In an unpublished opinion, Hope Network Rehabilitation Services v Michigan Catastrophic Claims Association, et al, the Michigan Court of Appeals granted dismissal of the MCCA as a party defendant in an action brought by a medical provider on the theory of tortious interference in a contractual relationship. Where the Circuit Court allowed the provider to add the MCCA as a defendant to its action, and thereafter denied the MCCA’s Motion for Summary Disposition, the Court of Appeals reversed the decision of the Circuit Court, finding that there was nothing illegal or improper with the actions taken by the MCCA in its assessment of the underlying claim and by advising the claimant’s insurance company, Farm Bureau, as to the likelihood of reimbursement of no-fault PIP benefits paid out.
The underlying motor vehicle accident occurred on January 13, 2018, in which Marilyn Koyl sustained serious injuries including a traumatic brain injury. Ms. Koyl presented claims for first-party no-fault PIP benefits to her insurer, Farm Bureau. Hope Network Rehab provided services for Ms. Koyl’s care, recovery and rehabilitation from accident-related injuries. After months of fruitless negotiations between Hope Network and Farm Bureau, the two parties could not reach an agreement on payments for services rendered between March and October 2018.
In March, 2019, Hope Network filed suit against Farm Bureau, seeking recovery of expenses incurred for services rendered Ms. Koyl. During the course of the underlying litigation, the Circuit Court granted leave for Hope Network to amend its complaint, adding a claim of tortious interference of business relationship or expectancy against the MCCA for its alleged interference with Hope Network’s attempt(s) to secure payment from Farm Bureau during the litigation. Hope Network’s theory was that the MCCA had refused to approve payment to Farm Bureau and/or threatened to withhold reimbursement to Farm Bureau for some or all of Hope Network’s bills.
The MCCA moved for Summary Disposition, arguing that Hope Network and Farm Bureau were in a dispute over the reasonableness of the charges, that if the parties could not reach a mutual settlement agreement, the issue would be decided by a jury, and only then would the MCCA reimburse Farm Bureau for whatever amount it was statutorily obligated to pay. Hope Network argued that the MCCA interfered by refusing payment to Farm Bureau, or by threatening to withhold reimbursement to Farm Bureau, and this was sufficient to suggest the MCCA did something illegal, unethical and/or fraudulent. The Circuit Court agreed, thereby denying the MCCA’s Motion for Summary Disposition.
On appeal, the MCCA argued that the Circuit Court erred by denying its motion for summary disposition, where Hope Network had failed to sufficiently plead the third and fourth elements of a claim of tortious interference with a business relationship or expectancy. In order to sustain a claim of tortious interference with a business relationship or expectancy, a plaintiff must establish: (1) the existence of a valid business relationship or expectancy; (2) knowledge of the relationship or expectancy on the part of the defendant; (3) intentional interference by the defendant in inducing or causing a breach or termination of the relationship or expectancy; and, (4) resultant damage to the plaintiff. Cedroni Ass’n, Inc v Tomblinson, Harburn Assoc, Architects & Planners, Inc., 492 Mich 40, 45; (821 NW2d 1 (2012).
Regarding the third element, the Court noted that interference alone will not support a claim. Instead, a plaintiff must establish that the defendant acted both intentionally and either improperly or without justification. If a defendant’s actions were motivated by a legitimate business reason, those actions do not satisfy the third element noted above. The business expectancy with which Hope Network the MCCA interfered was the payment of no-fault benefits for reasonable and necessary PIP expenses. However, the Court noted that the benefits were not paid, at least in part, because Hope Network and Farm Bureau disputed those expenses, and the MCCA had nothing to do with this decision. The Court noted that Hope Network failed to plead any specific and affirmative acts on the part of MCCA that were inherently wrongful and instead, MCCA is authorized to involve itself in the settlement process and adjust situations that it anticipates might expose it to unreasonable indemnification costs.
Regarding the fourth element, Hope Network alleged that its damages included the costs of prosecuting the lawsuit. The Court noted, however, that attorney fees incurred in litigating a matter do not constitute damages unless a statute or court rule explicitly provides otherwise and Hope Network failed to assert any such provision. Thus, the Court of Appeals concluded that amendment of the complaint would be futile, where, as here, Hope Network could not sufficiently allege resultant damages as a result of any alleged improper interference by MCCA.
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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 snadeau@garanlucow.com