Michigan Court of Appeals; Docket #341562; Unpublished
Judges Kelly, Meter, and O’Brien per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Medical Provider Standing (Post-Covenant)
In this unanimous per curiam opinion, the Court of Appeals reversed the trial court’s grant of summary disposition for Defendant Esurance Insurance Company (“Esurance”) regarding the issue of an anti-assignment clause in its no-fault contract. The Court reversed the trial court’s grant of summary disposition because it found that its prior holding in Jawad A Shah, MC, PC v State Farm Mut Auto Ins Co, 324 Mich App 182, 208; ___ NW2d ___ (2018) barred anti-assignment clauses in no-fault contracts because they were against public policy.
Choka Johnson (“Johnson”) was injured in a motor vehicle accident and Plaintiff Somerset Pain Clinic, PC (“Somerset”) provided medical services to Johnson for her injuries. On March 30, 2017 Somerset brought an action against Esurance claiming that it had failed to reimburse Somerset for its services. During the pendency of the trial, the Michigan Supreme Court decided Covenant Med Ctr, Inc v State Farm Mut Ins Co, 500 Mich 191; 895 NW2d 490 (2017), which declared that medical providers did not have an independent statutory action against no-fault providers. On June 8, 2017 Johnson assigned her no-fault benefits to Somerset and Somerset filed an amended complaint on June 14, 2017. Esurance moved for summary disposition based on the anti-assignment clause in the no-fault contract. The trial court agreed and granted summary disposition for Esurance based on the anti-assignment clause. It also rejected Somerset’s motion to file its amended pleading because it said it would be futile to do so.
The Court of Appeals reversed the trial court because it had declared that anti-assignment clauses in no-fault contracts are unenforceable because of public policy. In Shah, the Court held that anti-assignment clauses are unenforceable because of public policy. The Court also held in Shah, that cases pending during the time Covenant was decided should be allowed to file supplemental pleadings when benefits were assigned. Here, the Court found that the anti-assignment clause in the Esurance-Johnson no-fault contract was unenforceable under Shah. The Court accordingly reversed the trial court. The Court also reasoned that Somerset should be allowed to file its amended pleading, but that pleading should be treated as a supplemental pleading.
“Applying Shah to the remarkably similar facts of the present case, the anti-assignment provision was unenforceable because of public policy. Johnson had an accrued claim against defendant, her insurer, for “payment of health care services that had already been provided by plaintiff.” Id. This accrued claim against defendant existed “before [Johnson] executed the assignment.” Id. (emphasis added). Therefore, Johnson was free to assign this claim to plaintiff, despite the anti-assignment provision.”
Thus, the Court reversed the trial court and found that the assignment was allowed and Somerset should be allowed to file a supplemental pleading.