Michigan Court of Appeals; Docket #359673; Published
Judges Kelly, Murray, and Swartzle; Authored by Judge Swartzle
Official Michigan Reporter Citation: Forthcoming; Link to Opinion
Coordination with HMO and PPO Coverages [§3109a]
In this unanimous, published decision authored by Judge Swartzle, the Court of Appeals affirmed the trial court’s denial of Defendant Auto-Owners Insurance Company’s (“Auto-Owners”) motion for summary disposition, in which it sought dismissal of Plaintiff Advance Therapy & Rehab Inc’s (“Advance Therapy”) action for No-Fault PIP benefits. The Court of Appeals held that under the “excess medical” provision in Andre Yglesias’s coordinated No-Fault policy, Auto-Owners had to pay for the treatment he received from Advance Therapy—an out-of-network provider which, although covered under Yglesias’s preferred provider organization (“PPO”) health insurance plan, was more expensive to Yglesias than in-network treatment.
At the time of Andre Yglesias’s motor vehicle accident, he had coordinated health and No-Fault insurance. He received his health insurance from CIGNA, under a preferred provider organization (“PPO”) plan which covered services provided by both in-network and out-of-network medical providers. Services provided by in-network providers had a lower annual deductible ($2,000) than services provided by out-of-network providers ($6,000), and when Yglesias received treatment from Advance Therapy—an out-of-network provider—after his accident, CIGNA refused to pay because Yglesias had not yet met his $6,000 deductible. CIGNA did, however, apply the amount of Advance Therapy’s bills to Yglesias’s deductible. Advance Therapy then sought payment from Auto-Owners, but Auto-Owners also refused to pay, arguing that under Tousignant v Allstate Ins Co, 444 Mich 301 (1993), it did not have to pay Advance Therapy’s bill because Yglesias did not attempt to mitigate his out-of-pocket expenses by treating with an in-network provider. Advance Therapy proceeded to file suit against Auto-Owners, and Auto-Owners moved for summary disposition, which the trial court denied.
The Court of Appeals affirmed the trial court’s denial of Auto-Owners motion for summary disposition, holding that the “excess medical” provision in Yglesias’s No-Fault policy required that Auto-Owners pay for his treatment from Advance Therapy. In order to trigger Auto-Owners’ obligation to pay under the “excess medical” provision, Yglesias needed to (1) receive treatment from a provider that was covered by his health insurance, and (2) seek payment for said treatment from his health insurer before turning to Auto-Owners. Advance Therapy—although out-of-network and thus more expensive—was covered by Yglesias’s PPO plan, and Advance Therapy did seek payment from CIGNA before turning to Auto-Owners. Therefore, Auto-Owners’ obligations under the “excess medical” provision were clearly triggered.
The Court went on to note that nothing in Section 3109a of the No-Fault Act or in Tousignant—which dealt with an HMO plan that explicitly excluded out-of-network coverage, and a plaintiff who failed to establish that she could not receive the services at issue from an in-network provider—requires that an insured “minimize the cost to a secondary no-fault insurer by maximizing the amount that the primary health insurer will cover.” In other words, there is no requirement that an insured seek out cost-saving, in-network services when out-of-network services are also covered.
“Critically, there is nothing in Tousignant that requires an insured to minimize the cost to a secondary no-fault insurer by maximizing the amount that the primary health insurer will cover. Rather, when an insured chooses to coordinate the two policies, the insured must seek to recover expenses obtainable from the primary health insurer before turning to the secondary no-fault insurer. Id. at 308. With respect to an HMO, this means, in effect, that an insured must seek necessary services that are available within the HMO network before seeking reimbursement from a coordinated no-fault insurer.
CIGNA did not provide coverage to Yglesias as an HMO, but instead as a PPO. This distinction is material, as CIGNA’s PPO policy did provide coverage for out-of-network services, even though such coverage was subject to a higher deductible and lower reimbursement rate than services received in-network. When Yglesias submitted the bills to CIGNA, CIGNA did not refuse to pay them because the services provided were out-of-network. Rather, CIGNA acknowledged that the services were covered, but the insurer did not pay the bills because Yglesias had not yet reached the applicable deductible. Instead, CIGNA applied the amount of the bills to Yglesias’ deductible. Thus, Yglesias did, in fact, seek ‘to obtain payment’ from CIGNA ‘to the extent of the health coverage available’ from the insurer, and CIGNA did, in fact, provide such coverage (through the credit to Yglesias’ deductible). Id. at 307.
Under the coordination-of-benefits provision, Auto-Owner’s policy with Yglesias covered PIP-related expenses in ‘excess of other insurance.’ Before this coverage applied, Yglesias was required, among other things, to receive treatment from a provider that was covered by CIGNA and seek payment for such treatment from CIGNA. As explained, Yglesias did this.”