Borgess Med. Ctr. v. Resto

• Decision Date: 09 January 2007
• Docket Number: Docket No. 270773.
• Citation: 730 N.W.2d 738,273 Mich. App. 558
• Parties: BORGESS MEDICAL CENTER, Plaintiff-Appellee, v. Juan RESTO, Defendant, and Southern Michigan Insurance Co., Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

730 N.W.2d 738

273 Mich. App. 558

BORGESS MEDICAL CENTER, Plaintiff-Appellee, v. Juan RESTO, Defendant, and Southern Michigan Insurance Co., Defendant-Appellant.

Docket No. 270773.

Court of Appeals of Michigan.

Submitted November 7, 2006, at Grand Rapids.

Decided January 9, 2007, at 9:05 a.m.

Released for Publication March 30, 2007.

Miller Johnson (by Stephen R. Ryan and Richard E. Hillary, II), Grand Rapids, for Borgess Medical Center.

Lupo & Koczkur, P.C. (by Mark T. Rajt, Scott J. Lupo, and Kenneth L. Lupo), Detroit, for Southern Michigan Insurance Company.

Before: O'CONNELL, P.J., and WHITE and MARKEY, JJ.

PER CURIAM.

Defendant appeals by right the trial court's judgment awarding plaintiff no-fault benefits, penalty interest, and attorney fees after granting plaintiff's motion for summary disposition pursuant to MCR 2.116(C)(10). Defendant also appeals the trial court's granting of plaintiff's motion to compel discovery and the imposition of sanctions. We affirm.

I

Plaintiff brought this action to recover no-fault benefits from defendant, Southern Michigan Insurance Company, after providing medical treatment to Juan Resto for injuries he received in a January 23, 2004, automobile accident. According to an Allegan County Sheriff's Department accident report, Resto was injured while a passenger in a 1993 GMC van operated by Tomas Lucas-Diaz and owned by Francisco Lopez, whom defendant insured. The accident report indicated that Lucas-Diaz was driving the van south on US-131 when he lost control, slid into the median, and rolled over. The police report records the injuries of persons involved in the accident on a scale in descending order of severity from K (which apparently stands for "killed"), to A, B, C, and finally 0 (which apparently indicates no injury). The report indicated that Resto received level-A injuries in the accident and was transported by ambulance to "Borgess" for treatment.

Plaintiff filed its complaint for personal injury protection (PIP) benefits on August 9, 2004, alleging that it provided emergency medical care and inpatient medical care and treatment to Resto on January 23 and 24, 2004, as well as outpatient services on February 5, 2004, with Resto incurring charges totaling $12,402. Plaintiff attached to its complaint the affidavit of Linda Collins, its director of patient financial services, who averred that plaintiff provided medical services to Resto as stated in the complaint and in attached itemized statements. Collins also averred that plaintiff "provided a UB-92¹ and itemized statement for the care and treatment provided to Juan Resto, to [defendant] on April 19, 2004." Plaintiff also alleged in its complaint that the services it provided to Resto were medically necessary and that the charges for the services were commercially reasonable.

With respect to its direct claim against defendant, plaintiff alleged that defendant provided no-fault insurance to Francisco Lopez on the date of the accident and that Resto did not have no-fault insurance of his own or available to him as a resident relative of another. Plaintiff further alleged that defendant had unreasonably refused to pay or delayed paying plaintiff no-fault benefits. Thus, plaintiff alleged that it was entitled to penalty interest under MCL 500.3142 and attorney fees under MCL 500.3148.

Defendant filed its answer on September 3, 2004, neither admitting nor denying most of plaintiff's allegations, professing a lack of present knowledge. But defendant admitted that it had received plaintiff's itemized statements of care and treatment provided to Resto and a UB-92. Defendant claimed lack of knowledge to either admit or deny that the services plaintiff provided Resto were medically necessary. Defendant denied as untrue that plaintiff's charges were customary and commercially reasonable, but also claimed to lack present knowledge to be able to either admit or deny whether plaintiff's claim of $12,402 consisted of "customary charges for like professional medical services ... [that] are commercially reasonable." Defendant admitted that it provided no-fault coverage to Francisco Lopez on the date of the accident and that it had refused and still refused to pay no-fault benefits. As became apparent during discovery, the crux of Southern Michigan's defense was that after Resto's release from treatment, neither plaintiff nor defendant could locate him to verify that he had no other available insurance.

On May 27, 2005, plaintiff moved for summary disposition under MCR 2.116(C)(10). Plaintiff contended that the facts establishing defendant's liability for the charges incurred in treating Resto were undisputed: Resto was injured in an automobile accident while a passenger in a vehicle owned by Lopez and insured by defendant. Plaintiff asserted that it had provided defendant with its itemized statement, UB-92s, and the affidavit of its financial director attesting to the fact and the amount of the loss sustained. According to plaintiff, defendant's assertion that a hypothetical insurer might exist with a higher priority for paying plaintiff's claim was not a viable defense, and, therefore, plaintiff was entitled to judgment as matter of law.

Defendant responded by asserting that Resto, and therefore plaintiff, had the burden of proving that he had no other insurance of his own or available to him as a resident in the home of a relative who had insurance. Defendant asserted "the burden is upon a party claiming no fault benefits to establish that the orders of priority set forth in MCL 500.3114 have been satisfied." Defendant also asserted that plaintiff had not met its burden of proof that the charges were medically necessary and reasonable. Specifically, defendant argued that although defendant's affidavit had established that its charges were customary, they were not necessarily reasonable. See Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 257 Mich.App. 365, 670 N.W.2d 569 (2003), aff'd 472 Mich. 91, 693 N.W.2d 358 (2005). Thus, defendant argued that not only should plaintiff's motion for summary disposition be denied, defendant should be granted summary disposition under MCR 2.116(I)(2) instead.

The trial court ruled there was no dispute that defendant insured the vehicle in which Resto was a passenger when injured. Further, there was no evidence of any other insurance available to Resto, and the court rejected as unreasonable defendant's argument that plaintiff was required to prove a negative. The court noted that plaintiff made a reasonable inquiry whether other insurance was available; therefore, defendant has primary liability for no-fault benefits. Further, the court noted that defendant could seek reimbursement if another higher-priority carrier were subsequently identified. The trial court stated that defendant's interpretation of the no-fault act "doesn't even make sense" and "would defeat the purpose" of the act. Accordingly, the trial court ruled that plaintiff had met its burden of proof regarding defendant's liability. But the court found plaintiff's evidence lacking with respect to whether its charges were reasonable and reasonably necessary. Nevertheless, the court ruled that plaintiff would be entitled to interest and penalty interest on whatever charges plaintiff established were reasonable and reasonably necessary. The court also ruled that plaintiff would be entitled to attorney fees because defendant could not simply ignore plaintiff's claim on the basis that another carrier might be responsible. Consequently, the trial court granted partial summary disposition to plaintiff and denied defendant's motion for summary disposition pursuant to MCR 2.116(I)(2).

Plaintiff subsequently moved again for summary disposition with additional affidavits attesting that the services provided to Resto were medically necessary and that the charges were reasonable. Dr. William J. Behrje averred that all the products and services plaintiff provided Resto "were not only medically necessary, but they were essential to Mr. Resto's care, recovery, and rehabilitation for the injuries that he received as a result of his January 23, 2004, motor vehicle accident." Carol Lindauer, plaintiff's manager of patient financial services, expanded on Collins's prior affidavit. Specifically, Lindauer averred that all of plaintiff's charges were established after considering its costs, its nominal return, and regional and national comparisons of similarly situated and sized health-care providers. Lindauer asserted that all of plaintiff's charges were reasonable in light of the factors it considered in setting them and that plaintiff would charge the same amount with or without insurance coverage.

In its brief responding to plaintiff's second motion for summary disposition, defendant asserted that, on the basis of Dr. Behrje's affidavit, it no longer disputed that plaintiff's "treatment [of] Mr. Resto was reasonably necessary for his care, recovery, and/or rehabilitation as a result of injuries sustained in the motor vehicle accident...." Defendant only contested the imposition of penalty interest and attorney fees.

At the hearing on the motion, defendant argued that because plaintiff did not establish that its charges were reasonably necessary and reasonable until its second motion for summary disposition, the charges were not "overdue" until 30 days after that motion. The trial court disagreed with defendant's interpretation of MCL 500.3142(2) and asked defense counsel what was deficient about the information plaintiff initially provided to defendant. Defense counsel could not answer the court's question. The trial court ruled that it would not change its prior determination that penalty interest would accrue from 30 days after plaintiff provided defendant with its billing materials. The court observed that defendant had never indicated what it considered reasonable and necessary, which the court found to...