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Spectrum Health Hosps v Farm Bureau Gen Ins Co of Mich, et al (COA - UNP 1/28/2021; RB #4213)


Michigan Court of Appeals; Docket #351018; Unpublished 
Judges Shapira, Sawyer, and Beckering; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Allowable expenses: Reasonable Charge Requirement [§3107(1)(a)]


In this unpublished per curiam opinion, the Court of Appeals vacated and remanded the trial court’s award of unpaid charges, interest, and attorney fees to plaintiff on the issue of whether defendant was liable to pay plaintiff’s charges. The Court of Appeals held that based on recent decisions regarding the evidence that is admissible regarding the reasonableness of charges under MCL 500.3107(1)(a), the case must be remanded back to the trial court for a new trial because defendant should have been allowed to present evidence of payment by third parties, such as Medicare, Medicaid and private health insurance regarding the issue of whether the provider charges at issue were reasonable under MCL 500.3107(1)(a).

This case arose from a dispute involving personal protection insurance (PIP) benefits. Defendant paid a portion of the charges billed by plaintiff, but refused to pay the full amount, arguing that plaintiff’s charges were unreasonable. Plaintiff filed suit seeking payment of the remaining balance. Defendant filed a motion in limine seeking a ruling that “publicly available data regarding payments by third parties (such as health insurers, Medicaid, Medicare, and workers compensation) and expert opinions relying on this data was relevant and admissible for purposes of assessing the reasonableness of a healthcare provider’s charges.” The trial court denied the request to admit this evidence and granted summary disposition to plaintiff and awarded plaintiff unpaid charges as well as an award of interest and attorney fees. Defendant appealed.

On appeal, the Court considered what evidence may be used to assess the reasonableness of plaintiff’s charges. While defendant argued that the amounts paid on the open market are highly relevant to a reasonableness assessment, plaintiff argued that case law from the Michigan Court of Appeals “forecloses consideration of such data, that third-party payments are not relevant to the reasonableness of a provider’s charges because ‘payments’ and ‘charges’ are different terms, and that the evidence in question cannot be relevant or admissible because it is not subject to discovery under the no-fault act.” In its analysis, the Court noted that the issues raised by both parties was recently addressed by the Michigan Court of Appeals in Spectrum Health Hosps. Farm Bureau Ins Co of Mich, __ Mich App __; __NW2d __ (2020) (Docket Nos. 347553 and 348440), 1v pending, which held that “payments by third parties may be relevant to an assessment of the reasonableness of a healthcare provider’s charges under the no-fault act.” Applying the relevant holding of Spectrum to the case at bar, the Court noted that the cases were “indistinguishable” and therefore concluded that the trial court had abused its discretion by reaching the “erroneous legal conclusion that evidence of third-party payments was categorically inadmissible . . . [a]s . . . such evidence may be relevant and admissible when assessing reasonableness under MCL 500.3107(1)(a) and MCL 500.3157.” Thus, given the error by the trial court, the Court vacated the judgment in favor of plaintiff and remanded the case to the trial court for a determination of the relevance of the specific data. The Court further vacated and remanded the award of attorney fees and interest because “such an award would be premature before a determination of defendant’s liability on remand.”

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