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Covenant Med Ctr Inc v. Employers Mut Cas Co, et al (COA - UNP 2/11/2021; RB #4218)

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Michigan Court of Appeals; Docket # 342379; Unpublished
Judges Boonstra, Borrello and Rick; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING:
One-Year Back Rule Limitation [§3145(1)]

TOPICAL INDEXING:
Medical Provider Standing (Post-Covenant)


SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals reversed the trial court’s order granting in part plaintiff’s motion for summary disposition on the issue of whether the claims of plaintiff Covenant Medical Center, Inc  were barred by the one-year-back rule and dismissed plaintiff’s cross-appeal regarding attorney fees as moot. In doing so, the Court held that the holding in Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, 324 Mich App 182; 920 NW2d 148 (2018) clarifying that the healthcare-provider plaintiff could not obtain any greater right than the insured possessed on the date of the assignment was binding.

This case arose from a motor vehicle accident in which Jussie Craddock sustained injuries. Plaintiff Covenant provided healthcare services to Craddock and filed an action to obtain reimbursement for its services as no-fault personal protection insurance (PIP) benefits. Following the Michigan Supreme Court’s decision in Covenant Med Ctr, Inc v. State Farm Mut Auto Ins Co, 500 Mich 191; 985 NW2d 490 (2017) holding that healthcare providers do not have a direct cause of action against no-fault insurers for recovery of no-fault benefits under the no-fault act, plaintiff obtained an assignment of rights from Craddock and filed an amended complaint. In response, the defendant no-fault insurer, Employers Mutual Casualty Company moved for summary disposition arguing that “the amended complaint could not relate back to the date of the original pleading and that plaintiff’s claims were therefore barred by the ‘one-year-back’ rule of MCL 500.3145. The trial court denied defendant’s motion, ruling that “the amended complaint related back to the date of the original pleading, and that plaintiff’s claims in the amended complaint were therefore not barred by the one-year-back rule.” Defendant appealed and plaintiff cross-appealed the trial court’s order limiting attorney fees to only those fees incurred after plaintiff secured an assignment.

On appeal, the Court noted that, in the context of the one year back rule set forth in MCL 500.3145(1), the Court’s decision in Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, 324 Mich App 182; 920 NW2d 148 (2018) was binding. Specifically, the Court stated

In Shah, the healthcare-provider plaintiffs filed suit in February 2017 to recover no-fault benefits.  Following the issuance of our Supreme Court’s decision in Covenant on May 25, 2017, and as in this case, the providers obtained an assignment of rights from the insured and sought to amend their complaint to pursue their action under an assignment theory.  Id. at 187-188, 202-203.  This Court determined that the plaintiffs could not obtain any greater rights than the insured had possessed on the date of the assignment and that, if the insured had filed an action directly against the defendant on that date, he would not have been permitted to recover benefits for any portion of the loss incurred more than one year before that date.  Id. at 204.  Therefore, the plaintiffs could not obtain any right to recover benefits for losses incurred more than one year before the date of the assignment.   Id.    This Court further stated that because the assignment was an event that occurred after the filing of the original complaint, the motion for leave to amend actually sought leave to file a supplemental pleading, which could not relate back to the date of the original filing.

Thus, the Court held that, under Shah, “plaintiff could not obtain any greater rights than Craddock possessed on the date of the assignment. And as of that date, Craddock would not have been permitted to recover benefits for losses incurred more than one year before the date of the assignment.” Further, the Court held that under Shah, because the assignment was an event that occurred after the original complaint was filed, plaintiff’s amended complaint constituted a supplemental pleading, which could not relate back to the date of the original filing. Plaintiff disagreed, and argued both that Shah was wrongly decided and that the Court’s recent decision in Mich Head & Spine Institute, PC v. Mich Assigned Claims Plan, 331 Mich App 262;  __ NW2D __ (2020), conflicted with Shah. The Court was not persuaded that Shah was incorrectly decided, and disagreed that Mich Head & Spine conflicted with Shah, as Mich Head & Spine was “critically distinguishable from this case and Shah because the first assignment was executed before the original complaint was filed.” Thus, the holding of the trial court granting summary disposition in favor of plaintiff was reversed. Accordingly, when addressing plaintiff’s cross appeal regarding the trial court’s limitation on its award of attorney’s fees to those incurred after the assignment was obtained, the Court concluded this issue moot.

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