TAKING THE BITE OUT OF UTILIZATION REVIEW

Steven Landstrom

In the published case of True Care Physical Therapy, PLLC v Auto Club Group Insurance Company, ___ Mich App ___ (5/25/23), the Court of Appeals considered whether it is required that a medical provider administratively appeal a carrier’s utilization review determination though the procedures in MCL 500.3157a and Mich Admin Code, R 500.65 prior to filing a lawsuit. The Court resolved such an appeal was not required.

True Care provided treatment to Rozarta Vukaj for injuries she sustained as a result of a 2018 motor vehicle accident. Her treatment with True Care started about ten months after the accident, and lasted for about two years. Ms. Vukaj assigned her right to pursue PIP benefits from her insurer, Auto Club, to True Care.

Auto Club conducted a utilization review of True Care’s bills and ultimately stopped paying for Ms. Vukaj’s treatment with True Care in September 2021. The utilization review found that True Care’s treatment exceeded the American College of Occupational and Environmental Medicine (ACOEM) guidelines for treatment of injuries like Ms. Vukaj’s. ACOEM recommended 10 visits over 8 weeks, but True Care had provided more than 137 dates of service by mid-June 2021. The explanation of benefits (EOB) issued by Auto Club denied True Care payment based upon the utilization review. Each EOB denying True Care payment based upon the utilization review also included information on how to appeal the determination to the Department of Insurance and Financial Services (DIFS).

Instead of appealing to DIFS, True Care filed a lawsuit based upon breach of contract.

Auto Club then filed a motion for summary disposition under MCR 2.116(C)(4), (C)(8), and (C)(10), arguing that MCL 500.3157a and Rule 500.65 of the Michigan Administrative Code required True Care to appeal to DIFS before filing suit. True Care responded by arguing that they had a valid assignment of PIP benefits from Ms. Vukaj and that pursuant to MCL 500.3112, they had the right to a direct cause of action against the insurer.

The trial court denied Auto Club’s motion, holding that there was no prerequisite of an administrative appeal in MCL 500.3112, that the language used by both the Legislature and DIFS was discretionary, and that requiring an administrative appeal under MCL 500.3157a would shorten the one-year back rule as provided in MCL 500.3145. The trial court stayed enforcement of the judgment pending this appeal.

The Court of Appeals affirmed the trial court’s ruling that it had subject-matter jurisdiction over True Care’s claim. The Court noted that the plain language of the no-fault act’s definition of utilization review in MCL 500.3157a(6) demonstrated the Legislature’s intent for alternate avenues to determine whether care was appropriate. The Court pointed out that under MCL 500.3157a, Rule 500.64, and Rule 500.65, a medical provider may appeal a utilization review, but was not required to do so.

Auto Club argued that “may” as used here, actually means “shall” or “must.” The Court was not persuaded by this argument and pointed out the ways in which taking this position would “frustrate, rather than fulfill, legislative intent.” By using the plain language and ordinary meaning of the word “may”, any conflict between the statute and Rule 500.65 was avoided, as well as any conflicts between the statutory provisions themselves.

Because the administrative appeal provided by MCL 500.3157a and Rule 500.65 is permissive, and not mandatory, a medical provider may file suit under MCL 500.3112 without first exhausting their administrative remedies.

The Court of Appeals did acknowledge Auto Club’s concern that interpreting the plain language of the statute as it did will effectively make MCL 500.3157a and Rule 500.65 irrelevant, but noted that argument should be directed to the Legislature.

The Court’s decision in this case means that carriers will need more than just a utilization review to determine whether treatment was appropriate. Carriers will need to examine the cost effectiveness of performing a utilization review to make an initial determination of whether the level and quality of treatment provided is appropriate and within medically accepted standards.