An appellate court in Michigan has ruled that a health care provider that held post-treatment assignments from an insured injured in an automobile accident could proceed with its lawsuit against the insurer to collect no-fault benefits.
The Case
After State Farm Mutual Automobile Insurance Company’s insured was injured in an automobile accident, she received treatment from the Associated Surgical Center, PLLC.
Thereafter, the surgical center sued State Farm, seeking payment of no-fault benefits for the treatment it had provided as the holder of assignments executed by State Farm’s insured on or about May 30, 2017 and June 9, 2017.
State Farm moved for summary disposition, arguing that Covenant Medical Center, Inc. v. State Farm Mutual Automobile Ins. Co., 895 NW2d 490 (Mich. 2017), barred the surgical center’s direct cause of action. State Farm also asserted that the surgical center’s alternative assignment theory lacked merit because the State Farm insurance policy included a provision barring assignments in the absence of State Farm’s approval and it had not given that approval.
The trial court dismissed the surgical center’s case with prejudice, and it appealed. It argued that the policy’s anti-assignment clause did not prohibit post-loss assignment of benefits because Covenant did not impact a healthcare provider’s ability to sue as the insured’s assignee. It also argued that the anti-assignment clause in the State Farm policy violated MCL 500.3143 because the statute only prohibited the assignment of future benefits, and Covenant did not alter an insured’s ability to assign hir or her right to past or presently due benefits.
The Appellate Court’s Decision
The appellate court reversed.
In its decision, the appellate court found that State Farm’s insured only assigned her right to collect past or presently due benefits arising from the services the center provided. Consequently, it ruled, the anti-assignment clause in the State Farm insurance policy was “unenforceable with respect to the assignments at issue in this case.”
Moreover, the appellate court ruled, the assignments did not run afoul of MCL 500.3143, “which only prohibits an assignment of benefits payable in the future.”
The appellate court concluded its opinion by rejecting the surgical center’s contention that Covenant should not be applied retroactively, observing that it already had concluded that the rule articulated in Covenant should be applied retroactively. W. A. Foote Memorial Hospital v. Michigan Assigned Claims Plan, 909 N.W.2d 38 (Mich. Ct. App. 2017), leave to appeal pending.
The case is Associated Surgical Center, PLLC v. State Farm Mutual Automobile Ins. Co., No. 340816 (Mich. Ct. App. Aug. 8, 2019).
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Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].