Michigan Court of Appeals; Docket # 345916; Unpublished
Judges Borrello, Kelly, and Servitto; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Assignments of Benefits—Validity and Enforceability
SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals reversed the trial court’s summary disposition order dismissing the plaintiffs’ first-party action to recover no-fault PIP benefits on the basis of assignments, and remanded for further proceedings. The plaintiffs obtained valid assignments from their patient and the Court of Appeals reaffirmed its holding in Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, 324 Mich App 182 (2018), that antiassignment clauses violate public policy and are therefore unenforceable.
Kuanda Bey was injured in two separate motor vehicle collisions on July 3, 2014 and November 11, 2015, and subsequently sought treatment from both the Michigan Head & Spine Institute, PC (MHSI) and Beaumont Health. At the end of each appointment, MHSI and Beaumont obtained assignments of benefits from Bey, ranging in dates from August 2, 2016 to June 8, 2017. On October 4, 2016, MHSI commenced the instant action against the two no-fault insurers, State Farm and GEICO, who were deemed to be in the highest order of priority with respect to paying no-fault PIP benefits for the two collisions, and the trial court granted Beaumont’s motion to intervene shortly thereafter. On May 25, 2017, while the instant action was proceeding, the Michigan Supreme Court decided Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, in which it held that healthcare providers do not possess a direct cause of action against no-fault insurers for recovery of PIP benefits, prompting State Farm and GEICO to move for summary disposition three weeks later. MHSI and Beaumont moved for leave to amend their complaint to reflect the assignments they had obtained, but the trial court granted State Farm and GEICO’s motions for summary disposition regardless because of antiassignment clauses in each of the subject policies.
The Court of Appeals reversed the trial court’s summary disposition orders in favor of State Farm and GEICO, reaffirming its previous holding in Shah that antiassignment clauses such as those found in the subject policies violate public policy and are therefore unenforceable.
Our resolution of the instant appeal is guided by our decision in Shah. Like this case, Shah involved a situation where medical providers sought to rely on assignments to maintain their action seeking to recover from a no-fault insurer after the Covenant decision was issued during the course of ongoing litigation, while the no-fault insurer contended that the assignments were invalid due to an antiassignment clause in the insurance policy. Shah, 324 Mich App at 186-191. This Court held in Shah that “the antiassignment clause in the instant case is unenforceable to prohibit the assignment that occurred here—an assignment after the loss occurred of an accrued claim to payment—because such a prohibition of assignment violates Michigan public policy that is part of our common law as set forth by our Supreme Court.”
. . .
The trial court in this case granted summary disposition and dismissed MHSI from this action pursuant to Covenant and then denied MHSI the opportunity to amend its pleadings to account for a theory of standing based on assignments it had already obtained from Bey before filing the instant action,10 believing that the antiassignment clauses made such an amendment futile. However, because the assignments could have provided MHSI with the standing it lacked once the Covenant decision was issued and the antiassignment clauses were unenforceable to prevent the post-loss assignments in this case, the antiassignment clauses thus did not dictate the conclusion that it would have been futile to permit MHSI to amend its complaint to reflect the existence of the assignments. Shah, 324 Mich App at 200, 204, 209; Covenant, 500 Mich at 195-196, 217 n 40. Therefore, the trial court necessarily abused its discretion in denying MHSI’s motion for leave to amend because its decision was based on a mistake in law. Shah, 324 Mich App at 208-209. Furthermore, because assignments from Bey could have provided MHSI with standing under Covenant, the trial court erred by granting summary disposition without properly applying the law regarding the effect of the antiassignment clauses in order to determine whether an amendment to the pleadings based on the assignments would have been futile. Shah, 324 Mich App at 209.
