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December 29, 2020
Following the release of several unpublished opinions on the topic in recent years, the Court of Appeals has now issued a published ruling regarding the validity of an agreement to assign no-fault benefits for medical expenses when the agreement is part of the insured’s intake process at a medical facility, and is executed before the insured’s medical care has actually commenced. In the case, Bronson Health Care Group v USAA Casualty Insurance Company, ___ Mich App ___ (December 10, 2020) (Court of Appeals Docket No. 351050), Bronson sought reimbursement for hospital services it provided to USAA’s insured, Brian Moore, in connection with a motor vehicle accident. The services at issue took place before the 2019 amendments to the Michigan No-Fault Act (which now affords medical providers a direct cause of action against no-fault insurers), and therefore, Bronson sought reimbursement pursuant to an assignment of benefits executed by Mr. Moore. Without the assignment, Bronson’s claim would fail. Further, to be valid, the assignment could only relate to benefits for expenses incurred either before or concurrently with the execution of the assignment; under the no-fault act, an assignment of the right to receive benefits payable in the future is void. MCL 500.3143.
The assignment agreement at issue here was presented to the insured, Mr. Moore, upon his admission to Bronson’s facility as part of a larger consent for treatment form, and Mr. Moore completed and signed the form, including the assignment of benefits, before he received any substantive care from Bronson. Accordingly, USAA, represented by Garan Lucow Miller, maintained that it was not liable to Bronson because the consent to treat form, including the assignment, was undisputedly signed before the insured’s care began, and thus constituted an assignment of future benefits in violation of MCL 500.3143. After the district court in which the case began rejected this argument, USAA ultimately obtained leave to appeal in the Michigan Court of Appeals.
Bronson raised several responsive arguments, including most notably that under the Supreme Court’s ruling in Proudfoot v State Farm, 469 Mich 476 (2003),the insured’s execution of the consent to treat forms (which also contained an agreement by the insured to pay for Bronson’s services) rendered his benefits with respect to Bronson’s care then “payable,” even though the services had not actually been provided yet. Bronson argued that since Mr. Moore had signed an agreement to pay for Bronson’s yet to-be-determined services, he had become contractually liable for those expenses, making the expenses thus incurred, and the associated loss thus accrued and payable under the no-fault act. Accordingly, Bronson claimed, the costs for its services were incurred simultaneously with, rather than subsequently to, Mr. Moore’s execution of the assignment, and the assignment was thus valid under MCL 500.3143.
The Court of Appeals rejected Bronson’s argument, distinguishing the case from Proudfoot and holding that a medical expense benefit, like those at issue here, is not payable until medical services are actually provided. While the Proudfoot case contemplated otherwise with regard to distinguishable circumstances involving a home modification construction contract – wherein the insured might become liable by signing the contract and obligating himself to receive the specified services – in this case, Mr. Moore’s agreement to pay for medical services did not obligate him to receive the services. He was free to walk away at any time, and would not be obligated to pay Bronson unless he actually received medical treatment. As such, the Court held that Mr. Moore’s medical expenses from Bronson had not been incurred or become payable at the time he signed the pre-treatment intake form including the assignment of benefits. Instead, the assignment constituted an assignment of benefits that would be payable in the future (after Mr. Moore received treatment), rendering it void pursuant to MCL 500.3143 and warranting dismissal of Bronson’s claims.