PROVIDERS MAINTAIN RIGHT TO PURSUE CLAIM DESPITE PRIOR ASSIGNMENT OF RIGHT TO FACTORING COMPANIES

Samantha Orvis

In a published decision, the Michigan Court of Appeals addressed a medical provider’s ability to pursue reimbursement of a claim in a direct PIP action, when it had previously entered into an agreement assigning its right to bring suit to multiple factoring companies.

In C-Spine Orthopedics, PLLC v Progressive, the medical provider filed a direct action, pursuant to MCL 500.3112, seeking reimbursement on a No-Fault claim for services provided to two injured parties, Jose Cruz-Muniz and Sandra Cruz. C-Spine alleged that the No-Fault carrier, Progressive, had failed to pay the reasonable charges for necessary care incurred by the Cruzes.

Progressive filed a motion for summary disposition on the basis that prior to initiating the legal action, C-Spine had sold its right to pursue reimbursement to a number of factoring companies, which buy invoices at a discount in exchange for the right to bring suit to recover the outstanding balances. Progressive argued that as a result, C-Spine no longer had standing, legal capacity, or legal right to bring a claim regarding those balances. C-Spine argued that it, and the factoring companies, had also executed counter-assignments and purchase agreement amendments which reinvested C-Spine with its original right to pursue the balance.

Initially, the trial court denied Progressive’s motion, however the motion was renewed after additional discovery suggested that some of the counter-assignments and purchase agreement amendments were entered into after the complaint was filed, or were backdated. The trial court granted Progressive’s motion the second time around stating that C-Spine lacked standing when the suits were filed and the counter-assignments and purchase agreements were “done retroactively after.”

On appeal, the Court of Appeals majority believed there was no question that C-Spine had intended to transfer its rights to the factoring companies prior to the suit being initiated, but considered the question of whether C-Spine was still entitled to bring its own action and pursue reimbursement of its claim against Progressive, despite that intent. The majority analyzed the language in MCR 2.201(B), which states that “[an action must be prosecuted in the name of the real party in interest…” and determined that this was distinct from the concept of standing, which is whether or not the party has the right to have a court consider the claim.

The majority determined that standing was not an issue because MCL 500.3112 granted C-Spine a direct right of action.. The majority also rejected Progressive’s argument that C-Spine was not the real party in interest, by examining the language in MCR 2.201(B)(1), which states in part that “a person authorized by statute may sue in his or her own name without joining the party for whose benefit the action is brought.” The majority opined that C-Spine could maintain the action regardless of whether it was bringing suit for its own benefit, the benefit of the factoring companies, or the joint benefit of all involved.

The majority found that even if C-Spine had not signed counter assignments, joinder of the factoring companies would have resulted in a single judgment, eliminating any risk to Progressive of a second suit. They further opined that allowing a dismissal of the claims would have resulted in a windfall to Progressive.

The broad implications of the Court’s decision in this case suggest that a medical provider can bring an action for the benefit of another party (such as a factoring company), despite having previously assigned the right to pursue an action on a balance or invoice to another entity.

In a lengthy dissent, Judge Markey addressed the numerous factual questions which remained because the record did not include the purchase agreements or factoring agreements at issue. The dissent determined that C-Spine was not a real party in interest for the simple fact that it had sold all of its rights to the factoring companies prior to filing its complaint, and had not recovered those rights, if at all, until after the complaint was filed. The dissent noted that the purchase agreements at issue spoke for themselves and established that C-Spine conveyed all of its rights, and further opined that the majority’s reliance upon Cannon Twp v Rockford Pub Sch, 311 Mich App 403 (2015), was misplaced because that case’s reasoning did not support C-Spine’s position. Instead, the dissent believed that the unpublished decision of Greater Lakes Ambulatory Surgical Ctr, LLC v Meemic Ins Co controlled, in which the Court of Appeals found that a factoring agreement deprived the plaintiff insurer of standing.