CHALLENGING UTILIZATION REVIEW: ADMINISTRATIVE APPEAL OR LAWSUIT?

The Court of Appeals in Infinity Physical Therapy, LLC v Auto Club Insurance Association, unpublished per curiam opinion of the Court of Appeals, issued [Aug. 17, 2023] (Docket No. 361244), reminds insurers that medical providers are not required to appeal utilization review decisions to the Department of Financial and Insurance Services (DIFS) before filing a lawsuit.

In this case, Plaintiff provided physical therapy treatment to a patient following a motor vehicle accident. About one and a half years after the accident, Defendant conducted a utilization review of Plaintiff’s services in accordance with MCL 500.3157a. The utilization review determined that the treatment was in excess of the recommended duration and frequency of therapy, and Defendant advised that it would not pay PIP benefits for services rendered after the utilization review. Defendant’s explanation of benefits reflected the non-payment, and advised that Plaintiff may appeal the utilization review decision to DIFS.

Plaintiff did not appeal the decision to DIFS, but rather brought a lawsuit in circuit court pursuant to MCL 500.3112 and MCL 500.3157a. Defendant moved for summary disposition, arguing that the trial court did not have subject-matter jurisdiction over Plaintiff’s claim because Plaintiff was required to exhaust its administrative remedy, by appealing the utilization review decision to DIFS, before seeking relief in court. The trial court denied Defendants motion and the Court of Appeals affirmed.

In its analysis, the Court of Appeals relied on True Care Physical Therapy, PLLC v Auto Club Group Ins Co, ___ Mich ___; ___ NW2d ___ (2023) (Docket No. 362094), which decided this identical issue on materially similar facts and held that “the administrative appeal provided by MCL 500.3157a(5) . . . [is] permissive, not mandatory.” Id. at ___; slip op at 11. The Court further found that contrary to Defendant’s argument, there was no conflict between MCL 500.3157a(5) and MCL 500.3112 because the plain language of §3157a(5) and Rule 500.65 say that an appeal is voluntary, not mandatory, and Defendant’s arguments asked the Court to look beyond that language to infer a Legislative intent which would be improper.