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Michigan Spine & Brain Surgeons, PLLC v Auto Owners Ins Co (COA – UNP 12/11/2018; RB #3823)


Michigan Court of Appeals; Docket # 340800; Unpublished
Judges Kelly, Meter, and O’Brien per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

One-Year Notice Rule Limitation [§3145(1)]
Prohibition Against Assigning Future Right to Benefits

Medical Provider Standing (Post-Covenant)

In this unanimous per curiam opinion the Court of Appeals upheld the trial court’s order for summary disposition in favor of the Defendant Auto Owners Insurance Company (“Auto Owners”) regarding the application of the one year back rule to an assignment of benefits claim. The Court upheld the trial court’s order for summary disposition because it found that only one of the three assignments was not for future benefits and the proper assignment occurred more than one year after Plaintiff Michigan Spine & Brain Surgeons (“MSBS”) rendered its services.

MSBS provided medical services to Willie McGee after he was involved in a motor vehicle accident. McGee first assigned his benefits to MSBS on October 31, 2014. McGee assigned his benefits again to MSBS on March 25, 2016. McGee received surgery from MSBS on March 28, 2016. McGee assigned his benefits again to MSBS on May 12, 2017. MSBS sought reimbursement for its March 28, 2016 surgery against Auto Owners. Additionally, the Auto Owners no-fault policy had an anti-assignment clause in it that required McGee to get permission from Auto Owners to assign his claim.

The Court first found that the first two assignments were for future benefits and not proper. Citing to Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich 191; 895 NW2d 490 (2017), the Court found that assignments that contemplate payment for future services are invalid under the language of the Act. Here the first two assignments were invalid because they each contemplated an assignment for the future surgery. The first assignment occurred on October 31, 2014 and the second assignment occurred on March 25, 2015; however, the surgery occurred on March 28, 2016 after the assignment of both. Thus, the assignments of the first two were improper.

“Despite plaintiff’s various contentions regarding the assignments of October 31, 2014, and March 25, 2016, it is not legitimately disputable that the assignments are invalid under Covenant because they contemplate an assignment for services from plaintiff that were not rendered until March 28, 2016, thereby comprising a preclusive future assignment of benefits.”

The Court next found that the third assignment was barred by the one year back rule. In Jawad A Sha, MC, PC v State Farm Mut Auto Ins Co, 324 Mich App 182, __; ___ NW2d __ (2018) the Court ruled that an assignee cannot gain more rights than the assignor has. When an entity is assigned PIP benefits it stands in the shoes of the assignor and can only collect bills that the assignor was eligible to collect on that date. Id. Further, claims for medical benefits can only be reimbursed if they are brought within one year from the time the services were rendered. MCL 500.3145(1). Here, the surgery occurred on March 28, 2016 and Plaintiff initiated the action on May 3, 2016. However, the proper assignment did not occur until May 12, 2017 and thus MSBS only had authority to collect bills owed from one year prior to the date of the proper assignment. Therefore, MSBS could only collect bills owed from May 12, 2016 onward. Because the surgery occurred before May 12, 2016 MSBS could not be reimbursed.

“It is routinely recognized that “[a]n assignee stands in the position of the assignor, possessing the same rights and being subject to the same defenses.” Burkhardt, 260 Mich App at 653. As such, plaintiff is afforded only the same rights, not greater rights, than McGee would have possessed on the date of the assignment. See Jawad A Shah, MD, PC, 324 Mich App at ___. Had McGee initiated an action against defendant on May 12, 2017, he would have been precluded from recovering any benefits for the part of the loss incurred more than one year before May 12, 2017.”

The Court also explained that the anti-assignment clause was invalid. The Court had previously ruled that anti-assignment clauses in no-fault contracts are invalid as a matter of public policy in Shah. Here, State Farm’s anti-assignment clause was invalid. However, because the assignments were for future benefits or barred by the one year back rule, MSBS was still barred in its action.

“As argued by plaintiff, however, courts have refused to enforce an anti-assignment clause when the loss at issue occurs before the assignment is executed.”

Finally, the Court found that the trial court did not abuse its discretion by denying MSBS’s motion for reconsideration. Thus, the Court upheld the trial court’s grant of summary disposition.           

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