No-Fault Medical Provider Actions Now At Potential Risk

On May 27, 2016, the Michigan Supreme Court has effectively signaled a complete 180 from its stated opinion exactly one-year ago, despite no change in the Court’s current composition of justices.  Last May 28, 2015, the Michigan Supreme Court denied an application to appeal a decision issued by the Michigan Court of Appeals, in Wyoming Chiropractic Health Clinic, PC v Auto-Owners Ins Co, 308 Mich App 389 (2014).  In that case, Auto-Owners challenged whether a medical provider had standing to bring a direct action to collect medical charges incurred by injured insureds, arising out of a motor vehicle accident.  In that published/binding opinion, the Michigan Court of Appeals ruled affirmatively that medical providers do have standing under the no-fault act, particularly section 3112, consistent with long-standing Michigan no-fault jurisprudence dating as far back as 1982 in Lansing Gen Hosp Osteopathic v Gomez, et al, 114 Mich App 814 (1982).  And so, a year ago the Michigan Supreme Court denied Auto-Owner’s application stating it was “not persuaded that the question presented should be reviewed by this Court.”  (S. Ct. Order 150868).  In other words, by denying leave on that specific question raised by Auto-Owners, the Michigan Supreme Court said “no,” having been satisfied with the Michigan Court of Appeals’ ruling on the precise issue.  Now, fast forward to May 27, 2016: in another published opinion by the Michigan Court of Appeals, Covenant Med Ctr v State Farm Mut Auto Ins Co, 313 Mich App 50 (2015), the medical provider brought a direct action to collect unpaid no-fault benefits for charges incurred by an injured insured.  The only dispute in Covenant was whether State Farm was liable even though it had settled a claim with the insured that did not include Covenant’s charges, of which State Farm was on notice of.  Basically, State Farm tried to pull a fast one on Covenant by settling with the insured and then sticking both the insured and Covenant with the bill based upon the release agreement.  The Michigan Court of Appeals said not so and enforced liability against State Farm to pay the Covenant charges.  State Farm filed an application to appeal this decision and on May 27, 2016, the Michigan Supreme Court granted it and directed the parties to address three issues: “(1) whether a healthcare provider has an independent or derivative claim against a no-fault insurer for no-fault benefits; (2) whether a healthcare provider constitutes ‘some other person’ within the meaning of the second sentence of MCL 500.3112; and (3) the extent to which a hearing is required by MCL 500.3112.”  (S. Ct. Order 152758).  Thus, a clear signal that the Michigan Supreme Court may just pull a 180 and now rule that a medical provider does not have standing to bring a direct action, contrary to long-standing Michigan no-fault jurisprudence.  This would constitute a radical change in the law.  And, it would create great detriment to medical providers, particularly hospital systems that must treat anyone who is presented at their door.  Realize what this is all about: it is the unrelenting push by the no-fault insurance industry to shift the burden of medical care expenses to the taxpayers, i.e., Medicaid and/or Medicare.  The auto-insurers want to keep their billions in premiums while avoiding paying claims and instead, stick that burden to the body public.  Medical associations like the Michigan Health & Hospital Association (MHA), with considerable governmental influence and knowledge of facts (including taxpayer-funded liabilities v private insurance), should file motions for leave to participate as Amicus Curiae, in support of the medical provider direct action.  Given this potential risk ahead for medical providers, it may be most prudent to bring action on stale accounts immediately before the Michigan Supreme Court potentially rules that such a claim may not be had; given the drastic change in the law, while uncertain, it would appear to be a ruling that should not apply retroactively to pending claims or those filed before the court actually issues its decision which likely will come either at the end of 2016, but more likely in 2017.  Medical providers with no-fault questions, generally, or about this particular topic are welcomed to call Smith & Johnson, Attorneys, P.C., to discuss the no-fault landscape and how to recover unpaid charges.

Authored by L. Page Graves