October 11, 2024
Understanding Canty v. Mason: PIP Coverage and Medicare Impacts
October 11, 2024
The recently published Michigan Court of Appeals decision in Canty v. Michael Chester Mason, __ NW3d__(2024) addresses whether the fee caps in MCL 500.3157 apply when an injured person has elected not to maintain PIP coverage under his automobile insurance policy because he maintained “qualified health coverage” in the form of Medicare. The Canty Court further addresses whether such an injured person must first submit his claims to Medicare before seeking recovery of no-fault benefits.
Canty was rear ended by Mason. Canty had Medicare and opted out of PIP allowable expense coverage. He brought a tort suit against Mason and specifically sought to recover related medical expenses pursuant to MCL 500.3135(3)(c), which would have been covered by PIP but for the opt out. MCL 500.3135(3)(c) allows a claim against a tortfeasor for “[d]amages for allowable expenses…as defined in sections 3107 to 3110…without limit for allowable expenses if an election to not maintain that coverage was made under section 3107d….”
Mason sought partial summary disposition, arguing that MCL 500.3135(3)(c) does not allow for a limitless recovery of allowable expenses, instead arguing that the benefits claimed must be reasonable and must comport with the fee caps in MCL 500.3157. Mason also argued that Canty was required to mitigate damages by submitting the claims to Medicare. The motion was denied in part and an appeal followed.
The Court of Appeals interpreted the amended MCL 500.3135(3)(c) as allowing a person who opted out of PIP allowable expenses to pursue the entirety of those PIP benefits from the tortfeasor. In an unlimited PIP situation, the plaintiff would only be able to seek PIP benefits in “excess of” the statutory PIP limitations (i.e. daily, monthly, and 3-year caps), the Court reasoned.
The Court ruled that in an opt-out situation, the “without limit” language grammatically and contextually means that the plaintiff can pursue the entirety of the PIP claim (from dollar one) against the tortfeasor, and not merely the amounts in excess of the statutory limitations. The only distinction between a Plaintiff with allowable expense coverage and a Plaintiff that opted out is that a Plaintiff who opted out may recover “without limit,” in the sense that their recovery is not limited by the statutory daily, monthly, or 3-year limitations on the payment of PIP benefits.
The Court confirmed, however, that any claim must comply with the definition of “allowable expenses” under MCL 500.3107 through MCL 500.3110 (which were specifically incorporated into the tort statute), reaffirming that the charges must still be reasonable.
The Court found that the Legislature intended for the fee schedule in MCL 500.3157 to apply to claims pursuant to MCL 500.3135(3)(c). Although MCL 500.3135(3)(c) does not directly reference the fee schedule provisions found in MCL 500.3157, the Court reasoned it did so indirectly by incorporating MCL 500.3107, which in turn specifically states that the provisions are “[s]ubject to the exceptions and limitations in this chapter.” One such limitation is MCL 500.3157, which sets caps on recovery. Accordingly, a plaintiff who opted out of PIP can pursue medical benefits in his tort claim, but these benefits are limited by the fee caps in MCL 500.3157.
Finally, the Court of Appeals also held that, in a third-party negligence suit, a Plaintiff who opted out of PIP allowable expenses, is required to mitigate his or her damages by submission of the claim to Medicare, and that an offset for expenses that Medicare would cover is appropriate.
The Court reasoned that the No-Fault Act did not invalidate the long standing common law requirement that a Plaintiff must mitigate his or her damages in a tort case; and an automobile negligence claim is a tort action. The Court reached the same conclusion with an analysis of the statutory text. Specifically, MCL 500.3109 (which was incorporated into the tort statute) offers a PIP carrier an offset for benefits provided or required to be provided by state or federal law when those benefits serve the same purpose as the no-fault benefits (e.g. workers compensation, Social Security disability, etc).
Under federal law, Medicare benefits are not payable when the benefits are covered by an auto insurer. But in an opt-out situation, there is no PIP coverage for allowable medical expenses. The tort statute explicitly incorporates MCL 500.3109, which requires the offset of any claims provided or required to be provided by Medicare. “Therefore, the question becomes whether Medicare benefits would have been required to be provided to him or his providers had any of the pertinent medical bills been submitted to Medicare for payment. And to that extent, Mason is entitled to a setoff under MCL 500.3109(1) for purposes of any damage calculation on a finding of liability.”
Canty confirms that damages recoverable under MCL 500.3135(3)(c) must constitute “allowable expenses.” The Court applies the fee schedules in MCL 500.3157 to Canty’s claims. Under either MCL 500.3109(1) or common law mitigation principles, Mason is entitled to a setoff for medical expenses that Medicare would have covered. If necessary, the trier of fact must resolve whether any incurred expenses for services rendered by providers who did not accept Medicare were reasonably incurred to mitigate damages.
In a dissent, Judge Mariani opined that MCL 500.3135(3)(c) does not incorporate MCL 500.3157’s fee schedule into its defined scope of available tort damages. Rather, section 3135(3)() expressly designates a narrow and specific range of statutory provisions within Chapter 31 – sections 3107 to 3110 – to define the scope of available tort damages.