies of their assignments to insurers.
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Sarah Nadeau, Editor of The Garan Report Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or email@example.com