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Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co (COA – UNP 2/25/2021; RB #4224)


Michigan Court of Appeals; Docket # 353298; Unpublished 
Judges SwartzleBeckering and Gleicher 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion; Link to Dissent

Lawfully Rendered Treatment [§500.3157]

Legislative Purpose and Intent

In this unpublished 2-1 opinion (Judge Swartzle dissenting), the Court of Appeals reversed the trial court’s holding in favor of the defendant, finding that the services provided by Insight Healing Center were not adult foster care services requiring corresponding licensure and were thus lawfully rendered within the meaning of the no-faut act, requiring payment of these services by defendant. 

This case arose from an accident in which Michael Stone was struck by a vehicle driven by a person insured by Defendant. After the accident, Stone was admitted to Insight Healing Center for rehabilitation and therapy and resided at this facility for almost two years. Insight billed defendant $787,000 for Stone’s treatment, and defendant resisted payment, contending that plaintiff was an adult foster care facility requiring licensure, and that plaintiff’s lack of licensure meant the services provided to Stone were not lawfully rendered as required by the no-fault act.  

At trial, the focus of both parties’ arguments was the statutory definition of “adult foster care.” At the time plaintiff provided services to Stone, the term “foster care” was defined in Michigan’s Adult Foster Care Licensing Act (AFCLA) as “the provision of supervision, personal care, and protection in addition to room and board, for 24 hours a day, 5 or more days a week, and for 2 or more consecutive weeks for compensation.” The parties’ disagreement centered on the meaning of the phrase “the provision of,” with plaintiff arguing that it did not “provide” Stone with “board,” “supervision,” or “personal care,” and that the true providers of those services were separate commercial entities and independent contractors, some of which had their own licenses and hired licensed personnel who provided services to Stone. Plaintiff further argued that residents were permitted to select their own providers of the services, and that plaintiff “did not direct the care that the individual personal care or supervisory providers delivered to Stone.” Additionally, plaintiff noted that the Department of Licensing and Regulatory Affairs (LARA) had visited Insight and determined it was not an adult foster care facility requiring licensure. In contrast, defendant insisted that “the utilization of staffing agencies” did not excuse plaintiff from obeying the licensing requirement set forth in the AFCLA. The trial court agreed with defendant. 

On appeal, the Court looked to the language of the AFCLA, noting that the Court was guided by the principle that “the act’s words are the most reliable indicator of legislative intent and should be interpreted based on their ordinary meaning, and their context within the statute.” Applying this principle, the Court found that “[r]easonably interpreted in context, it makes sense to construe the phrase ‘the provision of’ the same way as did the department and Insight: that licensing was required only if the ‘establishment’ itself provided ‘supervision, personal care, and protection in addition to room and board[.]’” The Court noted that “[b]y requiring residents to choose their own providers from a menu of suppliers of ‘supervision,’ ‘personal care,’ and ‘board,’ Insight deliberately distanced itself from the responsibility for providing those services [and] . . . [n]o evidence suggests that this was improper.” Thus, the Court noted, “Insight’s organizational structure was not similar to that of a ‘home’ where residents enjoyed coordinated services provided by a single owner or ‘establishment.’” The Court further elaborated that it generally deferred to “an agency’s administrative expertise in making decisions falling within the agency’s wheelhouse, including the agency’s conclusions of law[,]” and that an agency’s interpretation of a statute “is entitled to respectful consideration . . . .” Here, the Court found that the department’s interpretation of the statutory language was correct, as evidenced by the legislature’s recent amendment of the statutory definition of foster care to include facilities like Insight providing the provision of supervision, personal care, protection, and room and board at a single address. Accordingly, the Court held that “based on both a reasonable interpretation of the statutory language then in existence and because deference to the department’s interpretation is appropriate,” Insight did not qualify as an adult foster care facility during Stone’ stay and the holding of the trial court was reversed. 

In his dissent, Judge Swartzle contended that “[u]nder the adult foster care act, an ‘adult foster care facility’ is an establishment ‘that provides foster care to adults . . . [and] [i]t is undisputed that . . . Stone was provided with each and every component of adult-foster-care services at plaintiff’s facility: supervision, personal care, protection, and room and board.” Judge Swartzle elaborated that “[t]o provide something means to supply or make it available, and the statutory language is broad enough to encompass the provision of a service via an employee . . . or a contractor.” Judge Swartlze further noted that “[a]lthough LARA bears responsibility under Michigan’s licensing laws to determine whether to pursue legal action against a facility for providing adult-foster-care services without a license under MCL 400.713(1), the Legislature has not given LARA responsibility for determining whether a service is reimbursable under the no-fault act.” 

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