Michigan Court of Appeals; Docket # 343005; Unpublished
Judges Markey, Fort Hood, and Gadola; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Allowable Expenses: Incurred Expense Requirement [§3107(1)(a)]
TOPICAL INDEXING:
Assignments of Benefits: Validity and Enforceability
SUMMARY:
In this unanimous unpublished per curiam decision regarding the meaning of the term “incurred” under MCL 500.3107(1)(a), the Court of Appeals reversed the trial court’s summary disposition order in favor of the defendant, finding that charges for medical treatment could not become “un-incurred” as a result of language in the assignment which stated that “[plaintiff medical provider] certifies that it will not pursue payment of its charges from [patient], but will accept payment from the persons or companies it pursues as payment of its total charges.” The assignment was more akin to a covenant not to sue, and did not release the plaintiff’s patient from all liability. Therefore, the assignment could not be construed to mean that the charges were no longer “incurred.”
Plaintiff Team Rehabilitation W2 provided treatment to Timothy Haerens after he was involved in a motor vehicle accident. Plaintiff obtained an assignment from Haerens, and brought this action against Haerens’s automobile insurer, State Farm, to obtain reimbursement for the treatments it provided. State Farm argued, and the trial court agreed, that specific language in the assignment released Haerens from his obligation to pay Plaintiff for the treatments he received, and that there were therefore no longer any “incurred charges” for State Farm to pay. The relevant portion of the assignment read:
Team Rehab certifies that it will not pursue payment of its charges from Me, but will accept payment from the persons or companies it pursues as payment of its total charges. If I receive a payment from one of the parties pursued by Team Rehab that includes payment for therapy provided by Team Rehab, and that party denies payment to Team Rehab, Team Rehab may demand payment from Me.
The trial court granted summary disposition in favor of State Farm, arguing:
The Plaintiff’s assignment clearly states that it will only demand payment from Haerens if [State Farm] pays Haerens No-Fault benefits . . . . If [State Farm] never makes a payment to Haerens, Haerens never has to pay the Plaintiff. Likewise, if [State Farm] never makes a payment to Haerens, the Plaintiff cannot file a lien against Haerens. Therefore, Haerens has no legal obligation to pay the Plaintiff if [State Farm] never pays any benefits. The court concludes that because of the assignment, Haerens has not incurred the charges from the Plaintiff and therefore he is not entitled to benefits from [State Farm] on those charges. Therefore, no factual development could possibly justify recovery on any of Plaintiff’s claims. The Amended Complaint is dismissed.
The Court of Appeals disagreed with the trial court’s interpretation, finding that the charges did not lose there “incurred” status merely because of Plaintiff’s promise not to pursue payment from Haerens. The Court reasoned:
There can be no reasonable dispute that Haerens incurred charges when he accepted and received services from plaintiff. The question is whether those charges lost their “incurred”status following the execution of the assignment between plaintiff and Haerens. Bombalski and Williams did not involve an assignment, and those cases entailed circumstances in which healthcare providers actually received payment for their services and accepted the payments infull satisfaction of the incurred debts even though more was originally owed to the healthcare providers. We conclude that the assignment did not discharge the liability or responsibility concerning payment for the services plaintiff rendered. Nor did the charges lose their “incurred” character upon execution of the assignment. The trial court’s ruling failed to appreciate the nature of an assignment.
. . .
On consummation of the assignment, plaintiff stood in Haerens’s shoes, and the shoes in which Haerens had been standing were those of a party that had an existing incurred debt that was covered, or potentially covered, by the State Farm no-fault policy. The assignment did not extinguish the obligation or liability; rather, the right to recover the debt simply shifted to the assignee—plaintiff. There remained an incurred charge for services, and to construe the assignment to the contrary would render it entirely illusory. Haerens would enjoy the benefit of not being pursued for payment in return for plaintiff’s having no ability to recover from State Farm.
. . .
Here, the assignment provided, “If I [Haerens] receive a payment from one of the parties pursued by Team Rehab that includes payment for therapy provided by Team Rehab, and that party denies payment to Team Rehab, Team Rehab may demand payment from Me.” If the charge were truly no longer “incurred” or Haerens’s liability ended with the assignment, Haerens could not be made to pay plaintiff for the rehabilitation and therapy services upon his receipt of benefits covering those services. Additionally, plaintiff simply promised “not [to] pursue payment” from Haerens, which is more in the nature of, or akin to, a covenant not to sue. There is no language in the assignment indicating that plaintiff was releasing Haerens from all liability.
