Michigan Court of Appeals; Docket #318440; #319331; Unpublished
Judges O’Connell, Sawyer, and Markey; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
On 11/25/2015, the Michigan Supreme Court denied the application for leave to appeal;
Link to Order
STATUTORY INDEXING:
Allowable Expenses for Products and Medical Equipment [§3107(1)(a)]
Allowable Expenses: Claims by Service Providers [§3107(1)(a)]
Requirement That Benefits Were Unreasonably Delayed or Denied [§3148(1)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion involving the reasonableness of a Lakeland Hospital’s charge for surgical implants, the Court of Appeals held:
1) the trial court properly denied Auto-Owners’ motion for directed verdict under MCL 500.3107(1) and MCL 500.3157 because “a factual question regarding the reasonableness of the charge existed at the close of Lakeland’s proofs on which reasonable jurors could differ,” and
2) the trial court did not abuse its discretion by denying Lakeland’s request for attorney fees under MCL 500.3148(1), given the existence of the foregoing question of fact.
Plaintiff, Lakeland Hospitals, treated a motorcycle accident victim for his injuries. The treatment included surgery. The injured motorcyclist was insured with Auto-Owners, which paid the full amount charged for all treatment expenses, except the amount billed for the surgical implants. Auto-Owners disputed the reasonableness of the charges for the surgical implants. Auto-Owners later agreed to pay 150 percent of Lakeland’s cost for the surgical implants, rather than the full amount charged (which was over 350 percent greater than the actual cost of the surgical implants). Lakeland then brought an action for the outstanding balance. Auto-Owners moved for directed verdict, which the trial court denied. Following trial, a jury rendered a verdict in favor of Lakeland. The trial court then denied Lakeland’s request for attorney fees under §3148(1), finding that Auto-Owners’ denial of payment was reasonable under the circumstances. Auto-Owners appealed, claiming the trial court erred in denying its motion for directed verdict and that Lakeland’s calculation of surgical implant costs resulted in impermissible “cost-shifting” to no-fault insurers.
Directed Verdict
The Court of Appeals rejected Auto-Owners argument that its motion for directed verdict was improperly denied.
In this regard, the Court of Appeals said a factual question existed at the close of Lakeland’s proofs as to the reasonableness of the charge for the implants. The court said:
“While it is true that each specific expense must be reasonable … it does not follow that only direct evidence of the implant cost may be used to establish the reasonableness of the charges. Rather, evidence regarding the additional overhead costs included in the price charged for the implants shed some light on the reasonableness of the charge and was appropriately heard by the jury. … Because the issue was factually disputed and Lakeland presented evidence to support the reasonableness of the charge, we conclude that the reasonableness of the charge was a question of fact for the jury to decide.”
Cost-Shifting
The Court of Appeals further rejected Auto-Owners claim that Lakeland’s calculation of charges for the implants was unreasonable and resulted in impermissible cost-shifting to no-fault insurers. In this regard, the court said:
“[T]he Legislature has addressed the potential for such abuses by limiting the reimbursement of medical expenses to only those that are ‘reasonable,’ without restricting the evidence which may be presented to support the reasonableness of a charge. Thus, allowing Lakeland to calculate its charges by allocating the overhead costs for the services and medical items it provides at the hospital to an individual covered by no-fault insurance — which takes into account the money it loses from procedures and services performed for individuals not covered by a no-fault insurer — does not circumvent the public policy of cost-containment. Instead, it is merely evidence of the reasonableness of the charges, which the trier of fact may accept or reject.”
The Court of Appeals additionally rejected Auto-Owners’ claim that the “cost-containment” provisions in §3107(a) and §3157 rose to the level of constitutional consideration. The court reasoned:
“[T]he manner in which a provider calculates its charges must [not] pass constitutional muster. … [T]his Court has recognized that the mandate that the existence of no-fault insurance not increase the cost of health care in this state is a matter of public policy. … There is simply no statutory language or caselaw to support Auto-Owners’ argument that the cost-containment provisions in this case must be interpreted as a constitutional constraint on provider charges.”
Penalty Attorney Fees
After resolving the foregoing issues, the Court of Appeals held the trial court properly denied Lakeland’s request for penalty attorney fees under §3148(1).
In this regard, the Court of Appeals said:
“The trial court did not abuse its discretion by denying Lakeland’s request for attorney fees. Auto-Owners agreed to pay 150% of Lakeland’s cost for the surgical implants, rather than the full amount charged, which was over 350% greater than the actual cost of the surgical implants per a study conducted by CorVel Corporation, the company hired by Auto-Owners to review medical and hospital bills to determine the reasonableness of the charges. Without guidance regarding how to judge the reasonableness of such a charge, from either the no-fault act or as applied through caselaw, the trial court’s finding that Auto-Owners’ denial of benefits was reasonable under the facts of this case was not clearly erroneous.”
