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Physiatry and Rehab Associates v State Farm Mutual Ins Co (COA – UNP 4/1/2021; RB #4243)

Michigan Court of Appeals; Docket# 350826; Unpublished
Judges Stephens, Servitto and Letica; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING:
Not Applicable

TOPICAL INDEXING:
Collateral Estoppel and Res Judicata
Assignment of Benefits – Validity and Enforceability


SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals affirmed the trial court’s grant of summary disposition in favor of Defendant State Farm Mutual Automobile Insurance Company ("State Farm") on the issue of whether a medical provider assigned rights by an injured policyholder was barred from bringing a separate suit for benefits on the basis of the injured policyholder’s release, collateral estoppel, and res judicata. In its holding, the Court noted that the Michigan Supreme Court has long held that when an assignment of rights occurs after a lawsuit is filed, the assignor may settle or release those claims, precluding any further recovery by the assignee.

This case arose from a motor vehicle collision in which Lina Kasha was injured. Following the collision, Kasha filed a complaint against State Farm and began treatment with Plaintiff Physiatry and Rehab Associates ("Plaintiff").  Shortly thereafter, Kasha executed an assignment, assigning Plaintiff “'all of [Kasha]’s right to recover payment for all past and present [s]ervices' that it provided to her.” Accordingly, Plaintiff filed its own lawsuit against State Farm, and two days later, Kasha and counsel for State Farm appeared for a settlement conference in which they reached an agreement to settle Kasha’s claim. Kasha executed a release that “cover[ed] all claims for PIP benefits by or for Ms. Kasha, whether now known or unknown, arising out of the accident policy coverage, which accrued only through March 1, 2019.” Kasha also represented that she had

"not assigned or transferred or purported to assign or transfer to any person or entity any claim or cause of action arising out of or related to the matters released herein.  Ms.  Kasha  agrees  to  indemnify,  defend,  and  hold  State  Farm  harmless  from  and against any and all claims based on or arising out of any such assignment or transfer or purported assignment or transfer."

Therefore, State Farm moved for summary disposition in Plaintiff's action, arguing that Plaintiff was barred by Kasha’s release, collateral estoppel, and res judicata. The trial court agreed and granted State Farm's motion.

On appeal, the Michigan Court of Appeals first considered plaintiff’s argument that the trial court erred when it granted summary disposition in State Farm's favor because Kasha could not release a claim once she had assigned it to Plaintiff. In analyzing this claim, the Court noted that the Michigan Supreme Court has “long held that when as assignment of claims occurs after a lawsuit is filed — the subject of which concerns those assigned claims — the assignor may settle or release those claims, precluding any further recovery by the assignee.” The Court clarified that while Plaintiff had the right to intervene in the first suit as a result of the assignment, plaintiff had lost that right when it chose not to intervene. Specifically, the Court noted that, in choosing not to intervene, Plaintiff acquiesced to Kasha, the assignor, proceeding on its assigned claims.

The Court next examined Plaintiff’s argument that res judicata did not apply to its claims because its claims were not ripe and did not arise from the same transaction or occurrence as Kasha’s claims. In examining this claim, the Court noted that “[f]or res judicata to preclude a claim, three elements must be satisfied: (1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first.” In this case, the Court noted that

“while plaintiff’s claims may not have been ripe at the time Kasha filed her complaint because plaintiff’s services had not yet rendered, its claims were ripe at the time plaintiff filed its own lawsuit . . . . There was nothing preventing plaintiff from bringing its claims at the time Kasha’s lawsuit was pending.”

The Court further disagreed with Plaintiff’s arguments that its claims arose out of a different transaction or occurrence than Kasha’s claims. In so holding, the Court held that “Kasha sought payment of no-fault benefits from defendant as a result of her November 18, 2016 automobile accident. Plaintiff, through its lawsuit, also sought payment of no-fault benefits arising from the same accident.” Thus, the Court noted that “for plaintiff, as an assignee, to exercise any rights under the assignment, those rights must have arisen from the same transaction or occurrence under which the assignor obtained those rights.”

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