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Surgeons Choice Med Ctr v Everest Nat’l Ins Co, et al (COA – UNP 10/6/2022; RB #4491)   


Michigan Court of Appeals; Docket #352744; Unpublished  
Judges Murray, Fort Hood, and Rick; Per Curiam 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Not Applicable:

Collateral Estoppel and Res Judicata
Assignments of Benefits – Validity and Enforceability

In this unanimous, unpublished, per curiam decision, the Court of Appeals vacated the trial court’s summary disposition order dismissing Plaintiff Surgeons Choice Medical Center’s (“Surgeon’s Choice”) action for no-fault PIP benefits against Defendant Everest National Insurance Company (“Everest”).  Applying its holding in Mecosta Co Med Ctr v Metro Group Prop & Cas Ins Co, ___ Mich ___ (2022), the Court of Appeals held that Surgeons Choice was not bound by judgments against its patient/assignor Tracy Tran’s other medical providers in separate lawsuits against Everest, because (1) Surgeons Choice obtained its assignment from Tran prior to those judgments being rendered, and (2) Surgeons Choice was not in privity with Tran’s other providers. 

Tracy Tran was injured in a motor vehicle accident, after which she received treatment from Surgeons Choice and several other medical providers.  She assigned her rights to pursue no-fault PIP benefits related to the respective treatments she received to each provider, and each provider filed its own lawsuit against Everest.  The assignments were executed in April of 2019, and the providers each filed separate lawsuits against Everest shortly thereafter.  In each of Tran’s other provider’s cases, summary disposition was granted in Everest’s favor on the issue of whether Everest was entitled to void her policy, ab initio, based on material misrepresentations she made in her original application for insurance.  Everest then moved for summary disposition in Surgeons Choice’s action, which it argued was resultantly barred by res judicata.  Everest sought to distinguish this case from the recent Supreme Court decision in Mecosta by arguing that Mecosta was limited to issues of ‘vertical privity’—whether the provider/assignee was in privity with its patient/assignor—whereas this case featured a question of “horizontal privity”—whether Surgeons Choice was in privity with Tran’s other providers, with which Everest argued Surgeons Choice “share[s] the same presently existing property interest in the Everest no-fault insurance policy.”  The trial court ultimately granted Everest’s motion, reasoning that, because the other trial court’s judgments had the effect of voiding Tran’s policy, ab initio, Surgeons Choice could no longer pursue its claim under the policy.

The Court of Appeals reversed the trial court’s summary disposition order, holding that Mecosta applied to this case irrespective of the issue of vertical versus horizontal privity.  Contrary to Everest’s argument, the Court noted that Surgeons Choice and Tran’s other providers did not have the “same presently existing property interest in the Everest policy”; rather, “the property interests to each medical provider are distinct”—“Tran did not assign to each provider the right to recover PIP benefits collectively,” each provider’s interest was only in the benefits owed for the treatments they, specifically, rendered.  The other factors in the res judicata analysis also weighed against a finding of privity, leading the Court to conclude that Surgeons Choice was not in privity with Tran’s other providers, and that the judgments against Tran’s other providers—rendered after Surgeons Choice obtained its assignment—could not affect Surgeons Choice’s rights under its assignment, which vested on the date of execution.

“The question here is whether plaintiff is in privity with [Tran’s other providers].. The judgments in the other provider lawsuits were all entered after Tran’s assignment to plaintiff. Defendant argues that the holding in Mecosta is limited to issues of ‘vertical privity,’ and inapplicable because ‘[p]laintiff is in privity with all three of the other providers because they share the same presently existing property interest in the Everest no-fault insurance policy.’ We disagree. 

First, we note that the property interests assigned to each medical provider are distinct. The assignment by Tran to each medical provider assigned only her right to recover PIP benefits for services that each provider rendered—she did not assign to each provider the right to recover PIP benefits collectively. Therefore, each medical provider assignee had an interest only in the recovery of PIP benefits for their respective assignments from Tran. 

Although the underlying facts regarding assignments in Mecosta differ, it is still instructive and the same principals apply. In order to be bound by a subsequently entered judgment, the assignees must be in privity. Id. at ___; slip op at 13. ‘When the litigation involving the assignor occurs after the assignment, the rights could not yet have been affected by the litigation at the time they were transferred to the assignee.’ Id. at ___; slip op at 8. Under Mecosta, Tran would have ceased to be in privity with the respective medical providers after she executed the assignments upon which their actions were based. It is undisputed that plaintiff was not a party to the other provider lawsuits. Additionally, there is no evidence that plaintiff and the other providers had ‘a working or functional relationship’ in which the interests of plaintiff were ‘presented and protected by the party in the litigation.’ Phinisee, 229 Mich App at 553-554 (quotation marks, citation, and alteration omitted). Tran and plaintiff were not in privity with respect to any judgment subsequent to the assignment, and, therefore, it follows that plaintiff and the other medical provider assignees were also not in privity. Accordingly, the assignees were not in privity with each other with respect to the judgments that were rendered against those providers after Tran had assigned her present PIP claims to plaintiff. Mecosta Co Med Ct, ___ Mich at ___; slip op at 13. Therefore, plaintiff is not bound by the post-assignment adjudications resulting from the actions of the other assignees because the parties were not in privity." 

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