Centria Home Rehab. v. Phila. Indem. Ins. Co.
| Decision Date | 02 March 2023 |
| Docket Number | 359371,359372 |
| Parties | CENTRIA HOME REHABILITATION, LLC, Plaintiff-Appellant, v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant-Appellee, and AUTO CLUB INSURANCE ASSOCIATION, Defendant. CENTRIA HOME REHABILITATION, LLC, Plaintiff-Appellant, v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant-Appellee, and AUTO CLUB INSURANCE ASSOCIATION, Defendant. |
| Court | Court of Appeal of Michigan — District of US |
Oakland Circuit Court LC Nos. 2020-180029-NF, 2020-180029-NF
Before: K. F. KELLY, P.J., and MURRAY and SWARTZLE, JJ.
In these consolidated appeals, in Docket No. 359371, plaintiff Centria Home Rehabilitation, LLC, appeals by delayed application for leave to appeal[1] the trial court's order granting summary disposition under MCR 2.116(C)(10) in favor of defendant Philadelphia Indemnity Insurance Company.[2] In Docket No. 359372, plaintiff appeals by right the same trial court's order granting defendant's motion for case evaluation sanctions under MCR 2.403(O). This case presents the question of whether a health care provider, acting as assignee of an insured's right to personal injury protection (PIP) benefits or as a plaintiff in a direct action under MCL 500.3112, may sue an insurer to recover the difference between what the assignee billed and what the insurer paid when there is a dispute over the reasonableness of the charges. We conclude that it does When a healthcare provider, acting under an assignment of rights from the insured or under a direct cause of action under MCL 500.3112, seeks to recover the balance due for PIP benefits from an insurer and there is a dispute over the reasonableness of the charges, the health care provider has standing to bring such a claim directly against the insurer. Thus, because the trial court erred when it granted defendant's motion for summary disposition, we reverse the trial court's order in Docket No. 359371, vacate the trial court's order in Docket No. 359372 granting case evaluation sanctions, and remand for further proceedings consistent with this opinion.
On July 6, 2018, Nicholas Randall was injured while a passenger in a commercial vehicle operated by Homes of Opportunity, Inc. and insured by defendant. Randall suffered various injuries including diffuse traumatic brain injury, lumbar spine fractures, and a fractured pelvis. On December 22, 2018, plaintiff began providing 24-hour in-home attendant care prescribed for Randall.
Plaintiff charged $33.20 an hour for its services. For the period from December 22, 2018, through January 12, 2019, plaintiff submitted a claim in the amount of $15,767.77. Defendant issued a check in the amount of $12,363.12 to plaintiff, accompanied by a letter explaining that payment was lower than billed on the basis of a "market survey conducted in April 2019." Plaintiff subsequently filed a single count complaint against defendant and Auto Club Insurance Association (ACIA), alleging that Randall was entitled to receive benefits under the no-fault act and that defendant and ACIA were obligated under the no-fault act to pay for Randall's medical expenses, including attendant care services. Plaintiff alleged that Randall had assigned to plaintiff all rights to payment for services performed by plaintiff and that plaintiff possessed all right to collect past or present benefits.
Defendant moved for summary disposition under MCR 2.116(C)(10), asserting that it had paid $446,335.68 for attendant care services for Randall through February 13, 2021, the balance claimed by plaintiff totaled $157,792.90, plaintiff's claim to that balance arose solely from an assignment from Randall's mother as Randall's caregiver and, without that assignment, plaintiff had no cause of action against defendant for the balance. Citing McGill v Auto Ass'n of Mich, 207 Mich.App. 402; 526 N.W.2d 12 (1995), and LaMothe v Auto Club Ins Ass'n, 214 Mich.App. 577; 543 N.W.2d 42 (1996), overruled in part on other grounds by Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich. 191; 895 N.W.2d 490 (2017), defendant contended that Randall, as assignor, had no cause of action, direct or indirect, against defendant for the balance. Thus plaintiff, as assignee standing in the shoes of Randall, likewise had no cause of action against defendant, and dismissal of the complaint was required as a matter of law.
In its motion, defendant contended that under McGill and LaMothe, an insured cannot suffer damages from a dispute regarding a balance due for medical care or expenses because an insurer is obligated to defend and indemnify its insured in the event the insured is sued by a provider for an outstanding balance. Defendant contended that a provider that is dissatisfied with an insurer's payment has no cause of action against the insurer; rather, it must sue the insured. Thus, because an assignee acquires only the rights possessed by the assignor, Randall could not assign a claim against defendant. Defendant also contended that any claims for payment for services provided before March 2, 2019, were precluded by MCL500.3145(1), which limits recovery of benefits to one year before commencement of the action and that plaintiff's claims for payment for services provided after January 5, 2020, the date of the assignment, were precluded by MCL 500.3143, which provides that "an agreement for assignment of a right to benefits payable in the future is void."
In plaintiff's response to defendant's motion for summary disposition, plaintiff admitted that defendant had paid a portion of its charges, but denied that the hourly rate proposed by defendant was reasonable. Plaintiff also denied that its claims were based solely on the assignment of rights, and contended it had a statutory direct cause of action against defendant under MCL 500.3112, part of the July 2019 amendment of the no-fault act. Plaintiff disputed defendant's reliance on McGill, asserting that McGill was factually distinguishable from this case. Plaintiff also discounted defendant's reliance on LaMothe, asserting that both decisions had concluded that the insured had not "incurred" the provider's charge.
Addressing defendant's argument regarding the one-year-back rule, plaintiff stated that it was not seeking payment for services provided before March 2, 2019. Responding to defendant's contention that claims were precluded for services provided after the date of the assignment, plaintiff explained that it was not only requesting payment of PIP benefits under the assignment of rights, but also under MCL 500.3112, which took effect on June 11, 2019, and created an independent right for medical providers to claim PIP benefits from insurers.
After the parties submitted their briefs but before the court issued a decision, the parties attended facilitation. The facilitator, serving as a special case evaluation panel pursuant to the trial court's amended scheduling order, issued an award of $35,000 in favor of plaintiff. Defendant accepted the award but plaintiff rejected it.
Foregoing oral argument pursuant to MCR 2.119(E)(3), the trial court issued an opinion and order granting summary disposition in favor of defendant. The trial court agreed with defendant that, under McGill and LaMothe, Randall had no cause of action against defendant for the balance due and, therefore, could not assign any cause of action to plaintiff. The trial court also agreed that plaintiff's challenge to the reasonableness of the rate paid by defendant must be asserted in a suit against Randall, in which defendant would be obligated to defend and indemnify him. Thus, the trial court granted defendant's motion for summary disposition and dismissed plaintiff's complaint.
Plaintiff subsequently moved for reconsideration under MCR 2.119(F)(3), repeating its attempt to distinguish McGill on the ground that plaintiff had taken action to collect the balance due by initiating this action, unlike the plaintiffs in McGill, and contending that Randall would suffer injury to his credit rating if plaintiff is required to file suit against him for the balance due. Citing Auto-Owners Ins Co v Compass Healthcare PLC, 326 Mich.App. 595; 928 N.W.2d 726 (2018), plaintiff contended that the reasonableness of a provider's charges is an issue of fact requiring presentation of evidence at trial. The trial court denied the motion as untimely, also noting that the motion presented "the same issues as ruled on by the Court, either expressly or by implication, and rests on legal theories and facts which could have been pled or argued prior to the Court's decision."
Defendant subsequently filed a motion for case evaluation sanctions, asserting that it had accepted the facilitator's case evaluation award, but plaintiff had rejected it. Thus, because the trial court had granted defendant's motion for summary disposition and dismissed plaintiff's complaint, defendant was entitled to an award of its actual costs, including a reasonable attorney fee, for services necessitated by plaintiff's rejection of the award under MCR 2.403(O).
Plaintiff opposed defendant's motion, first asserting the complaint was erroneously dismissed because Michigan law had changed following the release of this Court's opinion in Mich Institute of Pain &Headache, PC v State Farm Mut Automobile Ins Co, unpublished per curiam opinion of the Court of Appeals, issued June 24, 2021 (Docket No. 353033). Second, plaintiff asserted that the motion for sanctions should be denied in the interest of justice under MCR 2.403(O)(11), contending that Michigan law was "unsettled" at the time the trial court had granted summary disposition in favor of defendant, but had since been resolved in plaintiff's favor by this Court's decision in Mich Institute of Pain. Finally ...
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