Wyoming Chiropractic v Auto-Owners reaffirms a medical providers’ right to file lawsuits directly against auto insurance companies that fail to pay for services rendered

By: George T. Sinas

On December 9, 2014, the Michigan Court of Appeals issued an important
unanimous, published Opinion which reaffirms the right of medical providers who treat
auto accident victims to file lawsuits directly against auto no-fault insurance companies
who do not pay for the services rendered by the provider. The decision also reaffirms the
right of providers to seek penalty interest and attorney fee sanctions against insurers who
violate their statutory duty to pay benefits in a timely fashion. This decision came in the
case of Wyoming Chiropractic Health Clinic PC v Auto-Owners Ins Co, COA Docket
No. 317876. The unanimous Opinion was written by Judge Talbot, who was joined by
Judges Jansen and Servitto.

In the Wyoming Chiropractic case, Defendant Auto-Owners took the position that, in
spite of numerous court decisions to the contrary, the Michigan no-fault statute only
permits the injured party to file a lawsuit for payment of medical expenses and that the
injured party’s medical provider did not have legal standing to bring such a claim. In
rejecting this argument, the Court noted that §3112 of the No-Fault Act states in pertinent
part: “Personal protection insurance benefits are payable to or for the benefit of an injured party. . . .”

Citing earlier cases, the Court stated that the statutory phrase requiring payment of
PIP benefits “for the benefit of an injured person” allows medical providers to bring a direct
cause of action against no-fault insurance companies and to recover penalty sanctions
when the insurer does not comply with its legal obligations. In this regard, the Court
stated:

[W]e find that Wyoming Chiropractic had standing to bring a cause of action against
Auto-Owners for PIP benefits under the no-fault act. This Court established in
Munson that a healthcare provider has the “right to be paid for the injureds’ no-fault
medical expenses.” This Court further explained in Lakeland Neurocare that when
a healthcare provider submits a claim for payment under the no-fault act, the
healthcare provider submits the claim “for the benefit of” the insured. The fact that
a healthcare provider submits a claim on behalf of an insured individual allows a
healthcare provider to sue to enforce the penalty provisions of the no-fault act. Thus,
by implication, a healthcare provider may also bring an action for PIP benefits “for
the benefit of” an insured individual. Finally, this Court clarified that its decision
in Lakeland Neurocare held that a healthcare provider has a direct cause of action to
sue an insurer for PIP benefits under the no-fault act.

In reaching this conclusion, the Court made an important point that giving medical
providers legal standing to sue no-fault insurance companies directly for non-payment of
claims was consistent with the “public policy goals” of the Michigan No-Fault Act. In this
regard, the Court stated:

In addition, the public policy goals of the no-fault act support allowing a healthcare
provider to have standing to sue an insurer for PIP benefits. . . . The goal of the
no-fault act is “ ‘to provide victims of motor vehicle accidents with assured,
adequate, and prompt reparation for certain economic losses.’ ” The no-fault act was
designed to remedy “ ‘long delays, inequitable payment structure, and high legal
costs’ “ in the tort system [citing Cruz v State Farm, 466 Mich 588 (2002)].
Allowing a healthcare provider to bring a cause of action expedites the payment
process to the healthcare provider when payment is in dispute. Thus, provider
standing meets the goal of prompt reparation for economic losses. Healthcare
provider standing also offers a healthcare provider a remedy when an insured
individual does not sue an insurer for unpaid PIP benefits, thus preventing
inequitable payment structures and promoting prompt reparation. Therefore, public
policy supports this Court’s prior opinions. For the reasons stated above, the trial
court properly denied Auto-Owners’s motion for summary disposition because
Wyoming Chiropractic had standing to sue Auto-Owners for PIP benefits under the
no-fault act.

This well-reasoned, comprehensive decision by the Court of Appeals is an important
victory for medical providers who experience payment delays and denials at the hands of
no-fault insurance companies who engage in claim practices that make the auto no-fault
reparations system unnecessarily adversarial. Arming medical providers with the right
to sue no-fault insurers directly for non-payment of benefits is one way to preserve and
protect the goals and objectives of the original Michigan No-Fault Act. The Wyoming
Chiropractic case is an important recognition of that concept.