RETROACTIVE REVOCATION OF ASSIGNMENTS DOES NOT RESTORE STANDING TO INJURED PLAINTIFF

Dylan J. Church

Although medical providers have an independent right under Section 3112 of the No-Fault Act to bring a claim for services rendered to persons injured in an auto accident, it remains a common practice for injured persons to contractually assign their own right to collect PIP benefits for those services to the servicing medical provider. Such assignments, however, effectively deprive the injured person of legal standing to bring those claims, which can lead to a statutory bar on the recovery of those bills if the “real party in interest” does not bring suit within one year.

In Robinson v Szczotka, et al, (Unpub, COA No. 359646, April 6, 2023), the remaining defendant in the case, Suburban Mobility Authority for Regional Transportation (SMART), sought summary disposition on the basis that the Plaintiff had assigned her rights to seek PIP benefits to several medical providers prior to commencing her own suit wherein she sought reimbursement for those same medical bills. SMART argued that Plaintiff lacked standing to pursue those claims in light of the prior assignments and that the assignee medical providers needed to assert their own claims.

In response, Plaintiff revealed that those prior assignments had been revoked, albeit after the filing of her lawsuit, which she claimed to have effectively restored her prior right to pursue those benefits. SMART disagreed, arguing that the medical providers were unable to restore Plaintiff’s rights through the revocation of assignments. In particular, SMART pressed the fact that over one year had passed since the rendering of all at-issue medical services and, therefore, pursuant to MCL 500.3145(1), the medical provider’s claims were extinguished. As a result, they had no valid claims to return to the Plaintiff. The trial court denied SMART’s motion, holding that the revocation was a valid means of restoring Plaintiff’s status as the real party in interest.

The Court of Appeals began its analysis with the principle than an action must be prosecuted in the name of the real party in interest, which is the one vested with the right of action on a given claim. MCR 2.201 (B). Generally, one who receives the rights of an assignor becomes the real party in interest with respect to the given claim. Under the facts of this case, the Plaintiff was not the real party in interest at the time she filed her Complaint because the rights to recover unpaid medical bills had been vested in her medical providers by virtue of the assignments. The Court of Appeals rejected Plaintiff’s argument that the revocations executed after the commencement of litigation had nullified the assignments retroactively, as if the assignments never existed in the first place (“nunc pro tunc”), such that Plaintiff retained standing even when her Complaint was filed. The Court held that a retroactive revocation cannot be used to fix a problem that existed at the time a lawsuit is filed, and revocation does not return parties to the status quo if the revocation occurs after the parties’ rights are fixed.

Furthermore, while the medical providers who received assignments from the Plaintiff could have pursued claims for reimbursement of their bills within one year of the services being provided, all but one provider failed to do so such that the providers’ claims were barred by the one-year-back rule. The providers, therefore, had no valid claims to pursue or return to the Plaintiff at the time the revocations were attempted. As a result, the Court reversed the trial court’s ruling and remanded the matter for entry of summary disposition in favor of SMART.