Michigan Court of Appeals; Docket # 324245; Unpublished
Judges Stephens, Hoekstra, and Servitto; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Collateral Estoppel and Res Judicata
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion, the Court of Appeals held that a federal jury verdict in a suit for no-fault benefits barred plaintiff-medical provider’s subsequent state-court action for unpaid medical bills, because plaintiff-medical provider could have intervened in the federal action, but did not.
Ashford Garley was injured in an auto accident. Plaintiff Michigan Head & Spine Institute (MHSI) treated Garley’s injuries. Garley sought PIP benefits from defendant State Farm. State Farm denied payment. The matter of State Farm’s obligation to pay PIP benefits was removed to federal court, where a jury found that State Farm did not owe any benefits. After the federal jury verdict, MHSI brought this action in state court, seeking payment of Garley’s medical bills. State Farm and MHSI moved for summary disposition. The trial court granted State Farm’s motion.
The Court of Appeals held that the jury verdict in the federal action barred MHSI’s state-court claim for payment of its medical bills because MHSI was in privity with Garley. In so holding, the court said:
“[Plaintiff] argues that res judicata should not apply because [it] was not a party to Garley’s actions and because [its] bills were not submitted to the jury, meaning that the jury did not actually consider whether State Farm owed MHSI payment for services provided. These arguments implicate the issues of privity and whether [plaintiff’s] claims were, or could have been, raised in Garley’s lawsuit. … Previously, this Court has specifically concluded that a healthcare provider, seeking payment under a no-fault insurance policy, stands in privity with an injured party who previously brought a lawsuit attempting to claim no-fault benefits under the same policy. … It follows that in this case, [plaintiff] stands in privity with Garley.”
Applying the principles of privity, the Court of Appeals said that MHSI’s entitlement to payment depended on Garley’s eligibility for benefits under State Farm’s policy. In this regard, the court said:
“Aside from the issue of privity, MHSI emphasizes … that its bills were not specifically submitted to the [federal] jury for actual consideration and that, because the jury did not specifically reject payment of [plaintiff’s] bills, res judicata cannot apply. Although it appears that MHSI’s bills were not introduced at Garley’s trial, the fact remains that the jury did in fact conclude that Garley could recover nothing from State Farm. That is, the jury did consider the broader issue of State Farm’s liability under the policy and the jury rejected Garley’s claim for no fault benefits, meaning that MHSI, as Garley’s privy, cannot relitigate this issue.”
In light of the foregoing, the Court of Appeals did not address the issue of collateral estoppel or MHSI’s arguments regarding summary disposition.
In conclusion, the Court of Appeals rejected MHSI’s argument that applying res judicata would deprive it of due process and its statutory right to reimbursement under MCL 500.3112. The court said these issues were not preserved for appeal and, even if they were, they were meritless.
