An appellate court in Michigan, reversing a trial court’s decision, has rejected an auto insurer’s efforts to rely on an anti-assignment clause in a coverage action brought by two health care providers that treated insureds injured in a crash.
The Case
After James and Roneica Johnson were injured in a motor vehicle crash, they received medical treatment from Spine Specialists of Michigan, PC, and American Anesthesia Associates, LLC (together, the “plaintiffs”).
In April 2017, the plaintiffs sued the Johnsons’ no-fault auto insurer, Geico Indemnity Company, seeking to recover payment for the medical services they provided to the Johnsons.
After the Michigan Supreme Court issued its opinion in Covenant Medical Center, Inc. v. State Farm Mutual Automobile Ins. Co., 895 N.W.2d 490 (Mich. 2017), Geico moved for summary disposition on the ground that, in the absence of an assignment of rights from the Johnsons to the plaintiffs, the plaintiffs had no statutory cause of action against Geico for recovery of no-fault benefits.
In response, the plaintiffs argued that the trial court should deny Geico’s motion because the plaintiffs had received assignments of rights from the Johnsons. The plaintiffs also sought leave to amend their complaint to include the assignments.
Geico, however, asserted that the assignments were void because they violated an anti-assignment clause in the Johnsons’ no-fault insurance policy.
The trial court agreed with Geico, granted it summary disposition, and the Johnsons appealed.
The Appellate Court’s Decision
The appellate court reversed.
In its decision, the appellate court explained that, in Covenant, the Michigan Supreme Court held that “healthcare providers do not possess a statutory cause of action against no-fault insurers for recovery of [PIP] benefits under the no-fault act.” The appellate court pointed out that the Supreme Court clarified that its opinion 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.”
Moreover, the appellate court continued, the court in Jawad A. Shah, M.D., PC v. State Farm Mutual Automobile Ins. Co., 920 N.W.2d 148 (Mich. Ct. App. 2018), lv pending, declared that, “[u]nder general contract law, rights can be assigned unless the assignment is clearly restricted” (quotation marks and citation omitted) – and that when an anti-assignment clause was “unambiguous,” it had to be enforced unless it violated the law or public policy.
The appellate court said that even if the Johnsons’ no-fault policy unambiguously prohibited the assignment of rights to the plaintiffs, anti-assignment clauses in no-fault insurance policies were “unenforceable” if they prohibited an assignment after the loss occurred of an accrued claim to payment.
The appellate court reasoned that the Johnsons had an accrued claim against Geico for payment for healthcare services that already had been provided by the plaintiffs before the Johnsons executed the assignments. Accordingly, it ruled, even assuming that the anti-assignment clause was unambiguous, it was unenforceable because it was contrary to public policy.
The appellate court concluded by rejecting Geico’s request that it find that Shah was wrongly decided, observing that Shah still was on appeal to the Michigan Supreme Court. See Jawad A. Shah, M.D., PC v. State Farm Mutual Automobile Ins. Co., 503 Mich. 882 (2018).
The case is Spine Specialists of Michigan, PC. v. Geico Indemnity Co., No. 343683 (Mich. Ct. App. Aug. 15, 2019). Attorneys involved include: For SPINE SPECIALISTS OF MICHIGAN PC, AMERICAN ANESTHESIA ASSOCIATES LLC, Plaintiffs-Appellants: JEAN E. CHARBONEAU. For GEICO INDEMNITY COMPANY, Defendant-Appellee: KAREN E. BEACH.
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].