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Mercy Mt. Clemens Corporation v Auto Club Insurance Association; (COA-PUB, 9/20/1996; RB #1879)

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Michigan Court of Appeals; Docket No. 180140; Published  
Judges Murphy, Holbrook, and O'Connell; Unanimous; Opinion by Judge O’Connell  
Official Michigan Reporter Citation:  219 Mich App 46; Link to Opinion alt  


STATUTORY INDEXING:  
Allowable Expenses: Reasonable Charge Requirement [§3107(1)(a)] 
Providers Entitled to Charge Reasonable Amount for Services [§3157] 
Use of Fee Schedules to Determine Reasonable Charges [§3157] 
Prohibition Against Charging No-Fault Insurers More Than Uninsured Patients [§3157]  
Providers May Not Charge No-Fault Insurers More Than Uninsured Patients [§3157]

TOPICAL INDEXING:  
Legislative Purpose and Intent
Workers Disability Compensation Act (MCL 418.1, et seq.)     


CASE SUMMARY:  
This unanimous published Opinion by Judge O'Connell is virtually identical to the holding in Munson Medical Center vAuto Club Insurance Association (Item No. 1872). Relying upon Munson, supra, Hofmann vAuto Club Insurance Association (Item No. 1787), Johnson v Michigan Mutual Insurance Company (Item No. 1303) and Hicks v Citizens Insurance Company (item No. 1703), the Court of Appeals held that defendant ACIA could not utilize workers' compensation fee schedules or the amounts customarily accepted by hospitals from Medicare, Medicaid, Blue Cross/Blue Shield, HMOs and PPOs to determine its liability to pay allowable medical expenses under §3107 and §3157 of the no-fault act. 

The plaintiffs in this case were hospitals who treated auto accident patients and who then submitted the bills for payment to defendant ACIA under the provisions of the no-fault act ACIA only paid that portion of the bill that would be payable under the workers' compensation fee schedules. During the course of the litigation, defendant ACIA sought discovery from plaintiffs regarding the amounts they accepted from various third-party payors, such as Medicare, Medicaid, Blue Cross, workers' compensation, HMOs and PPOs. Defendant argued that under §3157 of the statute, plaintiff could not charge an amount that exceeded the amount plaintiff "customarily charges for like products, services and accommodations in cases not involving insurance." The defendant argued that because plaintiffs customarily accept lesser amounts from these third-party payors, this shows that the amount of the hospital bills submitted by plaintiffs to defendant was not a "customary charge."
  
The trial court rejected defendant's argument and the Court of Appeals affirmed. 

First, the Court of Appeals rejected defendant's argument that the reference to "insurance" in §3157 should be read to refer to no-fault insurance only, rather than all types of insurance which provide payment for medical care. The court held:

"The words 'in cases not involving insurance' in §3157 should not be interpreted to mean 'in cases not involving no-fault insurance' . . . . Defendant's interpretation of §3157 is inconsistent with prior rulings by this court. In Hofmann v ACIA. . .this court interpreted the word 'insurance' in §3157 to include health insurance as well as no-fault insurance, noting that the relevant inquiry under §3157 Ms not the amount that is customarily charged to other health insurers, but rather the amount that is customarily charged in cases not involving insurance.'"

The court noted that payments made by Medicare, Medicaid, workers' compensation, Blue Cross, HMOs and PPOs were considered to be "insurance" under §3157 of the act. However, regardless of whether such entities are considered to be "insurance" payors, "the amounts which plaintiffs accepted as payment in full from those entities cannot be used to prove the customary charge for those services under §3157 of the no-fault act. Such third party health coverages are treated as health insurance to be excluded from consideration when determining the customary charge under §3157. Such health care coverage is considered "insurance" even if it is not provided by an entity which meets defendant's strict definition of an insurer."  

The court then went on to hold that defendant could not allege that the hospital bills submitted by plaintiffs were "unreasonable" because they exceeded the amount plaintiffs customarily accept as payment in full from third-party payors such as Medicare, Medicaid, Blue Cross and workers' compensation. In this regard, the court stated:

"Reimbursement for Medicare, Medicaid and workers' compensation insurance is set by statutory and regulatory limitations. Reimbursement from Blue Cross, HMOs and PPOs is set by contracts between those entities and health care providers. Under Munson, Hofmann, Hicks and Johnson, such information is not admissible to prove the customary charge which defendant must pay under §3157 . . . . In light of this precedent we conclude that the circuit judge did not err by finding that the information sought on discovery was not relevant to whether the amounts charged by plaintiffs met the requirements of §3107 and §3157 of the no-fault act, and that it was not reasonably calculated to lead to the discovery of admissible evidence. The circuit court did not abuse his discretion by granting plaintiffs' requested protective order."


Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit SinasDramis.com.

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