On February 18, 2020, the Michigan Court of Appeals issued an unpublished opinion in WA Foote Memorial Hosp v. Farmers Ins Exch. In 2015, plaintiff, a healthcare provider, sought PIP benefits under the no-fault insurance act for treatment provided to nonparty, Jessica Jacobs, in August and September of 2014. Before trial, the parties entered into a stipulation agreeing that the only issue for trial was whether Jacobs’s injuries were accidental under MCL 500.3105. The jury returned a verdict in plaintiff’s favor and the trial court entered a judgment against defendant and awarded case evaluation sanctions to plaintiff.
On appeal, the Court of Appeals noted that Jacobs received medical treatment at Allegiance Health Hospital after deliberately and voluntarily jumping from the front passenger seat of a moving vehicle. Defendant argued that pursuant to Covenant Med Ctr, Inc v Farm Mut Auto Ins Co, 500 Mich 191; 895 NW2d 490 (2017), a healthcare provider such as plaintiff “possesses no statutory cause of action against a no-fault insurer for recovery of PIP benefits.” Plaintiff argued that Covenant is inapplicable to the current case, as defendant waived any challenge to plaintiff’s capacity to file suit when entering into a stipulation regarding the disputed issues for trial. Plaintiff also argued that it should have the opportunity to amend its complaint to plead an assignment theory based on Jacobs’s rights to benefits.
The Court of Appeals held that although the Supreme Court decided Covenant after the trial in this case, Covenant applies retroactively and can be applied even when defendant has not raised it in the trial court because the question of a provider’s statutory right to bring a claim is one of law. The Court further held that defendant did not waive its ability to challenge plaintiff’s right to maintain a direct cause of action when entering into the stipulation. Notably, the stipulation did not include an agreement that plaintiff was the proper party to litigate the issue, that plaintiff had standing to pursue benefits or “that defendant intended to clearly and unequivocally waives its legal position with respect to plaintiff’s standing.” In the absence of such a stipulation, the Court would not infer that defendant intended to abandon all legal arguments regarding standing or that defendant clearly and unequivocally waived the legal standing issue.
Regarding plaintiff’s assignment theory, the Court held that a remand to allow plaintiff the opportunity to add an assignment theory would be futile in light of the one-year-back rule. Covenant was not intended to alter an insured’s ability to assign their right to past or present due benefits to a healthcare provider. As such, “a healthcare provider who obtains an assignment from an insured individual ‘possess the right [the insured] would have to collect past due or presently due benefits from [the insurer].” In this case, plaintiff secured an assignment from Jacobs on June 8, 2017, after the trial, which assigned to plaintiff Jacobs’ right to no-fault benefits, her right to seek payment of those benefits, and her right to bring a lawsuit for payment of those benefits. In light of the one-year-back rule, Jacobs’s rights on June 8, 2017 did not include plaintiff’s right to obtain benefits for the medical expenses incurred in August and September of 2014 and thus, plaintiff could not obtain the right to recover benefits for losses incurred more than a year before June 8, 2017.
The Court vacated the judgment in plaintiff’s favor, remanded for entry of judgment in favor of defendant in light of Covenant, and held that Plaintiff was not entitled to case evaluation sanctions.
Check out our News & Events page to see what’s happening at GLM and find out about our upcoming seminars.
_________________________________________________________________________________________
Sarah Nadeau, Editor of The Garan Report Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com