Michigan Court of Appeals; Docket # 340316; Unpublished
Judges Swartzle, Jansen, and O’Brien per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Medical Provider Standing (Post-Covenant)
In this unanimous unpublished per curiam opinion, the Court of Appeals upheld the trial court’s grant of summary disposition denying Plaintiff Michigan Head and Spine, PC (“MHS”) an independent statutory cause of action against Defendant Allstate Property and Casualty Insurance Co. (“Allstate”) and reversed the grant of summary disposition denying MHS’s motion to amend its complaint. The Court of Appeals upheld the trial court’s summary disposition because the Michigan Supreme Court’s decision in Covenant Medical Center, Inc. v State Farm Mutual Auto Insurance Co., 500 Mich 191 (2017), abolished a medical provider’s independent statutory cause of action against an insurance company under the no-fault scheme. The Court of Appeals reversed the denial to amend because assignment of benefits are allowed and cannot be prohibited in a no-fault contract.
Lisa Chisty (“Chisty”) received medical services from MHS after she was involved in an automobile accident. MHS submitted claims for payment to Allstate, but Allstate did not fully pay the claims. MHS then brought an action to receive the money owed to it by Allstate. Considering the Supreme Court’s decision in Covenant, Allstate moved for summary disposition. The lower court granted summary disposition and did not allow MHS to amend its complaint because the trial court did not believe MHS had a cause of action under assignment-of-benefits theory after Covenant.
First, the Court upheld the trial court’s grant of summary disposition regarding an MHS’s independent action because it found that medical providers lacked an independent statutory cause of action in a no-fault action. The Court reviewed Covenant and found that healthcare providers lack an independent statutory cause of action against no-fault insurers to recover PIP benefits. The Court also concluded that it had previously found the Covenant decision to apply retroactively to cases awaiting appeal. Because MHS was brining an independent cause of action and its case was pending before the trial court when Covenant was decided, the Court found that summary disposition was appropriate.
“Covenant applies to bar plaintiff’s independent action against defendant for the recovery of PIP benefits owed to Christy. Summary disposition was therefore appropriate on plaintiff’s independent statutory claim.”
Second, the Court overturned the lower court’s denial of a request to amend the complaint. The Court explained that denial of a request is in the trial court’s discretion and it can only be overturned for an abuse of discretion. The Court then explained that a trial court necessarily abuses its discretion when it makes an error of law. The trial court reasoned that because MHS did not have a direct cause of action against Allstate, it could not amend its complaint. However, Covenant did not change the right of individuals to assign their claims for benefits past or presently due. Thus, the trial court was incorrect in believing that Plaintiff did not have a direct cause of action because under the assignment-of-benefits theory MHS could bring a direct action if Christy had assigned her benefits to it. Because MHS potentially had a direct cause of action, the trial court made an error of law, and its order denying the amendment of the pleadings was overturned by the Court of Appeals.
“The trial court reasoned that, because plaintiff did not have a direct statutory cause of action, plaintiff could not amend its complaint. Yet, in Covenant, 500 Mich. at 217 n. 40, our Supreme Court recognized that an insured may “assign his or her right to past or presently due benefits to a healthcare provider.” Thus, in the situation where a health-care provider’s independent statutory claim for PIP benefits is summarily dismissed, this Court has held that the provider should be granted leave to amend its complaint to assert a claim under an assignment-of-benefits theory. See Bronson Healthcare Group, ___ Mich App at ___; slip op at 3, citing W A Foote Mem Hosp, 321 Mich App at 196. Accordingly, the trial court erred by denying plaintiff’s motion to amend on the basis that plaintiff did not have a direct cause of action.”
Thus, the Court of Appeals upheld the trial court’s order for summary disposition, but it overturned the order denying MHS from amending its complaint.