Michigan Court of Appeals; Docket No. 171729; Published
Judges Taylor, McDonald, and Collins; 2-1 (with Judge McDonald, Concurring in Part and Dissenting in Part); Opinion by Judge Taylor
Official Michigan Reporter Citation: 214 Mich App 577; Link to Opinion 
STATUTORY INDEXING:
Allowable Expenses: Reasonable Charge Requirement [§3107(1)(a)]
Medical Bill Auditing to Determine Reasonable Charges [§3157]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this 2-1 published Opinion written by Judge Taylor, the Court of Appeals affirmed the trial court's order granting summary disposition in favor of defendant in a case filed by an insured against his no-fault insurance company for failing to pay certain medical expenses that the insurer deemed were "unreasonable" pursuant to a company-wide system of medical auditing.
Through the audit process, the defendant insurer determined that some of these medical expenses were not reasonable within the meaning of §3107(l)(a) and therefore refused to pay that portion of the expense. The insurer further informed the plaintiff insured that the insurer would defend and indemnify the plaintiff insured in the event any of the medical providers filed suit against plaintiff in an attempt to collect their bill. The defendant insurer also promised to protect the plaintiff insured's credit ratings from the adverse affect of the non-payment of these medical expenses.
The majority, relying upon the earlier opinion in McGill v Auto Club Insurance Association [Item No. 1743], agreed with the trial court that plaintiff did not provide adequate proof of damages to create a genuine issue of material fact for trial. The court further agreed with the trial court that plaintiff did not state a claim for breach of contract and had failed to adequately support allegations of fraud regarding the utilization of the medical audit process. The court stated that there was no breach of contract because the defendant insurer continued to pay medical bills, refusing only to pay that portion which it contended were "unreasonable." Even if a breach of contract was demonstrated, the court went on to say that plaintiff had suffered no damages as a matter of law, because the defendant's promise to defend and indemnify the plaintiff from any collection efforts by the medical providers was a legally binding promise under the doctrines of judicial estoppel and promissory estoppel. In this regard, the court stated:
"Regardless of the likelihood for success what is clear is that once a health care services provider sees an insured, for any outstanding balance, the insurer would be estopped to renege on its promise to defend and indemnify the insured, which is simply to say that the promise is enforceable."
"With regard to plaintiffs allegation that collection efforts by providers to obtain payment of the outstanding balances and subjected the plaintiff to annoying and harassing telephone calls and caused him emotional distress and anxiety, the court held that such damages were "not recoverable in a breach of contract action absent allegations and proof of tortious conduct existing independently of the breach of contract Accordingly, because plaintiff in this case has failed to plead and prove tortious conduct independent of the breach of contract claim, damages for emotional distress and anxiety are not recoverable."
Judge McDonald concurred in part and vigorously dissented in part. He agreed that plaintiffs allegations of fraud were insufficient to state a claim with regard to the medical audit process. However, Judge McDonald disagreed that plaintiff had failed to state a claim for breach of contract In this regard, Judge McDonald stated that a question of fact existed as to whether defendant paid all reasonable and necessary expenses that were submitted by plaintiff for payment. Furthermore, plaintiff had introduced evidence of a blemished credit rating, which creates a factual dispute regarding damages. Finally, Judge McDonald criticized any rule that would require the insured to first be sued by a medical provider in order to file a lawsuit against the insurance company. This could subject insureds to the risk that some of their medical bills may not be enforceable if the suit they.eventually file against the insurance company is filed beyond the one year no-fault statute of limitations. Judge McDonald had serious questions whether an insurer's agreement to defend and indemnify the insured was enforceable to the extent that insureds would be protected from harm in this scenario.
