Michigan Court of Appeals; Docket #358170; Published
Judges Gleicher, Markey, and Patel; Per Curiam
Official Michigan Reporter Citation: Forthcoming; Link to Opinion, Link to Dissent
Statutory Right of Service Providers to Assert Direct Causes of Action Against Insurers [§3112]
Medical Provider Standing (Post-Covenant)
In this 2-1, published decision authored by Judge Gleicher (Markey, dissenting), the Court of Appeals reversed the trial court’s summary disposition order dismissing Plaintiff C-Spine Orthopedics, PLLC’s (“C-Spine”) action for unpaid no-fault PIP benefits against Defendant Progressive Michigan Insurance Company (“Progressive”). To deal with cash flow issues, C-Spine sold Sandra Cruz’s and Jose Cruz-Muniz’s account balances to various factoring companies, assigning to the factoring companies the right to pursue payment on the accounts from Progressive, the priority no-fault insurer for the Cruz’s claims. The Court of Appeals held that C-Spine could still sue Progressive on the accounts in its name, however, pursuant to MCR. 2.201(B)(1) and MCL 500.3112.
Sandra Cruz and Jose Cruz-Muniz were both injured in a motor vehicle accident, after which they both received treatment from C-Spine, and assigned to C-Spine their right to pursue no-fault PIP benefits related to their treatments. At some point thereafter, C-Spine began to experience cash flow issues, prompting it to sell the Cruz’s outstanding account balances to various factoring companies at discounted rates. In addition to selling the accounts, C-Spine assigned to the factoring companies its right to pursue payment on the accounts from Progressive, the priority no-fault insurer with respect to both claims. C-Spine then filed suit against Progressive, claiming the unpaid PIP benefits which comprised the outstanding account balances, and obtained counter-assignments from the factoring companies, which “reinvest[ed] C-Spine with the right to bring suits seeking payment of outstanding balances.” Progressive moved for summary disposition, arguing that, at the time C-Spine filed its lawsuit, it had transferred its interests in the Cruz’s debts to the factoring companies and, therefore, lacked standing or the legal right to bring legal claims regarding those debts. The trial court ultimately agreed with the Progressive and granted its motion.
The Court of Appeals reversed the trial court’s summary disposition order, holding that, under the court rules, C-Spine could pursue a legal action against Progressive for unpaid PIP benefits comprising the Cruz’s accounts. The Court noted that, under MCR 2.201(B), “[a]n action must be prosecuted in the name of the real party in interest.” MCR. 2.201(B)(1), however, provides:
‘A personal representative, guardian, conservator, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a person authorized by statute may sue in his or her own name without joining the party for whose benefit the action is brought. [Emphasis added.]’
MCL 500.3112 grants providers the right to ‘assert a direct cause of action against an insurer . . . to recover overdue benefits payable for charges for products, services, or accommodations provided to an injured person.’ In other words, C-Spine, as the Cruz’s provider, was ‘authorized by statute’ to sue Progressive, and MCR. 2.201(B)(1) makes clear that it could do so in its own name, even if the factoring companies were “the part[ies] for whose benefit the action [was] brought.”
The Court acknowledged that, without the counter-assignments, “Progressive might have had a legitimate concern that it could face a second lawsuit brought by the factoring companies,” but the necessary-joinder rule of MCR 2.205(A) would prevent that from happening.
"Standing is not a barrier to C-Spine’s case because MCL 500.3112 grants C-Spine the right to ‘assert a direct cause of action against an insurer . . . to recover overdue benefits payable for charges for products, services, or accommodations provided to an injured person.’ As a provider, C-Spine has statutory standing to bring a claim on its own behalf. ‘Statutory standing, which necessitates an inquiry into whether a statute authorizes a plaintiff to sue at all, must be distinguished from whether a statute permits an individual claim for a particular type of relief.’ Miller v Allstate Ins Co, 481 Mich 601, 608; 751 NW2d 463 (2008). Whether C-Spine has an actionable claim for relief is a different question than whether it has a right to litigate its current grievance in our courts.
The real-party-in-interest rule does not preclude C-Spine’s suit, either. The court rule anticipates that situations such as this one might arise. MCR 2.201(B)(1) provides:
A personal representative, guardian, conservator, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a person authorized by statute may sue in his or her own name without joining the party for whose benefit the action is brought. [Emphasis added.]
C-Spine is authorized by statute to bring a first-party no-fault claim, and the plain language of the court rule permits it to do so despite that the action was brought for the benefit of the factoring companies, or for the joint benefit of C-Spine and the factoring companies."
Judge Markey dissented, arguing that, although she is “sympathetic to the view that Progressive should not be allowed to possibly avoid liability for the payment of PIP benefits, the pertinent court rules, statutes, and caselaw, when viewed in conjunction with the facts and procedural history of these cases, demand summary dismissal of C-Spine’s complaints.”