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Spectrum Health Hosps, et al v Farm Bureau Gen Ins Co of Mich, et al (UNP – COA 7/22/2021; RB # 4297)

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Michigan Court of Appeals; Docket #353553, 354201; Unpublished
Judges Borrello, Servitto, and Stephens; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING:
Requirement That Benefits Were Unreasonably Delayed or Denied [§3148(1)]
Bona Fide Factual Uncertainty / Statutory Construction Defense [§3148(1)]

TOPICAL INDEXING:
Assignments of Benefits—Validity and Enforceability
Medical Provider Standing (Post-Covenant)


SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s denial of Defendant Farm Bureau General Insurance Company of Michigan’s (“Farm Bureau”) motion for summary disposition, in which Farm Bureau sought dismissal of Plaintiff Spectrum Health Hospitals’ (“Spectrum”) first-party action against it. As to Farm Bureau’s motion for summary disposition, the Court of Appeals held that Spectrum obtained valid assignments from its patient/Farm Bureau’s insured, Kevin Schild, after Schild was injured in a motor vehicle collision, and therefore had standing to pursue its first-party action against Farm Bureau. As to Spectrum’s motion for attorney fees, the Court of Appeals held that the trial court did not err in denying that motion because Farm Bureau’s denial of Spectrum’s claims for no-fault PIP benefits was based on legitimate questions regarding the reasonableness of Spectrum’s charges, and therefore not an unreasonable denial for purposes of MCL 500.3148(1).

Schild was injured in a motor vehicle collision in November 2017 and received treatment for his collision-related injuries from Spectrum. The timeline and procedural history of Spectrum’s underlying case against Farm Bureau is unclear, but based on the Court of Appeals’ recounting, it appears to have proceeded as follows: Spectrum provided treatment to Schild on November 17, 2017, January 8, 2018, March 6, 2018, and October 18, 2018, obtaining separate assignments on each date. Spectrum then filed a claim for PIP benefits with Schild’s no-fault insurer, Farm Bureau, but Farm Bureau tendered only partial payment of Spectrum’s charges. Spectrum then filed a first-party action against Farm Bureau, after which it obtained another assignment from Schild, on November 23, 2018. Spectrum moved for summary disposition as to the November 23, 2018 assignment, arguing that the charges assigned on that date did not relate back to the filing date of Spectrum’s original complaint. The trial court denied that motion, after which Farm Bureau moved for summary disposition again, arguing that Spectrum’s charges were unreasonable and that Schild could not assign his right to no-fault interest and attorney fees to Spectrum. The trial court denied that motion as well, after which Farm Bureau “moved to withdraw its affirmative defenses, amend its answer to admit that the charges were reasonable, and request summary judgment in favor of plaintiffs so that it could appeal the trial court’s rulings on summary disposition.” Farm Bureau rationalized “that it would be more efficient to simply appeal because it was already awaiting rulings on its cases currently pending on appeal that raised issues relevant to this case.” However, Farm Bureau disputed Spectrum’s entitlement to attorney fees after Spectrum filed a motion for them, which the trial court denied. The trial court then entered a final judgment in Spectrum’s favor, albeit denying Spectrum’s subsequent motion for attorney fees.

The Court of Appeals affirmed the trial court’s denial of Farm Bureau’s motion for summary disposition. In doing so, the Court of Appeals rejected Farm Bureau’s argument on appeal that Spectrum did not have standing to pursue its first-party action because the assignments it obtained from Schild were not valid. The Court of Appeals first noted that, based on the timing of when the assignments were obtained and the language of the assignments, the assignments were not invalid pursuant to its holding in Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, 324 Mich App 182 (2018). The Court of Appeals next rejected Farm Bureau’s argument that the assignments that Schild signed on November 17, 2017, January 8, 2018, March 6, 2018, and October 18, 2018 were limited in scope to only the services provided on the date the assignments were signed:

Farm Bureau argues that the assignments that Schild signed on November 17, 2017, January 8, 2018, March 6, 2018, and October 18, 2018, are limited in scope to only the services provided on the date the assignments were signed. Farm Bureau directs this Court, however, to no such limiting provision in the assignments and this Court finds none. Moreover, the language assigning Schild’s rights to ‘all benefits, claims and any other rights’ is unambiguous and extremely broad. Indeed, ‘there cannot be any broader classification than the word ‘all’. In its ordinary and natural meaning, the word ‘all’ leaves no room for exceptions.’ Heritage Resources, Inc v Caterpillar Fin Serv Corp, 284 Mich App 617, 642; 774 NW2d 332 (2009) (citation omitted).

The Court of Appeals next rejected Farm Bureau’s argument that Schild could not assign his action to collect penalty interest and attorney fees to Spectrum, as Farm Bureau failed to present “any authority that is binding on this court” to support its argument that a right to pursue such penalties cannot be assigned.

Farm Bureau nevertheless argues that an action to collect a penalty is not assignable at common law. However, Farm Bureau has not provided any authority that is binding on this Court to support its argument. Instead, Farm Bureau cites caselaw from nonbinding foreign jurisdictions. Farm Bureau also argues that Michigan has not revoked the common law. However, Covenant makes clear that insured individuals are free to assign all of their rights to a healthcare provider. Absent some precedential authority to demonstrate that Covenant does not allow for all rights to be assigned from the insured to the healthcare provider, Farm Bureau did not demonstrate that plaintiffs’ claims were so clearly unenforceable as a matter of law that no factual development could possibly justify recovery. See Adair, 470 Mich at 119. Similarly, when taking the facts in the light most favorable to plaintiffs, Farm Bureau did not demonstrate that reasonable minds could not differ regarding the applicability of the assignment from Schild to plaintiffs. Consequently, the trial court did not err by denying Farm Bureau’s motion for summary disposition pursuant to MCR 2.116(C)(8) and (C)(10).

Lastly, the Court of Appeals held that the trial court did not err in denying Spectrum’s motion for attorney fees because Farm Bureau’s denial of Spectrum’s claim for no-fault PIP benefits was not unreasonable for purposes of MCL 500.3148. Spectrum’s denial was based on a “legitimate question” as to whether Spectrum’s charges were reasonable pursuant to MCL 500.3107(1)(a).

In this case, there is no factual dispute regarding Schild’s automobile accident, the medical treatment he received, or the charges that he incurred from that medical treatment. Farm Bureau argues that its decision not to pay the charges was reasonable because it raised a legitimate question of law. Moreover, Farm Bureau argues that its question regarding whether plaintiffs’ charges were reasonable, and what criteria may be used to determine whether those charges were reasonable, was an ongoing source of litigation in this Court and in our Supreme Court. At the time that Farm Bureau decided not to pay the charges, these questions were still outstanding. Farm Bureau raised those same questions in the trial court at the beginning of this case. Given that Farm Bureau was aware of its outstanding appeals concerning the same issues presented in this case, it was not unreasonable for Farm Bureau to deny payments while it awaited the conclusion of those issues because they presented legitimate legal questions. The trial court thus did not err in denying plaintiff’s motion for attorney fees.

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