AN ASSIGNMENT OF RIGHTS IS NOT A CONTRACT FOR ATTENDANT-CARE SERVICES

Kevin L. Travis

A provider lost out on a quarter of its nearly $95,000 in medical bills because its generic assignment of rights was not a contract for the provision of services. In the unpublished opinion of 5 Star Comfort Care, LLC v. Geico Indemnity Company, the Court of Appeals found that the assignment of rights provided by an injured party to his service provider, which the provider argued to be a contract for services, was “a mere certification that [the insured] incurred some unspecified charges for some unidentified services provided by [the provider].”

The insured, Mr. Higgins, was provided in-home attendant care services by 5 Star Comfort Care, LLC. In reality, the provider hired Mr. Higgins’s girlfriend. She received minimal training and was paid a rate of $10 per hour. The provider then billed Geico $39.99 per hour for the services she rendered. Geico moved for partial summary disposition under MCR 2.116(C)(10), arguing that the only expense “incurred” under MCL 500.3107(1)(a) was the $10 per hour charge for the services provided by Mr. Higgins’s girlfriend. The Circuit Court agreed. 5 Star appealed.

On appeal, 5 Star argued that Mr. Higgins signed a binding contract for attendant-care services. The alleged contract stated as follows:

[Higgins] hereby certifies that [he] has incurred charges for services provided by [5 Star] for which the rights, privileges and remedies for payment are hereby assigned.

The Court of Appeals interpreted this provision under MCL 500.3107(1)(a), noting that PIP benefits payable are those for “[a]llowable expenses consisting of reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation.” The Court affirmed that an expense is an “allowable expense” for purposes of obtaining PIP benefits if: (1) the expense is “for an injured person’s care, recovery, or rehabilitation,” (2) the expense is “reasonably necessary,” (3) the expense is a charge incurred, and (4) the charge incurred is reasonable. Douglas v Allstate Ins Co, 492 Mich 241, 257-259; 821 NW2d 472 (2012).

Analyzing the definitions of the words “incur” and “charge”, the Court affirmed that the charges in excess of the $10 per hour paid to Higgins’s girlfriend were not charges “incurred” under the statute. Further, the assignment of rights was too ambiguous to show that there was a degree of liability for paying the charges for the services. Instead, the document was merely a contract between Higgins and 5 Star in which Higgins assigned his right to PIP benefits to 5 Star in exchange for 5 Star handling the collection of the benefits due to him under the no-fault act. The assignment was not a contract for the provision of services. Rather, it was a certification that a charge exists which is not the equivalent of a contract to be liable for that charge.