RECEIVED by MSC 1/23/2019 3:48:35 PM...{36274/2/D1321696.DOCX;9} vi STATEMENT OF QUESTION PRESENTED...

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STATE OF MICHIGAN

IN THE SUPREME COURT

JAWAD S. SHAH, M.D., PC, INTEGRATED

HOSPITAL SPECIALISTS, PC, INSIGHT

ANESTHESIA, PLLC, and STERLING

ANESTHESIA, PLLC,

Plaintiffs-Appellees,

v.

STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY,

Defendant-Appellant.

Supreme Court Case No. 157951

Court of Appeals Case No. 340370

Genesee County Circuit

Case No. 2017-108637-NF

Hon. Judith A. Fullerton

BRIEF OF AMICUS CURIAE

COALITION PROTECTING AUTO NO-FAULT

SINAS, DRAMIS, BRAKE,

BOUGHTON & MCINTYRE, P.C.

George T. Sinas (P25643)

Attorneys for Amicus Curiae

Coalition Protecting Auto No-Fault

3380 Pine Tree Road

Lansing, MI 48911-4207

(517) 394-7500

KERR, RUSSELL AND WEBER, PLC

Joanne Geha Swanson (P33594)

Attorney for Amicus Curiae


500 Woodward Avenue, Suite 2500

Detroit, MI 48226-3427

(313) 961-0200; FAX (313) 961-0388

E-mail: [email protected]

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TABLE OF CONTENTS

INDEX OF AUTHORITIES........................................................................................................... ii

STATEMENT OF QUESTION PRESENTED ............................................................................. vi

INTRODUCTION AND STATEMENT OF INTEREST OF AMICUS

CURIAE COALITION PROTECTING AUTO NO-FAULT .........................................................1

ARGUMENT ...................................................................................................................................5

I. State Farm’s Anti-Assignment Clause is Unenforceable Because it is Contrary to

Public Policy as Articulated by the Decisions of this Court, the Court of Appeals,

and Statutes of This State, and Because it Contravenes the Assignment Provision

of the No-Fault Act. .............................................................................................................5

A. The Anti-Assignment Clause is Unenforceable Under Roger Williams. .................5

B. The Anti-Assignment Clause Is Inconsistent With and Violates Legislative

Intent, as Clearly Expressed in the No-Fault Act. ...................................................9

II. In Covenant, this Court Recognized and Preserved the Insured’s Ability to Assign

the Right to Recover Past or Presently Due No-Fault Benefits to the Provider. ...............11

III. State Farm’s Non-Assignability Argument Violates the Stated Purposes of the

No-Fault Act By Making It More Likely That Patients Will Have to Litigate in

Order to Recover Their Benefits and By Impairing Patients’ Access to Medical

Care and Legal Representation. .........................................................................................14

IV. The Overly Broad and Unlawful Anti-Assignment Clause State Farm Seeks to

Enforce Interferes with the Provider-Patient Relationship and Impairs the

Patient’s Right to Contract with Providers. .......................................................................17

CONCLUSION ..............................................................................................................................18

RELIEF REQUESTED ..................................................................................................................19

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INDEX OF AUTHORITIES

Cases

Action Auto Stores v United Capitol Ins Co,

845 F Supp 417 (WD Mich 1993) ...................................................................................... 7

Attendant Care Companies v Farm Bureau Gen’l Ins Co,

unpublished per curiam opinion of the Court of Appeals,

issued November 29, 2018 (Docket No. 340205)............................................................. 12

Bloomfield Estates Improvement Ass'n, Inc v City of Birmingham,

479 Mich 206; 737 NW2d 670 (2007) .............................................................................. 17

Bronson Healthcare Group, Inc v Michigan Assigned Claims Plan,

323 Mich App 302; 917 NW2d 682 (2018) ...................................................................... 12

Century Indemnity Co v Aero-Motive Co,

318 F Supp 2d 530 (WD Mich 2003) ................................................................................. 7

Covenant Medical Center, Inc v Auto-Owners Ins Co,

unpublished opinion of the United States District Court for the Eastern District

of Michigan, issued October 13, 2017 (Case No. 17-cv-11176) .................................. 7, 13

Covenant Medical Ctr v State Farm Mutual Auto Ins Co,

500 Mich 191; 895 NW2d 490 (2017) ....................................................................... passim

Cox v Farm Bureau Mut Ins Co,


issued June 14, 2018 (Docket Nos. 336326, 336353, 336356)......................................... 12

Detroit, T & IR Co v WU Tel Co,

200 Mich 2; 166 NW 494 (1918) .................................................................................... 2, 8

Estate of Grimmet v Encompass Indemnity Co,

unpublished opinion of the United States District Court for the Eastern District

of Michigan, issued November 21, 2017 (Case No. 14-14646) ................................... 7, 19

Harrison v Allstate Prop & Cas Ins Co,



Henry Ford Health Sys v Everest Natl Ins Co,

___ Mich App ___; ___ NW2d ___ (2018) ...................................................................... 12

In re Hurol-Martin Drain,

331 Mich 504; 50 NW2d 143 (1951) .................................................................................. 9

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In re Jackson,

311 BR 195, 201 (WD 2004) .............................................................................................. 7

In re MCI Telecom Complaint,

460 Mich 396; 596 NW2d 164 (1999) .............................................................................. 11

Insight Institute of Neurosurgery and Neuroscience v State Farm Mut Auto Ins Co,


issued September 20, 2018 (Docket No. 339740) ............................................................ 13

Joseph v Auto Club Ins Ass’n,

491 Mich 200; 815 NW2d 412 (2012) ................................................................................ 9

Marion v Vaughn,

12 Mich App 453; 163 NW2d 239, 244 (1968) .................................................................. 8

Michigan Head & Spine Institute, PC v Allstate Prop and Cas Ins Co,



Michigan Head & Spine Institute, PC v Essurance Property & Casualty Ins Co,



Michigan Head & Spine Institute, PC v Hastings Mut Ins Co,



Michigan Head & Spine Institute, PC v Michigan Assigned Claims Plan,


issued November 13, 2018 ............................................................................................ 8, 13

Michigan Spine & Brain Surgeons, PLLC v. Auto-Owners Insurance Company,


issued December 11, 2018 (Docket No. 340800) ............................................................... 8

Murphy v Michigan Bell Tel Co,

447 Mich 93; 523 NW2d 310 (1994) .................................................................................. 9

Nation v W D E Electric Co,

454 Mich 489; 563 NW2d 233 (1997) ................................................................................ 9

Northwestern Cooperage & Lumber Co v Byers,

133 Mich 534; 95 NW 529 (1903) .................................................................................. 2, 8

Ocean Accident & Guarantee Corp v Southwestern Bell,

100 F2d 441 (CA 8 1939) ................................................................................................... 8

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Professional Rehab Assoc v State Farm Mut Auto Ins Co,

228 Mich App 167; 577 NW2d 909 (1998) .................................................................. 3, 10

Professional Rehabilitation Ass’n v State Farm Mut Automobile Ins Co,

452 Mich 857; 550 NW2d 794 (1996) .............................................................................. 10

Roger Williams Ins Co v Carrington,

43 Mich 252; 5 NW 303 (1880) ................................................................................. passim

Rory v Continental Ins Co,

473 Mich 457; 703 NW2d 23 (2005) .................................................................................. 5

Shah v State Farm Mut Auto Ins Co,

324 Mich App 182; 920 NW2d 148 (2018) ............................................................... passim

Shavers v Attorney General,

402 Mich 554; 267 NW2d 72 (1978) ...................................................................... 3, 14, 15

Somerset Pain Clinic, PC v Esurance Ins Co,


issued December 13, 2018 (Docket No. 341562) ............................................................. 12

Spine Specialists of Michigan PC v Allstate Prop and Cas Ins Co,

opinion of the United States District Court for the Eastern District

of Michigan, issued March 12, 2018 (Case No. 15-14102) .......................................... 6, 13

Sun Valley Foods Co v Ward,

460 Mich 230; 596 NW2d 119 (1999) ................................................................................ 9

VHS Michigan, Inc v Farm Bureau Mut Ins Co,



Voigt v Murphy Heating Co,

164 Mich 539; 129 NW 701 (1911) ................................................................................ 2, 8

Whitman v City of Burton,

493 Mich 303; 831 NW2d 223 (2013) ................................................................................ 9

Statutes

CL 1871, §5775 .............................................................................................................................. 6

MCL 500.3105(1) ......................................................................................................................... 15

MCL 500.3142(1) ......................................................................................................................... 15

MCL 500.3142(2) ......................................................................................................................... 15

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MCL 500.3143 ....................................................................................................................... passim

MCL 500.3148 .............................................................................................................................. 17

MCL 600.2041 ................................................................................................................................ 6

Other Authorities

2A Singer & Singer, Sutherland Statutory Construction (7th ed), § 46:6 ...................................... 9

Rules

MCR 2.201(B) ................................................................................................................................ 6

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STATEMENT OF QUESTION PRESENTED

As articulated by this Court, the question presented is “whether the anti-assignment clause

in the defendant’s insurance policy precludes the defendant’s insured from assigning his right to

recover no-fault personal protection insurance benefits to the plaintiff healthcare providers.”

Plaintiffs-Appellees say “no.”

Defendant-Appellant State Farm says “yes.”

Amicus Curiae CPAN says “no.”

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INTRODUCTION AND STATEMENT OF INTEREST

OF AMICUS CURIAE

COALITION PROTECTING AUTO NO-FAULT

Amicus Curiae Coalition Protecting Auto No-Fault (“CPAN”) is composed of medical and

legal associations, professional and provider organizations, and labor and veterans’ groups which

are united under a common mission to protect and preserve the vitality of Michigan’s No-Fault

automobile insurance system and the comprehensive coverage it provides to Michigan’s auto

accident victims. This broad-based coalition represents constituencies with widely divergent

political views who nonetheless share a common objective: to counterbalance the interests of

Michigan’s auto insurance industry against the rights and needs of Michigan’s injured accident

victims and their medical and service providers.1

Since its formation in 2003, CPAN has frequently lent its combined wisdom and expertise

to support – or oppose – various legislative initiatives, and has consistently raised its voice against

efforts to diminish the rights of patients and providers under No-Fault. On many occasions, it has

appeared as amicus curiae by leave of this Honorable Court to express its views on issues of

significance to its members. Such an issue is presented by this Court’s order granting oral

argument on the application in Shah v State Farm and directing the parties to address “whether the

1 CPAN members include the Michigan State Medical Society, Michigan Osteopathic

Association, Michigan Orthopaedic Society, Michigan Association of Chiropractors, Eisenhower

Center, Michigan Academy of Physician Assistants, Michigan Brain Injury Provider Council,

Michigan Dental Association, Michigan Home Care and Hospice Association, Michigan

Rehabilitation Association, Spectrum Health System, Michigan Assisted Living Association,

Michigan Orthotics and Prosthetics Association, Michigan Society of Oral and Maxillo Facial

Surgeons, Brain Injury Association of Michigan, Mary Free Bed Rehabilitation Association,

Michigan Podiatric Medical Association, Michigan Physical Therapy Association, Michigan

Association for Justice, Michigan Protection and Advocacy, Michigan Paralyzed Veterans of

America, Area Agency on Aging Association of Michigan, Michigan Disability Rights Coalition,

Michigan Guardian Association, Peckham, NeuroRestorative of Michigan, Special Tree, Rainbow

Rehabilitation, Origami Brain Injury Rehabilitation, Michigan Committee on Trauma, and

MARO.

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anti-assignment clause in the defendant’s insurance policy precludes the defendant’s insured from

assigning his right to recover no-fault personal protection insurance benefits to the plaintiff

healthcare providers.”

The published Court of Appeals opinion in Shah2 correctly answered that question,

following the long-held precedent of this Court in Roger Williams Ins Co v Carrington.3 Roger

Williams explained that an anti-assignment clause in an insurance contract is against public policy

as applied to an assignment made after the loss.4 This conclusion is consistent with other

established Supreme Court precedent recognizing the assignability of contracts that do not involve

personal performance. Northwestern Cooperage & Lumber Co v Byers,5 Voigt v Murphy Heating

Co,6 Detroit, T & IR Co v WU Tel Co.7

By voiding only the assignment of a right to future benefits, the No-Fault Act embraces

and endorses the rule of Roger Williams. MCL 500.3143 provides that “an agreement for

assignment of a right to benefits payable in the future is void” (emphasis added). As explained in

Shah, “By not including past due benefits in this statutory prohibition, the Legislature, under the

doctrine of expressio unius est exclusio alterius, made clear its intent to adhere to the fundamental

principle that assignments of past due benefits are effective and proper.” Shah (Shapiro, J.,

concurring in part and dissenting in part). State Farm’s attempt to apply its anti-assignment clause

2 324 Mich App 182; 920 NW2d 148 (2018).

3 43 Mich 252; 5 NW 303 (1880).

4 43 Mich at 254.

5 133 Mich 534; 95 NW 529 (1903).

6 164 Mich 539; 129 NW 701 (1911).

7 200 Mich 2, 5; 166 NW 494 (1918).

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to a post-loss assignment contravenes the Legislature’s intent, as expressed in the language of this

statute.

Shah was correctly decided for other reasons as well. In Covenant Medical Ctr v State

Farm Mutual Auto Ins Co,8 this Court, rejecting decades of case law, held that a No-Fault provider

could not assert a direct cause of action against an insurer to recover payment for medical services

rendered to the insured. But in making that ruling, this Court expressly recognized that the

provider could directly sue the insurer under an assignment of rights from the patient, stating “our

conclusion today is not intended to alter an insured’s ability to assign his or her right to past or

presently due benefits to a healthcare provider.” 500 Mich at 217, n 40. This Court relied upon

MCL 500.3143 and Professional Rehab Assoc v State Farm Mut Auto Ins Co, 228 Mich App 167,

172; 577 NW2d 909 (1998) (noting that only the assignment of future benefits is prohibited by

MCL 500.3143). Id.

Further, the purpose of the No-Fault Act will be thwarted if an insured’s right to past or

presently due benefits cannot be assigned to the insured’s providers, who have the financial ability

and incentive to enforce the insured’s right to No-Fault payments. The No-Fault Act “was offered

as an innovative social and legal response to the long payment delays, inequitable payment

structure, and high legal costs inherent in the tort (or ‘fault’) liability system.” Shavers v Attorney

General, 402 Mich 554; 267 NW2d 72 (1978). In Shavers, this Court emphasized that the “goal

of the no-fault insurance system was to provide victims of motor vehicle accidents assured,

adequate, and prompt reparation for certain economic losses.” Id. at 578-579. Contrary to those

goals, if an assignment of past or presently due benefits is not permitted, the patient-insureds will

be thrown right back into the litigation arena as the only party empowered to enforce the insurer’s

8 500 Mich 191; 895 NW2d 490 (2017).

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payment obligations and as the only party from whom medical providers may seek payment for

services rendered. Without the ability to sue under an assignment, providers will be left with the

unenviable choice of having to sue their patients for medical service payments that are most

assuredly beyond the patient’s ability to pay, or declining in the first instance to treat auto accident

victims.

This is an issue of great concern to CPAN’s members. For these reasons, and others more

fully addressed below, Amicus Curiae Coalition Protecting Auto No Fault urges this Court to deny

the application for leave to appeal and allow the published Shah decision to remain standing as the

law of this State, or, if this Court determines that it should otherwise consider the issue, to deny

the relief State Farm seeks, affirm the Court of Appeals Shah decision, and uphold the

unenforceability of anti-assignment clauses with respect to past or presently due benefits.

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ARGUMENT

I. State Farm’s Anti-Assignment Clause is Unenforceable Because it is Contrary to

Public Policy as Articulated by the Decisions of this Court, the Court of Appeals, and

Statutes of This State, and Because it Contravenes the Assignment Provision of the

No-Fault Act.

A contract provision that violates public policy is unenforceable. In Rory v Continental

Ins Co, 473 Mich 457, 471; 703 NW2d 23 (2005), this Court explained that in “[i]n ascertaining

the parameters of our public policy, we must look to ‘policies that, in fact, have been adopted by

the public through our various legal processes, and are reflected in our state and federal

constitutions, our statutes, and the common law.’” State Farm’s anti-assignment clause is

unenforceable under the public policy of this state because it contravenes the established precedent

of this Court and the limited restriction on assignment set forth in Section 3143 of the No-Fault

Act.

A. The Anti-Assignment Clause is Unenforceable Under Roger Williams.

Over a century ago, this Court held that an anti-assignment clause in an insurance policy

did not preclude the insured from assigning rights that had already accrued under the policy

because the anti-assignment clause violated the public policy of this State. In Roger Williams Ins

Co v Carrington, Mr. Carrington was the claimant under an insurance policy covering livery stable

stock that had been assigned to him after a fire destroyed the property. The insurer denied the

claim. With respect to the assignment, this Court explained that the insurer’s anti-assignment

provision was against public policy as applied to a cause of action that had already accrued and

thus the insurer’s consent to assignment was not required:

The assignment having been made after the loss did not require consent of the

company. The provision of the policy forfeiting it for an assignment without the

company's consent is invalid, so far as it applies to the transfer of an accrued cause

of action. It is the absolute right of every person—secured in this state by statute—

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to assign such claims, and such a right cannot be thus prevented. It cannot concern

the debtor, and it is against public policy. [43 Mich at 304 (emphasis added)].9

Federal courts in Michigan have followed the rule of Roger Williams. Most recently, in

Spine Specialists of Michigan PC v Allstate Prop and Cas Ins Co, opinion of the United States

District Court for the Eastern District of Michigan, issued March 12, 2018 (Case No. 15-14102),

p 310, the Eastern District of Michigan rejected as contrary to Michigan law, Allstate’s assertion

that the insured’s assignment of the right to recover existing benefits to its medical provider was

barred by an anti-assignment clause in the Allstate policy. The Court explained:

According to Allstate, the alleged assignment between Plaintiff and Najor is invalid

because the insurance policy between it and Najor precluded assignments. The

policy states: “This policy can't be transferred to anyone without our written

consent.” (ECF No. 41 at Pg ID 799.) However, Defendant’s position is contrary

to Michigan’s law regarding assignments that occur after a loss, which is precisely

what occurred in this case. The Michigan courts make a distinction between pre-

loss assignments and post-loss assignments [emphasis added].

Citing Roger Williams, the Court reiterated that “the Michigan Supreme Court recognized the rule

that a clause in an insurance policy prohibiting an assignment by the insured is ineffective to

preclude the insured from making an assignment after a loss has occurred.” The Court explained

that the Roger Williams rule “recognizes the distinction between pre-loss assignments, which can

be prohibited, and post-loss assignments, which cannot be prohibited, in that a pre-loss assignment

involves a transfer of a contractual relationship, whereas a post-loss assignment is a transfer of a

chose [sic] in action or a right to a money claim.” The purpose of a non-assignment clause is to

guard against an increase in the risk the insurer has agreed to insure, but when the events giving

9 The Shah plaintiffs fully address State Farm’s assertion that the statute referenced in Roger

Williams no longer exists. The substance of that statute, CL 1871, §5775, was to permit an

assignee to sue and recover in his or her own name on a bond, note, or chose in action. The right

of an assignee to sue in his or her own name is continued in the “real party in interest” rules set

forth in MCL 600.2041 and MCR 2.201(B).

10 A copy of each unpublished case cited herein is attached for reference.

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rise to liability have already occurred, the risk is not increased by the assignment; thus, the reason

for the anti-assignment clause no longer exists and the cause of action is assignable. Given

circumstances similar to those that exist in Shah, the Court concluded:

In this case, the assignment to Plaintiff was not the contractual relationship between

Allstate and Najor, whereby Allstate’s insurance coverage would extend to Plaintiff

causing Allstate to be liable to any insured loss by Plaintiff. Rather, the assignment

between Plaintiff and Najor was a post-loss assignment that assigned Najor’s right

to pursue her benefits due under her policy, which is permissible.

In Estate of Grimmet v Encompass Indemnity Co, unpublished opinion of the United States

District Court for the Eastern District of Michigan, issued November 21, 2017 (Case No. 14-

14646), p 5, the Court cited Roger Williams for the proposition that “the provision of the policy

forfeiting it for an assignment without the company’s consent is invalid, so far as it applies to the

transfer of an accrued cause of action.” The same conclusion as to Roger Williams was expressed

in Covenant Medical Center, Inc v Auto-Owners Ins Co, unpublished opinion of the United States

District Court for the Eastern District of Michigan, issued October 13, 2017 (Case No. 17-cv-

11176), p 4. See also, Action Auto Stores v United Capitol Ins Co, 845 F Supp 417, 423 (WD

Mich 1993) (citing Roger Williams and further stating, “Because the clause at issue is itself

ambiguous and because there is a strong public policy in favor of assignment of such contract

rights, the Court holds that paragraph F of the ‘Common Policy Conditions’ prohibits only transfer

and assignment of a right prior to loss and does not prohibit assignment of an accrued cause of

action.”); Century Indemnity Co v Aero-Motive Co, 318 F Supp 2d 530, 539-540 (WD Mich 2003)

(citing Roger Willlams and stating that “an anti-assignment clause will not be enforced where a

loss occurs before the assignment, because in that situation the assignment of the claim under the

policy is viewed no differently than any other assignment of an accrued case of action”); In re

Jackson, 311 BR 195, 201 (WD 2004) (“once a party to a contract performs its obligations to the

point that the contract is no longer executory, its right to enforce the other party’s liability under

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the contract may be assigned without the other party’s consent, even if the contract contains a non-

assignment clause”).11 See also, Ocean Accident & Guarantee Corp v Southwestern Bell, 100 F2d

441 (CA 8 1939) (stating “The principle on which the courts hold that an assignment of a right

under a policy prohibiting assignment may be made is that such an assignment is not the

assignment of the policy itself (because the parties have contracted otherwise), but it is the

assignment of a claim, or debt, or chose in action” and citing Roger Williams).

Michigan appellate courts have also relied upon Roger Williams. See e.g., Marion v

Vaughn, 12 Mich App 453, 463; 163 NW2d 239, 244 (1968) (“Provisions prohibiting assignment

of rights under insurance policies have been held not to prevent assignment of the insured's claim

against the insurer after the loss,” citing Roger Williams); Michigan Spine & Brain Surgeons,

PLLC v. Auto-Owners Insurance Company, unpublished per curiam opinion of the Court of

Appeals, issued December 11, 2018 (Docket No. 340800), p 3 (“courts have refused to enforce an

anti-assignment clause when the loss at issue occurs before the assignment is executed,” citing

Roger Williams and Shah); Michigan Head & Spine Institute, PC v Michigan Assigned Claims

Plan, unpublished per curiam opinion of the Court of Appeals, issued November 13, 2018 (Docket

No. 339766), p 5 (“this Court held based on Roger Williams . . . that ‘an accrued cause of action

may be freely assigned after the loss and that an anti-assignment clause is not enforceable to restrict

such assignment because such a clause violates public policy in that situation,’” citing Shah). The

rule of Roger Williams remains good law today.

11 This is consistent with the recognized assignability of contracts that do not involve personal

performance. See also, Northwestern Cooperage & Lumber Co v Byers, 133 Mich 534; 95 NW

529 (1903) (recognizing the assignability of contracts other than those involving personal

performance); Voigt v Murphy Heating Co, 164 Mich 539; 129 NW 701 (1911) (same); Detroit, T

& IR Co v WU Tel Co, 200 Mich 2, 5; 166 NW 494 (1918) (same).

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B. The Anti-Assignment Clause Is Inconsistent With and Violates Legislative

Intent, as Clearly Expressed in the No-Fault Act.

State Farm’s anti-assignment clause is also unenforceable because it violates the plain

language of Section 3143 of the No-Fault Act, MCL 500.3143, which states in full, “An agreement

for assignment of a right to benefits payable in the future is void.” This statute, which specifically

governs the legality of an assignment of the right to No-Fault benefits, prohibits only the

assignment of benefits payable in the future. Consistent with Roger Williams, it does not prohibit

an assignment of benefits as to which the obligation to pay has already accrued.

Disregarding this discrete statutory limitation on the right to assign, State Farm urges this

Court to depart from its long-held textualist approach to statutory interpretation and to place State

Farm’s will above the will expressed by the Legislature in the language of the statute. But the

well-accepted rules of statutory construction do not allow this Court to rewrite the statute. The

rules of construction require that every word in a statute be given full effect according to its plain

meaning, see Joseph v Auto Club Ins Ass’n, 491 Mich 200, 215; 815 NW2d 412 (2012); Sun Valley

Foods Co v Ward, 460 Mich 230, 236-237; 596 NW2d 119 (1999); Murphy v Michigan Bell Tel

Co, 447 Mich 93, 98; 523 NW2d 310 (1994); Nation v W D E Electric Co, 454 Mich 489, 494;

563 NW2d 233 (1997), and a court may not read words into a statute that the Legislature did not

see fit to add. In re Hurd-Martin Drain, 331 Mich 504, 509; 50 NW2d 143 (1951). Nor may

plainly expressed words be disregarded. Rather,

[e]ffect should be given to every phrase, clause, and word in the statute and,

whenever possible, no word should be treated as surplusage or rendered nugatory.

Whitman v City of Burton, 493 Mich 303, 311-312; 831 NW2d 223 (2013) (footnotes omitted).12

12 Further, “[t]he use of different terms within similar statutes generally implies that different

meanings were intended.” 2A Singer & Singer, Sutherland Statutory Construction (7th ed), § 46:6,

p 252.

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These rules of statutory construction do not permit this Court to disregard the pivotal words

“payable in the future.” They must be given their clearly intended meaning of limiting the

prohibition against assignment to only benefits “payable in the future.” If the Court wanted to

limit all assignments, it would not have included the words “payable in the future.” It would have

simply said “an agreement for assignment of a right to benefits payable in the future is void.”

Considering an anti-assignment clause in light of this unambiguous provision, the Court of

Appeals upheld an assignment of past due benefits as consistent with the language of the No-Fault

Act. In Professional Rehab Assoc v State Farm Mut Auto Ins Co, 228 Mich App 167; 577 NW2d

909 (1998), relied upon by this Court in Covenant, a provider of medical and rehabilitation services

sued State Farm as an assignee of the No-Fault insured after State Farm paid for some, but not all,

of the services provided. Payment was refused for services rendered on four specific dates. As in

the present case, State Farm argued that the assignment was void. The Court of Appeals disagreed.

Finding that the statutory language was “clear and unambiguous”, the Court reasoned that “[u]nder

the plain language of the statute, a ‘right to benefits payable in the future’ is distinguishable from

a right to past due or presently due benefits.” Id. at 172. The Court explained:

Keeping in mind our duty to discern and effectuate the intent of the Legislature, we

believe that if the Legislature had intended to prohibit the assignment of all rights,

it would not have included the word ‘future’ in the language of the statute. The

Legislature is presumed to have intended the meaning that a statute plainly

expresses. Institute in Basic Life Principles, Inc. v. Watersmeet Twp. (After

Remand), 217 Mich. App. 7, 12, 551 N.W.2d 199 (1996). [Id. at 172].13

The express language of MCL 500.3143 belies the argument State Farm makes to validate

its anti-assignment clause. If the Legislature intended such clauses to have the meaning State Farm

13 The case actually came before this Court after the trial court granted summary disposition for

State Farm and the Court of Appeals denied leave. In lieu of granting leave, this Court remanded

for consideration by the Court of Appeals as if on leave granted. Professional Rehabilitation Ass’n

v State Farm Mut Automobile Ins Co, 452 Mich 857; 550 NW2d 794 (1996).

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expresses, it would have said that “an assignment of benefits payable under this Act is void.” This

Court may not read the statute as if the words “payable in the future” do not exist. Further, under

the doctrine of expressio unius est exclusio alterius, “[t]he express mention of one thing in a statute

implies the exclusion of other similar things.” In re MCI Telecom Complaint, 460 Mich 396, 415;

596 NW2d 164 (1999). That the statute voids only the assignment of benefits payable in the future

means that the assignment of past or existing benefits cannot be infringed. State Farm’s argument

cannot trump the clear language of the statute, which must be enforced as written.

II. In Covenant, this Court Recognized and Preserved the Insured’s Ability to Assign the

Right to Recover Past or Presently Due No-Fault Benefits to the Provider.

This Court has recognized an insured’s right to assign its entitlement to past or presently

due No-Fault benefits to a medical service provider. In Covenant, supra, this Court rejected

decades of case law recognizing the No-Fault provider’s right to assert a direct cause of action

against an insurance company for medical service payment. But in holding that the provider did

not possess a direct cause of action against the insurer under the No-Fault Act, this Court expressly

recognized that a provider could still directly sue an insurer under an assignment of rights from

the patient, stating “our conclusion today is not intended to alter an insured’s ability to assign his

or her right to past or presently due benefits to a healthcare provider.” 500 Mich at 217, n 40

(emphasis added). As support for this recognition, this Court cited MCL 500.3143 and

Professional Rehab Assoc v State Farm Mut Auto. Ins Co, 228 Mich App 167, 172; 577 NW2d

909 (1998) (noting that only the assignment of future benefits is prohibited by MCL 500.3143).

The assignability rule recognized by this Court in Covenant gave effect to the precise

language of MCL 500.3143 by referencing as preserved the assignment of past or presently due

benefits. Numerous panels of the Michigan Court of Appeals have relied upon this Court’s

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recognition in Covenant of the validity of an assignment of past or presently due benefits, as have

federal courts in Michigan. See, for example, the following:

Michigan Head & Spine Institute, PC v Essurance Property & Casualty Ins Co,

unpublished per curiam opinion of the Court of Appeals, issued September 18, 2018

(Docket No. 340807), p 2 (Swartzle, Jansen, and O’Brien) (“In Covenant … our

Supreme Court recognized that an insured may ‘assign his or her right to past or

presently due benefits to a healthcare provider’” and “[t]hus, in the situation where

a health-care provider’s independent statutory claim for PIP benefits is summarily

dismissed, this Court has held that the provider should be granted leave to amend

its complaint to assert a claim under an assignment-of-benefits-theory.”)

Bronson Healthcare Group, Inc v Michigan Assigned Claims Plan, 323 Mich App

302, 307; 917 NW2d 682 (2018) (O’Connell, Swartzle, Hoekstra) (“In Covenant,

the Court expressly recognized that a healthcare provider’s inability to bring a

direct cause of action did not alter the injured party’s ability to assign past or

presently due benefits.”)

Michigan Head & Spine Institute, PC v Hastings Mut Ins Co, unpublished per

curiam opinion of the Court of Appeals, issued September 18, 2018 (Docket No.

340656), p 1 (Swartzle, Jansen and O’Brien) (“Yet, the Covenant Court also stated

that its holding was ‘not intended to alter an insured’s ability to assign his or her

right to past or presently due benefits to a healthcare provider [citation omitted].’

Rather, only the assignment of future benefits is prohibited.”)

Cox v Farm Bureau Mut Ins Co, unpublished per curiam opinion of the Court of

Appeals, issued June 14, 2018 (Docket Nos. 336326, 336353, 336356), p 3

(Sawyer, Cavanagh, and Fort Hood) (“In Covenant … our Supreme Court

recognized that an insured may ‘assign his or her right to past or presently due

benefits to a healthcare provider.’”)

Somerset Pain Clinic, PC v Esurance Ins Co, unpublished per curiam opinion of

the Court of Appeals, issued December 13, 2018 (Docket No. 341562), p 1 (MJ

Kelly, Meter and O’Brien) (“[N]othing in Covenant ‘alter[s] an insured’s ability to

assign his or her right to past or presently due benefits to a healthcare provider’”

and following Shah).

Henry Ford Health Sys v Everest Natl Ins Co, ___ Mich App ___; ___ NW2d ___

(2018) (O’Brien, Turkel and Letica) (following Shah).

Attendant Care Companies v Farm Bureau Gen’l Ins Co, unpublished per curiam

opinion of the Court of Appeals, issued November 29, 2018 (Docket No. 340205),

p 1 (Jansen, KF Kelly, and Borrello) (“[T]he [Covenant] Court clarified that its

conclusion was ‘not intended to alter an insured’s ability to assign his or her right

to past or presently due benefits to a healthcare provider.’”)

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VHS Michigan, Inc v Farm Bureau Mut Ins Co, unpublished per curiam opinion of

the Court of Appeals, issued November 27, 2018 (Docket No. 341176), p 1

(O’Brien, Tukel, and Letica) (Citing Covenant and stating “[a]ccordingly, a

medical provider may have standing to bring a claim against an insurer to recover

no-fault benefits by obtaining a valid and enforceable assignment of rights from the

injured person.”)

Michigan Head & Spine Institute, PC v Michigan Assigned Claims Plan,

unpublished per curiam opinion of the Court of Appeals, issued November 13, 2018

(Docket No. 339766), p 2 (Murray, Meter, and Gleicher) (“Covenant’s ruling also

was ‘not intended to alter an insured’s ability to assign his or her right to past or

presently due benefits to a healthcare provider [citations omitted].’ Accordingly, an

injured party could still assign his or her right to recover benefits” and following

Shah.)

Insight Institute of Neurosurgery and Neuroscience v State Farm Mut Auto Ins Co,

unpublished per curiam opinion of the Court of Appeals, issued September 20, 2018

(Docket No. 339740), p 1 (O’Connell, Cavanagh, and Servitto) (citing Shah for the

proposition that “a post-loss anti-assignment provision was unenforceable.”)

Michigan Head & Spine Institute, PC v Allstate Prop and Cas Ins Co, unpublished

per curiam opinion of the Court of Appeals, issued September 18, 2018 (Docket

No. 340316), p 2 (Swartzle, Jansen, and O’Brien) (noting that “in Covenant

[citation omitted], our Supreme Court recognized that an insured may ‘assign his

or her right to past or presently due benefits to a healthcare provider.’”)

Harrison v Allstate Prop & Cas Ins Co, unpublished per curiam opinion of the

Court of Appeals, issued November 28, 2017 (Docket No. 334083), p 5 (Meter,

Borrello, Riordan) (recognizing this Court’s statement that its holding in Covenant

does not alter an insured’s ability to assign to a healthcare provider his or her right

to past or presently due benefits.)

Spine Specialists of Michigan PC v Allstate Prop and Cas Ins Co, opinion of the

United States District Court for the Eastern District of Michigan, issued March 12,

2018 (Case No. 15-14102), p 3 (“Plaintiff correctly points out that Covenant’s

holding did not apply to assignments, and the Michigan Supreme Court specifically

preserved the insured’s option to assign its benefits. The court noted that its

decision does not affect the insured’s ability to assign past and present benefits.”)

Covenant Medical Center, Inc v Auto-Owners Ins Co, unpublished opinion of the

United States District Court for the Eastern District of Michigan, issued October 13,

2017 (Case No. 17-cv-11176), p 4 (stating, “the court in Covenant explicitly

addressed assignments, explaining ‘our conclusion today is not intended to alter an

insured’s ability to assign his or her right to past or presently due benefits to a

healthcare provider.’”)

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The clear message recognized and preserved by this Court in Covenant is that the insured

retains the right to assign recovery of past or presently due benefits to his or her medical service

providers. Nothing has occurred in the interim to alter that view. Indeed, according to the Shah

plaintiffs, during oral argument in Covenant, State Farm’s lawyers argued that even if providers

no longer had a direct cause of action against the insurer, a provider could continue to obtain an

assignment of rights against the insurer from the insured. See e.g., Shah’s Corrected Answer to

Defendant/Appellant State Farm’s Application for Leave to Appeal, at 41 (MS. WHEATON: “…

They could go after patients, they could get an assignment of the claim from the patient . . . And

in fact, then there would be no question on the part of the insurance company. When resolving the

claim they would have all the defenses available to it that it would have were it the injured person

bringing the claim. And a resolution of that would -- would have some finality to it”); Id. at 42

(JUSTICE LARSEN: … So couldn’t this whole problem be solved that way, if the providers just

got an assignment of rights from everybody who showed up for treatment? Couldn’t this problem

just go away? … I won’t treat you unless you assign to me your rights under any insurance that

you may have. MS. WHEATON: It definitely decreases the problem. And when that happens, it

helps the insurance companies …”).14

III. State Farm’s Non-Assignability Argument Violates the Stated Purposes of the No-

Fault Act By Making It More Likely That Patients Will Have to Litigate in Order to

Recover Their Benefits and By Impairing Patients’ Access to Medical Care and Legal

Representation.

State Farm’s non-assignability argument undermines the stated purpose of the No-Fault

Act. In Shavers v Attorney General, 402 Mich 554; 267 NW2d 72 (1978), this Court expressed

14 State Farm apparently suggested that another way for the provider to get paid would be to sue

the patient, who could then bring in the insurance company. See Shah’s App at 43. This would

multiply the proceedings unnecessarily given that an assignment of rights would permit recovery

from the insurer directly without involving the patient in litigation.

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that the No-Fault Act “was offered as an innovative social and legal response to the long payment

delays, inequitable payment structure, and high legal costs inherent in the tort (or ‘fault’) liability

system” and emphasized that the “goal of the no-fault insurance system was to provide victims of

motor vehicle accidents assured, adequate, and prompt reparation for certain economic losses.”

Id. at 578-579. The Act requires an insurer to pay personal protection insurance benefits for

accidental bodily injury arising out of the ownership, operation, maintenance, or use of a motor

vehicle as a motor vehicle, subject to the provisions of the Act, MCL 500.3105(1), and further

provides that statutory benefits “are payable as loss accrues.” MCL 500.3142(1). Benefits “are

overdue if not paid within 30 days after an insurer receives reasonable proof of the fact and of the

amount of loss sustained.” MCL 500.3142(2).

Contrary to the laudatory goals this Court recognized in Shavers, State Farm’s transparent

purpose is to create a system that makes it difficult to challenge an insurer’s denial by injecting

the insured right back into the litigation fray as the only party authorized to enforce an insurer’s

obligations under the No-Fault Act and as the only party from whom a medical provider can seek

payment. This will unquestionably result in the very same delays, inequities, and high legal costs

the Act seeks to avoid. The No-Fault insured will be squeezed between provider actions for

medical service payments the insured lacks the means to pay, and actions the insured must bring

against the insurer to enforce the insured’s rights under the Act. The end result will leave insurer

denials free from challenge in many instances.

There is no question that the insured No-Fault victim is far less equipped to pursue an

action against its insurer than are the medical service providers. Doctors, hospitals, and other

medical providers have the financial ability and incentive to pursue litigation, particularly if

multiple claims remain unpaid. In instances of partial non-payment, they are also better equipped

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to address the substance of the denial. For example, a frequently arising issue is the reasonableness

of the fee. The provider might charge $5,000 in fees, but receive only $2,500 from the insurer.

Providers have the knowledge, capability, economic wherewithal, and incentive to challenge such

a decision. The patient does not. Thus, the institutional assignment provides an important vehicle

to ensure that the insurance industry honors its statutory obligation to pay benefits and does not

trample upon the rights of its insureds. Assignments allow for a leveling of the David (patient)

versus Goliath (insurer) playing field. Hence, the insured’s ability to assign his or her accrued

rights to the medical service provider greatly advantages the insured.

In addition to converting patients to plaintiffs, access to medical care will be impaired if

patients can no longer assign to their providers their right to receive payment for services provided.

Without an assignment, it’s a Hobson’s choice for providers. If a provider treats the patient and is

not paid, without an assignment the provider’s only option is to sue its patient, which no provider

wants to do. Confronted with the reality of having to routinely sue patients for medical bills they

cannot pay, some providers will undoubtedly decide in the first instance not to treat auto accident

victims potentially leaving No-Fault insureds without access to the medical care they need.

Finally, prohibiting patients from assigning their legal rights and claims to their providers

will significantly limit the ability of patients to access the protections of the legal system. Absent

the ability to assign, the insured will be forced to incur the burden and expense of hiring a lawyer

to enforce their right to benefits. But many patients do not have the resources to pay a lawyer an

hourly fee and contingent fee agreements are not always practical. In many thousands of instances,

the amount at stake is insufficient to warrant the expense of hiring experts and litigating on a

contingency fee basis. The economics simply do not work. This results in a loss of access to the

legal system and a loss of the patient’s ability to legally enforce the rights that the Michigan No-

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Fault Act was specifically enacted to guarantee and protect.15 Thus, insurers will be permitted to

deny benefits with impunity, shifting to other segments of the community the costs associated with

millions of dollars of unpaid provider claims.

This is all completely antithetical to the purposes of the Michigan No-Fault system.

IV. The Overly Broad and Unlawful Anti-Assignment Clause State Farm Seeks to

Enforce Interferes with the Provider-Patient Relationship and Impairs the Patient’s

Right to Contract with Providers.

This Court has long-enforced and respected the fundamental right of parties to arrange their

affairs with one another through contracts that do not violate law or public policy. In Bloomfield

Estates Improvement Ass'n, Inc v City of Birmingham, 479 Mich 206; 737 NW2d 670 (2007), this

Court expressed:

The United States Supreme Court has listed the “right to make and enforce

contracts” among “those fundamental rights which are the essence of civil

freedom.” United States v Stanley, 109 US 3, 22, 3 S Ct 18, 27 LEd 835 (1883).

We “respect[ ] the freedom of individuals freely to arrange their affairs via contract”

by upholding the “fundamental tenet of our jurisprudence ... that unambiguous

contracts are not open to judicial construction and must be enforced as written,”

unless a contractual provision “would violate law or public policy.” Rory v

Continental Ins Co, 473 Mich 457, 468, 470, 703 NW2d 23 (2005) (emphasis in

original). [479 Mich at 212].

“Consequently, when parties have freely established their mutual rights and obligations through

the formation of unambiguous contracts, the law requires this Court to enforce the terms and

conditions contained in such contracts, if the contract is not ‘contrary to public policy.’” Id. at 213

(footnote omitted), citing Sands Appliance Services, Inc v Wilson, 463 Mich 231, 239; 615 NW2d

241 (2000).

15 The No-Fault Act does contain an attorney fee provision but fees are awarded under the statute

only if the claim is unreasonably denied; if the case involves a bona fide fact dispute, statutory

issue, or constitutional interpretation, fee awards are not available. See MCL 500.3148.

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Through its unlawful anti-assignment provision, State Farm seeks to invalidate the

lawfully-entered assignment of benefits agreements between patients and providers so it can

escape provider enforcement of its obligations under the No-Fault Act and leave a lawsuit against

the patient as the provider’s only option. Dishonoring the fundamental right to contract that

underlies societal relationships, State Farm seeks to elevate its own contractual rights above the

rights of the insureds. This is a clear contortion of the No-Fault system. The insureds are the

intended beneficiaries of the No-Fault Act; it is their rights that the Act is designed to protect.

Their right to contract must be respected and cannot be sublimated to an unlawful contractual

restraint that violates public policy and only benefits State Farm.

Support for this conclusion exists in MCL 500.3143, where the Legislature has clearly

expressed that only the assignment of benefits payable in the future is barred. State Farm cannot

broaden the statute by judicial fiat.

CONCLUSION

Pursuant to longstanding Supreme Court case law, anti-assignment clauses are not

enforceable as to losses which have already occurred. MCL 500.3143 is the only provision in the

No-Fault Act that addresses assignments and consistent with Supreme Court authority, it voids

only the assignment of rights to benefits payable in the future. In Covenant, this Court referenced

that statute and the ability of patients to assign their right to recover past due or existing benefits,

impliedly rejecting the argument State Farm now makes in Shah. Indeed, without the vehicle of

assignment, the laudatory goals of the No-Fault Act cannot be achieved, and patient-insureds will

be forced to file lawsuits (if they can afford to do so) against their insurers and to defend lawsuits

brought against them by providers. In many instances, a lack of funding and economic incentive

will allow insurers to escape their obligations because there will be no one to monitor or enforce

compliance. As District Court Judge Avern Cohn explained “Allowing insurers to prevent the

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assignment of accrued claims would unfairly disadvantage insureds without providing any benefit

to the insurers other than the avoidance of obligations already incurred.”16

Fortunately, the Legislature has clearly spoken on this issue. Reflecting both the public

policy and the law of this State, the No-Fault Act itself validates the assignability of the insured’s

right to past or presently due benefits. Only assignments of benefits payable in the future are

prohibited. State Farm’s request for relief must be denied.

RELIEF REQUESTED

For these reasons, Amicus Curiae Coalition Protecting Auto No Fault urges this Court to

deny the application for leave to appeal, or, if this Court determines that it should otherwise

consider the issue, to deny the relief State Farm seeks, affirm the Court of Appeals Shah decision,

and uphold the unenforceability of anti-assignment clauses with respect to past or presently due

benefits.

SINAS, DRAMIS, BRAKE,

BOUGHTON & MCINTYRE, P.C.

By:/s/ George T. Sinas

George T. Sinas (P25643)

Attorneys for Amicus Curiae


3380 Pine Tree Road

Lansing, MI 48911-4207

(517) 394-7500

Dated: January 23, 2019

Respectfully submitted,

KERR, RUSSELL AND WEBER, PLC

By:/s/Joanne Geha Swanson

Joanne Geha Swanson (P33594)

Attorney for Amicus Curiae


500 Woodward Avenue, Suite 2500

Detroit, MI 48226-3427

(313) 961-0200; FAX (313) 961-0388

16 Estate of Grimmet v Encompass Indemnity Co, unpublished opinion of the United States

District Court for the Eastern District of Michigan, issued November 21, 2017 (Case No. 14-

14646), p 5, recognizing that “Michigan law does not support the upholding of contractual

provisions in insurance policies that are contrary to public policy.”

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CERTIFICATE OF SERVICE

Cynthia J. Villeneuve, being first duly sworn deposes and says that on January 23, 2019,

she filed the foregoing document with the Clerk of the Court using the Court’s electronic filing

system which will electronically serve all parties of record.

/s/ Cynthia J. Villeneuve

Cynthia J. Villeneuve

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Unpublished Cases

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Spine Specialists of Michigan, P.C. v. Allstate Property &..., Slip Copy (2018)

2018 WL 1255149

© 2019 Thomson Reuters. No claim to original U.S. Government Works. 1

2018 WL 1255149Only the Westlaw citation is currently available.

United States District Court, E.D.Michigan, Southern Division.

SPINE SPECIALISTS OF MICHIGAN, P.C.,(Stella Najor and Aracelis Najjar) Plaintiff,

v.ALLSTATE PROPERTY & CASUALTY INSURANCE

COMPANY, a foreign corporation, and CitizensInsurance Company of America, Defendants.

Civil Case No. 15-14102|

Signed 03/12/2018

Attorneys and Law Firms

Jean E. Charboneau, Padilla Law Group, Birmingham,MI, for Plaintiff.

Christina B. Bailey, Christina B. Bailey Assoc., ErnestoE. Bridgnanan, Allstate and Encompass Staff Counsel,Farmington Hills, MI, for Defendants.

OPINION AND ORDER GRANTING, IN PART,AND DENYING, IN PART, DEFENDANTALLSTATE PROPERTY & CASUALTY

INSURANCE COMPANY'S MOTION FORSUMMARY JUDGMENT [ECF NO. 41]

LINDA V. PARKER, U.S. DISTRICT JUDGE

*1 On July 14, 2015, Plaintiff Spine Specialists ofMichigan, P.C. (“Spine Specialists”) filed this lawsuitin a Michigan state court against Defendant AllstateProperty & Casualty Insurance Company (“Allstate”) forthe reimbursement of PIP benefits. (ECF No. 1-1 at PgID 17.) Plaintiff filed an amended complaint on August31, 2015, naming Citizens Insurance Company of America(“Citizens”) as a Defendant. (Id. at Pg ID 22.) Citizensremoved Plaintiff’s Amended Complaint to federal courtbased on diversity jurisdiction on November 23, 2015.(ECF No. 1 at Pg ID 3.) Presently before the Court isAllstate’s motion for summary judgment filed pursuant toFederal Rule of Civil Procedure 56 on August 17, 2017.(ECF No. 41.) The motion has been fully briefed. For the

following reasons, the Court grants, in part, and denies, inpart, Allstate’s motion for summary judgment.

I. Factual and Procedural BackgroundOn March 18, 2014, Stella Najor (“Najor”) and AracelisNajjar (“Najjar”) were injured in a motor vehicle accident.(Amend. Compl. ¶ 4.) At the time of the accident, Najorhad a policy of no-fault insurance with Allstate and Najjarwith Citizens. (ECF No. 1-1 at Pg ID 24.) On May 27,2014, Najor and Najjar visited Plaintiff for treatment forthe injuries sustained from the motor vehicle accident.(ECF No. 32-6 at Pg ID 446.) On that date, Najor alsoassigned her rights to PIP benefits to Plaintiff. (ECF No.45-3 at Pg ID 948.) Despite Plaintiff submitting proof of itsclaims to Defendants, Defendants refused to pay. Plaintiffthen initiated this lawsuit on July 14, 2015 and amended itscomplaint on August 31, 2015, seeking to recover the totalamount of liability pursuant to the personal protectionbenefits offered by Allstate and Citizens. (ECF No. 1-1.)

On November 23, 2015, this matter was removed tofederal court. In an Order and Opinion dated August 16,2017, this Court granted Citizens' motion for summaryjudgment and dismissed Citizen from the case. (ECF No.40). On September 13, 2017, the parties stipulated to thedismissal of Plaintiff’s claims on behalf of Najjar. (ECFNo. 42.) Allstate filed the instant motion on August 17,2017 for Plaintiff’s remaining claims on behalf of Najor.(ECF No. 41.)

II. Summary Judgment StandardSummary judgment pursuant to Federal Rule of CivilProcedure 56 is appropriate “if the movant shows thatthere is no genuine dispute as to any material fact and themovant is entitled to judgment as a matter of law.” Fed. R.Civ. P. 56(a). The central inquiry is “whether the evidencepresents a sufficient disagreement to require submission toa jury or whether it is so one-sided that one party mustprevail as a matter of law.” Anderson v. Liberty Lobby,Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d202 (1986). After adequate time for discovery and uponmotion, Rule 56 mandates summary judgment against aparty who fails to establish the existence of an elementessential to that party’s case and on which that party bearsthe burden of proof at trial. Celotex Corp. v. Catrett, 477U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

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*2 The movant has the initial burden of showing “theabsence of a genuine issue of material fact.” Id. at 323,106 S.Ct. 2548. Once the movant meets this burden,the “nonmoving party must come forward with specificfacts showing that there is a genuine issue for trial.”Matsushita Electric Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538(1986) (internal quotation marks and citation omitted).To demonstrate a genuine issue, the nonmoving partymust present sufficient evidence upon which a jury couldreasonably find for that party; a “scintilla of evidence” isinsufficient. See Liberty Lobby, 477 U.S. at 252, 106 S.Ct.2505.

“A party asserting that a fact cannot be or is genuinelydisputed” must designate specifically the materials in therecord supporting the assertion, “including depositions,documents, electronically stored information, affidavitsor declarations, stipulations, admissions, interrogatoryanswers, or other materials.” Fed. R. Civ. P. 56(c)(1). Rule 56 provides that “[a]n affidavit or declarationused to support or oppose a motion must be made onpersonal knowledge, set out facts that would be admissiblein evidence, and show that the affiant or declarant iscompetent to testify to the matters stated.” Fed. R. Civ.P. 56(c)(4). “In order to survive a motion for summaryjudgment, the non-moving party must be able to showsufficient probative evidence that would permit a findingin his favor on more than mere speculation, conjecture, orfantasy.” Lewis v. Philip Morris, Inc., 355 F.3d 515, 533(6th Cir. 2004) (internal quotations and brackets omitted).

Notably, the trial court is not required to construct aparty's argument from the record or search out facts fromthe record supporting those arguments. See, e.g., Streetv. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir.1989) (“the trial court no longer has a duty to search theentire record to establish that it is bereft of a genuine issueof material fact”) (citing Frito-Lay, Inc. v. Willoughby,863 F.2d 1029, 1034 (D.C. Cir. 1988)); see also InterRoyalCorp. v. Sponseller, 889 F.2d 108, 111 (6th Cir. 1989),cert. denied, 494 U.S. 1091, 110 S.Ct. 1839, 108 L.Ed.2d967 (1990) (“A district court is not required to speculateon which portion of the record the nonmoving partyrelies, nor is it obligated to wade through and search theentire record for some specific facts that might support thenonmoving party's claim.”). The parties are required todesignate with specificity the portions of the record such

that the court can “readily identify the facts upon whichthe ... party relies[.]” InterRoyal Corp., 889 F.2d at 111.

III. Applicable Law and AnalysisAllstate presents five arguments in support of its motionfor summary judgment. First, relying on Covenant Med.Ctr. v. State Farm Mutual Automobile Ins. Co., 500Mich. 191, 895 N.W.2d 490 (Mich. 2017), Allstate arguesthat Plaintiff lacks standing to bring a direct causeof action against an insurer for PIP benefits. Second,Allstate contends that no contract exists between Plaintiffand Allstate. Third, Allstate argues that Plaintiff is anincidental beneficiary to the insurance contract, andtherefore, cannot sue for breach of contract. Fourth,Allstate contends that its insurance policy with Najorincluded an anti-assignment clause, which precluded thetransfer of policy benefits. Finally, Allstate asserts thatany purported assignment is invalid because it would beinconsistent with the Michigan local court rules.

a. The Covenant HoldingThe Michigan No-Fault Act, Mich. Comp. Laws §500.3112, provides, in pertinent part: “Personal protectioninsurance benefits are payable to or for the benefit ofan injured person or, in case of his death, to or for thebenefit of his dependents.” The parties note that prior toCovenant, Michigan courts have interpreted § 500.3112 toread that a healthcare provider may bring at direct causeof action against an insurer. However, in Covenant, theMichigan Supreme Court overruled this former precedentand held that “a review of the plain language of theno-fault act reveals no support for plaintiff’s argumentsthat a healthcare provider possess a statutory cause ofaction against a no-fault insurer.” 895 N.W.2d at 504-05.Therefore, Michigan law precludes healthcare providersfrom directly suing insurers for PIP benefits.

*3 Although Plaintiff does not dispute that Covenantprecludes it from bringing an independent cause of actionagainst Allstate, Plaintiff suggests that the Court appliesthe Covenant holding prospectively. However, this Courtis not in a position to decide issues of state law as wellas to refuse to apply the Michigan courts' interpretationof its laws. “The highest court of each State, of course,remains ‘the final arbiter of what is state law.’ ” Montanav. Wyoming, 563 U.S. 368, 377 n.5, 131 S.Ct. 1765, 179L.Ed.2d 799 (2011) (citing West v. American Telephone &Telegraph Co., 311 U.S. 223, 236, 237, 61 S.Ct. 179, 85

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L.Ed. 139 (1940)) (“[I]t is the duty of [federal courts] inevery case to ascertain from all the available data what thestate law is and apply it rather than to prescribe a differentrule, however superior it may appear from the viewpointof ‘general law.’ ”). However, if the highest court has notdecided an issue, as is the case here, federal courts arerequired to follow the decisions of the lower state courts.Wieczorek v. Volkswagenwerk, A.G., 731 F.2d 309, 310(6th Cir. 1984) (“In order to determine the Michigan law,we thus turn to the decisions of the Michigan intermediatecourts, which are binding authority in federal courts inthe absence of any Michigan Supreme Court precedent.”)Therefore, because the Michigan Supreme Court hasnot decided the issue of retroactivity as it applies toCovenant, the Michigan Court of Appeals decision, W.A.Foote Memorial Hosp. v. Mich. Assigned Claims Plan,No. 333360, 321 Mich.App. 159 (Mich. Ct. App. Aug.31, 2017) is controlling. Contrary to Plaintiff’s assertion,W.A. Foote Memorial Hospital held that Covenant appliesretroactively. Therefore, applying Covenant, Plaintiff doesnot have standing under Mich. Comp. Laws § 500.3112 tobring an independent cause of action against Allstate forPIP benefits.

Accordingly, this Court grants Allstate’s motion forsummary judgment to the extent Plaintiff seeks anindependent cause of action for PIP benefits pursuant toMich. Comp. Laws § 500.3112.

b. Plaintiff’s Request to Amend Complaint

Alternatively, in its response 1 to Allstate’s motion forsummary judgment, recognizing it did not include a causeof action for an assignment, Plaintiff requests that itbe granted leave to amend its complaint to include aclaim for PIP benefits pursuant to its assignment. Plaintiffcorrectly points out that Covenant’s holding did notapply to assignments, and the Michigan Supreme Courtspecifically preserved the insured’s option to assign itsbenefits. The court noted that its decision does not affectthe insured’s ability to assign past and present benefits.See Covenant, 895 N.W.2d at 505 n.40.

Federal Rule of Civil Procedure 15(a) instructs the courtsto “freely grant[ ]” leave to amend “where justice sorequires.” This is because, as the Supreme Court hasadvised, “[i]f the underlying facts or circumstances reliedupon by a plaintiff may be a proper subject of relief, heought to be afforded an opportunity to test his claim on

the merits.” Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct.227, 9 L.Ed.2d 222 (1962). However, a motion to amend acomplaint should be denied if the amendment is broughtin bad faith or for dilatory purposes, results in undue delayor prejudice to the opposing party, or would be futile. Id.An amendment is futile when the proposed amendmentfails to state a claim upon which relief can be granted andthus is subject to dismissal pursuant to Rule 12(b)(6). Rosev. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6thCir. 2000).

The Court now turns to the factors for determiningwhether Plaintiff should be allowed to amend itscomplaint. There is no evidence before the Court thatPlaintiff acted in bad faith or for a dilatory purpose.Plaintiff filed this lawsuit on July 14, 2015 basedon precedent at that time that permitted healthcareproviders to bring independent actions against insurers.The Michigan Supreme Court issued its opinion inCovenant on May 25, 2017 overruling previous precedent.Subsequently, Allstate filed its motion for summaryjudgment in light of that decision on August 17, 2017.In Plaintiff’s response to Allstate’s motion for summaryjudgment, Plaintiff requested leave to amend its complaintto be consistent with Covenant. Additionally, the Courtdoes not find that if it were to allow Plaintiff to amendits complaint it would cause undue delay. There is likelyno need for additional discovery, and if there is a need,discovery would be limited to the issue of the assignment.Further, Allstate would not be prejudiced because it willcontinue to defend the same substantive merits of the case,which remains the reimbursement of PIP benefits.

*4 However, the parties dispute the futility of theamendment. According to Allstate, the alleged assignmentbetween Plaintiff and Najor is invalid because theinsurance policy between it and Najor precludedassignments. The policy states: “This policy can't betransferred to anyone without our written consent.” (ECFNo. 41 at Pg ID 799.) However, Defendant’s position iscontrary to Michigan’s law regarding assignments thatoccur after a loss, which is precisely what occurred in thiscase. The Michigan courts make a distinction between pre-loss assignments and post-loss assignments.

[I]n Roger Williams Insurance Co. v. Carrington, 43Mich. 252, 5 N.W. 303 N.W.2d, 43 Mich. 252, 5N.W. 303 303 (1880), the Michigan Supreme Courtrecognized the rule that a clause in an insurance policyprohibiting an assignment by the insured is ineffective

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to preclude the insured from making an assignmentafter a loss has occurred:

The assignment having been made after the lossdid not require the consent of the company. Theprovision of the policy forfeiting it for an assignmentwithout the company’s consent is invalid, so far as itapplies to the transfer of an accrued cause of action.It is the absolute right of every person—secured inthis state by statute—to assign such claims, and sucha right cannot be thus prevented. It cannot concernthe debtor, and it is against public policy.

Id. at 254, 5 N.W.2d at 304. The rule stated inRoger Williams Insurance, and applied by the majorityof courts, recognizes the distinction between pre-lossassignments, which can be prohibited, and post-lossassignments, which cannot be prohibited, in that a pre-loss assignment involves a transfer of a contractualrelationship, whereas a post-loss assignment is atransfer of a chose [sic] in action or a right to a moneyclaim. See generally Couch on Insurance 3d §§ 34:25, 35:7(1997); Straz v. Kansas Bankers Sur. Co., 986 F.Supp.563, 569 (E.D. Wis. 1997).

Century Indem. Co. v. Aero-Motive Co., No. 1:02-cv-108,2004 WL 5642427, at *4, 2004 U.S. Dist. LEXIS 31180 at*7-8 (W.D. Mich. Mar. 12, 2004). “The purpose of a non-assignment clause is to protect the insurer from an increaseto the risk it has agreed to insure. But when events givingrise to an insurer’s liability have already occurred, theinsurer’s risk is not increased by a change in the insured’sidentity.” Id. at *12-13 (citing Gopher Oil Co. v. AmericanHardware Mutual Insurance Co., 588 N.W.2d 756 (Minn.Ct. App. 1999)); see also Ocean Accident & Guar. Corp.v. Southwestern Bell Tel. Co., 100 F.2d 441, 444 (8th Cir.1939) (“[A]fter the event occurs giving rise to the liabilitythe reason for the rule disappears and the cause of actionarising under the policy is assignable....”).

In this case, the assignment to Plaintiff was not thecontractual relationship between Allstate and Najor,whereby Allstate’s insurance coverage would extend toPlaintiff causing Allstate to be liable to any insured lossby Plaintiff. Rather, the assignment between Plaintiff andNajor was a post-loss assignment that assigned Najor’sright to pursue her benefits due under her policy, which ispermissible.

Under Mich. Comp. Laws. § 500.3143, “[a]n agreementfor assignment of a right to benefits payable in the futureis void.” Michigan courts have interpreted this provisionto allow the assignment of past and present benefits. SeeProfessional Rehab. Assocs. v. State Farm Mut. Auto Ins.Co., 228 Mich. App. 167,172, 577 N.W.2d 909 (Mich.Ct. App. 1998) (“[W]e believe that if the Legislature hadintended to prohibit the assignment of all rights, it wouldnot have included the word ‘future’ in the language ofthe statute.”) Accordingly, the Court does not find thatthe anti-assignment clause is enforceable. See CenturyIndem. Co., 2004 WL 5642427, at *3, 2004 U.S. Dist.LEXIS 31180, at *14 (“When the event giving rise tothe insurer’s liability occurs, the reason for enforcing ananti-assignment clause disappears because the insurer’sliability becomes fixed ...” and there is no longer a risk.”).

*5 Next, Allstate offers several general arguments asto why the Court should find the assignment invalid.However, none of the arguments put forth specificallydeals with Plaintiff’s alleged assignment. For example,Allstate asserts that the Court must ascertain the facialvalidity of the assignment, but does not provide anyanalysis regarding the facial validity of the May 27, 2014assignment. The assignment provides:

I, Stella Najor, do hereby assign myrights to collect No-Fault InsuranceBenefits in the form of medicalexpenses from my auto insurerAllstate to Dr. Louis Radden, D.O.of the Spine Specialists of Michigan,P.C. This assignment of my rightdoes not include my right to anyother No-Fault benefits that I maybe entitled under the Michigan No-Fault Act.

(ECF No. 45-3 at Pg ID 948.) Further, Plaintiff states,“[c]learly, STELLA NAJOR assigned to Plaintiff herrights to pursue Defendant for payment of Plaintiff’scharges—charges that she incurred prior to her execution

of the assignment 2 .” (ECF No. 45-1 at Pg ID 937.)

In addition, Allstate argues that the assignment wouldsubject Allstate to piecemeal litigation and joinder issues.However, the Court of Appeals of Michigan has already

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addressed this issue in Garrett v. Washington, 314 Mich.App. 436, 886 N.W.2d 762 (Mich. Ct. App. 2016).

A person injured in an accidentarising from the ownership,operation, or maintenance of amotor vehicle as a motor vehicle isimmediately entitled to PIP benefitswithout the need to prove fault. SeeMCL 500.3105(2); MCL 500.3107.The PIP benefits are designed toensure that the injured personreceives timely payment of benefitsso that he or she may be properlycared for during recovery. Shaversv Attorney General, 402 Mich. 554,578-579, 267 N.W.2d 72 (1978).Moreover, the injured person has alimited period within which to suean insurer for wrongfully refusingto pay PIP benefits. See MCL500.3145(1). Because an injuredperson is immediately entitled toPIP benefits without regard to fault,requires those benefits for his orher immediate needs, and may losethe benefits if he or she does nottimely sue to recover when thosebenefits are wrongfully withheld, theinjured person has a strong incentiveto bring PIP claims immediatelyafter an insurer denies the injuredperson’s claim for PIP benefits.

Id. at 444. The Garrett court distinguished between thetypes of no fault benefits to which the insured is entitled,including uninsured motorists benefits, to which theinsured is not entitled without proving the uninsuredmotorists was at fault. Id. at 445, 886 N.W.2d 762; seealso Adam v. Bell, 311 Mich. App. 535 (Mich. Ct. App.2015) (“Thus, while an injured person will likely haveall the facts necessary to make a meaningful decision topursue a PIP claim within a relatively short time after anaccident, the same cannot be said for the injured person’sability to pursue a claim for uninsured motorist benefits.Finally, an injured person’s claim for uninsured motoristbenefits involves compensation for past and future pain

and suffering and other economic and noneconomiclosses rather than compensation for immediate expensesrelated to the injured person’s care and recovery.”). Assuch, relying on Adam, the court in Garrett found thatrequiring mandatory joinder of all no-fault benefits wouldbe inconsistent with the legislature’s intent. Id. at 446,886 N.W.2d 762; see also Advanced Surgery Ctr., LLC v.Allstate Ins. Co., No. 17-cv-12492, 2017 WL 4792376, at*3, 2017 U.S. Dist. LEXIS 175732 at *7-8 (E.D. Mich.Oct. 24, 2017) (“[N]ot all of those benefits may accrue atthe same time. For example, the Act provides that wageloss benefits are payable for the first three years after anaccident, whereas there is no such limitation on medicalexpenses. An injured person remains free to file suit at anytime in his life for unpaid medical expenses, so long as suitis filed within one year after the last unpaid expense. MCL500.3145 (‘one year back rule’). The Act contemplates thata complaint may be filed seeking no-fault benefits fromtime to time.”); Adam, 311 Mich. App. at 535, 879 N.W.2d879. Because it is clear that an insured may be entitled todifferent no fault benefits at different times, Defendant’sposition is unpersuasive. For the foregoing reasons, theCourt finds that Plaintiff’s amendment would be not befutile.

*6 Finally, pursuant to Mich. Comp. Laws § 500.3145,the statute of limitations for Plaintiff’s claim is one year.

An action for recovery ofpersonal protection insurancebenefits payable under this chapterfor accidental bodily injury maynot be commenced later than 1year after the date of the accidentcausing the injury unless writtennotice of injury as provided hereinhas been given to the insurer within1 year after the accident or unlessthe insurer has previously madea payment of personal protectioninsurance benefits for the injury.If the notice has been given or apayment has been made, the actionmay be commenced at any timewithin 1 year after the most recentallowable expense, work loss orsurvivor’s loss has been incurred.However, the claimant may not

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recover benefits for any portion ofthe loss incurred more than 1 yearbefore the date on which the actionwas commenced.

Although Plaintiff’s original action was filed on July 15,2014, within the statutory period, Plaintiff’s amendmentto enforce its assignment falls outside the statutory period.Accordingly, the Court must turn to Federal Rule ofCivil Procedure 15(c)(1)(B). “An amendment to a pleadingrelates back to the date of the original pleading when:the amendment asserts a claim or defense that arose outof the conduct, transaction, or occurrence set out—orattempted to be set out—in the original pleading.” Fed.R. Civ. P. 15(c)(1)(B). Allstate argues that Plaintiff didnot have standing when it filed its original complaintin light of Covenant. The Court disagrees. Plaintiff hadstanding at the time it filed its original complaint becauseCovenant had not been decided. Furthermore, the motorvehicle accident occurred on March 18, 2014, and theassignment was executed on May 27, 2014, within thestatutory period. The Court finds the amendment relatesback to the date the original action was filed because itconcerns the same healthcare provider, insurance policy/PIP benefits, motor vehicle accident, as well as injuries andmedical expenses as a result of the motor vehicle accident.

Therefore, the Court grants Plaintiff’s request to file aSecond Amended Complaint to include a claim to enforceits assignment.

IV. ConclusionFor the reasons stated above, the motion is granted, inpart, and denied, in part.

Accordingly,

IT IS ORDERED that Defendant Allstate’s motion forsummary judgment (ECF No. 41) is GRANTED, in part;

IT IS FURTHER ORDERED that the motion is grantedto the extent that Plaintiff lacks standing to assert aclaim for PIP benefits pursuant to Mich. Comp. Laws §500.3112;

IT IS FURTHER ORDERED that Plaintiff shall file asecond amended complaint, no later than 30 days from thedate of this order.

IT IS SO ORDERED.

All Citations

Slip Copy, 2018 WL 1255149

Footnotes1 Plaintiff does not address Allstate’s argument concerning Plaintiff’s status as an incidental beneficiary to the insurance

contract. Rather, Plaintiff’s position is that pursuant to its assignment it had a valid contract with Allstate.

2 The Court disagrees with Plaintiff that the assignment encompassed all of Najor’s rights under the No-Fault Act. Theassignment specifically states the assignment does not include any other benefits other than the medical expenses. SeeECF No. 45-3 at Pg ID 948.

End of Document © 2019 Thomson Reuters. No claim to original U.S. Government Works.

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Estate of Grimmett v. Encompass Indemnity Company, Not Reported in Fed. Supp. (2017)

2017 WL 5592897, 94 UCC Rep.Serv.2d 258


2017 WL 5592897United States District Court, E.D.

Michigan, Southern Division.

ESTATE OF Tona GRIMMETT,Michigan Ambulatory Surgical Center,Southeast Michigan Surgical Hospital,

LLC, Oakland MRI, LLC, Plaintiffs,v.

ENCOMPASS INDEMNITY COMPANY, Defendant.Michigan Ambulatory Surgical Center,Oakland MRI, LLC, Cross-Claimants,

v.Estate of Tona Grimmett, Cross-Defendant.

Case No. 14-14646|

Signed 11/21/2017


Jarrod Anthony, Anthony Litigation, PLLC, Southfield,MI, Anthony J. Bordoley, Farmington Hills, MI, KevinW. Geer, Law Offices of Kevin W. Geer, Grosse Pointe,MI, for Plaintiffs/Cross-Defendant.

Jacquelyn McEttrick, Nathan Tilden, Richard D. King,Jr., Smith & Brink, PC, Braintree, MA, Jason E.Maltzman, Kevin J. Peters, Prerana R. Bacon, Smith &Brink, Livonia, MI, for Defendant/Cross-Claimants.

MEMORANDUM AND ORDER DENYINGDEFENDANT'S MOTION TO DISMISS (Doc.97), DENYING DEFENDANT'S MOTION TO

DISMISS (Doc. 98), AND DENYING DEFENDANT'SMOTION FOR JUDGMENT ON THE PLEADINGS.

AVERN COHN, UNITED STATES DISTRICTJUDGE

I. INTRODUCTION AND PROCEDURAL HISTORY

1.

*1 This is an automobile no-fault insurance caseinvolving personal protection benefits. Plaintiff BrianGrimmett is the personal representative of the estate of

Tona Grimmett (Grimmett), 1 who was injured in a motorvehicle accident on March 4, 2013. At the time of theaccident, Grimmett was insured under a no-fault policyissued by Defendant Encompass Indemnity Company(Encompass) in accordance with Michigan’s No-FaultAct, M.C.L. § 500.3101, et seq. (No-Fault Act). Grimmettsued Encompass in the Wayne County Circuit Court(14-005777-NF) because Encompass refused to cover hermedical expenses (Doc. 8).

Plaintiff Michigan Ambulatory Surgical Center, LLC(MASC) also sued Encompass in the Wayne CountyCircuit Court (15-014301-NF) for expenses it incurredperforming a lumbar spine fusion surgery on Grimmettfollowing the accident (Doc. 49). Encompass removedboth cases to federal court, where they were consolidated

into the present case (Doc. 27). 2

Southeast Michigan Surgical Hospital, LLC (Southeast)intervened as a plaintiff at the state level (Doc. 1),seeking to recover from Encompass expenses related to acervical spine fusion surgery that Southeast performed onGrimmett following the accident.

Oakland MRI, LLC (OMRI) intervened as a plaintiffafter the case was removed to federal court (Doc. 21),seeking to recover from Encompass expenses related to anMRI scan that OMRI performed on Grimmett followingthe accident.

2.

On May 25, 2017, the Michigan Supreme Court decidedin Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins.Co., 500 Mich. 191 (2017) that medical service providershave no statutory cause of action to collect personalprotection insurance benefits from no-fault insurers underthe No-Fault Act. Id. This holding applies retroactively.W A Foote Mem'l Hosp. v. Michigan Assigned ClaimsPlan, No. 333360, 2017 WL 3836645, at *14 (Mich. Ct.App. Aug. 31, 2017). In light of Covenant, MASC andOMRI filed amended complaints (Docs. 93, 94) presentingnew theories of recovery against Encompass. Both partiesalso brought cross-claims against Grimmett to recovertheir expenses. Southeast did not amend its complaint, buthas now requested leave to amend in order to cure anydeficiencies revealed by the Court’s ruling on the presentmotions.

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Now before the Court are Encompass' Motion to DismissMASC’s claim pursuant to Fed. R. Civ. P. 12(b)(6) (Doc.97), Motion to Dismiss OMRI’s claim pursuant to Fed.R. Civ. P. 12(b)(6) (Doc. 98), and Motion for Judgmenton the Pleadings as to Southeast’s claim pursuant to Fed.R. Civ. P. 12(c) (Doc. 99). For the reasons that follow,all three motions are DENIED. Additionally, Southeastis granted leave to amend its complaint.

II. LEGAL STANDARDS

A. Fed. R. Civ. P. 12(b)(6)

A Fed. R. Civ. P. 12(b)(6) motion seeks dismissal for aplaintiff’s failure to state a claim upon which relief can begranted. “To survive a motion to dismiss under Rule 12(b)(6), a ‘complaint must contain either direct or inferentialallegations respecting all the material elements to sustain arecovery under some viable legal theory.’ ” Advocacy Org.for Patients & Providers v. Auto Club Ins. Ass'n, 176 F.3d315, 319 (6th Cir. 1999) (quoting Scheid v. Fanny FarmerCandy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988)). Aclaim “must be dismissed ... if as a matter of law it is clearthat no relief could be granted under any set of facts thatcould be proved consistent with the allegations.” Neitzkev. Williams, 490 U.S. 319, 327 (1989) (quoting Hishonv. King & Spalding, 467 U.S. 69, 73 (1984)) (internalquotation marks omitted).

B. Fed. R. Civ. P. 12(c)

*2 Fed. R. Civ. P. 12(c) provides that “[a]fter thepleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” Amotion for judgment on the pleadings under Rule 12(c)utilizes the same standard of review applicable underRule 12(b)(6). Wee Care Child Ctr., Inc. v. Lumpkin, 680F.3d 841, 846 (6th Cir. 2012). Thus, “[f]or purposes of amotion for judgment on the pleadings, all well-pleadedmaterial allegations of the pleadings of the opposing partymust be taken as true, and the motion may be grantedonly if the moving party is nevertheless clearly entitled tojudgment.” Poplar Creek Development Co. v. ChesapeakeAppalachia, L.L.C., 636 F.3d 235, 240 (6th Cir. 2011).

III. DISCUSSION

The most salient among the healthcare providers'claims are those regarding assignments and third partybeneficiaries, since the Covenant court explicitly left openthe possibility of a provider cause of action based on eachtheory. MASC and Southeast argue that Grimmett validlyassigned to them her rights to receive payment under herinsurance contract with Encompass. MASC and OMRIargue that they are intended third party beneficiaries ofthe contract between Grimmett and Encompass.

The Court will address each claim in turn.

A. Assignment

i. Background

The Michigan Supreme Court explicitly stated inCovenant that “our conclusion today is not intended toalter an insured's ability to assign his or her right topast or presently due benefits to a healthcare provider.”Covenant, 500 Mich. at 217 n.40. Thus, while a healthcare provider no longer has a statutory cause of actionagainst insurers, it may still have a contract-based causeof action if there has been a valid assignment of rights.See Id. at 217 n.39 (acknowledging that contractualcauses of action may still exist). An insurer has standingto “challenge an assignment if that challenge wouldrender[ ] the assignment absolutely invalid or ineffective,or void.” Conlin v. Mortg. Elec. Registration Sys., Inc.,714 F.3d 355, 361 (6th Cir. 2013) (quoting LivoniaProps. Holdings, LLC v. 12840–12976 Farmington Rd.Holdings, LLC, 399 Fed.Appx. 97, 102 (6th Cir. 2010))(internal quotation marks omitted). Here, Encompass hasstanding to challenge the assignments because it arguesthat the assignments are invalid.

ii. MASC Assignment

In its amended complaint, MASC alleges that theassignment of rights Grimmett signed on the day of her

treatment (Doc. 93) 3 entitles it to receive payment directlyfrom Encompass for the services rendered. Encompasssays the assignment is invalid and unenforceable for

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several reasons: (1) the assignment mentioned onlythe name “Specialty Surgical Center” and did notreference “Michigan Ambulatory Surgical Center;” (2)the assignment was for future, not present rights underthe policy because proof of reasonableness has to besubmitted to the insurer before payment becomes due; (3)the assignment was not notarized, and it was not clearthat MASC unambiguously accepted Grimmett’s offer toassign rights; (4) the assignment did not comply with theStatute of Frauds because it was not signed by a MASCrepresentative; (5) the assignment did not provide for theright to sue both the insurer and Grimmett; and (6) thepolicy contained an anti-assignment clause.

iii. Southeast Assignment

*3 As previously mentioned, Southeast did not filean amended complaint after Covenant. In its responseto Encompass' motion for judgment on the pleadings,however, Southeast asserts that it had a valid assignmentof rights from Grimmett. The Court therefore allowsSoutheast to amend its complaint to include relevantarguments regarding an assignment of rights. See Fed. R.Civ. P. 15(a)(2) (“The court should freely give leave” toamend pleadings.).

Encompass advances many of the same arguments inopposition to Southeast’s assignment as it did regardingMASC’s assignment, namely that: (1) Southeast’s exactname does not appear on the assignment; (2) theassignment was for future benefits; (3) it is not clear thatthere was an offer and acceptance of the assignment; (4)the assignment violates the Statute of Frauds; and (5) theinsurance contract contained an anti-assignment clause.In addition, Encompass argues that the assignment wasnot supported by consideration.

iv. Assumed Name

Michigan law provides that “[a] domestic or foreigncorporation may transact business under any assumedname or names other than its corporate name.” Mich.Comp. Laws § 450.1217. “[T]he obvious purpose of the[assumed name] statute is to inform the public withwhom it is dealing, and thereby serve its convenience andto prevent imposition and fraud.” Bankers Tr. Co. v.Bradfield, 324 Mich. 116, 123 (1949) (internal quotation

marks omitted). This means that “[a] corporation thathas complied with this statute has notified the publicconstructively regarding its assumed name. Accordingly,parties contracting with agents of the corporationoperating under the assumed name cannot claim that theywere without notice regarding the existence or identity ofthe corporation.” Penton Pub., Inc. v. Markey, 212 Mich.App. 624, 627 (1995).

Michigan courts have also declined to allow a party toavoid a contract even though an assumed name certificatewas not filed. See, e.g. People's State Bank v. Trombly,241 Mich. 199, 208 (1928); Rossello v. Trella, 206 Mich.20, 24 (1919). While an assignment and a contract arenot the same in all respects, both involve manifestation ofintent toward the other party. See Burkhardt v. Bailey, 260Mich. App. 636, 654–55 (2004); W. Michigan Univ. Bd.of Trustees v. Slavin, 381 Mich. 23, 31 (1968) (“An offeris a unilateral declaration of intention.”). Thus, where theidentity of an assignee is at issue, Michigan law regardingcontracts entered into under an assumed name can beapplied.

Here, in each case Grimmett knew she was assigning herrights to the hospital that was about to perform surgery.Since MASC filed a Certificate of Assumed Name before

the date of the surgery, 4 Grimmett was on constructivenotice that Specialty Surgical Center and MASC werethe same entity. Therefore, whether or not she actuallyknew the correct name of the hospital is irrelevant todetermining the validity of the assignment.

Because Southeast only showed it had an assignment in itsresponse to Encompass' motion, it did not have a chanceto respond to the name argument in Encompass' reply.As such, it has not provided documentation showing that“Michigan Surgical Hospital,” the name that appears onthe assignment, is the same entity as “Southeast MichiganSurgical Hospital.” It is for this reason also that the Courtgrants leave for Southeast to amend its complaint.

v. Assignment of Present Rights

*4 In Michigan, an assignment is valid “if it clearlyreflects the intent of the assignor to presently transfer‘the thing’ to the assignee.” Burkhardt v. Bailey, 260Mich. App. 636, 654–55 (2004). As the Covenant courtnoted, only past or present rights to insurance benefits are

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assignable. Covenant, 500 Mich. at 217 n.40; Mich. Comp.Laws § 500.3143 (providing that assignments of futurerights are void). Therefore, the Court must determine“whether the assignment in question purports to assignonly past due and presently due benefits or whether itpurports to assign future benefits as well.” Prof'l Rehab.Assocs. v. State Farm Mut. Auto. Ins. Co., 228 Mich.App. 167, 172 (1998).

In Aetna Cas. & Sur. Co. v. Starkey, 116 Mich. App.640 (1982), the Michigan Court of Appeals refused toenforce an assignment of benefits that “would becomepayable” over the course of a hospitalization. Id. at642, 646. In contrast, the assignment from Grimmett toMASC reads “I hereby assign to Specialty Surgical Center(the ‘Center’) my rights to collect no-fault insurancefrom my auto insurer for my care at the Center.” (Doc.93). The assignment from Grimmett to Southeast reads“I assign and authorize payment directly to MichiganSurgical Hospital of any healthcare benefits that I amentitled to receive.” (Doc. 100). Unlike in Starkey, thelanguage in both assignments is entirely in the presenttense, the treatment at each center consisted of one discreteoperation, and Grimmett signed the assignments on thesame days the respective operations were performed. Sincethe No-Fault Act provides that “[p]ersonal protectioninsurance benefits are payable as loss accrues,” Mich.Comp. Laws § 500.3142(1), Grimmett essentially assignedher rights as they came into existence. Therefore, theMASC and Southeast assignments referred to presentrights and are not void under Mich. Comp. Laws §500.3143. See Prof'l Rehab, 228 Mich. App. at 173-74(finding present-tense assignment valid to the extent itreferred to past or present benefits).

Encompass is incorrect to rely on subsection (2) of§ 500.3142, which provides that “[p]ersonal protectioninsurance benefits are overdue if not paid within 30 daysafter an insurer receives reasonable proof of the fact andof the amount of loss sustained.” Mich. Comp. Laws §500.3142(2). Subsection (2) only describes when benefitsare overdue, not when they first become due.

vi. Anti-Assignment Clause

Michigan courts have enforced anti-assignment clausesthat prohibit assignment of future benefits, but not thosethat prohibit assignment of accrued losses. Covenant

Med. Ctr., Inc. v. Auto-Owners Ins. Co., No. 17-CV-11176, 2017 WL 4572327, at *4 (E.D. Mich. Oct.13, 2017) (“[Under] Michigan law.... an anti-assignmentclause will not be enforced where a loss occurs before theassignment, because in that situation the assignment of theclaim under the policy is viewed no differently than anyother assignment of an accrued cause of action.”) (quotingCentury Indem. Co. v. Aero-Motive Co., 318 F. Supp.2d 530, 539 (W.D. Mich. 2003)). See also Roger WilliamsInsurance Co. v. Carrington, 43 Mich. 252 (1880) (“theprovision of the policy forfeiting it for an assignmentwithout the company's consent is invalid, so far as itapplies to the transfer of an accrued cause of action”); Inre Jackson, 311 B.R. 195, 201 (Bankr. W.D. Mich. 2004)(“This finding is based on the theory that once a party toa contract performs its obligations to the point that thecontract is no longer executory, its right to enforce theother party's liability under the contract may be assignedwithout the other party's consent, even if the contractcontains a non-assignment clause.”) (citing Detroit, T. &I.R. Co. v. Western Union Telegraph Co., 200 Mich. 2(1918)).

*5 Since the Court has already determined thatGrimmett made the assignments at the same time herlosses accrued, it declines to enforce the anti-assignmentclause. This is a sound result because Michigan law doesnot support the upholding of contractual provisions ininsurance policies that are contrary to public policy. SeeFarm Bureau Mut. Ins. Co. of Michigan v. Nikkel, 460Mich. 558, 568 (1999) (quoting Raska v. Farm BureauMut. Ins. Co. of Michigan, 412 Mich. 355, 361-62 (1982)).Allowing insurers to prevent the assignment of accruedclaims would unfairly disadvantage insureds withoutproviding any benefit to the insurers other than theavoidance of obligations already incurred. See Wonsey v.Life Ins. Co. of N. Am., 32 F. Supp. 2d 939, 943 (E.D.Mich. 1998) (“The rationale behind these cases is derivedfrom the implicit recognition that the obligor ... wouldnot suffer any harm by a mere assignment of paymentsunder a contract. Harm to obligor would result, however,in cases involving ... situations where the duties owed tothe parties may change depending on the identity of theassignee.”); cf. McHugh v. Manhattan Fire & MarineIns. Co., 363 Mich. 324, 328 (1961) (upholding anti-assignment provision where “the identity of the insured isa matter of importance to the insuring company.”).

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Further, lower Michigan courts have emphasized thatMichigan statutes prohibit contract terms that preventassignment of health insurance receivables. Mich. Spine &Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co.,No. 17-158827-NF (Oakland Cty. Cir. Ct. Aug. 9, 2017);Vision Specialists of Mich. v. Amica Mut. Ins. Co., No.17-31719-GC-2 (Oakland Cty. Dist. Ct. Oct. 13, 2017).Specifically, Michigan’s implementation of the UniformCommercial Code (UCC) provides:

(1) Except as otherwise provided in subsection (2) or(4), a term in a promissory note or in an agreementbetween an account debtor and a debtor that relates to ahealth-care-insurance receivable or a general intangible,including a contract, permit, license, or franchise, andwhich term prohibits, restricts, or requires the consentof the person obligated on the promissory note orthe account debtor to, the assignment or transfer of,or creation, attachment, or perfection of a securityinterest in, the promissory note, health-care-insurancereceivable, or general intangible, is ineffective to theextent that the term does 1 or more of the following:

(a) Would impair the creation, attachment, orperfection of a security interest.

(b) Provides that the assignment or transfer or thecreation, attachment, or perfection of the securityinterest may give rise to a default, breach, rightof recoupment, claim, defense, termination, right oftermination, or remedy under the promissory note,health-care-insurance receivable, or general intangible.

Mich. Comp. Laws § 440.9408. The scope provision ofthe Michigan UCC includes “an assignment by or to ahealth-care provider of a health-care-insurance receivableand any subsequent assignment of the right to payment.”Mich. Comp. Laws § 440.9109(4)(h). Thus, Encompass'anti-assignment clause is also invalid by statute.

vii. Other Arguments

Encompass' other arguments with respect to theassignments do nothing to advance its case. Since onlythe intent of the assignor is relevant to creating avalid assignment, notarization and “acceptance” by theassignee are not necessary. Grimmett’s signature on theassignment forms sufficiently manifests her intent to

assign her right to insurance benefit payments to MASCand Southeast.

Further, the Michigan Statute of Frauds provides thatan “assignment of things in action” must be in writingand signed “by the party to be charged.” Mich. Comp.Laws § 566.132. Assuming without deciding that the rightsassigned in this case were “things in action,” MASC iscorrect to point out that Grimmett is the party to becharged. Since Grimmett’s signature does appear on theassignments, this argument fails.

MASC is also correct to argue that it may sue bothGrimmett and Encompass at the same time, as theassignment provides that “I [Grimmett] recognize andagree that this assignment of rights simply allows theCenter to collect bills for my care at the Center directlyfrom my auto carrier; it does not relieve me of myobligation for payment of any medical bills for my care atthe Center.” (Doc. 93) (emphasis in original). Thus, wereMASC unable to recover its expenses from Encompass, itwould still have a valid claim against Grimmett. Fed. R.Civ. P. 8(d)(3) allows a party to bring inconsistent claimsat the same time.

*6 Finally, it is axiomatic that assignments do not needconsideration to be valid. Coe v. Hinkley, 109 Mich. 608,611-12 (1896).

B. Third-Party Beneficiary

Parties who are intended third-party beneficiaries toa contract may sue on the contract, but parties whoare merely incidental third-party beneficiaries may not.Brunsell v. City of Zeeland, 467 Mich. 293, 296 (2002). InCovenant, the Michigan Supreme Court did not prohibithealthcare providers from suing insurers as intended third-party beneficiaries to an insurance contract:

While defendant argues that aprovider likewise possesses nocontractual right to sue a no-fault insurer given that healthcareproviders are incidental ratherthan intended beneficiaries of acontract between the insured andthe insurer, this Court declines to

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make such a blanket assertion. Thatdetermination rests on the specificterms of the contract between therelevant parties.

Covenant, 500 Mich. at 217 n.39. The majority citedSchmalfeldt v. N. Pointe Ins. Co., 469 Mich. 422(2003), in which it was held that “[a] person is athird-party beneficiary of a contract only when thatcontract establishes that a promisor has undertaken apromise directly to or for that person.” Id. at 428 (citingMich. Comp. Laws § 600.1405). Further, “[a]n objectivestandard is to be used to determine, from the form andmeaning of the contract itself ... whether the promisorundertook to give or to do or to refrain from doingsomething directly to or for the person claiming third-party beneficiary status.” Id. (citation omitted).

In order to designate a party as an intended third-partybeneficiary to a contract, Michigan courts have requiredthat the contract identify either the party itself or thereasonably specific class to which the party belongs. InSchmalfeldt, the Michigan Supreme Court held that amember of the public who had been injured in a bar fightwas not an intended third-party beneficiary of the bar’scommercial insurance policy because

[n]othing in the insurance policyspecifically designates Schmalfeldt,or the class of business patrons ofthe insured of which he was one, asan intended third-party beneficiaryof the medical benefits provision.At best, the policy recognizes thepossibility of some incidental benefitto members of the public at large,but such a class is too broad toqualify for third-party status underthe statute.

Id. at 429. See also Shay v. Aldrich, 487 Mich. 648, 665(2010) (finding that police officers qualified as intendedthird-party beneficiaries where contract unambiguouslyreferenced “all other persons”); Koenig v. City of S.Haven, 460 Mich. 667, 683-84 (1999) (finding “thepublic” as an implied beneficiary to be too broad to

qualify as a reasonably identified class); Benefield v.Cincinnati Ins. Co., No. 300307, 2013 WL 1149552, at*6 (Mich. Ct. App. Mar. 19, 2013) (finding that a groupof “140 unit members” was “sufficiently identifiable.”);Vanerian v. Charles L. Pugh Co., 279 Mich. App.431, 436 (2008) (holding that the plaintiff was a third-party beneficiary because she was “expressly referredto in the contract.”); A.B. Petro Mart, Inc. v. Ali T.Beydoun Ins. Agency, Inc., 317 Mich. App. 290, 298(2016) (declining to find that plaintiff was a third-partybeneficiary because “the insurance contract simply doesnot refer to” him). Requiring that a third-party beneficiaryclass be sufficiently specific “assure[s] that contractingparties are clearly aware that the scope of their contractualundertakings encompasses a third party, directly referredto in the contract, before the third party is able to enforcethe contract.” Koenig, 460 Mich. at 677.

*7 Since Covenant, one Michigan lower court hasfound that healthcare providers are intended third-partybeneficiaries of no-fault insurance contracts because of thenature of the no-fault system:

One of the primary purposes of anauto insurance policy is to insure thepolicy holder and cover any medicalexpenses that the policy holder mayhave that are related to an autoaccident. Even though a specificmedical provider is not a known ornamed party to the contract, they arecertainly contemplated in the policycoverage.

Advanced Spine & Headache Ctr. v. 21st CenturyCentennial Ins. Co., No. 17-30412-GC-2 (Oakland Cty.Dist. Ct. Oct. 10, 2017); see also Vision Specialists, No.17-31719-GC-2 at 3. The court in these cases declined toapply Schmalfeldt in the no-fault context, reasoning that:

In Schmalfeldt .... [t]here was nopromise to directly benefit thepatron. In the instant case, theinsurance policy between the injuredand Defendant is for the solepurpose of covering the injured’s

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medical bills resulting from an autoaccident. It is intended to cover theexact services at issue here, coveragethat directly benefits the medicalproviders. This is a distinction witha signinficant [sic] difference.

Advanced Spine, No. 17-30412-GC-2 at 3 n.1. This isin keeping with the fact that the Michigan SupremeCourt has considered the purpose of a contract andthe statutory scheme underlying a contract in decidingwhether plaintiffs were intended third-party beneficiaries.See Brunsell, 467 Mich. at 298 (“[T]he contractualprovision at issue was intended to delineate the obligationsof the city and the bank with regard to the premises, notto directly benefit third parties.”); Blackwell v. CitizensIns. Co. of Am., 457 Mich. 662, 668 (1998) (“We note thatplaintiff may reasonably be viewed as an intended third-party beneficiary of the contract between Citizens and heremployer. This Court has held that the legislative policybehind the WDCA is to provide financial and medicalbenefits to the victims of work-connected injuries in anefficient, dignified, and certain form.”) (internal quotationmarks omitted); see also Vanerian, 279 Mich. App. at436 (2008) (“[T]he whole and singular purpose of thecontract was to secure repairs to the flooring in plaintiff'sbasement.”).

Here, the language of the contract between Grimmett andEncompass reads:

C. Covered person as used in this endorsement means:

1. You or any family member injured in an autoaccident;

2. Anyone else injured in an auto accident;

a. While occupying your covered auto; or

b. If the accident involves any other auto:

(1) Which is operated by you or any familymember; and

(2) To which Personal Liability Motor Vehicle ofthis policy applies.

c. While not occupying any auto if the accidentinvolves your covered auto.

...

II.A. We will pay personal injury protection benefits toor for a covered person who sustains bodily injury.

...

[P]ersonal injury protection benefits consist of thefollowing:

1. Medical expenses. Reasonable and necessarymedical expenses incurred for a covered person’s:

a. Care;

b. Recovery; or

c. Rehabilitation.

(Doc. 97).

While Covenant cited Schmalfeldt for the propositionthat intended third-party beneficiary status “rests onthe specific terms of the contract between the relevantparties,” Covenant, 500 Mich. at 217 n.39, it does notfollow that the Michigan Supreme Court meant to implythat the same level of specificity required of the premisesliability insurance contract in Schmalfeldt would also berequired of a no-fault insurance contract. In fact, thethird-party beneficiary question was not considered inCovenant because it had not been raised by the parties.Id. OMRI aptly argues that the no-fault insurance systemis structured in such a way that benefit payments can bemade directly from the insurer to the healthcare provider,meaning that the insurer necessarily knows that healthcareproviders will directly benefit from the contract betweenthe insurer and insured.

*8 The language of the present contract can becondensed to “[w]e will pay.... reasonable and necessarymedical expenses.... to or for a covered person whosustains bodily injury.” (Doc. 97) (emphasis added). Sinceit includes the word “for” in addition to the word “to,”the contract contemplated payment to third parties onbehalf of the insured, and the most obvious parties towhich payments for medical expenses would be madeare healthcare providers. While the Michigan SupremeCourt warned against implying a class of third-partybeneficiaries in Koenig, 460 Mich. at 683, it also stated inthat case that the purpose of the word “directly” in Mich.Comp. Laws § 600.1405 is to make parties aware that

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their contracts involve a third party. Id. at 677. When theyenter into a no-fault contract, insurers already know thathealthcare providers will benefit from insurers' payments,and healthcare providers are not as broad a class as “thepublic” in Koenig. The Court therefore finds that MASCand OMRI are intended third beneficiaries of Grimmettand Encompass' insurance contract.

C. Other

The Court is not persuaded by the parties' otherarguments. However, it will briefly address them in theinterest of completeness.

i. One Year Back Rule

Encompass says that because MASC and OMRI filedamended complaints more than one year after therespective procedures were performed, their claims arebarred by the “one year back” rule articulated in Mich.Comp. Laws § 500.3145:

An action for recovery ofpersonal protection insurancebenefits payable under this chapterfor accidental bodily injury may notbe commenced later than 1 year afterthe date of the accident causing theinjury unless written notice of injuryas provided herein has been givento the insurer within 1 year afterthe accident ... [in which case] theaction may be commenced at anytime within 1 year after the mostrecent allowable expense, work lossor survivor's loss has been incurred.

Id. Encompass is incorrect. The date of the amendedcomplaints is irrelevant since Fed. R. Civ. P. 15(c)(1)(B)allows an amended pleading to relate back to the date theoriginal pleading was filed if the amended pleading assertsa claim arising from the same transaction or occurrencedescribed in the original pleading. That is the case here.

ii. Lien

OMRI alleges that it is a “secured lien holder and creditor”of Grimmett because Grimmett signed a Payment Policycontracting to pay for all medical services rendered(Doc. 94). OMRI also alleges that it has a “perfectedsecurity interest in the payment of services by DefendantEncompass.” (Id.). Because Encompass has the duty toindemnify Grimmett under the No-Fault Act, OMRI saysthat it is entitled to enforce its lien and receive the amountowed directly from Encompass.

OMRI is correct to state that it has a security interestagainst Grimmett, but claiming that Encompass hasa statutory duty to indemnify Grimmett and payOMRI directly is just another way of describing thestatutory cause of action now prohibited by Covenant.The Payment Policy Grimmett signed expressly states“[p]lease be aware that the balance of your claim is yourresponsibility whether or not your insurance companypays your claim. You [sic] insurance benefit is a contractbetween you and your insurance company.” (Id.). Thus,the policy only describes the obligations between OMRIand Grimmett, and contains no language giving OMRI aninterest in payments from Encompass

iii. Intervention

OMRI also alleges that it has standing to enforce its lienunder the No-Fault Act because Covenant does not applyto intervenors. OMRI relies on Michigan State AFL-CIOv. Miller, 103 F.3d 1240 (6th Cir. 1997), in which theSixth Circuit stated that “an intervenor need not havethe same standing necessary to initiate a lawsuit.” Id. at1245. OMRI says it has a direct interest in the outcomeof the case and thus should be allowed to proceed as anintervenor. OMRI also relies on Michigan cases and courtrules, but this Court will only consider federal proceduralrules under the well-established principle espoused in ErieR. Co. v. Tompkins, 304 U.S. 64 (1938).

*9 Encompass says that OMRI and Grimmett areseeking different relief, which prohibits OMRI fromintervening according to Town of Chester, N.Y. v. LaroeEstates, Inc., 137 S. Ct. 1645 (2017), in which the SupremeCourt held that “at the least, an intervenor of right mustdemonstrate Article III standing when it seeks additional

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relief beyond that which the plaintiff requests.” Id. at1651.

Encompass is correct that OMRI and Grimmett areseeking different relief because OMRI would be seekinga money judgment in its own name. Since the SupremeCourt specifically stated that different relief “includescases in which both the plaintiff and the intervenor seekseparate money judgments in their own names,” Id.,OMRI cannot use intervention as a means of bypassingCovenant.

iv. Sufficiency of Pleading

Encompass also challenges Southeast’s complaint on thegrounds that the allegations are bare and conclusory,arguing that Southeast should have specified which“terms and conditions” of the insurance policy createdEncompass' obligation toward Grimmett. Since the Courtgrants Southeast leave to amend its complaint, thisargument is moot.

IV. CONCLUSION

1.

In sum, the claims of all three healthcare providerplaintiffs survive their respective motions to dismiss. Theassignment from Grimmett to MASC was valid, OMRIis an intended third-party beneficiary to the contractbetween Grimmett and Encompass, and Southeast wouldlikely have a valid cause of action based on assignmentafter amending its complaint.

2.

An additional comment is in order. While the Covenantmajority found that healthcare providers could receivebenefit payments under the No-Fault Act, it also said thatthe right to receive payments did not create a cause ofaction. Following that reasoning, however, the No-FaultAct also did not expressly create a cause of action even forthe injured person. Covenant, 500 Mich. at 221 (Bernstein,J., dissenting).

The statutory language interpreted by the MichiganSupreme Court in Covenant was present in the original1973 No-Fault Act and remains largely unchanged. See1972 Mich. Pub. Act No. 294. Since then, healthcareproviders have relied on the No-Fault Act (which requiresall people to be insured) to get paid for the services theyprovide to patients. At least since the 1980’s, healthcareproviders have brought suits or intervened in suitsagainst insurers in order to protect their own interests byadvocating for insureds. See, e.g. Dean v. Auto Club Ins.Ass'n, 139 Mich. App. 266 (1984); Johnson v. MichiganMut. Ins. Co., 180 Mich. App. 314 (1989); LaMothev. Auto Club Ins. Ass'n, 214 Mich. App. 577 (1995);Wyoming Chiropractic Health Clinic, PC v. Auto-OwnersIns. Co., 308 Mich. App. 389 (2014). The Covenantdecision has now given the insurance world an unexpectedarrow in its quiver that is to the detriment of the broaderpurposes of the no-fault scheme.

A statutory interpretation principle enunciated in thesixteenth century is still to be heeded today: that judgesmust seek to ascertain “[w]hat was the mischief anddefect for which the common law did not provide.”Heydon's Case, 76 Eng. Rep. 637, 638 (Ex. 1584).In 1973, the No-Fault Act endeavored to cure atleast three forms of mischief: inefficient and expensivelitigation, high healthcare costs, and the reality thatmany plaintiffs injured in automobile accidents were notadequately compensated. See Dean, 139 Mich. App. At273; McKendrick v. Petrucci, 71 Mich. App. 200, 206(1976); Shavers v. Kelley, 402 Mich. 554, 579-80 (1978);In re Requests of Governor & Senate on Constitutionalityof Act No. 294 of Pub. Acts of 1972, 389 Mich. 441, 491(1973); see also James T. Mellon & David A. Kowalski,The Foundations and Enactment of Michigan AutomobileNo-Fault Insurance, 87 U. Det. Mercy L. Rev. 653, 677(2010). Thus, imposing barriers to providers being assuredpayment does not make good sense. Barriers result in a lessefficient litigation process, an increase in healthcare costs,and the elimination of a significant source of plaintiffadvocacy.

*10 SO ORDERED.

All Citations

Not Reported in Fed. Supp., 2017 WL 5592897, 94 UCCRep.Serv.2d 258

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Footnotes1 Grimmett died on February 25, 2017, for reasons unrelated to the claim in this case (Doc. 95).

2 MASC’s case number before consolidation was 15-14249.

3 “[W]hen a document is referred to in the pleadings and is integral to the claims, it may be considered without convertinga motion to dismiss into one for summary judgment.” Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d327, 335–36 (6th Cir. 2007).

4 MASC attaches to its brief a document from the Michigan Department of Licensing and Regulatory Affairs showing thatthe two entities are the same. “A court may consider matters of public record in deciding a motion to dismiss withoutconverting the motion to one for summary judgment.” Commercial Money, 508 F.3d at 336.


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Covenant Medical Center, Inc. v. Auto-Owners Insurance..., Not Reported in Fed....

2017 WL 4572327



United States District Court, E.D.Michigan, Northern Division.

COVENANT MEDICAL CENTER, INC., aMichigan non-profit corporation, and Michigan

Spine and Brain Institute, P.C., Plaintiff,v.

AUTO-OWNERS INSURANCE COMPANY, andHome-Owners Insurance Company, Defendants.

Case No. 17-cv-11176|

Signed 10/13/2017


Thomas S. Baker, Patrick M. Jaicomo, Miller Johnson,Grand Rapids, MI, for Plaintiff.

David Carbajal, Robert A. Jordan, O'Neill, Wallace andDoyle, P.C., Saginaw, MI, for Defendants.

ORDER GRANTING IN PART AND DENYING INPART MOTION TO AMEND AND DIRECTING

FILING OF AMENDED COMPLAINT

THOMAS L. LUDINGTON, United States DistrictJudge

*1 Sandra Foor (“Insured” or “Ms. Foor”) was injuredin an automobile accident on March 16, 2010. Am.Compl. at 3, ECF No. 11-2. Plaintiffs Covenant MedicalCenter (Covenant) and Michigan Spine and BrainInstitute (Michigan Spine) provided Ms. Foor medicalcare for injuries allegedly arising from the automobileaccident. Id. Covenant provided Ms. Foor medical care onMay 24, 2016, August 16, 2016, from August 24–27, 2016,October 18–26, 2016, November 3–8, 2016, November 22,2016, and February 6, 2017. Id. Michigan Spine providedMs. Foor medical care on August 24, 2016 and December5, 2016. Id. at 5.

At the time of the accident, Ms. Foor was insured undera no-fault policy issued by Defendant Home-OwnersInsurance Company (“Defendant” or “Insurer”). Id. at3. Between December 2016 and February 2017, Plaintiffs

billed Defendant and furnished itemized charges andmedical records documenting healthcare services providedto Ms. Foor. Id. at 4. Plaintiffs filed a Complaint onFebruary 21, 2017 in Saginaw County Circuit Courtagainst Home-Owners Insurance Company, and Auto-Owners Insurance Company, who was dismissed on July19, 2017. Compl., ECF No. 1-2. Defendant removedthe action to this Court on April 14, 2017. Not.Rem., ECF No. 1. Plaintiffs filed the instant Motionto Amend Complaint on July 14, 2017. ECF No. 11.Plaintiffs Covenant and Michigan Spine seek damagesin a principal amount of $39,560.95 and $2,455.00,respectively, pursuant to the Michigan No-Fault Act,M.C.L 500.3101 et seq., plus interest, costs, and attorneyfees, for medical bills in connection with treatmentprovided to Sandra Foor. Am. Compl. at 3. Plaintiffs alsoseek to double their principal damages pursuant to theMedicare Secondary Payer Act (“MSPA”), 42 U.S.C. §1395y et seq. Id.

Plaintiffs' original complaint and proposed amendedcomplaint sought to recover no-fault damages on a directcause of action as a healthcare provider against theDefendant insurance company for non-payment of theinsured’s health benefits. At the time of the originalcomplaint, the direct cause of action was permissibleunder Michigan law. However, on May 25, 2017, theMichigan Supreme Court decided Covenant MedicalCenter, Inc. v. State Farm Mutual Automobile InsuranceCo., 895 N.W.2d 490 (Mich. 2017). In Covenant the courtheld that a healthcare provider possesses no statutorycause of action under the Michigan no-fault act against aninsurer for recovery of Personal Injury Protection (“PIP”)benefits owed to its insured, overruling a long line ofappellate precedent. Id.

Plaintiffs filed the instant Motion to Amend on July 14,2017. ECF No. 11. The proposed amended complaintretained the direct cause of action against insurers, asPlaintiffs asserted in their Motion that Covenant shouldnot be applied retroactively. Mot. Am. at 2. At the hearingon the Motion, however, Plaintiffs' counsel explained thatPlaintiffs will no longer pursue the direct action under theno-fault act, based on the decision of the Michigan Courtof Appeals on August 31, 2017 regarding retroactivity.W A Foote Mem'l Hosp. v. Michigan Assigned ClaimsPlan. 2017 WL 3836645 (Mich. Ct. App. Aug. 31, 2017).The proposed amended complaint asserts three additionalcauses of action: two derivative causes of action for breach

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of contract, and one cause of action for declaratory relief.The viability of these three alternative causes of action areat issue in the instant motion to amend.

I.

*2 Plaintiffs' two derivative causes of action for breach ofcontract arise out of an assignment agreement. Roughlyone month after the Michigan Supreme Court’s decision inCovenant, Ms. Foor entered into an agreement dated June23, 2017, assigning to Plaintiffs her rights, benefits, andcauses of action arising out of her automobile injury andsubsequent medical care. Br. Ex. A (Assignment), ECFNo. 11-3. The Assignment also designated Plaintiffs asMs. Foor’s authorized representative “for the purpose ofpursuing payment” of her hospital bills. Id.

In response to the Motion to Amend, Defendantcontends that amendment would be prejudicial andfutile. Defendant contends that amendment would beprejudicial because the proposed amended complaintalleges “alternative parties rather than alternative claims”by asserting a “direct action, as well as on behalfof Ms. Foor.” Resp. at 11. Defendant contends thatamendment would be futile to the extent the proposedamendment complaint seeks to recover for healthcareservices provided to Ms. Foor prior to June 6, 2016 that

have allegedly been released by Ms. Foor. Resp. at 6. 1

Defendant contends that amendment would also be futilewith respect to dates of healthcare service not covered bythe release because the assignment of benefits was invalid,and the proposed amended claims are time barred. Resp.at 9–12.

II.

Federal Rule of Civil Procedure 15(a)(2) provides that aparty may amend its pleading with the court’s leave andthat “the court should freely give leave when justice sorequires.” Denial of a motion to amend is appropriate,however, “ ‘where there is ‘undue delay, bad faith ordilatory motive on the part of the movant, repeated failureto cure deficiencies by amendments previously allowed,undue prejudice to the opposing party by virtue ofallowance of the amendment, futility of the amendment,etc.’ ” Morse v. McWhorter, 290 F.3d 795, 800 (6th Cir.2002) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).

*3 “Prejudice” in the context of Rule 15 means more thanthe inconvenience of having to defend against a claim.See Monahan v. N.Y.C. Dept. of Corr., 214 F.3d 275, 284(2d Cir. 2000). It requires something more substantial.In some situations, the closing of discovery is sufficientto warrant a finding of prejudice to the opponent. SeeR.S.W.W., Inc. v. City of Keego Harbor, 397 F.3d 427, 441(6th Cir. 2005).

An amendment would be futile if the amended complaintdoes not state a claim upon which relief can be granted.Midkiff v. Adams Cty. Reg'l Water Dist., 409 F.3d 758,767 (6th Cir. 2005). A pleading fails to state a claimunder Rule 12(b)(6) if it does not contain allegations thatsupport recovery under any recognizable legal theory.Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In consideringa Rule 12(b)(6) motion, the Court construes the pleadingin the non-movant’s favor and accepts the allegations offacts therein as true. See Lambert v. Hartman, 517 F.3d433, 439 (6th Cir. 2008). The pleader need not provide“detailed factual allegations” to survive dismissal, but the“obligation to provide the ‘grounds’ of his ‘entitle[ment]to relief’ requires more than labels and conclusions, anda formulaic recitation of the elements of a cause of actionwill not do.” Bell Atlantic Corp. v. Twombly, 550 U.S.544, 555 (2007). In essence, the pleading “must containsufficient factual matter, accepted as true, to state a claimto relief that is plausible on its face” and “the tenet that acourt must accept as true all of the allegations containedin a complaint is inapplicable to legal conclusions.” Iqbal,556 U.S. at 678–79 (quotations and citation omitted).

III.

A.

Here, Defendant will not be prejudiced by grantingPlaintiffs leave to amend. Discovery may continue underthe scheduling order until November 27, 2017. Sch. Order,ECF No. 9. Furthermore, granting leave to amend doesnot affect Defendant’s ability to defend against the meritsof Plaintiffs' underlying claim, namely that Defendantis responsible for paying Ms. Foor’s hospital charges.Whether Plaintiffs proceed under a direct cause of actionor a derivative cause of action does not affect the meritsof the underlying claim.

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B.

A motion to amend should be denied where amendmentwould be futile. Morse v. McWhorter, 290 F.3d 795, 800(6th Cir. 2002). Amendment of the complaint is futile ifthe proposed claims in the amended complaint would notwithstand a Rule 12(b)(6) motion to dismiss for failure tostate claim upon which relief could be granted. Fed. R.Civ. P. 12(b)(6); Midkiff v. Adams Cty. Reg'l Water Dist.,409 F.3d 758, 767 (6th Cir. 2005).

Plaintiffs' amended complaint asserts six new counts,consisting of two counts (one for each plaintiff) for each

of their three new causes of action. 2 Proposed CountsV and VI assert a derivative cause of action for breachof contract between the Insured and Insurer based onan assignment of benefits by the Insured to Plaintiffs.Proposed Counts VII and VIII assert a derivative cause ofaction for breach of contract based on the designation ofPlaintiffs as the Insured’s authorized representative for thepurpose of asserting her claims for PIP benefits. ProposedCounts IX and X assert a cause of action for declaratoryrelief on the theory that Plaintiffs are interested partieswith respect to the determination of the insurer’s liabilityfor payment of the hospital charges. Each theory of reliefwill be addressed in turn.

1.

*4 In proposed Counts V and VI, Plaintiffs asserta derivative cause of action for breach of Ms. Foor’sinsurance contract with Defendant based on the June 23,2017 assignment of benefits by the Insured to Plaintiffs.Plaintiffs allege that the Insured’s Assignment was valid,notwithstanding the language in the Insured’s policypurporting to prohibit assignments without the Insurer’sprior written consent. Defendant contends that amendingthe complaint would be futile because the assignment isinvalid and the proposed amended claims are time barred.Resp. at 4. Defendant contends the assignment is invalidbecause 1) it is “overly broad”; 2) “Ms. Foor could notassign her rights at the time the assignment was made”;and 3) “there has been no determination by any court thatMs. Foor is entitled to recover the benefits that are thesubject of the assignment.” Resp. at 4, ECF No. 15.

Defendant’s argument that the assignment is overbroadlacks support. Defendant emphasizes that the Assignmentdoes not identify the Home-Owner’s insurance policy orspecifically assign Ms. Foor’s rights thereunder. Id. at 9.Rather, it assigns “all present, past due or owing benefitspayable to [insured]” by “any entity providing insurancecoverage or benefits for my medical care.” Assignment,ECF No. 11-3. Defendant furnishes no authority forthe proposition that the Assignment must specify theinsurance policies under which Ms. Foor may be entitledto benefits, as opposed to assigning all such rights, as shedid.

Defendant also contends that Ms. Foor’s rights underher policy were non-assignable, citing to the anti-assignment clause in the Home-Owner’s insurance policy,which prohibits assignment of policy benefits withoutHome-Owner’s consent. At oral argument, Defendantemphasized that the anti-assignment clause in theirinsurance policy is valid, as Ms. Foor had not suffered an“accrued loss” at the time of the assignment. Resp. at 10.

The court in Covenant explicitly addressed assignments,explaining “our conclusion today is not intended toalter an insured’s ability to assign his or her right topast or presently due benefits to a healthcare provider.”Covenant at 505; see also Professional Rehab Assoc. v.State Farm Mut. Auto Ins. Co., 228 Mich. App. 167,172 (noting that only the assignment of future benefits isprohibited under MCL 500.3143). In Century Indemnity,the court distinguished between anti-assignment clauseswhich prohibit assignment of future benefits, and thosewhich purport to prohibit assignment of accrued losses:

Michigan law recognizes the validityof contractual provisions againstassignment of contracts, includinginsurance policies ... However, ananti-assignment clause will not beenforced where a loss occurs beforethe assignment, because in thatsituation the assignment of theclaim under the policy is viewedno differently than any otherassignment of an accrued cause ofaction.

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Century Indem. Co. v. Aero-Motive Co., 318 F. Supp.2d 530, 539 (W.D. Mich. 2003) (citing Roger WilliamsInsurance Co. v. Carrington, 43 Mich. 252 (1880) (“theprovision of the policy forfeiting it for an assignmentwithout the company’s consent is invalid, so far as itapplies to the transfer of an accrued cause of action”)).The court also explained the distinction between futurebenefits and accrued losses: “Michigan follows themajority rule that an insurer’s responsibility under aliability policy accrues at the time the complainant suffersdamage rather than at the time of the negligent act.” Id.(citing Quemetco Inc. v. Pacific Automobile Insurance Co.,24 Cal. App. 4th 494, 503 (1994) (“there could have beenno assignment of the proceeds of the policies as there wasno loss or injury or accrued right to collect the proceedsin existence”)).

Here, Ms. Foor assigned to Plaintiffs her right to recoverfor an accrued loss, not a future loss. Plaintiffs' proposedamended complaint alleges the following facts: Ms. Foorwas involved in a motor vehicle accident on March16, 2010; Plaintiffs provided healthcare services to herbetween May, 2016 and February, 2017, for injuriesallegedly arising out of that accident; between December2016 and February 2017 Plaintiffs billed Defendantand furnished itemized charges and medical recordsdocumenting healthcare services provided to Ms. Foor; onJune 23, 2017, Ms. Foor assigned Plaintiffs her rights topayment for “all present, past due or owning benefits” forher hospital bills. Am. Compl. at 3–4, ECF No. 11-2.

*5 Accordingly, at the time of the assignment, Ms. Foorpermissibly assigned her accrued cause of action, not aright to future benefits. Century Indem., 318 F. Supp. 2dat 539 (citing Roger Williams, 43 Mich. 252). Defendantnotes that “there has been no determination by any courtthat Ms. Foor is entitled to recover the benefits that arethe subject of the assignment.” Resp. at 4. Defendant’sargument is without merit. Ms. Foor need not have ajudgment entitling her to recover benefits in order to havean assignable prospective cause of action to sue for thosebenefits.

Defendant also argues that Plaintiffs' proposedamendment is futile because Ms. Foor’s claims are timebarred, and that the assignment could not “toll the one-year statute of limitations to preserve claims they hadno standing to make if Ms. Foor failed to preserve herrights within one year of incurring the expense.” Resp.

at 10, ECF No. 15. Defendant’s counsel acknowledgedduring the hearing on Plaintiffs' Motion that the only datepotentially implicated by the one-year back rule is theMay 24, 2016 date of healthcare service. Plaintiff filed itsoriginal complaint in Saginaw County Circuit Court onFebruary 21, 2017, which was then removed to this Courton April 14, 2017. See ECF No. 1. Plaintiff filed its Motionto Amend attaching it’s proposed amended complaint onJuly 14, 2017, more than one year after the May 24, 2016date of healthcare service. See ECF No. 11.

Defendant argues that the proposed amendment will notrelate back to the date of the original complaint. Resp.at 5, 11–12. However, an amendment relates back to thedate of the original pleading when it “asserts a claimor defense that arose out of the conduct, transaction,or occurrence set out ... in the original pleading.” Fed.R. Civ. P. 15(c)(1)(B). The original complaint asserted adirect action by Plaintiff healthcare providers for recoveryof no fault benefits for healthcare services provided toMs. Foor allegedly arising out of her 2010 automobileaccident. Counts V and VI of the proposed amendedcomplaint assert a derivative cause of action, based on theAssignment, by the same healthcare providers to recoverthe same benefits for the same healthcare services allegedlyarising out of the same automobile accident. Thus, theproposed amendment asserts a claim arising out of thesame conduct, transaction, or occurrence as the originalcomplaint. Therefore, the amendment relates back.

Accordingly, Counts V and VI of Plaintiffs' proposedamended complaint state a plausible claim upon whichrelief can be granted. Counts V and VI of the proposedamended complaint are therefore not futile, and leave to

amend will be granted. 3

2.

Proposed Counts VII and VIII assert a derivative causeof action for breach of contract. Each of these countsis based on Ms. Foor’s designation of Plaintiffs in theAssignment agreement as her authorized representativefor the purpose of “pursuing her claim for hospitalbills.” The very same assignment agreement transfersthose “claims for hospital bills” and associated rights topayment from Ms. Foor to Plaintiffs. Thus, those rightsto payment now belong to Plaintiffs and not to Ms. Foor.Plaintiffs do not explain how Ms. Foor can designate an

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authorized representative to pursue rights to payment shehas expressly assigned to the same party. Thus, proposedCounts VII and VIII fail to state a claim upon which reliefcan be granted. Accordingly, proposed Counts VII andVIII are futile and should be omitted from the amendedcomplaint.

3.

*6 Proposed Counts IX and X assert a causeof action for declaratory relief on the theory thatPlaintiffs are “interested parties” with respect to thedetermination of the insurer’s liability for payment of thehospital charges. Am. Compl. at 19–21, ECF No. 11-2.Specifically, Plaintiffs seek a declaration that Defendant“is responsible to provide payment of the HospitalCharges for the benefit of Sandra Foor to Covenantunder MCL 500.3112.” Id. at 21. Plaintiffs' requested reliefis, however, foreclosed by Covenant. Plaintiffs stipulatedduring the hearing on the Motion that the Covenantdecision is to be applied retroactively based upon WA Foote. 2017 WL 3836645. Granting declaratory relief

that Defendant is responsible to pay Plaintiffs would bethe functional equivalent of a judgment for Plaintiffs ona direct cause of action for damages, and is thereforeforeclosed by the Covenant decision. Therefore, proposedCounts IX and X fail to state a claim upon which reliefcan be granted. Accordingly, they should be omitted fromthe amended complaint.

IV.

Accordingly, it is ORDERED that Plaintiffs' Motion toAmend, ECF No. 11, is GRANTED as to proposedCounts V and VI, and DENIED as to proposed CountsVII–X.

It is further ORDERED that Plaintiffs are DIRECTEDto file their Amended Complaint within seven days of theentry of this Order.

All Citations

Not Reported in Fed. Supp., 2017 WL 4572327

Footnotes1 Defendant explains for the first time in their response that Ms. Foor brought her own cause of action against Home-

Owners in state court after which the matter was settled and Ms. Foor executed a release agreement which purportedlyreleased Home-Owners from any liability under her policy “for no-fault benefits through June 6, 2016, as a result of injuriessustained in the aforesaid automobile accident of March 16, 2010.” Resp., Ex. 1 (Release), ECF No. 15-2. Based onthe Release, Defendant argues it has no liability to the Insured for no-fault benefits for medical care provided to her byPlaintiff Covenant on May 24, 2016. On this basis Defendant asserts it has no liability to Plaintiff Covenant for the May24 date of service, as Ms. Foor could not assign Plaintiff any greater rights than she had. Considering that this matteris before the Court on a motion to amend, the operative standard in evaluating the futility of the amended claims is theRule 12(b)(6) standard. Accordingly, the Release Agreement, as an exhibit to Defendant’s response brief, cannot beconsidered by the Court at this stage. A court faced with a Rule 12(b)(6) motion must typically limit its consideration tothe pleadings or convert it to a motion for summary judgment under Federal Rule of Civil Procedure 12(d). Tackett v. M& G Polymers, USA, L.L.C., 561 F.3d 478, 487 (6th Cir. 2009). During the September 19, 2017 hearing on the Motionto Amend, Plaintiff’s counsel stated that he believes the Release may bar Plaintiff Covenant from recovering no faultbenefits under Counts 5 and 6 for the May 24, 2016 date of service (and may also bar the MSPA claim under Counts 3and 4 with respect to the May 24 date). If so, the amended complaint will so reflect. It is also worth noting that Defendant’sresponse appears to have a typographical error, as it indicates the Release covers the period through July 7, 2016,though the release itself states that it covers the period through June 6, 2016.

2 Counts I and II of Plaintiffs' original complaint and amended complaint assert a direct cause of action for recovery of no-fault medical benefits under the Michigan No Fault Act. During the September 19, 2017 hearing on the Motion to Amend,Plaintiffs explained that they no longer intend to pursue counts I and II based on the decision of the Michigan Court ofAppeals in W A Foote Mem'l Hosp. v. Michigan Assigned Claims Plan, 2017 WL 3836645 (Mich. Ct. App. Aug. 31, 2017).Accordingly, the amended complaint will not include counts I and II.

3 As noted in footnote 1 above, to the extent Plaintiff Covenant does not contest the validity and effect of the ReleaseAgreement, Plaintiff Covenant may omit the May 24, 2016 date of service from its amended complaint and specify whichdates of healthcare service remain actionable.

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Michigan Spine & Brain Surgeons, PLLC v. Auto-Owners..., Not Reported in N.W....

2018 WL 6517749



UNPUBLISHED OPINION. CHECKCOURT RULES BEFORE CITING.

UNPUBLISHEDCourt of Appeals of Michigan.

MICHIGAN SPINE & BRAINSURGEONS, PLLC, Plaintiff-Appellant,

v.AUTO-OWNERS INSURANCE

COMPANY, Defendant-Appellee.

No. 340800|

December 11, 2018

Oakland Circuit Court, LC No. 2016-152783-NF

Before: M. J. Kelly, P.J., and Meter and O'Brien, JJ.

Opinion

Per Curiam.

*1 Plaintiff appeals as of right an order grantingsummary disposition to defendant in this lawsuit forpersonal injury protection benefits under the no-fault act,MCL 500.3101 et seq. Plaintiff also contests the trialcourt's order denying its motion for reconsideration. Weaffirm.

I. TIMELINE

This matter arose from the filing of a complaint byplaintiff on May 3, 2016, seeking payment for medicalservices provided to Willie McGee for injuries McGeeincurred in an automobile accident, while McGee wasinsured with defendant. The following dates are importantand undisputed regarding the timeframe of eventspertinent to the litigation:

First assignment executed to plaintiff--------------------October 31, 2014

McGee's motor vehicle accident----------------------November 21, 2014

Second assignment executed toplaintiff------------------March 25, 2016

McGee's surgery with plaintiff-------------------------March 28, 2016

Plaintiff's initial complaint filed------------------------May 3, 2016

Third assignment executed toplaintiff--------------------- May 12, 2017

Plaintiff's amended complaintfiled-------------------------June 5, 2017

II. SUMMARY DISPOSITION– ONE-YEAR BACK RULE

Plaintiff contests the applicability of the one-year-backrule to the assignments of the insurance claim thatis the subject of this litigation. It further denies theenforceability of any restriction on assignment of thebenefits in defendant's insurance policy with McGee.Plaintiff contends that the three assignments executed byMcGee in favor of plaintiff were not for future benefitsand did not run contrary to the rulings in Covenant Med.Ctr., Inc. v. State Farm Mut. Auto Ins. Co., 500 Mich.191; 895 N.W.2d 490 (2017), and it challenges defendant'scontention that plaintiff lacked standing at the time ofthe filing of its complaint. Further, plaintiff argues thatdefendant lacks standing to challenge the assignmentsbecause it was not a party to the assignments.

Although the trial court stated that it granted summarydisposition under MCR 2.116(C)(8), because the trialcourt considered material outside of the pleadings, weevaluate the motion in accordance with MCR 2.116(C)(10).

A motion for summary dispositionbrought pursuant to MCR 2.116(C)(10) tests the factual support fora claim. Summary disposition isappropriate under MCR 2.116(C)(10) if there is no genuine issueregarding any material fact andthe moving party is entitled to

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judgment as a matter of law. Amotion pursuant to MCR 2.116(C)(10) is reviewed by considering thepleadings, admissions, and otherevidence submitted by the partiesin the light most favorable to thenonmoving party. A genuine issue ofmaterial fact exists when the record,giving the benefit of reasonabledoubt to the opposing party,leaves open an issue upon whichreasonable minds might differ. It iswell settled that the circuit courtmay not weigh the evidence or makedeterminations of credibility whendeciding a motion for summarydisposition. Moreover, a court maynot make findings of fact; if theevidence before it is conflicting,summary disposition is improper.[Patrick v. Turkelson, 322 Mich.App. 595, 605; 913 N.W.2d 369(2018) (citations, quotation marks,emphasis, and brackets removed).]

*2 In addition, “[t]he interpretation of contractuallanguage, as well as the determination of whether thatcontractual language is ambiguous, is a question of lawthat we review de novo.” Kyocera Corp. v. HemlockSemiconductor, LLC, 313 Mich. App. 437, 445; 886N.W.2d 445 (2015) (citations and quotation marksomitted).

This case is subject to the Michigan Supreme Court'sdecision in Covenant, wherein the Court stated:

[A] review of the plain languageof the no-fault act reveals nosupport for plaintiff's argument thata healthcare provider possesses astatutory cause of action againsta no-fault insurer. This conclusiondoes not mean that a healthcareprovider is without recourse; aprovider that furnishes healthcareservices to a person for injuriessustained in a motor vehicle accident

may seek payment from the injuredperson for the provider's reasonablecharges. However, a provider simplyhas no statutory cause of actionof its own to directly sue a no-fault insurer. [Covenant, 500 Mich.at 217-218.]

The Court additionally stated:

[O]ur conclusion today is notintended to alter an insured's abilityto assign his or her right topast or presently due benefits toa healthcare provider. See MCL500.3143; Professional Rehab Assoc.v. State Farm Mut. Auto Ins. Co.,228 Mich. App. 167, 172; 577N.W.2d 909 (1998) (noting that onlythe assignment of future benefitsis prohibited by MCL 500.3143).[Covenant, 500 Mich. at 217 n. 40.]

Despite plaintiff's various contentions regarding theassignments of October 31, 2014, and March 25, 2016,it is not legitimately disputable that the assignmentsare invalid under Covenant because they contemplatean assignment for services from plaintiff that were notrendered until March 28, 2016, thereby comprising apreclusive future assignment of benefits. This is consistentwith the proscription of MCL 500.3143 that “[a]nagreement for assignment of a right to benefits payablein the future is void.” In contrast, the third assignmentexecuted May 12, 2017, is arguably valid, at least onits face, because it encompasses past services or benefitsrendered, having come into existence after McGee'ssurgery provided by plaintiff on March 28, 2016.

Defendant argued that the assignments were invalidbecause McGee failed to obtain defendant's writtenconsent for the assignments to plaintiff, as required in thepolicy of insurance. Insurance policies are construed ascontracts and “subject to the same contract constructionprinciples that apply to any other species of contract.”Rory v. Continental Ins. Co., 473 Mich. 457, 461; 703

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N.W.2d 23 (2005), implied overruling on other groundsrecognized in W. A. Foote Mem. Hosp. v. MichiganAssigned Claims Plan, 321 Mich. App. 159, 183-184; 909N.W.2d 38 (2017). “In ascertaining the meaning of acontract, we give the words used in the contract theirplain and ordinary meaning that would be apparentto a reader of the instrument.” Rory, 473 Mich. at464. “[U]nambiguous contracts are not open to judicialconstruction and must be enforced as written.” Id. at 468(emphasis omitted). “[T]he judiciary is without authorityto modify unambiguous contracts or rebalance thecontractual equities struck by the contracting parties....”Id. at 461. “[C]ourts are to enforce the agreement aswritten absent some highly unusual circumstance such asa contract in violation of law or public policy.” Id. at 469(quotation marks and citation omitted; emphasis added).

*3 “Under general contract law, rights can be assignedunless the assignment is clearly restricted.” Burkhardtv. Bailey, 260 Mich. App. 636, 653; 680 N.W.2d 453(2004). Here, McGee's insurance policy with defendantis clear and unambiguous in stating that “[y]our rightsand duties under this policy may not be assigned withoutour written consent.” As argued by plaintiff, however,courts have refused to enforce an anti-assignment clausewhen the loss at issue occurs before the assignment isexecuted. Specifically, in Jawad A. Shah, M.D., PC v. StateFarm Mut. Auto Ins. Co., 324 Mich. App. 182, ––––; –––N.W.2d –––– (2018); quoting Roger Williams Ins. Co. v.Carrington, 43 Mich. 252, 254; 5 NW 303 (1880), the Courtstated:

“The assignment having been made after the loss didnot require consent of the company. The provision ofthe policy forfeiting it for an assignment without thecompany's consent is invalid, so far as it applies to thetransfer of an accrued cause of action. It is the absoluteright of every person—secured in this state by statute—to assign such claims, and such a right cannot be thusprevented. It cannot concern the debtor, and it is againstpublic policy.”

See also Century Indemnity Co. v. Aero-Motive Co., 318F. Supp. 2d 530, 539-540 (W.D. Mich., 2003) (referencing,in part, Roger Williams in explaining that “an anti-assignment clause will not be enforced where a lossoccurs before the assignment, because in that situationthe assignment of the claim under the policy is viewed nodifferently than any other assignment of an accrued causeof action.”). As such, defendant's contention that the May

12, 2017, assignment is void based on the anti-assignmentlanguage of the insurance policy lacks merit.

The validity of the May 12, 2017, assignment, however,is still subject to further scrutiny in conjunction with theone-year-back rule of MCL 500.3145(1), which states, inrelevant part:

An action for recovery ofpersonal protection insurancebenefits payable under this chapterfor accidental bodily injury may notbe commenced later than 1 year afterthe date of the accident causing theinjury unless written notice of injuryas provided herein has been givento the insurer within 1 year afterthe accident or unless the insurerhas previously made a paymentof personal protection insurancebenefits for the injury. If the noticehas been given or a payment hasbeen made, the action may becommenced at any time within 1year after the most recent allowableexpense, work loss or survivor's losshas been incurred. However, theclaimant may not recover benefitsfor any portion of the loss incurredmore than 1 year before the dateon which the action was commenced.[Emphasis added.]

“The one-year-back rule is designed to limit the amountof benefits recoverable under the no-fault act to thoselosses occurring no more than one year before an action isbrought.” Joseph v. Auto Club Ins. Ass'n, 491 Mich. 200,203; 815 N.W.2d 412 (2012).

Plaintiff initiated this action on May 3, 2016, amendingits complaint on June 5, 2017. The case was initiated asa direct lawsuit by plaintiff against defendant before theSupreme Court's ruling in Covenant was issued on May25, 2017, with amendment of the complaint occurringafter Covenant was issued, in an attempt to comport withthat ruling. Plaintiff's relevant assignment was executed on

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May 12, 2017, and the surgery for which plaintiff assertsa right to payment occurred on March 28, 2016.

It is routinely recognized that “[a]n assignee stands inthe position of the assignor, possessing the same rightsand being subject to the same defenses.” Burkhardt, 260Mich. App. at 653. As such, plaintiff is afforded only thesame rights, not greater rights, than McGee would havepossessed on the date of the assignment. See Jawad A.Shah, M.D., PC, 324 Mich. App. at ––––. Had McGeeinitiated an action against defendant on May 12, 2017, hewould have been precluded from recovering any benefitsfor the part of the loss incurred more than one year beforeMay 12, 2017. See id. at ––––. “[T]he procurement of theassignment[ ] was an event that occurred after the filingof the original complaint and provided the only meansby which plaintiff[ ] could have standing to maintain adirect action against defendant insurer for recovery of no-fault benefits in this case.” Id. at ––––, citing Covenant, 500Mich. at 195-196, 217 n. 40.

*4 This Court in Jawad A. Shah, M.D., PC, 324 Mich.App. at ––––, indicated, under similar circumstances, thata plaintiff's later attempt to amend its complaint “toaccount for the assignment-of-rights theory,” as done herein early June of 2017, comprises a supplemental pleadingunder MCR 2.118(E) and not an amended pleadingin accordance with MCR 2.118(D). This distinction issignificant because a supplemental pleading “could notrelate back to the date of the original pleading.” Jawad A.Shah, M.D., PC, ––– Mich. App. at ––––. Specifically:

Through the assignment, plaintiff[ ]only obtained the rights [the insured]actually held at the time of theexecution of the assignment, andplaintiff[ ] cannot rely on therelation-back doctrine to essentiallygain the potential for a greaterright to recovery than [it] actuallyreceived. [Id. at ––––.]

Hence, this Court concluded:

[T]hrough the assignment[ ] in thiscase, plaintiff[ ] did not obtain the

right to pursue no-fault benefits forany portion of the loss incurredmore than one year before [the dateof the assignment], because that isthe pertinent point of reference forpurposes of the one-year-back rule.A supplemental pleading predicatedon the [assignment] could not relateback to the date of the originalpleading. [Id. at ––––.]

Plaintiff also makes an argument regarding its allegedstatus, by way of the May 2017 assignment, as McGee'sattorney-in-fact. Plaintiff suggests that as McGee'sattorney-in-fact it was entitled to proceed on McGee'sbehalf because it stood in the shoes of McGee. However,McGee could not have pursued, under the one-year-backrule, the benefits to which plaintiff asserts entitlement.Plaintiff's alleged status as McGee's attorney-in-fact doesnot alter the fact that the only rights it could pursue werethose which McGee had, which in this instance involvedpayments only for the timeframe encompassed by the one-year-back rule.

Plaintiff further suggests that defendant lacked standingto oppose the assignments because defendant was nota party to those documents. As stated by the MichiganSupreme Court in Lansing Sch. Ed. Ass'n v. Lansing Bd. ofEd., 487 Mich. 349, 372; 792 N.W.2d 686 (2010):

[A] litigant has standing wheneverthere is a legal cause of action.Further, whenever a litigant meetsthe requirements of MCR 2.605, itis sufficient to establish standing toseek a declaratory judgment. Wherea cause of action is not providedat law, then a court should, inits discretion, determine whether alitigant has standing. A litigant mayhave standing in this context ifthe litigant has a special injury orright, or substantial interest, thatwill be detrimentally affected in amanner different from the citizenryat large or if the statutory scheme

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implies that the Legislature intendedto confer standing on the litigant.

It is disingenuous, at best, for plaintiff to contestdefendant's standing to challenge the assignmentsexecuted between McGee and plaintiff, when the broadercontext of the case pertains to defendant's insurancepolicy with McGee and McGee's assignment of his rightsunder that policy. Because defendant, as the insurer, hasa “substantial interest” in whether it will be liable toplaintiff under its policy of insurance, including the anti-assignment provision within that policy, it has standing tochallenge plaintiff's claims.

We note that plaintiff also argues for the applicabilityof MCL 440.9408, which deems ineffective “[r]estrictionson assignment of promissory notes, health-care-insurancereceivables, and certain general intangibles.” Plaintiffasserts that this statutory provision bolsters its claimthat the failure to obtain defendant's consent for theassignment of benefits in McGee's insurance policy isimmaterial to the validity of the assignment. First, itis unnecessary to address this argument based on thedetermination that the third assignment, on May 12, 2017,was not precluded by the anti-assignment language in theinsurance policy. Second, because this case pertains toa no-fault action, “the more specific statute controls.”See Mich. Deferred Presentment Servs. Ass'n v. Comm'r ofOffice of Fin. & Ins. Regulation, 287 Mich. App. 326, 334;788 N.W.2d 842 (2010). Thus, the restrictions imposedby the no-fault act, such as MCL 500.3143 (stating thatthe “assignment of a right to benefits payable in thefuture is void”) take precedence over general commercialprovisions.

III. MOTION FOR RECONSIDERATION

*5 Plaintiff argues that the trial court erred by denyingits motion for reconsideration, premised on allegationsthat defendant did not reveal that McGee's no-fault case,pending in a different court, had concluded and assertingthat defendant had agreed to indemnify McGee againstplaintiff.

This Court reviews “a trial court's decision on a motionfor reconsideration for an abuse of discretion. An abuseof discretion occurs when the trial court's decision falls

outside the range of reasonable and principled outcomes.”Frankenmuth Ins. Co. v. Poll, 311 Mich. App. 442, 445;875 N.W.2d 250 (2015) (citations and quotation marksomitted).

We find no basis for relief. First, the transcript ofthe hearing on the motion for summary dispositionreveals that plaintiff had information regarding McGee'scase but elected not to intervene in that proceeding.Thus, it appears incongruous for plaintiff to now claimthat it was somehow blindsided by defendant, giventhe acknowledged availability of information regardingMcGee's case and its status in another court. Additionally,in its appellate brief, plaintiff offers no citation to legalauthority in support of its contention of error, i.e., thatthe alleged “concealment” with regard to the other casemandates appellate relief. It is not sufficient for a party to“simply ... announce a position or assert an error and thenleave it up to this Court to discover and rationalize thebasis for his claim, or unravel and elaborate for him hisarguments and then search for authority either to sustainor reject his position.” Wilson v. Taylor, 457 Mich. 232,243; 577 N.W.2d 100 (1998) (citation and quotation marksomitted). Finally, MCR 2.119(F)(3) states:

Generally, and without restrictingthe discretion of the court, a motionfor rehearing or reconsiderationwhich merely presents the sameissues ruled on by the court,either expressly or by reasonableimplication, will not be granted. Themoving party must demonstrate apalpable error by which the courtand the parties have been misledand show that a different dispositionof the motion must result fromcorrection of the error.

Based on this court rule, it was incumbent uponplaintiff, to succeed on its motion for reconsideration,to demonstrate that the trial court made a “palpableerror” and that a “different disposition ... must result fromcorrection of the error.” Even if the trial court had beenmade aware, in greater or more accurate detail, regardingthe status of McGee's separate lawsuit, it would not haveaffected the trial court's ruling in this matter, which was

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premised on the validity of the assignment to plaintiff andthe one-year-back rule.

IV. PARTIAL ASSIGNMENT

Plaintiff contends the trial court erred because it“appeared to partially rely on [defendant's] argument thata partial assignment or claim-splitting, is impermissible.”Plaintiff asserts that its bill did not comprise a partialassignment because “the entire bill for this provider wasassigned.”

However, the trial court's ruling was premised on theone-year-back rule and not on a partial assignment.Accordingly, plaintiff's contention of error is simplymisplaced.

V. THIRD-PARTY BENEFICIARY

Plaintiff asserts that the trial court erred by determiningthat plaintiff's status was that of an incidental beneficiaryand not a third-party beneficiary.

*6 This Court discussed third-party beneficiaries inSchmalfeldt v. North Pointe Ins. Co., 252 Mich. App. 556,562; 652 N.W.2d 683 (2002), aff'd on other grounds 469Mich. 422 (2003), stating:

In Michigan, third-party beneficiary status is defined byMCL 600.1405, which states, in part:

Any person for whose benefit a promise is made byway of contract, as hereinafter defined, has the sameright to enforce said promise that he would have hadif the said promise had been made directly to him asthe promisee.

(1) A promise shall be construed to have been madefor the benefit of a person whenever the promisorof said promise had undertaken to give or to do orrefrain from doing something directly to or for saidperson.

An objective standard is used to determine a plaintiff'sstatus. The law presumes that a contract has beenexecuted for the benefit of the contracting parties, andthe mere fact that a third person would incidentally

benefit does not give the third person a right to sue forthe breach of contract. [Citations omitted.]

Specifically:

A person is a third-party beneficiaryof a contract only when thatcontract establishes that a promisorhas undertaken a promise directlyto or for that person. By usingthe modifier directly, the Legislatureintended to assure that contractingparties are clearly aware thatthe scope of their contractualundertakings encompasses a thirdparty, directly referred to in thecontract, before the third partyis able to enforce the contract.[Schmalfeldt v. North Pointe Ins. Co.,469 Mich. 422, 428; 670 N.W.2d 651(2003) (citations omitted).]

In contrast, an “incidental beneficiary” is defined as “[a]third-party beneficiary who, though benefiting indirectly,is not intended to benefit from a contract and thusdoes not acquire rights under the contract.” Black's LawDictionary (10th ed.).

In Covenant, 500 Mich. at 217 n. 39, the SupremeCourt “decline[d] to make ... a blanket assertion” that“healthcare providers are incidental rather than intendedbeneficiaries of a contract between the insured and theinsurer,” asserting that such a “determination rests onthe specific terms of the contract between the relevantparties.” “A third-party beneficiary may be a member ofa class, but the class must be sufficiently described.” Shayv. Aldrich, 487 Mich. 648, 663; 790 N.W.2d 629 (2010)(citation and quotation marks omitted).

Because plaintiff has failed to identify or assert theexistence of any language within the insurance policybetween McGee and defendant that either refers toplaintiff directly or to a class of which plaintiff isidentifiable as a member, it has failed to demonstrate thatan issue of fact existed regarding its status as a third-partyor intended beneficiary of the no-fault policy.

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Affirmed. All Citations

Not Reported in N.W. Rptr., 2018 WL 6517749


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Michigan Head & Spine Institute, P.C. v. Michigan..., Not Reported in N.W....

2018 WL 5929065





MICHIGAN HEAD & SPINE INSTITUTE,P.C., Plaintiff-Appellant/Cross-Appellee,

v.MICHIGAN ASSIGNED CLAIMS PLAN,

Defendant-Appellee/Cross-Plaintiff/Cross-Appellee,and

Home-Owners Insurance Company, Defendant-Appellee/Cross-Defendant/Cross-Appellant,

andUnnamed Assignee of the MichiganAssigned Claims Plan, Defendant.

No. 339766|

November 13, 2018


Before: Murray, C.J., and Meter and Gleicher, JJ.

Opinion

Per Curiam.

*1 Following a recent pronouncement of our SupremeCourt, healthcare providers no longer have a direct causeof action against no-fault insurers to collect for servicesprovided to injured parties. The injured party in thiscase, however, assigned her right to collect benefits to thehealthcare provider. The circuit court improperly deniedthe healthcare provider's motion to amend its complaintbased on the assignment and therefore erroneouslydismissed its action for lack of standing. We reverse thatpart of the circuit court's opinion and order denyingthe motion to amend, vacate that portion summarilydismissing the action for lack of standing, and remand forfurther proceedings.

I

Maureen Calcatera was seriously injured in a motorvehicle accident on February 9, 2016, while driving aToyota Camry owned by and registered to her father,Michael Cuddihy, Jr. Calcatera did not live with Cuddihy,but had some level of permission to drive the vehicle,which was kept in the driveway at Cuddihy's house. On theday in question, Calcatera entered Cuddihy's home whilehe was sleeping, picked up the keys, and took the Camryto run errands.

Unfortunately, the Camry was not insured. On June 3,2015, Cuddihy's grandson, Sean Horvath, allegedly calledthe Lenahan-Versical Insurance Agency, at Cuddihy'srequest, and cancelled a no-fault insurance policy coveringthe Camry because Cuddihy intended to transfer title to

Calcatera. 1 According to the insurance agent, Calcateracontacted the agency approximately two weeks later toconfirm that the Camry's policy had been cancelled.Calcatera denied making such a call and claimed thatshe “assumed” the vehicle was insured. Cuddihy neverfollowed through with his gift, but also never restartedcoverage. And Calcatera personally did not own a motorvehicle and therefore did not possess her own no-faultinsurance coverage.

Michigan Head & Spine Institute (MHSI) providedmedical and rehabilitative services to Calcatera fromFebruary 10 through June 6, 2016, leaving her with a$95,123 bill. MHSI had difficulty identifying the no-faultpolicy covering Calcatera in her accident. It thereforepursued reimbursement for Calcatera's treatment from the

Michigan Assigned Claims Plan (MACP). 2 The MACP“serves as the insurer of last priority.” Titan Ins. Co. v.American Country Ins. Co., 312 Mich. App. 291, 298,876 N.W.2d 853 (2015). Pursuant to MCL 500.3172, theMACP is required to investigate whether any policy ofhigher priority exists (as enumerated in MCL 500.3114)and if none are found, to assign an insurer to bear the dutyof coverage. The MACP delayed in assigning the claim toa no-fault insurer, leading MHSI to file the instant lawsuiton June 16, 2016. Two months after MHSI filed suit,Calcatera assigned to MHSI her “right to collect no-faultinsurance benefits, if any, for unpaid services renderedby [MHSI] to date.” The assignment was consistent withMCL 500.3143, which precludes the assignment of a rightto collect future benefits.

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*2 The MACP investigated coverage options andeventually discovered that Cuddihy possessed no-faultinsurance through Home-Owners Insurance Company,although the parties later discovered that this policyactually covered only Cuddihy's other vehicle—a Jeep.The circuit court granted MHSI's motion to add Home-Owners as a party defendant in its first amendedcomplaint and the MACP filed a cross-complaint againstHome-Owners as well, claiming that Home-Owners hadfirst priority to provide coverage to Calcatera.

Home-Owners sought summary disposition of bothMHSI's and the MACP's claims, asserting that Calcateraknowingly operated an uninsured vehicle and thereforewas not entitled to personal protection insurance (PIP)benefits under the no-fault act. Home-Owners explainedthat Cuddihy had maintained insurance on the vehiclethrough June 3, 2015, when he and his grandson contactedthe agency to remove the Camry. Home-Owners furtherargued that Calcatera did not fall within the threecategories of individuals entitled to benefits under MCL500.3114(1); she was not the named insured or the namedinsured's spouse, and she was not a resident relative of theinsured.

The MACP challenged Home-Owners' motion withevidence that Calcatera believed the Camry was insured.It also contended that Home-Owners was on the hookbecause Cuddihy “remained a Home-Owners insured”by virtue of his other vehicle. MHSI added that Home-Owners relied upon the inadmissible hearsay statements ofits agent, making the motion “[a]t best ... premature as thefacts regarding insurance coverage have not been fl[e]shedout due to the fact that no discovery has been served uponHome-Owners.”

Before the circuit court had considered Home-Owners'

motion, 3 the Michigan Supreme Court issued CovenantMed. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., 500Mich. 191, 895 N.W.2d 490 (2017), on May 25, 2017. InCovenant, 500 Mich. at 196, 895 N.W.2d 490, the Courtheld “that healthcare providers do not possess a statutorycause of action against no-fault insurers for recoveryof [PIP] benefits under the no-fault act.” Healthcareproviders still “may seek payment from the injured personfor the provider's reasonable charges,” id. at 217, 895N.W.2d 490, and the injured person may in turn fight theinsurance battle. Covenant's ruling also was “not intended

to alter an insured's ability to assign his or her right to pastor presently due benefits to a healthcare provider.” Id. at217, 895 N.W.2d 490 n. 40. Accordingly, an injured partycould still assign his or her right to recover benefits.

The very next day, Home-Owners filed a renewedmotion for summary disposition. Home-Owners clarifiedits initial argument, asserting that Calcatera was a“constructive owner” of the Camry as she regularly usedit under a blanket grant of permission, and knowinglydrove it without mandatory no-fault insurance coverage.Accordingly, neither she nor her medical service providerswere entitled to recovery or reimbursement pursuant to

MCL 500.3113(b). 4 Home-Owners added that MHSIlacked standing to bring suit under Covenant.

The MACP responded by playing both sides of thefield. It contended that evidence showed that Calcaterawas not a constructive owner of the Camry anddenied that Covenant applied to eliminate MHSI'sstanding. “However,” the MACP argued, “should it bedemonstrated that Calcatera is barred from PIP benefits ...[under MCL 500.3113(b)], she would also be barred fromclaiming benefits through” the Plan.

*3 MHSI retorted that Home-Owners still had notpresented admissible evidence to support that Cuddihyhad cancelled the insurance or that Calcatera knew theCamry was uninsured. Ultimately, MHSI argued, thereremained questions of fact regarding whether the Camrywas insured. MHSI contended that the testimony ofCuddihy and Calcatera established that Calcatera did notuse the vehicle in a manner consistent with ownership.

In response to the standing argument, MHSI emphasizedthat Covenant preserved a healthcare provider's right torecover benefits “based on the insured's assignment ofrights.” Calcatera validly assigned her right to collectfor MHSI's prior services to MHSI pursuant to MCL500.3143 and MHSI then stood in Calcatera's shoes.

MHSI concurrently filed a motion to file a secondamended complaint based on Calcatera's August 2016assignment. MHSI noted that it had a direct causeof action and did not need to rely on the assignmentfor standing until the Covenant decision. MHSI furthercontended that neither the MACP nor Home-Ownerswould be prejudiced as its claim for recovery raised no

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new facts or legal premises; rather MHSI would simply bestanding in Calcatera's shoes seeking the same recovery.

Home-Owners challenged MHSI's motion to file a secondamended complaint based on Calcatera's assignment.Home-Owners accused Calcatera of splitting her cause ofaction according to the debts owed to different healthcareproviders and assigning her cause of action piecemeal.Such splitting is prohibited, Home-Owners argued, “toprevent vexation and expense to a defendant. It is a ruleof justice that one shall present his whole cause of actionin one suit.” Quoting Szostak v. Chevrolet Motor Co., 279Mich. 603, 607, 273 N.W. 284 (1937). The cause-of-action-splitting prohibition is now embodied by MCR 2.203,Home-Owners asserted, which requires a party to joinevery claim he or she has against a particular defendant

arising out of a singular accident. 5

At the hearing on the parties' motions, Home-Ownerscontended that it did not rely solely on the insuranceagent's affidavit to classify Calcatera as a constructiveowner of the Camry. Rather, it relied on Calcatera'sand Cuddihy's testimony regarding the frequency ofCalcatera's vehicle use and the fact that Calcatera was notrequired to ask Cuddihy permission before using the car.)Home-Owners also relied on the insurance declarationspage, to establish that the Camry was uninsured at thetime of the accident. This evidence was not inadmissiblehearsay.

Home-Owners rejected that it was required to coverCalcatera under MCL 500.3114(4)(a) because it was “[t]heinsurer of the owner or registrant of the vehicle occupied”based on insurance Cuddihy held for another car. Home-Owners asserted that as Calcatera was a constructiveowner of the Camry, she had to be the insured owner ofa separate vehicle for the statutory subsection to apply.Home-Owners thereby implied that the MACP shoulddetermine that no insurer had priority to provide coverage

and accept its role as the insurer of last priority. 6

*4 In relation to its argument that MHSI lacked standingto file suit, Home-Owners added that MHSI had anassignment from Calcatera since August 15, 2016, and“never pled that cause of action all this time. Neveronce.” Home-Owners questioned why MHSI shouldbe allowed to amend nearly a year after it receivedthe assignment. As a result of this delay, the partieswere then one month before trial and Home-Owners

was unable to “ask[ ] questions about bargained forconsideration, was the assignment valid, [etc.]” Ratherthan an amendment, Home-Owners asserted, MHSI'sclaims based on assignment would be “really a newfiling, because it's a completely separate element.” As anew complaint filed in August 2017, the claims wouldbe barred by the one-year-back rule as services onlycontinued through June 2016. The delay was therefore“extremely prejudicial,” in Home-Owners' estimation.

MHSI responded by summarizing the evidence it feltcreated a genuine issue of material fact regardingownership and constructive ownership of the uninsuredCamry. As to the standing argument, MHSI assertedthat it had possessed a valid assignment since August2016, but had not earlier filed an amended complaint, orpleaded a right to recovery on assignment as an alternativeargument, because it had no need to until Covenant wasdecided. MHSI emphasized that Michigan is a noticepleading state and that its earlier complaint placed Home-Owners and the MACP on notice of the basis of its claim.The nature of the claim did not change simply becauseHome-Owners no longer possessed a direct cause of actionand instead had to rely on the assignment for standing.

The MACP argued at the hearing that Home-Ownerswas “clearly in the highest order of priority pursuant toMCL 500.3114(4).” Specifically, Cuddihy “was a Home-Owners' insured” and it should provide coverage despitethat the Camry was not insured. Alternatively, the MACPcontended that if the court granted summary dispositionbased on Calcatera's status as a constructive owner of anuninsured vehicle, then she similarly would be barred frombenefits through the MACP.

Ultimately, the circuit court denied MHSI's motion to filea second amended complaint and dismissed its action. Thecourt noted that MHSI admitted that it was a healthcareprovider and that Covenant had recently held that ahealthcare provider has no direct cause of action under theno-fault act for recovery of PIP benefits. However, MHSIrelied upon Calcatera's assignment executed after suit wasfiled. The court denied MHSI's motion to file a secondamended complaint based on undue delay (MHSI sat onthe assignment for 11 months without filing its motion),undue prejudice (given that the trial had been adjournedtwice and the new trial date was then only 30 days away),and failure to cure this deficiency in the previously allowedamendment.

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Without an amendment, the court determined thatMHSI's claims against Home-Owners and the MACPwere legally unsustainable under Covenant. Without anindependent cause of action against the insurer andthe MACP, summary disposition was granted underMCR 2.116(C)(8) but without prejudice. Given itsresolution of this issue, the court did not resolve Home-Owners' alternate ground for summary disposition—whether Calcatera was a constructive owner of the Camryineligible for coverage for owning an uninsured vehicle.

II

MHSI challenges the circuit court's denial of its motionto file an amended complaint based on Calcatera'sassignment. We review for an abuse of discretion a trialcourt's decision on a party's motion to amend its pleadingor to serve a supplemental pleading. Boylan v. Fifty EightLLC, 289 Mich. App. 709, 727, 808 N.W.2d 277 (2010).

This Court recently addressed an issue similar to that nowbefore us. In Shah v. State Farm Mut. Auto. Ins. Co., –––Mich. App. ––––; ––– N.W.2d –––– (Docket No. 340370,issued May 8, 2018), lv pending, this Court considereda healthcare provider's standing to seek recovery forPIP benefits when the provider belatedly secured anassignment from the injured party. In Shah, GeorgeHensley was injured in a motor vehicle accident onNovember 30, 2014, and his healthcare providers filedsuit against his no-fault insurer, State Farm, on February24, 2017, seeking payment for their services. Id., slipop. at 1. Following the Supreme Court's decision inCovenant, State Farm sought summary dismissal of thehealthcare providers' claims. Id., slip op. at 2. “Apparentlyanticipating defendant's motion, plaintiffs had obtainedan assignment of rights from Hensley” to seek recovery forservices “already provided.” Id. The healthcare providersrelied on this assignment in opposing summary dispositionand in filing a motion to amend their complaint “to reflectthat the suit was being pursued through the assignmentof rights obtained from Hensley.” Id., slip op. at 3. Thecircuit court denied the healthcare providers' motion toamend based on futility and granted summary dispositionafter determining that the insurance policy contained ananti-assignment clause and that any claims would be time-

barred in any event by the one-year-back rule. 7 Id., slipop. at 4, 14.

*5 State Farm argued that Hensley's assignment tohis healthcare providers was unenforceable because itsinsurance policy included an anti-assignment clause. Id.at 7. However, this Court held based on Roger WilliamsIns. Co. v. Carrington, 43 Mich. 252; 5 N.W.2d 303 (1880),that “an accrued cause of action may be freely assignedafter the loss and that an anti-assignment clause is notenforceable to restrict such assignment because such aclause violates public policy in that situation.” Shah, slipop. at 9.

This Court rejected the healthcare providers' contentions,however, that the assignment related back to the date thecomplaint was filed. This Court noted that an assigneestands in the shoes of the assignor, “possessing the samerights and being subject to the same defenses.” Id. at 11

(cleaned up). 8 “Thus,” this Court continued, “plaintiffscould not obtain any greater rights from Hensley on thedate of the assignments—July 11, 2017—than Hensleyhimself possessed on that date.” Id. Hensley was limited bythe one-year-back rule to recover only for those servicesaccruing from July 11, 2016, and plaintiffs took no morethan the right to recover for services provided on or afterthat date. Id.

Moreover, the healthcare providers did not actuallyseek to file an “amended” complaint, but rather a“supplemental pleading” based on the assignment, thisCourt held. Id. MCR 2.118(D) and (E) provide that anamended complaint is treated as if filed on the date ofthe original complaint, i.e., that it relates back. Id. But “‘there is no provision for relating back as to supplementalpleadings.’ ” Id., quoting Grist v. Upjohn Co., 1 Mich.App. 72, 84, 134 N.W.2d 358 (1965). Through theirsupplemental pleading, the healthcare providers in Shah“only obtained the rights Hensley actually held at the timeof the execution of the assignment.” Shah, slip op. at 11-12(emphasis added).

Based on Shah, MHSI should have filed a motionto file a supplemental, rather than second amended,complaint. The supplemental complaint would be basedon Calcatera's August 15, 2016 assignment. As held inShah, MHSI obtained the rights that Calcatera actuallyheld on August 15, 2016.

The lower court in Shah dismissed the healthcareproviders' action after finding that a supplement would be

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futile because the one-year-back rule and inapplicabilityof the relation-back doctrine barred all recovery. Thelower court in this case likely recognized that MHSI'ssupplement would not be futile as it had secured anassignment in August 2016, and the assignment's timingwould allow for full recovery of the incurred benefitsprovided by MHSI. Instead, the circuit court faultedMHSI for holding onto the assignment for 11 monthsbefore seeking amendment. This delayed the proceedingsand prejudiced the MACP and Home-Owners, the courtconcluded.

A court has discretion to grant a motion to file asupplemental pleading “on reasonable notice and on justterms.” MCR 2.118(E). Motions to file supplementalpleadings are treated similarly to motions to amend.See Casey v. Auto-Owners Ins. Co., 273 Mich. App.388, 401, 729 N.W.2d 277 (2006). The right to amendis usually “a matter of right rather than grace.” PTToday, Inc. v. Comm'r of Office of Fin. & Ins. Servs., 270Mich. App. 110, 143, 715 N.W.2d 398 (2006). “Thus, amotion to amend should ordinarily be denied only forparticularized reasons, including undue delay, bad faith ora dilatory motive, repeated failure to cure deficiencies byamendments previously allowed, undue prejudice to theopposing party, or futility.” Id.

*6 Delay, alone, does not warrantdenial of a motion to amend.However, a court may deny amotion to amend if the delay wasin bad faith or if the opposingparty suffered actual prejudice as aresult. “Prejudice” in this contextdoes not mean that the allowance ofthe proffered amendment may causethe opposing party to ultimately loseon the merits. Rather, “prejudice”exists if the amendment wouldprevent the opposing party fromreceiving a fair trial, if for example,the opposing party would notbe able to properly contest thematter raised in the amendmentbecause important witnesses havedied or necessary evidence hasbeen destroyed or lost. [Weymers

v. Khera, 454 Mich. 639, 659, 563N.W.2d 647 (1997) (cleaned up).]

Prejudice occasioned by delay may be found

when the moving party seeks to adda new claim or a new theory ofrecovery on the basis of the sameset of facts, after discovery is closed,just before trial, and the opposingparty shows that he did not havereasonable notice, from any source,that the moving party would rely onthe new claim or theory at trial. [Id.at 659-660.]

When MHSI filed suit, caselaw stated that healthcareproviders had standing in their own right to pursuerecovery claims. See Covenant, 500 Mich. at 203 n.23, 895 N.W.2d 490. That still held true when MHSIfiled its first amended complaint to name Home-Ownersas a defendant. The circuit court abused its discretionin denying MHSI's motion to file a second amendedcomplaint based on its failure “to cure deficiencies” in thefirst amendment. No “deficiency” existed at that time.

Similarly, MHSI did not cause any delay or prejudiceto Home-Owners or the MACP. Home-Owners filed itssummary disposition motion the day after Covenant wasdecided. Clearly, Home-Owners had completed its legalwork in advance of Covenant's change in the law; itwould have expended these legal resources regardless ofCovenant's outcome. The circuit court's ruling suggeststhat Covenant was the starting pistol for a filing race—MHSI was required to file a motion to amend orsupplement its complaint based on its assignee statusbefore Home-Owners or be deemed to have caused delayand prejudice. Only MHSI could not win because Home-Owners sought to enforce Covenant before the ink hadtime to dry. Home-Owners had run its lap and was waitingat the finish line before the filing race could begin. It isfundamentally unfair to punish MHSI for not beatingHome-Owners in a filing contest that began and endedonly one day after a significant change in the law.

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Further, MHSI did not fundamentally alter its cause ofaction. In the original and first amended complaints,MHSI asserted that Calcatera had been injured in amotor vehicle accident, either Home-Owners was first inpriority to provide coverage or the MACP was requiredto assign an insurer to provide coverage, and it wasentitled to payment for the services it had providedto Calcatera. MHSI would raise the same claims asbefore, only as Calcatera's assignee to collect for theservices rendered. Contrary to Home-Owners' objections,this was not a radical change in legal theories requiringadditional discovery or significant work. The circuitcourt thereby abused its discretion in denying MHSI'smotion to amend (or supplement) its complaint. As thecourt should have permitted the amendment/supplement,it erroneously granted summary disposition in Home-

Owners' favor based on the lack of standing. 9

*7 Home-Owners alternatively argues that the circuitcourt could have denied MHSI's motion to file asupplemental complaint because Calcatera invalidly splither cause of action when she assigned to MHSI onlyher right to collect benefits for the services provided byMHSI. Allowing MHSI's suit by assignment would leavethem open for a second lawsuit by McLaren Macombor by Calcatera directly for recovery of costs incurred atMcLaren, Home-Owners complains.

Following the Supreme Court's decision in Covenant andthis Court's opinion in Shah, this Court considered thisvery issue in the unpublished opinion of Michigan Head &Spine Institute, Inc. v. Hastings Mut. Ins. Co., unpublishedper curiam opinion of the Court of Appeals, issued

September 18, 2018 (Docket No. 340656), lv pending. 10

Just as in this case, the defendant insurance companyin Hastings relied on antiquated caselaw prohibiting thesplitting of causes of action. Id. at 2. And just as MHSIargues in this case, this Court noted that the defendant inHastings “ignore[d]” that the Supreme Court's adoptionof MCR 2.205 had superseded and replaced the formercommon-law rule against claim splitting. Id., citing UnitedStates Auto. Ass'n v. Nothelfer, 195 Mich. App. 87, 89, 489N.W.2d 150 (1992).

MCR 2.205(A) provides for the necessary joinder ofcertain parties:

Subject to the provisions of subrule(B) and MCR 3.501, personshaving such interests in the subjectmatter of an action that theirpresence in the action is essential topermit the court to render completerelief must be made parties andaligned as plaintiffs or defendantsin accordance with their respectiveinterests.

Under the court rule, “joinder is required for the benefitof the defendant.” United States Auto Ass'n, 195 Mich.App. at 189, 489 N.W.2d 175. The burden is therefore onthe defendant to “make a timely assertion of the positionthat separate suits violate the rule prohibiting the splittingof actions, modernly known as the joinder rule.” Id. at189-190, 489 N.W.2d 175.

Here, as in Hastings, there is no record indication thatany other person or entity who provided services toCalcatera has filed or will file a separate lawsuit inconnection with Calcatera's accident. Neither the MACPnor Home-Owners has requested joinder of McLarenMacomb or any other individual as a necessary partyplaintiff. Accordingly, we follow Hastings's example andconclude that denial of MHSI's motion to amend orsupplement its complaint or granting Home-Owners'summary disposition motion on this ground would beimproper.

III

Home-Owners alternatively argued below that the circuitcourt should summarily dismiss MHSI's recovery claimbecause Calcatera was barred from recovery of PIPbenefits as the constructive owner of an uninsured vehicle.Home-Owners continues to raise this argument on appeal.However, the circuit court did not reach this issue. OnceMHSI has filed its supplemental complaint in the circuitcourt, that court may consider Home-Owners' summarydisposition motion in the first instance.

*8 We reverse the order denying MHSI's motion to filea second amended (or supplemental) complaint, vacate

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the order granting Home-Owners' motion for summarydisposition based on lack of standing, and remand forfurther proceedings consistent with this opinion. We donot retain jurisdiction.

All Citations


Footnotes1 Cuddihy remembered that he intended to transfer title to Calcatera and that he changed his mind. However, Cuddihy did

not remember that he had ever insured the vehicle. During his deposition, Cuddihy indicated that at age 81, his memorywas not what it used to be.

2 Calcatera was also treated at McLaren Macomb Hospital and the hospital joined MHSI in seeking reimbursement fromthe MACP outside of court. The hospital is not a party to this lawsuit and there is no record indication whether McLarenpursued separate legal action.

3 In its final opinion and order, the circuit court indicated that it had previously dismissed Home-Owners' first summarydisposition motion as moot. No such order appears in the lower court record.

4 MCL 500.3113(b) excludes a person from claiming PIP benefits when he or she “was the owner or registrant of a motorvehicle ... involved in the accident with respect to which the security required by [MCL 500.3101 or MCL 3103] was notin effect.”

5 MCR 2.2203 provides, in relevant part:(A) Compulsory Joinder. In a pleading that states a claim against an opposing party, the pleader must join every claimthat the pleader has against that opposing party at the time of serving the pleading, if it arises out of the transaction oroccurrence that is the subject matter of the action and does not require for its adjudication the presence of third partiesover whom the court cannot acquire jurisdiction.(B) Permissive Joinder. A pleader may join as either independent or alternate claims as many claims, legal or equitable,as the pleader has against an opposing party. If a claim is one previously cognizable only after another claim hasbeen prosecuted to a conclusion, the two claims may be joined in a single action; but the court may grant relief onlyin accordance with the substantive rights of the parties.

6 We note that the circuit court has yet to consider the priority of insurers for coverage of Calcatera as it has not yetconsidered whether Calcatera is precluded from any coverage based on her status as a constructive owner of anuninsured motor vehicle.

7 MCL 500.3145(1) limits an injured party's recovery of PIP benefits to those costs incurred in the year before the actionis filed.

8 This opinion uses the new parenthetical (cleaned up) to improve readability without altering the substance of the quotation.The parenthetical indicates that nonsubstantive clutter such as brackets, alterations, internal quotation marks, andunimportant citations have been omitted from the quotation. See Metzler, Cleaning Up Quotations, 18 J App Pract &Process 143 (2017).

9 Although we are vacating the circuit court's summary disposition order, we note that we share Home-Owners' confusionregarding the lower court's decision to enter the order “without prejudice.” We need not resolve Home-Owners' claim oncross-appeal on the merits, however, as it has been rendered moot.

10 “Although unpublished opinions of this Court are not binding precedent, MCR 7.215(C)(1); In re Application of IndianaMichigan Power Co., 275 Mich. App. 369, 380, 738 N.W.2d 289 (2007), they may ... be considered instructive orpersuasive.” Paris Meadows, LLC v. City of Kentwood, 287 Mich. App. 136, 145 n. 3, 783 N.W.2d 133 (2010).


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Michigan Head & Spine Institute, PC v. Essurance..., Not Reported in N.W....

2018 WL 4579704





MICHIGAN HEAD & SPINEINSTITUTE, PC, Plaintiff-Appellant,

v.ESSURANCE PROPERTY & CASUALTY

INSURANCE COMPANY, Defendant-Appellee.

No. 340807|

September 18, 2018


Before: Swartzle, P.J., and Jansen and O'Brien, JJ.

Opinion

Per Curiam.

*1 Plaintiff appeals as of right the trial court's ordergranting summary disposition to defendant and denyingplaintiff's motion to amend its complaint. We affirm inpart, vacate in part, and remand for further proceedingsconsistent with this opinion.

I. BACKGROUND

Plaintiff allegedly provided medical treatment to 17patients for whom defendant was the highest-priority first-party no-fault insurer responsible for paying personal-injury-protection (PIP) benefits for injuries arisingout of motor vehicle accidents. Plaintiff asserts thatdefendant has refused to provide full payment of theoutstanding medical expenses owed to plaintiff for these17 patients. Plaintiff filed this action seeking to recover theoutstanding medical expenses along with no-fault penaltyinterest and attorney fees.

Defendant moved for summary disposition arguing thatmedical providers such as plaintiff lack an independentstatutory cause of action against a no-fault insurer such

as defendant in light of Covenant Med. Ctr., Inc. v.State Farm Mut. Auto. Ins. Co., 500 Mich. 191, 895N.W.2d 490 (2017). Plaintiff then moved to amendits complaint to assert claims under assignment-of-benefits and third-party-beneficiary theories. The trialcourt granted summary disposition to defendant underMCR 2.116(C)(8) and denied plaintiff's motion to amendthe complaint. The trial court reasoned that amendmentwould be futile because defendant's policy contained ananti-assignment clause and that defendant was not a third-party-beneficiary to the contract because the policy didnot evidence an intent to benefit plaintiff.

This appeal followed.

II. ANALYSIS

Defendant Was Entitled to Summary Disposition UnderCovenant. A trial court's decision on a motion forsummary disposition is reviewed de novo. Dell v. CitizensIns. Co. of America, 312 Mich. App. 734, 739, 880 N.W.2d280 (2015). “A motion under MCR 2.116(C)(8) tests thelegal sufficiency of the complaint.” Id.

In Covenant, 500 Mich. at 195-196, 217-218, 895 N.W.2d490, our Supreme Court held that healthcare providerslack an independent statutory cause of action againstno-fault insurers to recover PIP benefits. This Courthas concluded that the holding in Covenant appliesretroactively to pending cases. Bronson Healthcare Group,Inc. v. Mich. Assigned Claims Plan, 323 Mich. App. 302,––––; ––– N.W.2d –––– (2018) (Docket No. 336088); slipop at 2, citing W.A. Foote Mem. Hosp. v. Mich. AssignedClaims Plan, 321 Mich. App. 159, 196, 909 N.W.2d

38 (2017). 1 The present case was pending in the trialcourt when Covenant was decided. Thus, Covenant appliesto bar plaintiff's independent action against defendantfor the recovery of PIP benefits owed to defendant'sinsureds. Summary disposition was therefore appropriateon plaintiff's independent statutory claim.

Plaintiff's Motion to Amend. “The grant or denial of leaveto amend pleadings is within the trial court's discretion.”Jawad A Shah, M.D., P.C. v. State Farm Mut. Auto. Ins.Co., ––– Mich. App. ––––, ––––; ––– N.W.2d –––– (2018)(Docket No. 340370); slip op at 13 (cleaned up). “ThisCourt reviews for an abuse of discretion a trial court'sdenial of a motion to amend a complaint.” Tierney v. Univ.

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of Mich. Regents, 257 Mich. App. 681, 687, 669 N.W.2d575 (2003). “[A]n abuse of discretion occurs only whenthe trial court's decision is outside the range of reasonableand principled outcomes.” In re Kostin, 278 Mich. App.47, 51, 748 N.W.2d 583 (2008). “A trial court necessarilyabuses its discretion when it makes an error of law.” Shah,––– Mich. App. at ––––, ––– N.W.2d ––––; slip op at 14(cleaned up).

*2 “If a trial court grants summary disposition pursuantto MCR 2.116(C)(8), (C)(9), or (C)(10), the court mustgive the parties an opportunity to amend their pleadingspursuant to MCR 2.118, unless the amendment would befutile.” Id. (cleaned up); see also MCR 2.116(I)(5). “Anamendment is futile if it merely restates the allegationsalready made or adds allegations that still fail to statea claim.” Id. (cleaned up). “Under MCR 2.118(A)(2), aparty may amend a pleading by leave of the court andsuch leave shall be freely given when justice so requires.”Id. (cleaned up). “Amendment is generally a matter ofright rather than grace” and “should ordinarily be deniedonly for particularized reasons, including undue delay,bad faith or dilatory motive, repeated failure to curedeficiencies by amendments previously allowed, undueprejudice to the opposing party, or futility.” Id. at ––––,––– N.W.2d ––––; slip op at 13 (cleaned up).

Assignment of Benefits. The trial court concluded thatamendment to add an assignment-of-benefits claim toplaintiff's complaint would be futile in light of the anti-assignment clauses in defendant's policies. The trial courtreasoned that the anti-assignment clauses did not violatepublic policy and therefore were entitled to be enforced as-written. We disagree.

In Covenant, 500 Mich. at 217 n. 40, 895 N.W.2d 490, ourSupreme Court recognized that an insured may “assignhis or her right to past or presently due benefits toa healthcare provider.” Thus, in the situation where ahealth-care provider's independent statutory claim forPIP benefits is summarily dismissed, this Court has heldthat the provider should be granted leave to amendits complaint to assert a claim under an assignment-of-benefits theory. See Bronson Healthcare Group, 323 Mich.App. at ––––, ––– N.W.2d ––––; slip op at 3, citing W.A.Foote Mem. Hosp., 321 Mich. App. at 196, 909 N.W.2d38. Moreover, we held in Shah, ––– Mich. App. at ––––,––– N.W.2d ––––; slip op at 9, that an anti-assignmentclause in a no-fault policy is unenforceable to prohibit

an assignment that occurred after the loss or the accrualof the claim to payment “because such a prohibition ofassignment violates Michigan public policy that is partof our common law as set forth by our Supreme Court.”Therefore, under Shah, the anti-assignment provisionsin defendant's policies are void as against public policyand present no obstacle to plaintiff's claim under anassignment-of-benefits theory.

It is therefore necessary to vacate the portion of the trialcourt's order denying plaintiff's motion to amend thecomplaint with respect to a claim under an assignment-of-benefits theory. The case is remanded to the trial court todetermine whether amendment to assert a claim under anassignment-of-benefits theory is proper in the present case.To the extent that defendant argues on appeal that theclaim is otherwise futile, those fact-specific determinationsshould be decided in the first instance by the trial courtrather than by this Court. See generally, Id. at ––––––––,––– N.W.2d ––––; slip op at 13 (noting particularizedconsiderations pertinent to the decision whether to allowamendment of a pleading).

Third-party Beneficiary. The trial court also deniedplaintiff's motion to add a third-party-beneficiary claim,concluding that plaintiff was not a third-party beneficiaryto the policies because plaintiff was not referenced in thepolicies. We agree.

In Covenant, 500 Mich. at 217 n 39, 895 N.W.2d 490, ourSupreme Court declined to make a “blanket assertion”that “healthcare providers are incidental rather thanintended beneficiaries of a contract between the insuredand the insurer.” The determination would rest “onthe specific terms of the contract between the relevantparties.” Id. The third-party-beneficiary statute, MCL600.1405, states, in relevant part:

Any person for whose benefit a promise is made by wayof contract, as hereinafter defined, has the same right toenforce said promise that he would have had if the saidpromise had been made directly to him as the promisee.

*3 (1) A promise shall be construed to have been madefor the benefit of a person whenever the promisor of saidpromise had undertaken to give or to do or refrain fromdoing something directly to or for said person.

“The plain language of this statute reflects that not everyperson incidentally benefitted by a contractual promise

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has a right to sue for breach of that promise. Thus, onlyintended, not incidental, third-party beneficiaries may suefor a breach of a contractual promise in their favor.”Schmalfeldt v. North Pointe Ins. Co., 469 Mich. 422, 427,670 N.W.2d 651 (2003) (cleaned up). “A person is a third-party beneficiary of a contract only when that contractestablishes that a promisor has undertaken a promise‘directly’ to or for that person.” Id. at 428, 670 N.W.2d651 (cleaned up). “By using the modifier ‘directly,’ theLegislature intended to assure that contracting partiesare clearly aware that the scope of their contractualundertakings encompasses a third party, directly referredto in the contract, before the third party is able to enforcethe contract.” Id. (cleaned up). The objective form andmeaning of the contract itself is used to determine whethera person is an intended third-party beneficiary. Id. “Athird-party beneficiary may be a member of a class, butthe class must be sufficiently described.” Shay v. Aldrich,487 Mich. 648, 663, 790 N.W.2d 629 (2010) (cleaned up).

Here, plaintiff has not identified any language in the no-fault insurance policies that directly refers to plaintiff orthat sufficiently describes a class of which plaintiff is amember. Thus, plaintiff has not shown that an issue of factexists regarding whether it was an intended beneficiary ofthe PIP policies. Hence, the trial court correctly concludedthat amendment of the complaint to assert a third-party-beneficiary theory was futile.

Affirmed in part, vacated in part, and remanded forfurther proceedings consistent with this opinion. We donot retain jurisdiction.

All Citations


Footnotes1 Our Supreme Court has ordered oral argument on the application to consider the retroactivity of Covenant. W A Foote

Mem Hosp v. Mich. Assigned Claims Plan, 501 Mich. 1079, 911 N.W.2d 470 (2018).


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Michigan Head & Spine Institute, PC v. Hastings Mutual..., Not Reported in N.W....

2018 WL 4577282






v.HASTINGS MUTUAL INSURANCE

COMPANY, Defendant-Appellee.

No. 340656|

September 18, 2018



Opinion

Per Curiam.

*1 Plaintiff appeals as of right the trial court's ordergranting summary disposition in favor of defendant. Weaffirm in part, reverse in part, and remand for furtherproceedings consistent with this opinion.

I. BACKGROUND

Kelly Potocki was covered under a personal-injury-protection (PIP) policy with defendant. Plaintiff providedmedical services to Potocki for injuries she allegedlysuffered in an automobile accident. Following treatment,Potocki assigned her right to payment to plaintiff. Plaintiffsubmitted claims for payment to defendant—the allegedfirst-party no-fault insurer—but defendant allegedly didnot fully reimburse plaintiff for the services it providedto Potocki. Plaintiff commenced this action againstdefendant for recovery of first-party no-fault benefits,asserting entitlement to recovery under assignment-of-benefits and third-party-beneficiary theories. The trialcourt granted summary disposition in favor of defendantconcluding that Potocki's assignment of her claim wasbarred by the anti-assignment clause in defendant's policy

and that plaintiff was not an intended beneficiary of thepolicy and was therefore not entitled to enforce it.


II. ANALYSIS

A trial court's decision on a motion for summarydisposition is reviewed de novo. Dell v. Citizens Ins.Co. of America, 312 Mich. App. 734, 739, 880 N.W.2d280 (2015). Defendant sought summary disposition underMCR 2.116(C)(8) and (C)(10). The trial court did notindicate under which court rule it was granting summarydisposition; however, because the issues presented to thetrial court entailed consideration of material outside thepleadings, we conclude that MCR 2.116(C)(10) is therelevant court rule. “A motion for summary dispositionunder MCR 2.116(C)(10) tests the factual sufficiency ofthe claim, and is appropriately granted when, except as tothe amount of damages, there is no genuine issue as to anymaterial fact, and the moving party is entitled to judgmentas a matter of law.” Tomra of North America, Inc. v. Dep'tof Treasury, ––– Mich. App. ––––, ––––, ––– N.W.2d ––––,2018 WL 3443084 (2018) (Docket No. 336871), slip op. at2.

Assignment of Benefits. Plaintiff argues that the trial courterred by granting summary disposition to defendant withrespect to its assignment-of-benefits theory of recovery.We agree.

In Covenant Med. Ctr., Inc. v. State Farm Mut. Auto Ins.Co., 500 Mich. 191, 195-196, 217-218, 895 N.W.2d 490(2017), our Supreme Court held that healthcare providerslack an independent statutory cause of action against no-fault insurers to recover PIP benefits. Yet, the CovenantCourt also stated that its holding was “not intended toalter an insured's ability to assign his or her right to pastor presently due benefits to a healthcare provider.” Id. at217 n.40, 895 N.W.2d 490. Rather, only the assignmentof future benefits is prohibited. Id., citing MCL 500.3143and Prof. Rehab. Assoc. v. State Farm Mut. Auto Ins.Co., 228 Mich. App. 167, 172, 577 N.W.2d 909 (1998).Moreover, this Court has recently held that an anti-assignment clause in a no-fault policy is unenforceableto prohibit an assignment that occurred after the lossor the accrual of the claim to payment “because such aprohibition of assignment violates Michigan public policy

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that is part of our common law as set forth by our SupremeCourt.” Jawad A. Shah, MD, PC v. State Farm Mut. AutoIns. Co., ––– Mich. App. ––––, ––––, ––– N.W.2d ––––,2018 WL 2121787 (2018) (Docket No. 340370), slip op.at 9, citing Rory v. Continental Ins. Co., 473 Mich. 457,469-471, 703 N.W.2d 23 (2005), and Roger Williams Ins.Co. v. Carrington, 43 Mich. 252, 254, 5 N.W. 303 (1880).

*2 Here, Potocki's assignment to plaintiff was for past orpresently due benefits. Under Shah, the anti-assignmentprovision in defendant's policy is void as against publicpolicy and presents no obstacle to plaintiff's claim underan assignment-of-benefits theory. The trial court erred byconcluding otherwise. To the extent that defendant invitesthis Court to declare a conflict with Shah, we decline todo so.

Defendant also argues that prohibiting an assignmentwould be consistent with “the broader rule in Michiganprohibiting the splitting of causes of action.” Defendantcites Gen. Accident Fire & Life Assurance Corp. v. Sircey,354 Mich. 478, 482, 93 N.W.2d 315 (1958), for thefollowing proposition: “In this state the rule againstsplitting of causes of action is strictly enforced to preventvexation and expense to a defendant. It is a rule of justicethat one shall present his whole cause of action in onesuit.” Yet, defendant ignores subsequent case law holdingthat “MCR 2.205 has replaced the common-law ruleagainst splitting a cause of action.” United Servs. AutoAss'n v. Nothelfer, 195 Mich. App. 87, 89, 489 N.W.2d150 (1992). MCR 2.205(A) provides that “persons havingsuch interests in the subject matter of an action that theirpresence in the action is essential to permit the court torender complete relief must be made parties and aligned asplaintiffs or defendants in accordance with their respectiveinterests.”

The burden is on a defendant to object to nonjoinder ormisjoinder—“the defendant must make a timely assertionof the position that separate suits violate the ruleprohibiting the splitting of actions.” United Servs. Auto.Ass'n, 195 Mich. App. at 89-90, 489 N.W.2d 150. In thepresent case, there is no indication of any separate suitfiled by Potocki or anyone else against defendant withrespect to this matter, and defendant has made no requestfor joinder in accordance with MCR 2.205. Defendant'sargument concerning the purported splitting of a causeof action thus lacks merit. Accordingly, we reverse the

trial court's grant of summary disposition on plaintiff'sassignment-of-benefits claim.

Third-Party Beneficiary. Next, plaintiff argues that thetrial court erred in granting summary disposition todefendant on plaintiff's third-party-beneficiary claim. Wedisagree.

In Covenant, 500 Mich. at 217 n.39, 895 N.W.2d 490, ourSupreme Court declined to make a “blanket assertion”that “healthcare providers are incidental rather thanintended beneficiaries of a contract between the insuredand the insurer.” The determination would rest “onthe specific terms of the contract between the relevantparties.” Id. The third-party-beneficiary statute, MCL600.1405, states, in relevant part:

Any person for whose benefit a promise is made by wayof contract, as hereinafter defined, has the same right toenforce said promise that he would have had if the saidpromise had been made directly to him as the promisee.

(1) A promise shall be construed to have been made forthe benefit of a person whenever the promisor of saidpromise had undertaken to give or to do or refrain fromdoing something directly to or for said person.

“The plain language of this statute reflects that not everyperson incidentally benefitted by a contractual promisehas a right to sue for breach of that promise. Thus, onlyintended, not incidental, third-party beneficiaries may suefor a breach of a contractual promise in their favor.”Schmalfeldt v. North Pointe Ins. Co., 469 Mich. 422, 427,670 N.W.2d 651 (2003) (cleaned up). “A person is a third-party beneficiary of a contract only when that contractestablishes that a promisor has undertaken a promise‘directly’ to or for that person.” Id. at 428, 670 N.W.2d651 (cleaned up). “By using the modifier ‘directly,’ theLegislature intended to assure that contracting partiesare clearly aware that the scope of their contractualundertakings encompasses a third party, directly referredto in the contract, before the third party is able to enforcethe contract.” Id. (cleaned up). The objective form andmeaning of the contract itself is used to determine whethera person is an intended third-party beneficiary. Id. “Athird-party beneficiary may be a member of a class, butthe class must be sufficiently described.” Shay v. Aldrich,487 Mich. 648, 663, 790 N.W.2d 629 (2010) (cleaned up).

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*3 Here, plaintiff has not identified any language inthe no-fault insurance policies that directly refers toplaintiff or that sufficiently describes a class of whichplaintiff is a member. Thus, plaintiff has not shownthan an issue of fact exists regarding whether it was anintended beneficiary of the PIP policies. The trial courtthus properly granted summary disposition to defendanton plaintiff's third-party-beneficiary claim.

Affirmed in part, reversed in part, and remanded forfurther proceedings consistent with this opinion. We donot retain jurisdiction.

All Citations



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Cox v. Farm Bureau Mutual Insurance Company of Michigan, Not Reported in N.W....

2018 WL 2990615





William COX, Plaintiff,and

Michigan Institute of Pain and Headache,PC, doing business as Metro Pain

Clinic, Intervening Plaintiff–Appellant,and

City Xpress, LLC, and Maximum RehabPhysical Therapy, LLC, Intervening Plaintiffs,

andTotal Health Rehab, LLC, Intervening

Plaintiff Cross–Appellant,v.

FARM BUREAU MUTUAL INSURANCECOMPANY OF MICHIGAN,

Defendant–Appellee/Cross–Appellee.William Cox, Plaintiff–Appellant,

andMichigan Institute of Pain and Headache, PC,

doing business as Metro Pain Clinic, City Xpress,LLC, Maximum Rehab Physical Therapy, LLC, and

Total Health Rehab, LLC, Intervening Plaintiffs,v.

Farm Bureau Mutual Insurance Companyof Michigan, Defendant–Appellee.

William Cox, Plaintiff,and

Michigan Institute of Pain and Headache, PC,doing business as Metro Pain Clinic, Maximum

Rehab Physical Therapy, LLC, and TotalHealth Rehab, LLC, Intervening Plaintiffs,

andCity Xpress, LLC, Intervening Plaintiff–Appellant,

v.Farm Bureau Mutual Insurance Company

of Michigan, Defendant–Appellee.

No. 336326, No. 336353, No. 336356

|June 14, 2018

Wayne Circuit Court, LC No. 15–002187–NI

Before: Sawyer, P.J., and Cavanagh and Fort Hood, JJ.

Opinion

Per Curiam.

*1 These appeals arise from the same lower courtfile involving first-party no-fault claims asserted by theallegedly injured person as well as numerous interveningmedical providers. In Docket No. 336326, interveningplaintiff, Michigan Institute of Pain and Headache, PC(MIPH), appeals as of right an order granting summarydisposition in favor of defendant, Farm Bureau MutualInsurance Company of Michigan, pursuant to MCR2.116(C)(10), and a cross-appeal from the same orderwas filed by intervening plaintiff, Total Health Rehab.,LLC (Total Health). In Docket No. 336353, plaintiff,William Cox, appeals as of right the same order. In DocketNo. 336356, intervening plaintiff, City Xpress, LLC (CityXpress), appeals as of right the same order. The appealswere consolidated. Cox v. Farm Bureau Mut. Ins. Co. ofMich., unpublished order of the Court of Appeals, enteredFebruary 8, 2017 (Docket Nos. 336326, 336353, 336356).We affirm in part (on alternative grounds), reverse in part,and remand for further proceedings consistent with thisopinion.

This case arises out of a motor vehicle accident thatoccurred on July 3, 2014, in which plaintiff claims tohave been injured. Plaintiff filed this action againstdefendant, his no-fault insurer, seeking the paymentof personal injury protection benefits. The medicalproviders intervened seeking to recover from defendantthe amounts owed to them for providing services toplaintiff. Defendant sought summary disposition on theground that plaintiff committed fraud in various ways,including that, even though his doctor had indicated thatplaintiff was disabled from driving, plaintiff used a rentalcar during July of 2014 and drove to and from Baldwin,Michigan on July 26 and 27 of 2014. After initiallydenying defendant's request for summary disposition onthe basis of plaintiff's alleged fraud, the trial court granteddefendant's motion for reconsideration and then grantedsummary disposition to defendant pursuant to MCR2.116(C)(10) on the ground that plaintiff committed fraud.These appeals followed.

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Plaintiff and the intervening medical providers argue onappeal that the trial court erred in granting summarydisposition to defendant pursuant to MCR 2.116(C)(10)on the basis of plaintiff's purported fraud because agenuine issue of material fact exists concerning whetherplaintiff engaged in fraud. We agree. However, withrespect to the claims of the medical providers, defendantis entitled to summary disposition pursuant to MCR2.116(C)(8) because the medical providers lack a statutorycause of action under Covenant Med. Ctr., Inc. v. StateFarm Mut. Auto. Ins. Co., 500 Mich. 191, 895 N.W.2d490 (2017). The medical providers shall be afforded anopportunity on remand to amend their complaints toassert claims under an assignment of benefits theory.

Defendant's argument that the medical providers areunable to pursue their claims in light of Covenant was notraised below (given that Covenant had not been issuedyet), but that does not preclude review. This Court has“rejected preservation arguments relating to Covenant andexercised our discretion to review Covenant argumentsthat were not raised before, addressed and decided by,the trial court.” Bronson Healthcare Group, Inc. v. Mich.Assigned Claims Plan, ––– Mich. App. ––––, ––––; –––N.W.2d –––– (2018) (Docket No. 336088); slip op. at 2.

*2 Specifically, we have recognized that a defense of“failure to state a claim on which relief can be granted”cannot be waived, we have emphasized our discretionto consider unpreserved questions of law, and we haveacknowledged that, with regard to cases pending whenCovenant was decided, a defendant should not befaulted for failing to challenge a healthcare provider'sstatutory right to bring a claim because pre-Covenantcaselaw would have rendered any such arguments futile.[Id. at 2–3, citing W A Foote Mem. Hosp. v. Mich.Assigned Claims Plan, 321 Mich. App. 159, 173–174,909 N.W.2d 38 (2017), lv pending.]

We will therefore consider the question of law posed bydefendant's Covenant argument. See Bronson HealthcareGroup, ––– Mich. App. at ––––; slip op. at 3.

A trial court's decision on a motion for summarydisposition is reviewed de novo. Johnson v. Recca, 492Mich. 169, 173, 821 N.W.2d 520 (2012). The trial courtgranted summary disposition to defendant under MCR2.116(C)(10) on the fraud issue.

In reviewing a motion underMCR 2.116(C)(10), this Courtconsiders the pleadings, admissions,affidavits, and other relevantdocumentary evidence of recordin the light most favorable tothe nonmoving party to determinewhether any genuine issue ofmaterial fact exists to warranta trial. Summary disposition isappropriate if there is no genuineissue regarding any material factand the moving party is entitledto judgment as a matter of law.A genuine issue of material factexists when the record, giving thebenefit of reasonable doubt to theopposing party, leaves open an issueupon which reasonable minds mightdiffer. [Bank of America, NA v.Fidelity Nat'l Title Ins. Co., 316Mich. App. 480, 488, 892 N.W.2d467 (2016) (quotation marks andcitations omitted).]

With respect to the Covenant issue raised by defendantregarding the claims of the medical providers, review isproper under MCR 2.116(C)(8). See Bronson HealthcareGroup, ––– Mich. App. at ––––; slip op. at 2. Althoughdefendant moved for summary disposition under MCR2.116(C)(10), a party's failure to cite the correct subruleis not fatal if the record supports review under theproper subrule. Wells Fargo Bank, NA v. Null, 304 Mich.App. 508, 517, 847 N.W.2d 657 (2014). Also, affirmanceof summary disposition for defendant on the basis ofCovenant with respect to the medical providers' claimsis not precluded merely because the trial court grantedsummary disposition to defendant on other grounds.“When this Court concludes that a trial court has reachedthe correct result, this Court will affirm even if it doesso under alternative reasoning.” Messenger v. Ingham Co.Prosecutor, 232 Mich. App. 633, 643, 591 N.W.2d 393(1998).

Summary disposition is proper under MCR 2.116(C)(8) if the nonmoving party “has failed to state a

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claim on which relief can be granted.” Such claimsmust be so clearly unenforceable as a matter of lawthat no factual development could possibly justifyrecovery. In reviewing the outcome of a motion underMCR 2.116(C)(8), we consider the pleadings alone. Weaccept the factual allegations in the complaint as trueand construe them in a light most favorable to thenonmoving party. [Kuznar v. Raksha Corp., 481 Mich.169, 176, 750 N.W.2d 121 (2008) (some quotationsmarks and citations omitted).]

A trial court's decision regarding a motion forreconsideration is reviewed for an abuse of discretion. St.John Macomb–Oakland Hosp. v. State Farm Mut. Auto.Ins. Co., 318 Mich. App. 256, 261, 896 N.W.2d 85 (2016).A trial court abuses its discretion when its decision fallsoutside the range of reasonable and principled outcomes.Id.

*3 The interpretation of an insurance policy presentsa question of law that is reviewed de novo. Danceyv. Travelers Prop. Cas. Co., 288 Mich. App. 1, 7, 792N.W.2d 372 (2010). “Because insurance policies arecontractual agreements, they are subject to the samerules of contract interpretation that apply to contracts ingeneral.” Sherman–Nadiv v. Farm Bureau Gen. Ins. Co. ofMich., 282 Mich. App. 75, 78, 761 N.W.2d 872 (2008).Unambiguous language must be enforced as written.Century Surety Co. v. Charron, 230 Mich. App. 79, 82–83, 583 N.W.2d 486 (1998). A court must “give effectto every word, phrase, and clause in a contract andavoid an interpretation that would render any part of thecontract surplusage or nugatory.” Klapp v. United Ins.Group Agency, Inc., 468 Mich. 459, 468, 663 N.W.2d 447(2003).

We agree with defendant's argument that the interveningmedical providers' claims are barred by Covenant.Therefore, summary disposition in favor of defendantwith respect to the medical providers' claims is properunder MCR 2.116(C)(8).

In Covenant, 500 Mich. at 195–196, 217–218, 895 N.W.2d490, our Supreme Court held that healthcare providerslack an independent statutory cause of action againstno-fault insurers to recover personal injury protectionbenefits. The holding in Covenant applies retroactivelyto cases that were pending on direct appeal whenCovenant was decided. Bronson Healthcare Group, –––

Mich. App. at ––––; slip op. at 2, citing W A FooteMem Hosp, 321 Mich. App. at 196, 909 N.W.2d 38.The present case was pending on direct appeal whenCovenant was decided. Hence, the holding in Covenantis applicable, and the intervening medical providers inthis case lack an independent statutory claim againstdefendant. Defendant is thus entitled to summarydisposition pursuant to MCR 2.116(C)(8) with respectto the intervening medical providers' claims becausethe intervening medical providers have no independentstatutory cause of action against defendant. See BronsonHealthcare Group, ––– Mich. App. at ––––; slip op. at 2.

On remand, however, the intervening medical providersshall be afforded an opportunity to amend theircomplaints to assert claims premised on an assignmentof benefits theory. In Covenant, 500 Mich. at 217 n40, 895 N.W.2d 490, our Supreme Court recognizedthat an insured may “assign his or her right to pastor presently due benefits to a healthcare provider.”Therefore, in holding that a defendant was entitled tosummary disposition under Covenant, this Court hasallowed a healthcare provider to file a motion to amendits complaint to assert a claim under an assignment ofbenefits theory. See Bronson Healthcare Group, ––– Mich.App. at ––––; slip op. at 3, citing W A Foote MemHosp, 321 Mich. App. at 196, 909 N.W.2d 38. Such anopportunity should be afforded here because Covenanthad not yet been issued when this case was litigated belowand the intervening medical providers thus were unawarethat they did not possess an independent statutory cause ofaction. Defendant argues that such an opportunity shouldnot be afforded because the insurance policy in this caseprecludes an assignment of benefits without defendant'sconsent and because any claim premised on an assignmentof benefits theory would be barred by the one-year-backrule of MCL 500.3145(1). It is premature to address thoseissues because they have not yet been litigated below. It isunknown at this time whether any assignment of benefitshas occurred or will be asserted by the intervening medicalproviders as a theory of liability against defendant. Ifthey do assert claims under an assignment of benefitstheory, the intervening medical providers should at leasthave an opportunity on remand to present any argumentsconcerning the applicability or enforceability of the policyprovision that defendant claims bars such an assignmentwithout its consent and concerning the applicability of

the one-year-back rule in this situation. 1 Accordingly, theintervening medical providers on remand shall be allowed

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to amend their complaints to assert an assignment ofbenefits theory.

*4 Next, we agree with plaintiff and the interveningmedical providers that the trial court erred in grantingsummary disposition to defendant pursuant to MCR2.116(C)(10) because a genuine issue of material fact existsconcerning whether plaintiff engaged in fraud. The no-fault policy issued by defendant to plaintiff contained thefollowing provision:

C. Fraud or Concealment

The entire policy will be void if, whether before or aftera loss, you, any family member, or any insured underthis policy has:

1. intentionally concealed or misrepresented anymaterial fact or circumstance;

2. engaged in fraudulent conduct; or

3. made false statements;

relating to this insurance or to a loss to which thisinsurance applies.

This Court has explicated the elements for establishingfraud in this context as follows:

To void a policy because theinsured has willfully misrepresenteda material fact, an insurer must showthat (1) the misrepresentation wasmaterial, (2) that it was false, (3)that the insured knew that it wasfalse at the time it was made orthat it was made recklessly, withoutany knowledge of its truth, and (4)that the insured made the materialmisrepresentation with the intentionthat the insurer would act uponit. A statement is material if it isreasonably relevant to the insurer'sinvestigation of a claim. [Bahri v.IDS Prop. Cas. Ins. Co., 308 Mich.App. 420, 424–425, 864 N.W.2d 609(2014) (citation omitted).]

If the fraud exclusion bars plaintiff from recoveringbenefits, then it also bars recovery by the interveningmedical providers because they stand in plaintiff's shoesin this case. See id. at 424, 864 N.W.2d 609 (“Becauseintervening plaintiffs stood in the shoes of the namedinsured, if plaintiff cannot recover benefits, neithercan intervening plaintiffs.”). Further, this Court hasexplained:

Reliance on an exclusionary clausein an insurance policy is anaffirmative defense; therefore, [theinsurer] has the burden of proof.An insurance company has theburden to prove that one of thepolicy's exclusions applies. Thus,to obtain summary disposition, theinsurer must show that there is noquestion of material fact as to anyof the elements of its affirmativedefense. [Shelton v. Auto–OwnersIns. Co., 318 Mich. App. 648, 657,899 N.W.2d 744 (2017) (quotationmarks and citation omitted).]

When fraud is asserted as an affirmative defense, thedefendant must demonstrate fraud by a preponderanceof the evidence. See Stein v. Home–Owners Ins. Co., 303Mich. App. 382, 387–391, 843 N.W.2d 780 (2013); Minav. Gen. Star Indemnity Co., 218 Mich. App. 678, 685, 555N.W.2d 1 (1996), rev'd in part on other grounds 455 Mich.866, 568 N.W.2d 80 (1997).

In granting summary disposition to defendant on thefraud issue, the trial court stated:

Well the Plaintiff here is making a claim, No. 1 he'sgetting, the insurance company is paying for him tohave a rental car for the month of July.

Then at the same time he's making claims for areplacement service, somebody to drive him around andhe's up north driving around in the rental car.

So that's enough fraud under [Bahri], the motion isgranted.

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The trial court's reasoning is flawed. The fact that plaintiffobtained rental car coverage on his policy and used thatcoverage after his accident does not establish that hecommitted fraud by claiming replacement services thatincluded driving services during that time period. Whetherplaintiff was disabled had nothing to do with his use of hisrental car coverage. Further, the fact that plaintiff drove toBaldwin on July 26, 2017, to sign a lease for an apartment,and then drove back to his apartment in Farmington Hillsthe next day, while also claiming replacement serviceswere performed by Chris Ridgell on those dates, includingdriving services by Ridgell on July 27, 2017, does notestablish fraud as a matter of law.

*5 On July 24, 2014, plaintiff's physician, Dr. NazihIskander, signed a disability certificate indicating thatplaintiff needed household or replacement services andattendant care and that he was disabled from driving, allfor the period of July 24, 2014 through August 24, 2014.The fact that plaintiff drove during a period in whichhis doctor instructed him not to drive could mean thatplaintiff was not disabled or as injured as he claimedto be, or it could mean that plaintiff simply disobeyedhis doctor's instruction not to drive because he wantedto sign the apartment lease in Baldwin and had no oneelse to drive him there. It is also reasonable to infer thatplaintiff could have needed replacement services on thesame dates that he drove to and from Baldwin becauseplaintiff was not in Baldwin for the entire day on either ofthose dates, Ridgell could have performed some serviceswhile plaintiff was not present, and plaintiff could haveexperienced greater pain or exhaustion after returning

home from a long drive on July 27, 2017. 2 A reasonabletrier of fact could infer that plaintiff was engaging infraud, but for the reasons stated, a reasonable inferencealso exists that plaintiff did not engage in fraud. “Thetrial court is not permitted to assess credibility, weighthe evidence, or resolve factual disputes” when decidingwhether to grant summary disposition pursuant to MCR2.116(C)(10). Pioneer State Mut. Ins. Co. v. Dells, 301Mich. App. 368, 377, 836 N.W.2d 257 (2013).

Defendant also suggests that City Xpress engaged infraud because it submitted an invoice for transportingplaintiff to Dr. Iskander's office on July 23, 2014, butplaintiff's first appointment with Dr. Iskander was on July24, 2014. Defendant apparently infers that plaintiff's firstappointment with Dr. Iskander was on July 24, 2014,because that was the date on which Dr. Iskander signed

the first disability certificate. Even assuming that plaintiffdid not see Dr. Iskander until July 24, 2014, defendanthas not demonstrated as a matter of law that City Xpresscommitted fraud; the evidence on this record does notrule out innocent explanations for why City Xpress hassubmitted an invoice for transporting plaintiff to Dr.Iskander's office on July 23, 2014, such as that plaintiffhad to go the office to fill out forms or that he hadan appointment that was rescheduled. Defendant fails toaddress these possible explanations or to establish thatthere is no genuine issue of material fact on the issue offraud.

*6 Defendant further suggests that plaintiff's purchaseof a Yukon Denali in September 2014 demonstrates fraudas a matter of law because City Xpress claims to haveprovided medical transportation to plaintiff from July23, 2014, through November 28, 2014. According todefendant, plaintiff's use of the rental car in July 2014 andhis purchase of the Denali demonstrate that he did notneed medical transportation. Plaintiff testified that he hasnot yet driven the Denali; rather, his mother and Ridgellused the vehicle to take plaintiff to his appointments.Defendant fails to address the possibility that plaintiffsometimes used medical transportation companies such asCity Xpress to attend his medical appointments and atother times was driven to appointments by his mother or

Ridgell. 3 A genuine issue of material fact exists regardingwhether plaintiff committed fraud on this point.

On appeal, defendant does not appear to rely on plaintiff'spurported fraud in submitting a claim for damage tothe rental vehicle arising from an alleged hail stormon July 27, 2014, nor did the trial court cite this as areason for granting summary disposition to defendant.In any event, the evidence submitted in connection withthe summary disposition motion does not establish asa matter of law that defendant engaged in fraud withrespect to the damage to the rental vehicle. Althoughdefendant attached to its summary disposition motiondefendant's letters indicating that it had prospectivelycanceled plaintiff's no-fault policy effective on October 6,2014, on the ground that plaintiff had engaged in fraudwith respect to the claim that a hail storm had caused thedamage to the rented vehicle, defendant did not attachany report or documentation regarding its investigator'sconclusion that the damage to the rental vehicle wasmechanically induced rather than caused by hail. Plaintifftestified in his deposition that he encountered a hail storm

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on his way back from Baldwin on July 27, 2014, and thehail storm “messed the rental [car] up ....” At the very least,a genuine issue of material fact exists concerning whetherthe rental vehicle was damaged by a hail storm as plaintiffclaims or whether the claim of damage arising from a hailstorm was instead fraudulent.

Accordingly, a genuine issue of material fact existsconcerning whether plaintiff engaged in fraud. The trialcourt thus erred in granting summary disposition todefendant under MCR 2.116(C)(10).

Plaintiff and the intervening medical providers also arguethat the trial court erred in granting defendant's motionfor reconsideration of the trial court's earlier orderdenying defendant's motion for summary disposition onthe basis of fraud. MCR 2.119(F)(3) provides:

Generally, and without restrictingthe discretion of the court, a motionfor rehearing or reconsiderationwhich merely presents the sameissues ruled on by the court,either expressly or by reasonableimplication, will not be granted. Themoving party must demonstrate apalpable error by which the courtand the parties have been misledand show that a different dispositionof the motion must result fromcorrection of the error.

The language of the above court rule plainly indicatesthat the trial court's discretion is not restricted by thecriteria set forth in the rule. As this Court has explained,MCR 2.119(F)(3) “does not categorically prevent a trialcourt from revisiting an issue even when the motionfor reconsideration presents the same issues alreadyruled on; in fact, it allows considerable discretion tocorrect mistakes.” Macomb Co. Dep't of Human Servs.v. Anderson, 304 Mich. App. 750, 754, 849 N.W.2d 408(2014). See also Mich. Bank–Midwest v. D.J. Reynaert,Inc., 165 Mich. App. 630, 646, 419 N.W.2d 439 (1988)(“The court rule does not prevent a court's exercise ofdiscretion on when to give a party a ‘second chance’on a motion it has previously denied.”). Here, the trialcourt's decision to revisit its prior summary dispositiondetermination did not fall outside the range of reasonableand principled outcomes, but as discussed, the trial court'sultimate determination on reconsideration that defendantwas entitled to summary disposition under MCR 2.116(C)(10) was nonetheless erroneous. In other words, it wasnot unreasonable or unprincipled for the trial courtto grant reconsideration, but its ultimate decision onthe summary disposition motion was erroneous for thereasons explained above.

*7 Affirmed in part (on alternative grounds), reversedin part, and remanded for further proceedings consistentwith this opinion. We do not retain jurisdiction.

All Citations


Footnotes1 This Court has recently held that an anti-assignment clause in a no-fault policy is unenforceable to prohibit an assignment

that occurred after the loss or the accrual of the claim to payment “because such a prohibition of assignment violatesMichigan public policy that is part of our common law as set forth by our Supreme Court.” Jawad A. Shah, MD, PC v.State Farm Mut. Auto. Ins. Co., ––– Mich. App. ––––, ––––; ––– N.W.2d –––– (2018) (Docket No. 340370); slip op. at 9,citing Roger Williams Ins. Co. v. Carrington, 43 Mich. 252, 254, 5 N.W. 303 (1880), and Rory v. Continental Ins. Co., 473Mich. 457, 469–471, 703 N.W.2d 23 (2005). See also Jawad A Shah, MD, PC, ––– Mich. App. at ––––; slip op. at 10–12 (discussing the application of the one-year-back rule in this context). Because the application of the one-year-backrule has not yet been litigated below, it is not discussed further.

2 Indeed, those are the very explanations given by plaintiff and Ridgell in their November 23, 2016 affidavits attached toplaintiff's motion for reconsideration. Moreover, in his deposition, the transcript of which is attached to MIPH's motion forreconsideration, defendant's adjuster, Lawrence Clark, acknowledged that a person's pain could subside for part of aday if the person was on pain medication and that Clark himself has disobeyed a doctor's order. Clark also recognizedthat an insured may use various means of transportation to a medical appointment regardless of whether the insured isdisabled. Clark further acknowledged that the disability certificate could be interpreted as meaning that plaintiff should

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not drive or that it is recommended that he not drive so as not to aggravate his injuries, rather than that he is physicallyunable to drive. We do not rely on the affidavits of plaintiff and Ridgell or the deposition of Clark in analyzing this issuebecause those items were not submitted until plaintiff and MIPH moved for reconsideration and thus were not before thetrial court when it granted summary disposition to defendant. This Court may “only consider what was properly presentedto the trial court before its decision on the motion.” Pena v. Ingham Co. Road Comm., 255 Mich. App. 299, 310, 660N.W.2d 351 (2003); see also Gorman v. American Honda Motor Co., Inc., 302 Mich. App. 113, 120, 839 N.W.2d 223(2013) (noting that “appellate review of the trial court's decision is limited to the evidence that had been presented at thetime the motion was decided.”); Innovative Adult Foster Care, Inc. v. Ragin, 285 Mich. App. 466, 474 n 6, 776 N.W.2d398 (2009) (declining to consider on appeal evidence that was first presented in support of a motion for reconsideration).Rather than rely on these documents, we have simply reasoned from the evidence presented at the time of the trialcourt's decision on the summary disposition motion that defendant, who has the burden of proof on the fraud defense,Shelton, 318 Mich. App. at 657, 899 N.W.2d 744, has failed to demonstrate that there is no genuine issue of materialfact concerning whether plaintiff engaged in fraud.

3 The replacement service forms completed by Ridgell refer to driving services on various dates without specifying theplace to which Ridgell drove plaintiff on each date; it is thus not possible from the existing record to determine whetherRidgell purported to have driven plaintiff to the same medical appointments to which City Xpress claimed in its invoicesto have driven plaintiff. The existing record thus does not demonstrate fraud on this point as a matter of law.


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Somerset Pain Clinic, PC v. Esurance Insurance Company, Not Reported in N.W. Rptr....

2018 WL 6579122





SOMERSET PAIN CLINIC, PC, Plaintiff-Appellant,v.

ESURANCE INSURANCECOMPANY, Defendant-Appellee.

No. 341562|

December 13, 2018

Wayne Circuit Court, LC No. 17-005042-NF

Before: M.J. Kelly, P.J., and Meter and O'Brien, JJ.

Opinion

Per Curiam.

*1 In this action seeking recovery of personal injuryprotection (PIP) benefits under the no-fault act, MCL500.3101 et seq., plaintiff, Somerset Pain Clinic, PC,appeals as of right the trial court's order granting summarydisposition to defendant, Esurance Insurance Company,and denying plaintiff's motion for leave to amend itscomplaint. We reverse.

The facts of this case are undisputed. Choka Johnsonincurred injuries in an automobile accident that occurredon May 12, 2008. Plaintiff, “a provider of medical,therapeutic and rehabilitative services,” rendered variousmedical services to Johnson for the injuries she sustainedin the accident. Defendant, Johnson's automobile insurer,failed to reimburse plaintiff for these services. Plaintifffiled this action on March 30, 2017, alleging thatdefendant violated its statutory duty under the no-fault actto reimburse plaintiff for the services rendered to Johnson.

On May 25, 2017, the Michigan Supreme Court decidedCovenant Med. Ctr., Inc. v. State Farm Mut. Auto Ins.Co., 500 Mich. 191; 895 N.W.2d 490 (2017), and held thathealthcare providers have no statutory cause of actionagainst a no-fault insurer. Id. at 217-218. On June 8,

2017, Johnson assigned to plaintiff “all rights regardingbreach of contract for payment for medical treatment,services and products provided by [plaintiff] to [her].”Plaintiff filed an amended complaint on June 14, 2017; thisamended complaint set forth Johnson's assignment.

On September 14, 2017, defendant moved for summarydisposition, arguing that (1) plaintiff did not timely fileits amended complaint and filed it without the trialcourt's permission; (2) under Covenant, plaintiff could notsustain a statutory cause of action against defendant, ano-fault insurer, for PIP benefits; (3) if the trial courtallowed the amendment as a supplemental pleading, thenall benefits Johnson received before June 14, 2016, werebarred by the one-year-back rule, MCL 500.3145(1); and(4) anti-assignment language in the insurance contractbarred plaintiff's claim based on the assignment fromJohnson. Plaintiff subsequently filed a motion regardingthe amendment of the complaint. On December 4, 2017,the trial court, relying on the anti-assignment language,granted defendant's motion for summary disposition anddenied, as futile, plaintiff's motion for leave to amend itspleading.

A trial court's decision on a motion for summarydisposition is reviewed de novo, as are decisionsconcerning the “construction and application of courtrules.” Dextrom v. Wexford Co., 287 Mich. App. 406,416; 789 N.W.2d 211 (2010). A trial court's decision ona motion to amend pleadings is reviewed for an abuse ofdiscretion. Jawad A. Shah, MD, PC v. State Farm Mut.Auto Ins. Co., 324 Mich. App. 182, 208; ––– N.W.2d–––– (2018). A trial court abuses its discretion when itsdecision is “outside the range of reasonable and principledoutcomes.” Id. (citation and quotation marks omitted).

A healthcare provider does not have a statutory cause ofaction against a no-fault insurer. Covenant, 500 Mich. at

217-218. 1 Rather, the healthcare provider must recovercosts directly from “the person to whom services wereprovided.” Id. at 218. However, nothing in Covenant“alter[s] an insured's ability to assign his or her right topast or presently due benefits to a healthcare provider.”Id. at 217 n. 40.

*2 Contract-construction rules apply to insurancepolicies:

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We hold, first, that insurancepolicies are subject to the samecontract construction principles thatapply to any other species ofcontract. Second, unless a contractprovision violates law or one ofthe traditional defenses to theenforceability of a contract applies,a court must construe and applyunambiguous contract provisions aswritten. [Rory v. Continental Ins.Co., 473 Mich. 457, 461; 703 N.W.2d23 (2005), implied overruling onother grounds recognized in W.A. Foote Mem. Hosp. v. MichiganAssigned Claims Plan, 321 Mich.App. 159, 183-184; 909 N.W.2d 38(2017).]

Generally, assignments are permitted unless the contractclearly states otherwise. Shah, 324 Mich. App. at197. However, an otherwise clear and unambiguouscontractual provision is unenforceable if the provisionviolates law or public policy. Id. at 197.

In Shah, id. at 200, this Court held that an anti-assignment clause in an insurance policy contract wasunenforceable because it violated Michigan public policy.George Hensley had been injured in an automobileaccident on November 30, 2014, and the defendant was hisinsurer. Id. at 186. The plaintiffs provided medical servicesto Hensley and submitted costs to the defendant. Id. Thedefendant refused to pay. Id. The plaintiffs submittedtheir original complaint on February 24, 2017, against thedefendant, and the Supreme Court subsequently decidedCovenant on May 25, 2017. Id. “Apparently anticipatingdefendant's motion [for summary disposition], plaintiffs ...obtained an assignment of rights from Hensley on July11, 2017, to pursue payment of no-fault benefits forhealthcare services ‘already provided’ by plaintiffs.” Id. at187-188.

The Shah Court held that “the antiassignment clausein the instant case is unenforceable to prohibit theassignment that occurred here—an assignment after theloss occurred of any accrued claim to payment—because

such a prohibition of assignment violates Michigan publicpolicy[.]” Id. at 200.

Applying Shah to the remarkably similar facts ofthe present case, the anti-assignment provision wasunenforceable because of public policy. Johnson hadan accrued claim against defendant, her insurer, for“payment of health care services that had alreadybeen provided by plaintiff[ ].” Id. This accrued claimagainst defendant existed “before [Johnson] executed theassignment.” Id. (emphasis added). Therefore, Johnsonwas free to assign this claim to plaintiff, despite the anti-assignment provision.

The plaintiffs in Shah received their assignment on July11, 2017. Id. at 204. However, they argued that theiramendment, which added the assignment claim, shouldhave related back to the date of the initial complaint,i.e., February 24, 2017. Id. at 189. This Court disagreed,holding that

plaintiffs did not obtain the rightto pursue no-fault benefits for anyportion of the loss incurred morethan one year before July 11, 2017,because that is the pertinent pointof reference for purposes of theone-year-back rule. A supplementalpleading predicated on the July 11,2017 assignments could not relateback to the date of the originalpleading. [Id. at 205.]

*3 In reaching this conclusion, this Court held that theplaintiffs had in actuality filed a supplemental pleadingand not an amended pleading:

Had Hensley filed an action directlyagainst defendant on July 11, 2017,he would not have been permittedto recover any benefits beyond theportion of the loss incurred oneyear before that date. Accordingly,plaintiffs also could not obtainany right to recover benefits forlosses incurred more than one year

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before July 11, 2017, through anassignment of rights from Hensley.Furthermore, the procurement ofthe assignments was an event thatoccurred after the filing of theoriginal complaint and provided theonly means by which plaintiffs couldhave standing to maintain a directaction against defendant insurer forrecovery of no-fault benefits in thiscase. [Id. at 204 (citations omitted).]

Therefore,

[b]ecause plaintiffs actually soughtto file a supplemental pleading, itcould not relate back to the date ofthe original pleading. Through theassignment, plaintiffs only obtainedthe rights Hensley actually held atthe time of the execution of theassignment, and plaintiffs cannotrely on the relation-back doctrine toessentially gain the potential for agreater right to recovery than theyactually received. [Id. at 205-206(citations omitted).]

Accordingly, Shah instructs that plaintiff sought inactuality to file a supplemental pleading. Plaintiffobtained the assignment from Johnson on June 8, 2017,which was after its original complaint was filed on March30, 2017. Covenant barred plaintiff's direct cause of actionagainst defendant. Consequently, plaintiff's “procurementof the assignment[ ] was an event that occurred afterthe filing of [its] original complaint and provided theonly means by which plaintiff[ ] could have standing tomaintain a direct action against defendant insurer forrecovery of no-fault benefits in this case.” Id. at 204(emphasis added). Therefore, plaintiff cannot “obtain anyright to recover benefits for losses incurred more than oneyear before” June 8, 2017.” Id.

The trial court, however, did not allow the supplementalpleading in the first instance because it found that the anti-assignment clause rendered it futile. Given our conclusionthat the clause did not in fact bar the claim, the trial courtmust reconsider the issue of the supplemental pleading. Id.at 207-209.

We reverse the trial court's decision and remand forfurther proceedings consistent with this opinion. We donot retain jurisdiction.

All Citations


Footnotes1 Covenant applies retroactively. W. A. Foote Mem. Hosp. v. Mich. Assigned Claims Plan, 321 Mich. App. 159, 196; 909

N.W.2d 38 (2017).


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VHS of Michigan, Inc. v. Farm Bureau Mutual Insurance..., Not Reported in N.W....

2018 WL 6185314





VHS OF MICHIGAN, INC., Doing Business asDetroit Medical Center, Plaintiff-Appellant,

v.FARM BUREAU MUTUAL INSURANCE

COMPANY OF MICHIGAN, Defendant-Appellee.

No. 341176|

November 27, 2018


Before: O'Brien, P.J., and Tukel and Letica, JJ.

Opinion

Per Curiam.

*1 Plaintiff appeals as of right an order grantingdefendant's motion for summary disposition, arguing thatthe trial court erred because plaintiff obtained valid andenforceable assignments from its patient, Tiana Bailey.Plaintiff also argues that the trial court erred by failingto address plaintiff's request for leave to file an amendedcomplaint because the requested amendment did notintroduce new substantive information and would haveonly clarified “the basis of its standing due to a recentand unexpected change in the law that occurred during thecourse of litigation.” We affirm.

Defendant moved for summary disposition pursuant toMCR 2.116(C)(8) and (10). In ruling on the motion,the trial court considered material outside the pleadings,which is improper when considering a motion under MCR2.116(C)(8). Jawad A. Shah, MD, PC v. State Farm Mut.Auto. Ins. Co., ––– Mich. App. ––––, ––––; ––– N.W.2d–––– (2018) (Docket No. 340370); slip op. at 11-12. Theforms upon which plaintiff relied to argue that it hadobtained valid and enforceable assignments were attachedto its emergency supplemental response to defendant'smotion for summary disposition, but were not attached or

referred to in a pleading. Accordingly, “this Court musttreat the trial court's decision with respect to Subrule (C)(8) as though it were made only pursuant to Subrule (C)(10).” Van Buren Charter Twp. v. Visteon Corp., 319 Mich.App. 538, 544, 904 N.W.2d 192 (2017).

This Court reviews a trial court's decision on a motionfor summary disposition de novo. Johnson v. Recca, 492Mich. 169, 173, 821 N.W.2d 520 (2012). A motion forsummary disposition under MCR 2.116(C)(10) shouldbe granted if the evidence submitted by the parties failsto establish a genuine issue of a material fact, and themoving party is entitled to judgment as a matter of law.Innovation Ventures v. Liquid Mfg., 499 Mich. 491, 507,885 N.W.2d 861 (2016). A genuine issue of material factexists if, after viewing the record in a light most favorableto the nonmoving party, reasonable minds could differon an issue. West v. Gen. Motors Corp., 469 Mich. 177,183, 665 N.W.2d 468 (2003). In evaluating a motion underMCR 2.116(C)(10), the trial court considers affidavits,pleadings, depositions, and other evidence that the partiessubmitted. Innovation Ventures, 499 Mich. at 507, 885N.W.2d 861.

Plaintiff argues that the trial court erroneously granteddefendant's motion for summary disposition because itobtained valid and enforceable assignments from Baileyand, therefore, had standing to directly sue defendant. Wedisagree.

Shortly after plaintiff initiated this action, our SupremeCourt decided Covenant Med. Ctr., Inc. v. State Farm Mut.Auto. Ins. Co., 500 Mich. 191, 195-196, 895 N.W.2d 490(2017), which held that healthcare providers do not havean independent statutory cause of action against no-faultinsurers for the recovery of personal injury protectionbenefits under the no-fault act, MCL 500.3101 et seq. Thisrule applies retroactively, Jawad A. Shah, MD, ––– Mich.App. at ––––; slip op. at 6, but does not alter an insured'sability to “assign his or her right to past or presently duebenefits to a healthcare provider,” Covenant, 500 Mich.at 217 n. 40, 895 N.W.2d 490. Accordingly, a medicalprovider may have standing to bring a claim against aninsurer to recover no-fault benefits by obtaining a validand enforceable assignment of rights from the injuredperson. Id.

*2 Here, plaintiff did not obtain an assignment fromBailey in response to defendant's motion for summary

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disposition and instead relied upon four forms that Baileyexecuted at or around the time she received treatment.Plaintiff contends that these forms constitute validand enforceable assignments such that it has standingto pursue a direct cause of action against defendant.Michigan case law has not specifically articulated whatelements are necessary to create an assignment. Burkhardtv. Bailey, 260 Mich. App. 636, 654, 680 N.W.2d 453(2004). Generally, “ ‘there must be a perfected transactionbetween the parties which is intended to vest in theassignee a present right in the thing assigned.’ ” Id.,quoting Weston v. Dowty, 163 Mich. App. 238, 242,414 N.W.2d 165 (1987). Even a poorly-drafted writteninstrument can constitute a valid assignment so long asthe assignor's intent to presently transfer “the thing” tothe assignee is clearly reflected. Burkhardt, 260 Mich. App.at 654-655, 680 N.W.2d 453 (quotation marks omitted),citing Hovey v. Grand Trunk Western R. Co., 135 Mich.147, 149, 97 N.W. 398 (1903). However, under MCL500.3143, an assignment of benefits payable in the futureis void, but an assignment for past or presently duebenefits is not. Prof. Rehab. Assoc. v. State Farm Mut.Auto. Ins. Co., 228 Mich. App. 167, 172; 577 N.W.2d 909(1998), citing MCL 500.3143 (“Under the plain languageof the statute, ‘a right to benefits payable in the future’ isdistinguishable from a right to past due or presently duebenefits.”). Therefore, the relevant issue here is whetherthe purported assignments clearly reflect Bailey's presentintent to transfer to plaintiff her right to pursue past orpresently due personal protection insurance benefits fromdefendant. See Burkhardt, 260 Mich. App. at 654-655, 680N.W.2d 453.

Two of the forms relied upon by plaintiff, entitled“OUTPATIENT GENERAL CONSENT FORM,”include a provision providing: “I authorize payment ofmy insurance benefits to be made directly to the doctor.I agree to pay in full any and all charges not covered byinsurance or other benefits. I understand that providersmay bill separately.” The remaining two forms, entitled“DMC GENERAL CONSENT FOR ADMISSIONAND TREATMENT,” include a provision stating, “I

assign and authorize payment to be made directly tothe hospital and/or providers of all healthcare benefitsotherwise payable to me, but not exceeding the chargesfor this period of hospitalization.” Neither of theseprovisions constitute a sufficient assignment for thepurpose of establishing plaintiff's standing in this case.These provisions authorize the direct payment of benefitsto plaintiff as contemplated by MCL 500.3112, seeCovenant, 500 Mich. at 208-209, 895 N.W.2d 490, but donot clearly manifest Bailey's intent to assign to plaintiffher right to pursue benefits by way of litigation. SeeBurkhardt, 260 Mich. App. at 654-655, 680 N.W.2d 453.

Plaintiff also argues that it is has standing because it isan intended third-party beneficiary to a contract betweendefendant and PPOM, LLC (PPOM), an entity that,according to plaintiff, “contracts with various healthcare providers, such as [plaintiff], and various insurer[ ]s,including [defendant], to establish contractual reductionsof a medical provider's charged rate in exchange forprompt payment by the insurer.” Plaintiff's argument isseemingly based on its own contract with PPOM anddefendant's presumed contract with PPOM, but plaintifffails to present any evidence of the latter's existence. Thus,plaintiff's argument has no merit.

Furthermore, because plaintiff has not established itsright to maintain its case against defendant under anassignment or third-party beneficiary theory, the trialcourt did not abuse its discretion by failing to addressplaintiff's request to file an amended complaint, as anysuch amendment would have been futile. PT Today, Inc.v. Comm'r. of Office of Fin. & Ins. Servs., 270 Mich. App.110, 143, 715 N.W.2d 398 (2006) (stating that failureto specify reason for denying leave to amend requiresreversal unless amendment would be futile).

*3 Affirmed. 1

All Citations


Footnotes1 To the extent that plaintiff also argues that the trial court erred by dismissing its case based upon a discovery violation

—specifically, Bailey's failure to appear at several independent medical examinations and an examination under oath—plaintiff misconstrues the basis for the trial court's ruling. While the court referenced Bailey's lack of cooperation ininvestigating the claim and implied that recovery would be “difficult” without her participation, it premised dismissal of

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plaintiff's complaint on the insufficiency of the purported assignments and plaintiff's failure to adequately support its third-party beneficiary theory.


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Attendant Care Companies v. Farm Bureau General..., Not Reported in N.W....

2018 WL 6252058





ATTENDANT CARE COMPANIES, AttendantCare Services of Michigan, Progressions,

LLC, Progressions of SIL, and Caring HandsHome Care Services, LLC, Plaintiffs-Appellees,

v.FARM BUREAU GENERAL INSURANCE

COMPANY OF MICHIGAN, Defendant-Appellant.

No. 340205|

November 29, 2018

Macomb Circuit Court LC, No. 2016-002115-NF

Before: Jansen, P.J., and K. F. Kelly and Borrello, JJ.

Opinion

Per Curiam.

*1 In this suit under the no-fault act, MCL 500.3101et seq., seeking the recovery of personal protectioninsurance benefits for medical care provided to the injured

insured, defendant appeals by leave granted 1 the trialcourt's order denying defendant's motion for summarydisposition without prejudice. For the reasons set forthin this opinion, we reverse and remand this matter forentry of an order granting summary disposition in favorof defendant.

I. BACKGROUND

On April 3, 2015, Milad Ishaq was involved in anautomobile accident and suffered injuries that includeda severe traumatic brain injury (TBI), resulting in asubsequent determination that he needed 24 hour, one-to-one care. Ishaq was a named insured on a policy ofinsurance issued by defendant.

Ishaq was admitted to the Estates of Rochester, a group

home facility operated by plaintiff, 2 on approximatelyJune 18 or 19, 2015. On approximately July 6 or 7,2015, Ishaq was moved to plaintiff's Semi-IndependentLiving Program, where he continued to receive “twenty-four hour direct, one-on-one supervision both at homein his apartment and out in the community.” Ishaq wasdischarged from the Semi-Independent Living Programon November 27, 2015, and he was placed in anotherfacility that apparently is not owned by plaintiff.

Defendant denied requests for payment submitted byplaintiff. It is unclear from the documentary evidencesubmitted by the parties in the trial court exactly whichbills were denied or which charges plaintiff was specificallyclaiming were wrongfully denied, but the one denial lettersubmitted by plaintiff referred to invoices “regarding Mr.Ishaq's apartment.” It appears that defendant paid someof the charges billed by plaintiff, although the natureof the services paid for is also unclear from the record.Regardless of this lack of clarity about the nature andamount of the disputed charges, it appears from the recordevidence that plaintiff provided services to Ishaq fromapproximately June 18, 2015 to November 27, 2015. Theparties do not dispute that this was the period of timeduring which charges at issue were incurred.

On June 15, 2016, plaintiff initiated this action, filing acomplaint against defendant that sought payment of no-fault benefits that plaintiff alleged were owed by defendantbased on goods and services that plaintiff provided toIshaq related to his medical care, attendant care, andmedical transportation expenses.

On May 25, 2017, as the instant litigation was progressing,our Supreme Court issued its opinion in Covenant Med.Ctr., Inc. v. State Farm Mut. Auto Ins. Co., 500 Mich.191, 895 N.W.2d 490 (2017). In Covenant, our SupremeCourt held that “healthcare providers do not possess astatutory cause of action against no-fault insurers forrecovery of personal protection insurance benefits underthe no-fault act.” Id. at 196, 895 N.W.2d 490. Accordingly,healthcare providers do not have independent standing tosue no-fault insurers directly to recover these benefits. Id.at 195-196, 895 N.W.2d 490. However, the Court clarifiedthat its conclusion was “not intended to alter an insured'sability to assign his or her right to past or presently duebenefits to a healthcare provider.” Id. at 217, 895 N.W.2d490 n 40.

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*2 On May 30, 2017, plaintiff obtained an executedassignment of Ishaq's rights “to payment for healthcare services, products or accommodations” provided byplaintiff to which Ishaq was entitled under the no-faultact from any insurer. The assignment further providedthat the agreement was “not an assignment of a right tobenefits payable in the future, but an assignment of a rightto benefits payable as loss accrues and with respect toservices already provided; in other words, this assignmentaffects only those services provided prior to its execution.”The assignment was signed by Ishaq's guardian. Plaintiffalso apparently obtained another assignment of Ishaq'srights that was dated July 19, 2017.

Defendant moved for summary disposition under MCR2.116(C)(5), (8), and (10), arguing as relevant to theissues now on appeal, that plaintiff lacked standing underCovenant to sue defendant directly and that plaintiffshould not be allowed to amend its pleadings to rely on anassignment of rights from Ishaq because doing so wouldbe futile. More specifically with respect to the futility of anamendment, defendant argued that the one-year-back rulein MCL 500.3145(1) would bar the recovery of benefitsfor care provided from June 18, 2015 to November 27,2015, if the lawsuit were maintained on basis of the May30, 2017 assignment of rights because an assignee cannotobtain greater rights than those held by the assignor onthe date of the assignment.

Plaintiff argued in response that the instant lawsuit wasnot barred by the holding in Covenant because Covenantspecifically preserved the ability of medical providers topursue recovery from an insurer based on an insured'sassignment of rights to the medical provider, and plaintiffobtained a valid assignment of rights from Ishaq thatallowed its lawsuit against defendant to proceed. Plaintifffurther argued that this assignment of Ishaq's claim forpayment from defendant was not prohibited by the anti-assignment clause and that amendment of the complaintshould be permitted to reflect plaintiff's assignment-basedtheory of standing. Additionally, plaintiff argued thatCovenant should only be applied prospectively.

The trial court denied defendant's motion for summarydisposition and granted plaintiff's motion to amend itscomplaint.

This Court granted defendant's application for leaveto appeal, “limited to the following issues: (1) whetherplaintiffs' claims are barred by Covenant Med. Ctr. Inc.v. State Farm Mut. Auto Ins. Co., [500] Mich. [191], 895N.W.2d 490 (2017); and (2) whether plaintiffs' proposedamendment based on the assignment of the insuredperson's claims is futile due to the operation of MCL500.3145(1).” Attendant Care Cos. v. Farm Bureau Gen.Ins. Co., unpublished order of the Court of Appeals,entered December 14, 2017 (Docket No. 340205).

II. STANDARD OF REVIEW

This Court reviews a trial court's summary dispositionruling de novo to determine, based on the entire record,whether the moving party is entitled to judgment as amatter of law. Maiden v. Rozwood, 461 Mich. 109, 118,597 N.W.2d 817 (1999). This court also reviews de novo,as a question of law, whether a party has standing to bringan action. Franklin Historic Dist. Study Comm. v. Villageof Franklin, 241 Mich. App. 184, 187, 614 N.W.2d 703(2000). Questions involving the interpretation of statutesand court rules are also reviewed de novo. Sanders v.McLaren-Macomb, 323 Mich. App. 254, 265, 916 N.W.2d305 (2018). Additionally, “[t]his Court will not reversea trial court's decision regarding leave to amend unlessit constituted an abuse of discretion that resulted ininjustice.” PT Today, Inc. v. Comm'r of Office of Fin. &Ins. Servs., 270 Mich. App. 110, 142, 715 N.W.2d 398(2006). “[A]n abuse of discretion occurs only when thetrial court's decision is outside the range of reasonable andprincipled outcomes.” In re Kostin, 278 Mich. App. 47, 51,748 N.W.2d 583 (2008).

*3 Before addressing defendant's substantive argumentson appeal, it is necessary to address plaintiff's argumentthat defendant waived its ability to challenge plaintiff'sstanding. This requires us to determine the propersubrule under which to analyze the trial court's summarydisposition ruling.

Plaintiff argues that defendant's challenge to plaintiff'sstanding should be treated solely as a motion under MCR2.116(C)(5), which provides that summary disposition isproper against a party asserting a claim if that party“lacks the legal capacity to sue.” Plaintiff further arguesthat defendant failed to comply with MCR 2.116(D)(2),which provides in pertinent part that the “grounds listed

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in subrule (C)(5) ... must be raised in a party's responsivepleading[ ] unless the grounds are stated in a motionfiled under this rule prior to the party's first responsivepleading.” Thus, plaintiff contends that defendant waivedits ability to challenge plaintiff's standing pursuant toMCR 2.111(F)(2), which provides in pertinent part that“[a] defense not asserted in the responsive pleading or bymotion as provided by these rules is waived.”

Challenges to a party's standing have been treated asmotions under MCR 2.116(C)(5) by both our SupremeCourt and this Court. See, e.g, Miller v. ChapmanContracting, 477 Mich. 102, 104, 730 N.W.2d 462 (2007)(affirming the trial court's decision “granting defendants'motion for summary disposition pursuant to MCR2.116(C)(5) based on lack of standing”); UAW v. CentralMich. Univ. Trustees, 295 Mich. App. 486, 493-497, 815N.W.2d 132 (2012); Glen Lake-Crystal River WatershedRiparians v. Glen Lake Ass'n., 264 Mich. App. 523, 528,695 N.W.2d 508 (2004). The question of standing has alsobeen addressed in the context of motions under MCR2.116(C)(8), see, e.g., MOSES, Inc v. SEMCOG, 270Mich. App. 401, 411, 716 N.W.2d 278 (2006), and MCR2.116(C)(10), see, e.g., Civic Ass'n. of Hammond LakeEstates v. Hammond Lake Estates No. 3 Lots 126-135, 271Mich. App. 130, 132, 134-136, 721 N.W.2d 801 (2006).

Nonetheless, this Court has also stated that “standing tosue and capacity to sue are two distinct concepts” thatshould not be improperly conflated. Flint Cold Storage v.Dep't. of Treasury, 285 Mich. App. 483, 502, 776 N.W.2d387 (2009), citing Mich. Chiropractic Council v. Comm'rof Fin. & Ins. Servs. Office, 475 Mich. 363, 374 n 25, 716N.W.2d 561 (2006) (opinion by YOUNG, J.), overruledon other grounds by Lansing Sch. Ed. Ass'n. v. Lansing Bd.of Ed., 487 Mich. 349, 352, 371 & n 18, 792 N.W.2d 686(2010). In Mich. Chiropractic Council, Justice YOUNGwrote that “some recent Court of Appeals cases haveerroneously equated standing with capacity to sue for thepurposes of dispositive motions under MCR 2.116(C)(5)”but that “the two concepts are unrelated,” and “[o]urcourts are admonished to avoid conflating the two.” Mich.Chiropractic Council, 475 Mich. at 374 n 25, 716 N.W.2d561 (opinion by YOUNG, J.). Similarly, in Leite v. DowChem Co., 439 Mich. 920, 920, 478 N.W.2d 892 (1992), ourSupreme Court explained that “the real-party-in-interestis not the same as the legal-capacity-to-sue defense”and held that a defense based on the assertion that theplaintiffs “are not and never were persons who possessed

a cause of action against [the defendants]” is “withinMCR 2.116(C)(8) or MCR 2.116(C)(10), depending onthe pleadings or other circumstances of the particularcase.” The real-party-in-interest doctrine is a standingdoctrine. Stillman v. Goldfarb, 172 Mich. App. 231, 237,431 N.W.2d 247 (1988).

*4 The difference between the concepts of legal capacityto sue and standing is illustrated by considering themeanings of these terms of art. “Lack of ‘capacity tosue’ refers to some legal disability, such as infancy ormental incompetency, which deprives a party of the rightto come into court.” Moorhouse v. Ambassador Ins. Co.,Inc., 147 Mich. App. 412, 419 n 1, 383 N.W.2d 219(1985); see also Black's Law Dictionary (10th ed) (defining“capacity” in relevant part as “the satisfaction of a legalqualification, such as legal age or soundness of mind,that determines one's ability to sue or be sued, to enterinto a binding contract, and the like”). “ ‘Capacity tosue’ does not speak to whether the party has a causeof action or not.” Moorhouse, 147 Mich. App. at 419n 1, 383 N.W.2d 219. In contrast, “[t]he purpose of thestanding doctrine is to assess whether a litigant's interestin the issue is sufficient to ensure sincere and vigorousadvocacy.” Lansing Sch. Ed. Ass'n., 487 Mich. at 355,792 N.W.2d 686 (quotation marks and citation omitted).“[T]he standing inquiry focuses on whether a litigant isa proper party to request adjudication of a particularissue and not whether the issue itself is justiciable.” Id.(quotation marks and citation omitted). In other words,the lack of capacity to sue refers to a party's inherentinability to initiate any lawsuit, while standing refers towhether a party who possesses the legal capacity to suehas the requisite interest in the lawsuit to be allowed tomaintain it. Accordingly, the issue of standing is properlyconsidered under MCR 2.116(C)(8) or MCR 2.116(C)(10)rather than MCR 2.116(C)(5). Leite, 439 Mich. at 920, 478N.W.2d 892; Stillman, 172 Mich. App. at 237, 431 N.W.2d247; Moorhouse, 147 Mich. App. at 419 n 1, 383 N.W.2d219.

Furthermore, although MCR 2.116(D)(2) requireschallenges under MCR 2.116(C)(5) to be raised in a

responsive pleading or prior motion, 3 MCR 2.116(D)(4) does not place such a restriction on when motionsunder MCR 2.116(C)(8) and MCR 2.116(C)(10) may be

made. 4 This is in accord with the general principle thatthe question of standing may be raised by a party or the

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court at any stage of the proceeding, including for the firsttime on appeal. See 59 Am Jur 2d, Parties, § 28, p 466.

In this case, because it is necessary to consider theevidence submitted by the parties that is outsidethe pleadings, MCR 2.116(C)(8) is inapplicable, anddefendant's summary disposition motion should betreated as one brought under MCR 2.116(C)(10). Maiden,461 Mich. at 119-120, 597 N.W.2d 817. Defendanttherefore did not waive its ability to bring a motion underMCR 2.116(C)(10) challenging plaintiff's standing onceour Supreme Court issued its opinion in Covenant, eventhough plaintiff did not raise the question of standing inits responsive pleading or a prior motion. MCR 2.116(D)

(4). 5

III. ANALYSIS

We next turn the application of the Covenant opinion inthis case. As previously noted, our Supreme Court heldin Covenant that “healthcare providers do not possessa statutory cause of action against no-fault insurers forrecovery of personal protection insurance benefits underthe no-fault act,” explicitly rejecting the notion thathealthcare providers have independent standing to sue no-fault insurers directly to recover these benefits. Covenant,500 Mich. at 195-196, 218, 895 N.W.2d 490. The Courtfurther explained, however, that its conclusion was “notintended to alter an insured's ability to assign his or herright to past or presently due benefits to a healthcareprovider.” Id. at 217, 895 N.W.2d 490 n 40.

*5 “[T]he general rule is that judicial decisions are tobe given complete retroactive effect.” W. A. Foote Mem.Hosp. v. Mich. Assigned Claims Plan, 321 Mich. App.159, 176, 909 N.W.2d 38 (2017) (quotation marks andcitation omitted; alteration in original). In Foote, thisCourt held that Covenant applies retroactively, meaningthat it “applies to all cases still open on direct review.” Id.

at 176, 196, 909 N.W.2d 38. 6

The instant case was still proceeding in the trial courtwhen the Covenant opinion was issued, and it is nowbefore this Court on direct review. Therefore, Covenantapplies to the instant case. Id. Under Covenant, plaintiffin this case lacks independent standing and may notmaintain a direct action against defendant to recoverpersonal protection insurance benefits allegedly owed by

defendant for products and services plaintiff provided toIshaq related to his medical care. Covenant, 500 Mich. at195-196, 218, 895 N.W.2d 490.

The next issue to address is whether the trial court erred byallowing plaintiff to amend its complaint so as to be able toproceed with this action based on an assignment of Ishaq'srights, concluding in the process that the amendmentwas not futile in light of the one-year-back rule in MCL500.3145(1).

Under MCL 500.3145(1), “the claimant may not recoverbenefits for any portion of the loss incurred more than 1year before the date on which the action was commenced.”This provision is “the limitation on damages known as theone-year-back rule” and is “designed to limit the amountof benefits recoverable under the no-fault act to thoselosses occurring no more than one year before an action isbrought.” Joseph v. Auto Club Ins. Ass'n., 491 Mich. 200,203, 208, 815 N.W.2d 412 (2012).

MCR 2.118(A)(2) provides that a party may amend apleading by leave of the court and that “[l]eave shallbe freely given when justice so requires.” Further, underMCR 2.116(I)(5), if a summary disposition motion is“based on subrule (C)(8), (9), or (10), the court shall givethe parties an opportunity to amend their pleadings asprovided by MCR 2.118, unless the evidence then beforethe court shows that amendment would not be justified.”“[A] motion to amend should ordinarily be denied only forparticularized reasons, including undue delay, bad faithor a dilatory motive, repeated failure to cure deficienciesby amendments previously allowed, undue prejudice tothe opposing party, or futility.” PT Today, 270 Mich.App. at 143, 715 N.W.2d 398. “An amendment is futileif it merely restates the allegations already made or addsallegations that still fail to state a claim.” Yudashkinv. Linzmeyer, 247 Mich. App. 642, 651, 637 N.W.2d257 (2001) (quotation marks and citation omitted). “Anamendment that adds a claim or a defense relates back tothe date of the original pleading if the claim or defenseasserted in the amended pleading arose out of the conduct,transaction, or occurrence set forth, or attempted tobe set forth, in the original pleading.” MCR 2.118(D).However, if the pleading is a supplemental pleading ratherthan an amended pleading, then it does not relate backto the original pleading because “there is no provisionfor relating back as to supplemental pleadings.” Grist v.Upjohn Co., 1 Mich. App. 72, 84, 134 N.W.2d 358 (1965).

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Under MCR 2.118(E), a supplemental pleading is onethat “state[s] transactions or events that have happenedsince the date of the pleading sought to be supplemented,whether or not the original pleading is defective in itsstatement of a claim for relief or a defense.”

*6 This Court, in Jawad A. Shah, MD, PC v. StateFarm Mut. Auto Ins. Co., ––– Mich. App. ––––, ––––;––– N.W.2d –––– (2018) (Docket No. 340370); slip op.at 10-12, addressed the question of how the one-year-back rule operates with respect to proposed amendmentsto the complaint to account for an assignment of rightstheory under the same factual circumstances at issue inthis case, where the plaintiff healthcare providers initiallyfiled a pre-Covenant direct action against an insurer torecover personal protection insurance benefits but loststanding to maintain the action during the pendency ofthe proceedings when the Covenant opinion was issued.In Shah, this Court held that under these circumstances,the plaintiffs did not obtain by way of the assignments“the right to pursue no-fault benefits for any portion ofthe loss incurred more than one year before [the date theassignments were obtained] because that is the pertinentpoint of reference for purposes of the one-year-back rule.”Id. at ___; slip op. at 12.

The Shah Court reasoned that if the insured had filedan action against the insurer on the same date that theassignments were executed, the one-year-back rule wouldhave prohibited the insured from recovering benefits forany portion of the loss incurred more than one yearbefore that date and plaintiffs therefore could not obtainby assignment from the insured any right to recoverbenefits for losses incurred more than one year before thatdate either because an “assignee stands in the positionof the assignor, possessing the same rights and beingsubject to the same defenses.” Id. at ___; slip op. at 11(quotation marks and citation omitted). The Shah Courtfurther reasoned that the plaintiffs' motion for leave toamend was actually an attempt to seek leave to file asupplemental pleading because “the procurement of theassignments was an event that occurred after the filing ofthe original complaint and provided the only means bywhich plaintiffs could have standing to maintain a directaction against defendant insurer for recovery of no-faultbenefits” after Covenant was issued. Id. As a proposedsupplemental pleading, “it could not relate back to thedate of the original pleading.” Id. Accordingly, this Courtconcluded that “[t]hrough the assignment, plaintiffs only

obtained the rights [the insured] actually held at the timeof the execution of the assignment, and plaintiffs cannotrely on the relation-back doctrine to essentially gain thepotential for a greater right to recovery than they actuallyreceived.” Id. at ___; slip op. at 11-12 (citation omitted).

In this case, there is no dispute that plaintiff's claimthat it is entitled to personal protection benefits stemsfrom products and services it provided to Ishaq betweenapproximately June 18, 2015 and November 27, 2015.The earlier of the two assignments of Ishaq's rights wasobtained by plaintiff on May 30, 2017. On that date, hadIshaq initiated an action against defendant, he would havebeen unable to recover benefits for any portion of the lossincurred more than one year before May 30, 2017, andplaintiff, as assignee, thus cannot rely on the assignment torecover the benefits it seeks in this action from defendantbecause the losses at issue were incurred well more thanone year before May 30, 2017. MCL 500.3145(1); Shah,––– Mich. App. at ––––; slip op. at 11-12. As in Shaw,the proposed amendment at issue in this case actuallyconstitutes a proposed supplemental pleading that cannotrelate back to the date of the original pleading. Shah,––– Mich. App. at ––––; slip op. at 11-12. Because Ishaqdid not have any right to recover the benefits at issuefrom defendant on the date the assignment was executed,plaintiff did not obtain via the assignment any right torecover these benefits from defendant. Id.

Nonetheless, plaintiff argues that the one-year-backlimitation period was tolled pursuant to MCL 600.5856while the litigation proceeded below and before obtainingan assignment from Ishaq.

*7 Section 5856 of the Revised Judicature Act (RJA),MCL 600.101 et seq., provides as follows:

The statutes of limitations or repose are tolled in any ofthe following circumstances:

(a) At the time the complaint is filed, if a copy of thesummons and complaint are served on the defendantwithin the time set forth in the supreme court rules.

(b) At the time jurisdiction over the defendant isotherwise acquired.

(c) At the time notice is given in compliance with theapplicable notice period under section 2912b, if duringthat period a claim would be barred by the statute of

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limitations or repose; but in this case, the statute is tollednot longer than the number of days equal to the numberof days remaining in the applicable notice period afterthe date notice is given.

In Joseph, 491 Mich. at 202-203, 815 N.W.2d 412, ourSupreme Court addressed the question whether anothertolling provision in the RJA, the “minority/insanity tollingprovision of MCL 600.5851(1),” applied “to toll theone-year-back rule in MCL 500.3145(1) of the no-faultact.” Our Supreme Court held “that the minority/insanitytolling provision, which addresses only when an actionmay be brought, does not preclude the application of theone-year-back rule, which separately limits the amount ofbenefits that can be recovered.” Id. at 203, 815 N.W.2d412. The Court in Joseph explained as follows:

Although the minority/insanitytolling provision may certainly tollmyriad statutory provisions thatcontain a statute of limitations, itcannot toll the one-year-back ruleof MCL 500.3145(1) because theone-year-back rule is not a statuteof limitations in that it does notlimit the period of time withinwhich a claimant may file an action;rather, the one-year-back rule placesa limitation on the amount ofdamages a claimant is entitled torecover. Furthermore, the one-year-back rule does not serve thosepurposes typically associated witha statute of limitations because itdoes not operate to cut off a claimor bar the action or the recovery;it simply limits the compensationavailable to the claimant. Becausethe no-fault act's one-year-back ruleand the RJA's minority/insanitytolling provision serve manifestlydifferent purposes and functionindependently of each other, theone-year-back rule is not the subjectof tolling under the minority/insanity tolling provision. [Id. at216-217, 815 N.W.2d 412.]

The same reasoning applies in the instant case. The one-year-back rule is not a statute of limitations. Id. It alsois not a statute of repose, which also serves the purposeof prohibiting a claim entirely at a certain point in time.See Ostroth v. Warren Regency, GP, LLC, 474 Mich. 36,42 n 7, 709 N.W.2d 589 (2006) (“A statute of reposelimits the liability of a party by setting a fixed timeafter ... which the party will not be held liable for ... injuryor damage .... Unlike a statute of limitations, a statuteof repose may bar a claim before an injury or damageoccurs.”) (Quotation marks and citation omitted; ellipsesin original); Nortley v. Hurst, 321 Mich. App. 566, 572,908 N.W.2d 919 (2017) (“Unlike a statute of limitations,a statute of repose bars a claim after a fixed period oftime from the defendant's act or omission and may preventaccrual of a claim even if the injury happens after thestatutory period has expired.”). MCL 600.5856 only tolls“statutes of limitations or repose.” Accordingly, the one-year-back rule in MCL 500.3145(1), as a damage-limitingprovision, is not tolled by the tolling provision in MCL600.5856. Joseph, 491 Mich. at 203, 815 N.W.2d 412.

*8 Because plaintiff did not obtain any right to recoverthe benefits at issue through the assignment of Ishaq'srights, plaintiff's proposed amendment to account forthe assignment was futile, in addition to actually beingan attempt to file a supplemental pleading that wouldnot relate back to the original complaint. Yudashkin,247 Mich. App. at 651, 637 N.W.2d 257; Shah, –––Mich. App. at ––––; slip op. at 11-12. As such, the trialcourt abused its discretion by permitting the amendment.Because plaintiff lacked standing to bring this action,defendant was entitled to summary disposition in its favorand the trial court erred by denying defendant's motion.We therefore reverse the trial court's order and remandthis matter. On remand, the trial court is to enter an ordergranting summary disposition for defendant.

Finally, the parties' additional arguments are beyond thescope of this Court's order granting leave to appeal, whichwas limited to the issues (1) whether Covenant barredplaintiff's claims and (2) whether plaintiff's proposedamendment based on an assignment of the insured'srights was futile due to the one-year-back rule of MCL500.3145(1). This Court need not address an issue that isbeyond the scope of the order granting leave to appeal.See MCR 7.205(E)(4); Maxwell v. Dep't. of Environmental

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Quality, 264 Mich. App. 567, 576, 692 N.W.2d 68, 75(2004).

Reversed and remanded for entry of an order grantingsummary disposition for defendant. We do not retainjurisdiction.

All Citations


Footnotes1 Attendant Care Cos. v. Farm Bureau Gen. Ins. Co., unpublished order of the Court of Appeals, entered December 14,

2017 (Docket No. 340205).

2 The precise nature of the relationships between the plaintiff entities in this action is not clear from the record. However, itappears from our examination of the record that all of the plaintiff entities are essentially permutations of Attendant CareServices of Michigan in one form or another. Thus, for purposes of this opinion, we will refer to these entities collectivelyas “plaintiff.”

3 Notably, this requirement is not absolute, since this provision specifically allows for the possibility of amending responsivepleadings. See MCR 2.116(D)(2) (stating in pertinent part that “[a]mendment of a responsive pleading is governed byMCR 2.118”); see also Leite, 439 Mich. at 920, 478 N.W.2d 892 (stating that “MCR 2.116(D)(2) does not foreclose aparty from adding a defense in an amended responsive pleading”).

4 MCR 2.116(D)(4) provides:The grounds listed in subrule (C)(8), (9), and (10) may be raised at any time, unless a period in which to file dispositivemotions is established under a scheduling order entered pursuant to MCR 2.401. It is within the trial court's discretionto allow a motion filed under this subsection to be considered if the motion is filed after such period.

5 Additionally, plaintiff's alternative argument that defendant could not challenge plaintiff's standing because defendantdid not update its discovery responses regarding its reasons for denying payment on the charges at issue is withoutmerit. There is nothing inconsistent about challenging plaintiff's standing to maintain a lawsuit and indicating duringdiscovery that plaintiff's billed charges were denied in the first instance on the basis that they constituted charges forordinary products, services, and accommodations. Defendant is not claiming that it denied payment because plaintifflacked standing to maintain a lawsuit. Plaintiff's argument is factually illogical.

6 On May 25, 2018, our Supreme Court ordered that oral argument be scheduled on whether to grant leave to appeal inFoote. W. A. Foote Mem. Hosp. v. Mich. Assigned Claims Plan, 501 Mich. 1079, 1079, 911 N.W.2d 470 (2018). However,this does not negate the binding nature of this Court's opinion in Foote. See MCR 7.215(C)(2) (“A published opinion ofthe Court of Appeals has precedential effect under the rule of stare decisis. The filing of an application for leave to appealto the Supreme Court or a Supreme Court order granting leave to appeal does not diminish the precedential effect of apublished opinion of the Court of Appeals.”).


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Insight Institute of Neurosurgery and Neuroscience v. State..., Not Reported in N.W....

2018 WL 4573230





INSIGHT INSTITUTE OF NEUROSURGERY ANDNEUROSCIENCE, Jawad A. Shah, M.D., PC, Insight

Physical Therapy and Rehab Center, PC, InsightPain Management Center, Insight Anesthesia, PLLC,

Sterling Anesthesia, PLLC, and Insight Healthand Fitness Center, Inc., Plaintiffs-Appellants,

v.STATE FARM MUTUAL AUTOMOBILE


No. 339740|

September 20, 2018

Wayne Circuit Court, LC No. 16-014761-NO

Before: O'Connell, P.J., and Cavanagh and Servitto, JJ.

Opinion

Per Curiam.

*1 In this no-fault dispute, plaintiffs, an assortment ofmedical providers, appeal by right the trial court's ordergranting summary disposition under MCR 2.116(C)(8)(failure to state a claim) in favor of defendant, State FarmMutual Automobile Insurance Company. This litigationarose from unpaid bills for medical treatment for injuriessuffered by Antwan Johnson in a car accident on July 4,2015. The trial court ruled that plaintiffs failed to state aclaim because medical providers do not have a statutorycause of action under the no-fault act, MCL 500.3101 etseq., the insured's assignment of rights to plaintiffs wasunenforceable because it was only a partial assignment,and the anti-assignment provision requiring State Farm'sconsent precluded the assignment of rights because StateFarm did not agree to it. We affirm the trial court rulingthat plaintiffs do not have a statutory cause of action.However, because this Court recently held that a post-loss anti-assignment provision was unenforceable, JawadA. Shah, M.D., PC v. State Farm Mut. Auto. Ins. Co., –––

Mich. App. ––––, ––––; ––– N.W.2d –––– (2018) (DocketNo. 340370); slip op. at 9, we reverse.

This Court reviews de novo the legal question ofretroactivity in addition to a trial court's ruling on amotion for summary disposition. W A Foote Mem. Hosp.v. Mich. Assigned Claims Plan, 321 Mich. App. 159, 168;909 N.W.2d 38 (2017); Stevenson v. Detroit, 264 Mich.App. 37, 40; 689 N.W.2d 239 (2004). Summary dispositionunder MCR 2.116(C)(8) is proper if “[t]he opposing partyhas failed to state a claim on which relief can be granted.”A motion for summary disposition under subrule (C)(8) “tests the legal sufficiency of the complaint[,]” andcourts review only the pleadings when ruling on a motionbrought under this subrule. Maiden v. Rozwood, 461 Mich.109, 119-120; 597 N.W.2d 817 (1999). A motion forsummary disposition under MCR 2.116(C)(10) tests thefactual sufficiency of a complaint. Id. at 120. To the extentthe trial court referred to the insurance policy to addressthe parties' arguments regarding the assignment of rights,we review the pertinent rulings under subrule (C)(10). SeeShah, ––– Mich. App. at ––––; slip op. at 13.

First, plaintiffs argue against the retroactive applicationof Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins.Co., 500 Mich. 191, 196; 895 N.W.2d 490 (2017), in whichour Supreme Court held that “healthcare providers donot possess a statutory cause of action against no-faultinsurers for recovery of personal protection insurancebenefits under the no-fault act.” This Court has held thatCovenant applies retroactively. W A Foote, 321 Mich.App. 159. Accordingly, we affirm the trial court's rulingthat Covenant applies retroactively to bar plaintiffs' claim.

Plaintiffs next contend that their claim survives becauseJohnson, the insured, signed an assignment of rights.After the trial court issued its final ruling in this case,this Court held that a post-loss anti-assignment clausewas unenforceable because it violated public policy. Shah,––– Mich. App. at ––––; slip op. at 9. Accordingly, wereverse the trial court's ruling that the anti-assignmentclause in the insurance policy barred Johnson's assignmentof rights.

*2 Lastly, plaintiffs argue that the trial court erredby concluding that the assignment of rights wasunenforceable because it was a partial assignment that didnot fully discharge State Farm's obligations. On remand,

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Insight Institute of Neurosurgery and Neuroscience v. State..., Not Reported in N.W....

2018 WL 4573230


the trial court should reconsider this ruling in light ofShah.

We affirm the trial court's ruling that Covenant appliesretroactively. We reverse the trial court rulings regardingthe effect of the assignment of rights, and we remand for

further proceedings consistent with this opinion. We donot retain jurisdiction.

All Citations



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Michigan Head & Spine Institute, PC v. Allstate Property..., Not Reported in N.W....

2018 WL 4574766






v.ALLSTATE PROPERTY AND CASUALTY


No. 340316|

September 18, 2018



Opinion

Per Curiam.

*1 Plaintiff appeals as of right the trial court's ordergranting summary disposition to defendant under MCR2.116(C)(8) and denying plaintiff's request for leave toamend its complaint. We affirm in part, vacate in part,and remand for further proceedings consistent with thisopinion.

I. BACKGROUND

Lisa Christy was covered under a personal-injury-protection (PIP) policy with defendant. Christy wasinjured in an automobile accident and plaintiff providedmedical services to Christy in the amount of $68,513.Plaintiff submitted claims for payment to defendant—thealleged first-party no-fault insurer—but defendant did notfully reimburse plaintiff for the services it provided toChristy. Plaintiff filed this action against defendant forrecovery of the unpaid claim alleging a right to do so underthe no-fault act.

Defendant moved for summary disposition under MCR2.116(C)(8) arguing that medical providers such as

plaintiff lack an independent statutory cause of actionagainst a no-fault insurer such as defendant in light ofCovenant Med. Ctr., Inc. v. State Farm Mut. Auto Ins.Co., 500 Mich. 191; 895 N.W.2d 490 (2017). Plaintiff thenmoved to amend its complaint to assert a claim underan assignment-of-benefits theory. The trial court grantedsummary disposition to defendant and denied plaintiff'smotion to amend the complaint. The trial court reasonedthat plaintiff did not have a direct cause of action underCovenant and, because plaintiff did not have a direct causeof action, plaintiff had nothing to amend or relate back to.


II. ANALYSIS

Defendant Was Entitled to Summary Disposition UnderCovenant. A trial court's decision on a motion forsummary disposition is reviewed de novo. Dell v. CitizensIns. Co. of America, 312 Mich. App. 734, 739; 880 N.W.2d280 (2015). “A motion under MCR 2.116(C)(8) tests thelegal sufficiency of the complaint.” Id.

In Covenant, 500 Mich. at 195-196, 217-218, our SupremeCourt held that healthcare providers lack an independentstatutory cause of action against no-fault insurers torecover PIP benefits. This Court has concluded thatthe holding in Covenant applies retroactively to pendingcases. Bronson Healthcare Group, Inc. v. Mich. AssignedClaims Plan, ––– Mich. App. ––––, ––––; ––– N.W.2d–––– (2018) (Docket No. 336088); slip op. at 2, citingW A Foote Mem. Hosp. v. Mich. Assigned Claims Plan,

321 Mich. App. 159, 196; 909 N.W.2d 38 (2017). 1 Thepresent case was pending in the trial court when Covenantwas decided. Thus, Covenant applies to bar plaintiff'sindependent action against defendant for the recovery ofPIP benefits owed to Christy. Summary disposition wastherefore appropriate on plaintiff's independent statutoryclaim.

Plaintiff's Motion to Amend. “The grant or denial of leaveto amend pleadings is within the trial court's discretion.”Jawad A Shah, MD, PC v. State Farm Mut Auto Ins.Co., ––– Mich. App. ––––, ––––; ––– N.W.2d –––– (2018)(Docket No. 340370); slip op. at 13 (cleaned up). “ThisCourt reviews for an abuse of discretion a trial court'sdenial of a motion to amend a complaint.” Tierney v. Univ.of Mich. Regents, 257 Mich. App. 681, 687; 669 N.W.2d

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Michigan Head & Spine Institute, PC v. Allstate Property..., Not Reported in N.W....

2018 WL 4574766


575 (2003). “[A]n abuse of discretion occurs only when thetrial court's decision is outside the range of reasonable andprincipled outcomes.” In re Kostin, 278 Mich. App. 47, 51;748 N.W.2d 583 (2008). “A trial court necessarily abusesits discretion when it makes an error of law.” Shah, –––Mich. App. at ––––; slip op. at 14 (cleaned up).

*2 “If a trial court grants summary disposition pursuantto MCR 2.116(C)(8), (C)(9), or (C)(10), the court mustgive the parties an opportunity to amend their pleadingspursuant to MCR 2.118, unless the amendment would befutile.” Id. (cleaned up); see also MCR 2.116(I)(5). “Anamendment is futile if it merely restates the allegationsalready made or adds allegations that still fail to statea claim.” Id. (cleaned up). “Under MCR 2.118(A)(2), aparty may amend a pleading by leave of the court andsuch leave shall be freely given when justice so requires.”Id. (cleaned up). “Amendment is generally a matter ofright rather than grace” and “should ordinarily be deniedonly for particularized reasons, including undue delay,bad faith or dilatory motive, repeated failure to curedeficiencies by amendments previously allowed, undueprejudice to the opposing party, or futility.” Id. at ––––;slip op. at 13 (cleaned up).

The trial court reasoned that, because plaintiff did nothave a direct statutory cause of action, plaintiff could notamend its complaint. Yet, in Covenant, 500 Mich. at 217n. 40, our Supreme Court recognized that an insured may“assign his or her right to past or presently due benefitsto a healthcare provider.” Thus, in the situation where

a health-care provider's independent statutory claim forPIP benefits is summarily dismissed, this Court has heldthat the provider should be granted leave to amendits complaint to assert a claim under an assignment-of-benefits theory. See Bronson Healthcare Group, ––– Mich.App. at ––––; slip op. at 3, citing W A Foote Mem. Hosp.,321 Mich. App. at 196. Accordingly, the trial court erredby denying plaintiff's motion to amend on the basis thatplaintiff did not have a direct cause of action.

It is therefore necessary to vacate the portion of thetrial court's order denying plaintiff's motion to amendthe complaint. The case is remanded to the trial court todetermine whether amendment to assert a claim under anassignment-of-benefits theory is proper in the present case.Defendant has raised several theories on appeal regardingwhy amendment is futile in this case despite the trialcourt's error. The arguments are inherently fact-intensiveand should be decided in the first instance by the trialcourt rather than by this Court. See generally, Shah, –––Mich. App. at ––––; slip op. at 13 (noting particularizedconsiderations pertinent to the decision whether to allowamendment of a pleading).

Affirmed in part, vacated in part, and remanded forfurther proceedings consistent with this opinion. We donot retain jurisdiction.

All Citations


Footnotes1 Our Supreme Court has ordered oral argument on the application to consider the retroactivity of Covenant. W A Foote

Mem. Hosp. v. Mich. Assigned Claims Plan, ––– Mich. ––––; 911 N.W.2d 470 (2018).


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Harrison v. Allstate Property & Casualty Insurance Company, Not Reported in N.W.2d...

2017 WL 5759768





Rodney HARRISON, Plaintiff,and

Michigan Head & Spine Institute,PC, Intervening Plaintiff–Appellant,

v.ALLSTATE PROPERTY & CASUALTY

INSURANCE COMPANY, Defendant–Appellee,and

Thurman Clifford Ridenour, Defendant.

No. 334083|

November 28, 2017

Wayne Circuit Court, LC No. 14–013225–NF

Before: Meter, P.J., and Borrello and Riordan, JJ.

Opinion

Per Curiam.

*1 Intervening plaintiff, Michigan Head & SpineInstitute, PC (MHSI), appeals as of right an ordergranting summary disposition to defendant AllstateProperty & Casualty Insurance Company (Allstate), onthe basis of the purported fraud of plaintiff, RodneyHarrison, in pursuing his claim for first-party no-faultbenefits. We reverse and remand for further proceedingsconsistent with this opinion.

This case arose out of Harrison's alleged injuriesresulting from a September 16, 2014, motor-vehicleaccident. Harrison filed this action against his no-fault insurer, Allstate, seeking to recover first-party no-fault benefits, including medical expenses, lost wages,household-replacement-service expenses, and attendant-care expenses. MHSI, which is a medical provider,filed an intervening complaint seeking to recover fromAllstate $71,245 in medical expenses incurred in treatingHarrison for the injuries that he allegedly suffered in

the accident. Following discovery, Allstate moved forsummary disposition pursuant to MCR 2.116(C)(10) onthe ground that Harrison allegedly engaged in fraudulentacts in pursuing his first-party no-fault claim. Allstateargued that Harrison's fraud barred both his claim andthe claim of MHSI seeking benefits on Harrison's behalf.At the hearing on the summary-disposition motion, itwas noted that Harrison had accepted Allstate's offer tosettle the case for $1,500 but that MHSI was still goingforward with its claim. The trial court granted summarydisposition to Allstate and dismissed MHSI's claim.

MHSI argues that the trial court erred in grantingsummary disposition to Allstate on the basis of Harrison'spurported fraud because a genuine issue of material factexists regarding whether Harrison engaged in fraud. Weagree.

A trial court's decision on a motion for summarydisposition brought under MCR 2.116(C)(10) is reviewedde novo. Johnson v. Recca, 492 Mich. 169, 173, 821N.W.2d 520 (2012).

In reviewing a motion underMCR 2.116(C)(10), this Courtconsiders the pleadings, admissions,affidavits, and other relevantdocumentary evidence of recordin the light most favorable tothe nonmoving party to determinewhether any genuine issue ofmaterial fact exists to warranta trial. Summary disposition isappropriate if there is no genuineissue regarding any material factand the moving party is entitledto judgment as a matter of law.A genuine issue of material factexists when the record, giving thebenefit of reasonable doubt to theopposing party, leaves open an issueupon which reasonable minds mightdiffer. [Bank of America, NA v.Fidelity Nat'l Title Ins. Co., 316Mich. App. 480, 488, 892 N.W.2d467 (2016) (quotation marks andcitations omitted).]

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The interpretation of an insurance policy presents aquestion of law that is reviewed de novo. Dancey v.Travelers Prop. Cas. Co., 288 Mich. App. 1, 7, 792N.W.2d 372 (2010). “Because insurance policies arecontractual agreements, they are subject to the samerules of contract interpretation that apply to contracts ingeneral.” Sherman–Nadiv v. Farm Bureau Gen. Ins. Co. ofMich., 282 Mich. App. 75, 78, 761 N.W.2d 872 (2008).Unambiguous language must be enforced as written.Century Surety Co. v. Charron, 230 Mich. App. 79, 82–83, 583 N.W.2d 486 (1998). A court must “give effectto every word, phrase, and clause in a contract andavoid an interpretation that would render any part of thecontract surplusage or nugatory.” Klapp v. United Ins.Group Agency, Inc., 468 Mich. 459, 468, 663 N.W.2d 447(2003).

*2 Initially, we note that Allstate failed to attach to itsmotion for summary disposition that led to the instantappeal a copy of the no-fault policy containing the “fraud”exclusionary clause that Allstate argues barred the claimsasserted by Harrison and MHSI. MCR 2.116(G)(3)(b) provides: “Affidavits, depositions, admissions, orother documentary evidence in support of the groundsasserted in the motion [for summary disposition] arerequired ... when judgment is sought based on subrule(C)(10).” Therefore, when seeking summary dispositionunder MCR 2.116(C)(10), “[t]he moving party mustspecifically identify the undisputed factual issues andhas the initial burden of supporting its position withdocumentary evidence. The responding party must thenpresent legally admissible evidence to demonstrate thata genuine issue of material fact remains for trial.” E.R. Zeiler Excavating, Inc. v. Valenti Trobec Chandler,Inc., 270 Mich. App. 639, 644, 717 N.W.2d 370 (2006)(citations omitted). In this case, Allstate sought summarydisposition under MCR 2.116(C)(10) on the ground thata fraud exclusionary clause in the no-fault policy issuedby Allstate to Harrison barred the no-fault claims assertedby Harrison and MHSI. Yet Allstate failed to attachto its instant summary disposition motion the no-faultpolicy containing the fraud exclusionary clause. Allstatenotes on appeal that the no-fault policy was attached toMHSI's motion for reconsideration of the order granting

summary disposition to Allstate. 1 However, this Courtmay “only consider what was properly presented to thetrial court before its decision on the motion.” Pena v.Ingham Co. Road Comm., 255 Mich. App. 299, 310, 660

N.W.2d 351 (2003); see also Gorman v. American HondaMotor Co., Inc., 302 Mich. App. 113, 120, 839 N.W.2d 223(2013) (noting that “appellate review of the trial court'sdecision is limited to the evidence that had been presentedat the time the motion was decided”), and Innovative AdultFoster Care, Inc. v. Ragin, 285 Mich. App. 466, 474 n 6,776 N.W.2d 398 (2009) (declining to consider on appealevidence that was first presented in support of a motionfor reconsideration).

Nonetheless, Allstate had previously attached a copyof the no-fault policy to an earlier motion forsummary disposition (a motion that Allstate laterabandoned). MCR 2.116(G)(5) provides that “[t]heaffidavits, together with the pleadings, depositions,admissions, and documentary evidence then filed in theaction or submitted by the parties, must be considered bythe court when the motion is based on subrule (C)(1)–(7)or (10).” (Emphasis added.) Because the no-fault policyattached to Allstate's earlier motion was “then filed inthe action or submitted by the parties,” MCR 2.116(G)(5), the trial court could consider the no-fault policy whendeciding the instant motion for summary disposition, seeBrown v. Pointer, 390 Mich. 346, 354, 212 N.W.2d 201(1973) (holding that the trial court properly considereddocumentary evidence submitted with a prior motion forsummary disposition when deciding a later motion forsummary disposition).

We conclude, however, that the trial court erred ingranting summary disposition to Allstate. A genuineissue of material fact exists regarding whether Harrisonengaged in fraud when submitting his no-fault wage-lossclaim.

The no-fault policy issued by Allstate to Harrisoncontained the following provision:

2. Concealment, Misrepresentation Or Fraud

This coverage form is void in any case of fraud by you atany time as it relates to this coverage form. It is also voidif you or any other “insured”, at any time, intentionallyconceal or misrepresent a material fact concerning:

a. This coverage form;

b. The covered “auto”;

c. Your interest in the covered “auto”; or

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d. A claim under this coverage form.

This Court has set forth the elements for establishing fraudin this context as follows:

To void a policy because theinsured has willfully misrepresenteda material fact, an insurer must showthat (1) the misrepresentation wasmaterial, (2) that it was false, (3)that the insured knew that it wasfalse at the time it was made orthat it was made recklessly, withoutany knowledge of its truth, and (4)that the insured made the materialmisrepresentation with the intentionthat the insurer would act uponit. A statement is material if it isreasonably relevant to the insurer'sinvestigation of a claim. [Bahri v.IDS Prop. Cas. Ins. Co., 308 Mich.App. 420, 424–425, 864 N.W.2d609 (2014) (quotation marks andcitations omitted).]

*3 If the fraud exclusion bars the recovery of benefitsby Harrison, then it also bars recovery by MHSI becauseMHSI stands in the shoes of Harrison in this case. See id.at 424, 864 N.W.2d 609 (“Because intervening plaintiffsstood in the shoes of the named insured, if plaintiff cannotrecover benefits, neither can intervening plaintiffs.”).

Further, this Court has explained:

Reliance on an exclusionary clausein an insurance policy is anaffirmative defense; therefore, [theinsurer] has the burden of proof.An insurance company has theburden to prove that one of thepolicy's exclusions applies. Thus,to obtain summary disposition,the insurer must show that thereis no question of material factas to any of the elements of

its affirmative defense. [Shelton v.Auto–Owners Ins. Co., 318 Mich.App. 648, 657, 899 N.W.2d 744(2017), lv pending (quotation marksand citation omitted).]

In this case, the trial court found that Harrison committedfraud in submitting his wage-loss claim to Allstate andthat there was no genuine issue of material fact regarding

the matter. 2 MHSI argues that the trial court erred inmaking this determination because there was, at most, afactual question regarding whether Harrison committedfraud.

Harrison testified at his deposition that he was aprofessional limousine driver and that he worked beforethe accident as an independent contractor for variouslimousine companies, including Rochester Limousine,Luxury Limousine, and Rock Limo. According toHarrison, he worked 60 hours a week before the accident.He worked mostly for Rochester Limousine, where heearned $25 an hour for the first 40 hours each week,and $37.50 an hour for 20 hours of overtime. Harrisontestified that, following the accident, he lost his full-timestatus, returned to work on June 23, 2015, and worksapproximately five hours a month, mostly for RochesterLimousine. Harrison estimated that he made $1,000 aweek, not including tips, before the accident, and thatsince returning to work, he makes $100 a month, if he

is called in for work. 3 Contrary to his original answersto interrogatories from Allstate, Harrison testified thathe was not working for his wife's company, TPHTransportation Services (TPH), at the time of theaccident; according to Harrison, his original answersto interrogatories contained this incorrect informationbecause of an oversight and because he was heavilymedicated and did not understand what he was writing.

Harrison's wife, Theresa Pollard–Harrison, provideddeposition testimony that was somewhat confusing orunclear. She indicated that Harrison was not employedand had no income at the time of the accident, but she alsonoted that he worked on and off as a limousine driver. Shefurther testified that he was not currently employed andthat he had earned no income since the accident.

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*4 Amy O'Brien, a representative of RochesterLimousine, testified that Harrison was first hired byRochester Limousine in April 2015, which was after theaccident. O'Brien testified that Harrison at some pointasked Rochester Limousine to provide a letter sayingthings that were not true, which Rochester Limousinerefused to do, but O'Brien could not remember specificallywhat Harrison wanted the letter to say.

Luxury Limousine provided a statement indicating thatHarrison earned a total of $2,172 as a driver for thatcompany in the period from January 1, 2014, to December14, 2015. Samer Zahr, the director of operations forLuxury Limousine, testified that Harrison was not a full-time driver for that company, and was only called infor work as an independent contractor when LuxuryLimousine was very busy and needed extra help. LuxuryLimousine did not have any records concerning when acustomer provided a cash tip to a driver. Harrison toldZahr that Harrison had another job.

The custodian of records for Rock Limo provided anaffidavit indicating that she had no records to providebecause her computer files had been erased due to acomputer virus. The records custodian further indicatedthat she had no recollection of Harrison.

The evidence summarized above presents a genuineissue of material fact regarding whether Harrisonmade a material misrepresentation with knowledgethat the representation was false or made a materialmisrepresentation recklessly without knowledge of itstruth. Allstate relies on Bahri, but in Bahri, there wasunrebutted evidence of fraud. See Shelton, 318 Mich.App. at 655–656, 660, 899 N.W.2d 744 (distinguishingthe holding in Bahri given the uncontested evidence offraud in Bahri). In this case, there is conflicting testimonyregarding whether and how often Harrison worked.Harrison's wage-loss claim was supported by his owntestimony, which was contradicted by the testimony ofother witnesses, including O'Brien. The mere fact thatHarrison has provided no documentation in supportof his testimony regarding his employment does notestablish that he committed fraud. A plaintiff's inabilityto produce documentation of his employment is notfatal to a claim for wage loss. See Ward v. Titan Ins.Co., 287 Mich. App. 552, 555–556, 791 N.W.2d 488(2010), overruled in part on other grounds by Admire v.Auto–Owners Ins. Co., 494 Mich. 10, 831 N.W.2d 849

(2013). Allstate produced no documentation disprovingHarrison's testimony regarding his employment withRochester Limousine. The existing record weighs in favorof a finding of fraud, but we are constrained by law tofind that the conflicting testimony presents a credibilitydispute that must be resolved by a trier of fact. Indeed,“[t]he trial court is not permitted to assess credibility,weigh the evidence, or resolve factual disputes, and ifmaterial evidence conflicts, it is not appropriate to granta motion for summary disposition under MCR 2.116(C)(10).” Pioneer State Mut. Ins. Co. v. Dells, 301 Mich.App. 368, 377, 836 N.W.2d 257 (2013). Although therecords from Luxury Limousine indicated that Harrisonmade only a little over $2,000 while working for thatcompany over a two-year period, this is consistent withHarrison's testimony that he worked mostly for Rochester

Limousine. 4

*5 Another testimonial conflict exists regarding whenHarrison returned to work following the accident.Harrison testified that he returned to work in June2015, whereas O'Brien indicated that Harrison beganworking for Rochester Limousine in April 2015. Even ifHarrison's testimony regarding his return-to-work datewas incorrect, Allstate fails to establish that this wasmore than merely a mistaken memory on Harrison's part.See Mina v. Gen. Star Indemnity Co., 218 Mich. App.678, 686, 555 N.W.2d 1 (1996) (“Fraud or false swearingimplies something more than mistake of fact or honestmisstatements on the part of the insured.... In order toprevail, the insurer must prove not only that the swearingwas false, but also that it was done knowingly, wilfully,and with intent to defraud.”), rev'd in part on othergrounds 455 Mich. 866, 568 N.W.2d 80 (1997).

Overall, we conclude that a genuine issue of material factexists regarding whether Harrison committed fraud insubmitting his wage-loss claim. The trial court thereforeerred in granting summary disposition to Allstate on thisbasis.

Allstate has submitted a notice of supplemental authoritytaking note of the Michigan Supreme Court's recentopinion in Covenant Med. Ctr., Inc. v. State Farm Mut.Auto Ins. Co., 500 Mich. 191, 895 N.W.2d 490 (2017). InCovenant, id. at 196, 895 N.W.2d 490, the Court held that“healthcare providers do not possess a statutory cause ofaction against no-fault insurers for recovery of personalprotection insurance benefits under the no-fault act.” But

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the Supreme Court further stated that the holding inCovenant does not “alter an insured's ability to assign hisor her right to past or presently due benefits to a healthcareprovider.” Id. at 217, 895 N.W.2d 490 n 40.

MHSI has provided to this Court copies of numerousdocuments in which Harrison assigned to MHSI his rightto collect no-fault benefits for services rendered by MHSI.Although those documents are not in the lower-courtfile, this is likely because Covenant was issued while thiscase was pending on appeal and the parties have thusnot yet had an opportunity to litigate the applicabilityof Covenant. Further, although MHSI's interveningcomplaint did not directly allege that its claim waspremised on Harrison's assignment of his rights to MHSI,this again may be attributable to the fact that Covenantwas not issued until this case was pending on appeal.When a trial court grants summary disposition pursuantto MCR 2.116(C)(10), the nonprevailing party should begiven an opportunity to amend its pleadings unless theamendment would not be justified; an amendment wouldnot be justified if it would be futile. Ormsby v. CapitalWelding, Inc., 471 Mich. 45, 52–53, 684 N.W.2d 320(2004). In this case, an amendment of MHSI's interveningcomplaint may be justified if, as MHSI contends and asthe evidence submitted to this Court suggests, Harrisonassigned his rights to MHSI. The applicability of Covenantshould thus be decided by the trial court on remand afterthe parties have an opportunity to litigate the matter.

Reversed and remanded for further proceedingsconsistent with this opinion. We do not retain jurisdiction.

Riordan, J. (dissenting)I respectfully dissent.

Intervening plaintiff, Michigan Head & Spine Institute,PC (MHSI), appeals as of right of the trial court's ordergranting summary disposition in favor of defendant,Allstate Property & Casualty Insurance Company(Allstate), based upon the alleged fraud of the insured,Rodney Harrison. While this appeal was pending, theMichigan Supreme court issued its opinion in CovenantMed. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., 500Mich. 191, 895 N.W.2d 490 (2017). In that decision, theCourt held that “healthcare providers do not possess astatutory cause of action against no-fault insurers forrecovery of personal protection insurance benefits under

the no-fault act.” Id. at 196, 895 N.W.2d 490. The Courtclarified that its opinion was “not intended to alter aninsured's ability to assign his or her right to past orpresently due benefits to a healthcare provider.” Id. at 217,895 N.W.2d 490 n 40.

Subsequently, in W. A. Foote Mem. Hosp. v. MichiganAssigned Claims Plan, ––– Mich. App. ––––, ––––; –––N.W.2d –––– (2017) (Docket No. 333360); slip op. at19, we held that the Court's decision in Covenant appliedretroactively. In that case, we considered an appeal bya healthcare provider of a trial court's order grantingsummary disposition in favor of the Michigan AssignedClaims Plan on the ground that the healthcare provider's“claim was ineligible for assignment because applicableinsurance had been identified, and because [the healthcareprovider] could have recovered PIP benefits from [theapplicable insurance company] if it had acted in a timelyfashion.” Id. at ––––; slip op. at 3. Like in the instantcase, Covenant was decided while the healthcare provider'sappeal was pending before this Court. Id. Despite beingpresented a case that initially involved the grant ofsummary disposition against the healthcare provider forreasons wholly unrelated to Covenant, we affirmed thegrant of summary disposition based on Covenant, refusedto consider the issue initially presented for review, andremanded to the trial court for further proceedings. Id. at––––; slip op. at 19–20. We further opined that, shoulda healthcare provider assert that it wished to pursue anassignment theory given the Covenant decision, “the mostprudent and appropriate course for us to take ... is toremand this case to the trial court with direction that itallow [the healthcare provider] to amend its complaint, sothat the trial court may address the attendant issues in thefirst place.” W. A. Foote, ––– Mich. App. at ––––; slip op.at 19–20.

In the instant case, it is undisputed that the trial courtrecord is absent of any evidence of an assignment fromthe insured to MHSI. Although MHSI now provideson appeal documents it purports to be evidence of suchan assignment, MHSI is not now permitted to expandthe record. See Sherman v. Sea Ray Boats, Inc., 251Mich. App. 41, 56, 649 N.W.2d 783 (2002). Consideringthat MHSI sought payment from Allstate based on itsstanding as a healthcare provider for the insured andthere is no assertion or evidence on the record of anassignment, the Court's decision in Covenant, 500 Mich.App. at 196, mandates a finding that MHSI did not have

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any recognized statutory ground for recovery. Summarydisposition was therefore required in favor of Allstate. Seeid.

Consequently, pursuant to W. A. Foote, ––– Mich. App.at ––––; slip op. at 19–20, I would have held that theproper remedy in this case is to affirm the trial court'sorder granting summary disposition in favor of Allstate,albeit for a different reason than the trial court, refuseto consider the issue of the insured's alleged fraud, andremand with direction to the trial court to considerMHSI's motion to amend the complaint and determine theCovenant issue in the first instance should MHSI argueassignment. Given that Covenant, 500 Mich. at 196, 895

N.W.2d 490, and W. A. Foote, ––– Mich. App. at ––––; slipop. at 4, 19–20, are dispositive of this case, it is unnecessaryto resolve the remaining issue before us—the insured'salleged fraud.

I would affirm the trial court's order granting summarydisposition in favor of Allstate and remand with thedirection that it allow MHSI to move to amend thecomplaint.

All Citations

Not Reported in N.W.2d, 2017 WL 5759768

Footnotes1 The no-fault policy attached to MHSI's motion for reconsideration was issued after the accident in this case, but it

contained the identical fraud exclusionary clause contained in the policy that was in effect at the time of the accident.The policy in effect at the time of the accident was provided to the trial court in an earlier motion for summary disposition,as explained below.

2 Although Allstate also argued below that Harrison committed fraud in submitting his household-replacement-services andattendant-care-services claims to Allstate, the trial court did not find that Harrison committed fraud with respect to thoseclaims; in fact, the court expressed agreement with MHSI's argument regarding the household-services claim but statedthat the fraud with regard to wage loss required dismissal of the case.

3 In his amended interrogatory answers filed before his deposition, Harrison had indicated that, before the accident, heworked 65 hours a week and earned $1,750 a week as a limousine driver. It is not clear if this included tips.

4 Harrison's explanation of his initial discovery response falsely indicating that he worked for TPH—i.e., that this was anoversight and that he was heavily medicated and did not realize what he was writing—likewise presents a credibilityquestion for the trier of fact.


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