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August 28, 2020
Earlier this year, on May 13, 2020, the Garan Report notified readers of a favorable result our Firm obtained in the Court of Appeals in Physiatry and Rehab Associates v Westfield Insurance Co, __ Mich App __ ; __ NW2d __ (2020) (issued April 23, 2020) (Docket No. 349465), where the Court examined whether the insurer’s, Westfield’s, settlement with its insured over a claim for personal injury protection (“PIP”) benefits shielded Westfield from subsequent liability to one of the insured’s medical providers, the Plaintiff, Physiatry and Rehab Associates. The Court of Appeals held that it did, and we are pleased to report that the Court has agreed to publish this opinion, making the rule of law established therein binding upon all lower courts. A brief synopsis of the case follows below, and our original Garan Report article can be found here.
In this provider case, the Court noted that Westfield had previously entered into and made payment upon a settlement and release agreement with its insured, which applied to “any and all” PIP benefits arising from the subject auto accident. In a critical conclusion, the Court interpreted MCL 500.3112 — which allows 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 — to mean that notification “in writing of a claim of some other person” requires, in the provider context, notification of the insured’s assignment of benefits to the provider. Since a provider lacks a direct cause of action against an insurer for PIP benefits, the Court implied, the provider does not have a “claim” until it has an assignment.
In other words, for the purposes of MCL 500.3112 and determining whether an insurer’s payment of benefits discharges its liability for any given claim, an insurer is not deemed notified of a provider’s claim unless it has been provided with a copy of the assignment. Where the insurer only has notice of the services, and not the actual assignment and thus the claim, the insurer does not have the notice required. Because this was the situation in the present case, the Court affirmed summary disposition in favor of Westfield, finding that its payment pursuant to the settlement agreement discharged its liability for this provider’s claim. Because this situation is common – providers often do not produce copies of their assignments until they attach them to a complaint against the insurer – this now-published case affirms a useful defense to insurers facing provider claims after already making payment on an expansive settlement with the insured.
 As we noted in our original publication, the 2019 amendments to the no-fault act significantly changed the provisions of MCL 500.3112. The Court’s decision in the Pyshiatry and Rehab case is helpful with respect to claims for services rendered before the June 11, 2019 amendment date, many of which remain the subject of litigation today.