Michigan Court of Appeals; Docket # 338168, 340018; Unpublished
Judges Sawyer, Markey, and Stephens; Per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Intervention by Service Providers and Third Party Payors in PIP Claims
SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals vacated a judgment in favor of the plaintiff, WA Foote Memorial Hospital (“WA Foote”), because WA Foote lacked an independent cause of action for no-fault PIP benefits against the defendant, Farmers Insurance Exchange (“Exchange”), pursuant to the Supreme Court’s decision in Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191 (2017), which was decided after the trial court’s entry of judgment in favor of WA Foote but before Farmers appealed. Because Covenant applies retroactively, the Court determined that it also applies in this case.
Jessica Jacobs received treatment from WA Foote for injuries she sustained after jumping from a moving vehicle traveling between 45 and 55 miles per hour. WA Foote filed a lawsuit against Farmers in August 2015 to recover no-fault PIP benefits, and the case proceeded to trial, prior to which the parties stipulated that “the only issue for trial is whether the injuries Jessica Jacobs sustained arising out of the August 26, 2014 motor vehicle accident were accidental as defined by MCL 500.3105.” The jury ultimately returned a verdict in WA Foote’s favor. As a result, the trial court entered a judgment in favor WA Foote, as well as case evaluation sanctions against Farmers.
On appeal, Farmers argued that the judgment and sanctions award should be vacated based on the Supreme Court’s decision in Covenant, while WA Foote argued that Covenant is inapplicable because Farmers waived any challenge to WA Foote’s capacity to file suit by entering into the aforementioned stipulation agreement. WA Foote argued, alternatively, that the judgment should remain intact because it cured the defect by obtaining an assignment from Jacobs after trial or, at a minimum, that it should be given the opportunity to amend its complaint to plead an assignment theory.
The Court of Appeals agreed with Farmers, finding firstly that Farmers did not waive its ability to challenge WA Foote’s right to maintain a direct cause of action by entering into the stipulation agreement. “Notably missing from the stipulation,” the Court noted, “is an agreement that plaintiff was the proper party to litigate this issue.”
The Court next determined that the plaintiff’s post-judgment assignment did not cure the Covenant defect in this case, and that a remand to allow WA Foote to amend its complaint would be futile because any such amendment would be a supplemental pleading and therefore barred by the one-year-back rule.
Plaintiff now claims that the assignment cures any Covenant defect or that, at a minimum, plaintiff should be given the opportunity to amend its complaint to add an assignment theory. However, as argued by defendant, the flaw in plaintiff’s argument is that Jacobs could only assign to plaintiff the rights she possessed as of the date of the assignment—namely June 8, 2017. See Shah, 324 Mich App at 205. In light of the one-year-back rule, MCL 500.3145(2), Jacobs’s rights on June 8, 2017, did not include the ability to pursue the medical expenses sought by plaintiff for treatment provided in August and September of 2014. See Shah, 324 Mich App at 202-205. Because Jacobs did not possess rights to recover benefits beyond those allowed by MCL 500.3145, she could not assign such rights to plaintiff, and thus plaintiff could not obtain the right to recover benefits for losses incurred more than a year before June 8, 2017. See Shah, 324 Mich App at 202- 205. Moreover, contrary to plaintiff’s attempt to retroactively cure the Covenant defect, the addition of an assignment theory does not relate back to the commencement of the action. Id. Accordingly, Jacobs’s assignment—which was ineffective to convey the rights to plaintiff’s claims—did not retroactively cure the Covenant defect in this case, and the fact remains that plaintiff’s complaint failed to state a claim on which relief can be granted. See Bronson Healthcare Group, Inc, 323 Mich App at 305. Further, on the facts of this case, plaintiff need not be given an opportunity to amend its pleadings to add an assignment theory for recovery of PIP benefits because any such claim would be futile given that Jacobs’s assignment in June 2017 did not, and could not, convey the right to obtain benefits for the medical expenses incurred in August and September 2014. See Lane v KinderCare Learning Centers, Inc., 231 Mich App 689, 697; 588 NW2d 715 (1998) (“An amendment is futile if it merely . . . adds allegations that still fail to state a claim.”).
