Henry Ford Health Sys. v. Everest Nat'l Ins. Co.

• Decision Date: 20 November 2018
• Docket Number: No. 341563,341563
• Parties: HENRY FORD HEALTH SYSTEM, Plaintiff-Appellant, v. EVEREST NATIONAL INSURANCE COMPANY, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

326 Mich.App. 398

927 N.W.2d 717

HENRY FORD HEALTH SYSTEM, Plaintiff-Appellant,

v.EVEREST NATIONAL INSURANCE COMPANY, Defendant-Appellee.

No. 341563

Court of Appeals of Michigan.

Submitted November 14, 2018, at Detroit.

November 20, 2018, 9:00 a.m.

Foster Swift Collins & Smith, PC (by Paul J. Millenbach, Farmington Hills, and Donshur L. Oliver) for plaintiff.

Zausmer, August & Caldwell, PC, Farmington Hills (by Amy S. Applin, James C. Wright, and A. Adam Post, II ) for defendant.

Before: O’Brien, P.J., and Tukel and Letica, JJ.

Per Curiam.

In this action for recovery of personal protection insurance (PIP) benefits payable under the no-fault act, MCL 500.3101 et seq ., plaintiff, Henry Ford Health System, appeals as of right an order granting summary disposition in favor of defendant, Everest National Insurance Company. Because we agree that the trial court erred by enforcing an antiassignment clause contained in defendant’s insurance policy, we reverse and remand for further proceedings consistent with this opinion.

I. BACKGROUND

On July 30, 2016, Jennifer Quinn was involved in a motor vehicle accident. At the time of the accident, Quinn was insured under a no-fault insurance policy issued by defendant. Quinn received treatment from plaintiff, incurring medical expenses in excess of $200,000, which defendant refused to pay. On or about July 31, 2017, Quinn executed an assignment of rights, providing, in pertinent part, as follows:

This is an assignment of the right to enforce payment of charges incurred only for Services arising out of the July 30, 2016 accident, for which charges are payable under any policy of insurance, contract and/or statute. Such assignment shall include, in Assignee’s sole discretion, the right to pursue appeal of a payment denial under any procedure outlined in any insurance policy, contract or statute and/or the right to file a lawsuit to enforce the payment of benefits due or past due for these Services incurred and resulting charges.

Plaintiff initiated this action the same day, seeking payment for services provided to Quinn.

Defendant moved for summary disposition pursuant to MCR 2.116(C)(10), arguing that the subject insurance policy unambiguously precluded Quinn from assigning her rights without defendant’s consent. Defendant also asserted that because Quinn only assigned "the portion of her claim relating to [plaintiff]’s bills," rather than her entire cause of action, the partial assignment was invalid. Plaintiff opposed the motion on numerous grounds. Of significance to this appeal, plaintiff asserted that the purported antiassignment clause was ambiguous, unenforceable in the context of a postloss assignment of the right to payment for past or presently due benefits, and void pursuant to provisions of the Uniform Commercial Code (UCC), MCL 440.1101 et seq ., requiring that security interests in a healthcare-insurance receivable remain freely assignable.

The trial court ruled that plaintiff’s complaint against defendant was barred under the terms of the insurance policy. The court reasoned that Quinn’s failure to obtain defendant’s written consent before assigning her rights triggered a separate clause of the policy that precluded suit against defendant in the absence of full compliance with the terms of the policy. The trial court also rejected plaintiff’s contention that the antiassignment clause was invalid under the UCC because "[t]he assignee by operation of the statute is only a secured creditor who may assert rights to the health-insurance receivable against the assignor or lower priority creditors, but not against the account debtor (in this case the insurer)." Accordingly, the trial court granted defendant’s motion for summary disposition and dismissed plaintiff’s complaint with prejudice.

II. STANDARDS OF REVIEW

We review de novo a trial court’s ruling on a summary disposition motion. Robins v. Garg (On Remand) , 276 Mich. App. 351, 361, 741 N.W.2d 49 (2007). "Summary disposition is appropriate under MCR 2.116(C)(10) if there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law." Dancey v. Travelers Prop. Cas. Co. of America , 288 Mich. App. 1, 7, 792 N.W.2d 372 (2010) (quotation marks and citation omitted). Issues involving the proper interpretation of statutes and contracts are also reviewed de novo. Titan Ins. Co. v. Hyten , 491 Mich. 547, 553, 817 N.W.2d 562 (2012).

III. ANALYSIS

Plaintiff maintains on appeal that, acting as assignee of Quinn’s claim, it was entitled to recover past and presently due benefits for the services it rendered to Quinn for her accident-related injuries. According to plaintiff, to the extent that the pertinent clause in defendant’s insurance contract is construed as an antiassignment clause, it was inoperative to bar assignment of an accrued cause of action under Michigan law. We agree.

"Insurance policies are contracts and, in the absence of an applicable statute, are subject to the same contract construction principles that apply to any other species of contract." Id . at 554, 817 N.W.2d 562 (quotation marks and citation omitted). Under traditional principles of contract construction, "unless a contract provision violates law or one of the traditional defenses to the enforceability of a contract applies, a court must construe and apply unambiguous contract provisions as written." Rory v. Continental Ins. Co. , 473 Mich. 457, 461, 703 N.W.2d 23 (2005). A contract is ambiguous "if it is equally susceptible to more than a single meaning." Barton-Spencer v. Farm Bureau LifeIns. Co. of Mich. , 500 Mich. 32, 40, 892 N.W.2d 794 (2017). Because the contract at issue involves mandatory PIP benefits required by the no-fault act, the contract and statutes must be "read and construed together as though the statutes were part of the contract ...." Titan Ins. Co. , 491 Mich. at 554, 817 N.W.2d 562 (quotation marks and citation omitted).

The contractual provision at issue in this case states, in pertinent part, "Interest in this Policy may not be assigned without our [that is, defendant’s] written consent." Plaintiff contends that this provision should be read as an antitransfer clause, prohibiting the insured from assigning the policy to someone else without consent, rather than a limitation on the insured’s ability to assign an accrued right to recover under the policy. The policy does not define the term "interest." Thus, in determining the meaning of the word, it is appropriate to consult a dictionary. Vushaj v. Farm Bureau Gen. Ins. Co. of Mich. , 284 Mich. App. 513, 515, 773 N.W.2d 758 (2009). Relevant to interpreting this provision, Black’s Law Dictionary defines "interest" in both a "collective" and a "distributive" sense. "Collectively, the word includes any aggregation of rights, privileges, powers, and immunities; distributively, it refers to any one right, privilege, power, or immunity."Black’s Law Dictionary (10th ed.). Plaintiff’s interpretation is too narrow in that it focuses solely on the first half of the definition, while ignoring the latter. Nor does the dual nature of the term leave it equally susceptible to more than one meaning. Instead, "interest" can only be reasonably understood as referring to both collective rights and "distributive" or individual rights. By using a broad term like "interest" in this provision, the policy should be reasonably construed as prohibiting assignment of any interest—that is, interest in the policy itself or interest in specific benefits arising under the policy—without written consent from defendant. Because we construe this provision as unambiguously prohibiting assignment of any interest without defendant’s consent, we must enforce the provision as written unless it violates law or a traditional defense to enforceability applies. Rory , 473 Mich. at 461, 703 N.W.2d 23.

Another panel of this Court recently considered the enforceability of an unambiguous antiassignment clause in a no-fault insurance policy in Jawad A. Shah, MD, PC v. State Farm Mut. Auto. Ins. Co. , 324 Mich.App. 182, 920 N.W.2d 148 (2018). In that case, the Court determined that resolution of this issue turned on application of precedent established in Roger Williams Ins. Co. v. Carrington , 43 Mich. 252, 5 N.W. 303 (1880), in which the Court declined to enforce an antiassignment clause when the assignment was made after a loss of insured property had occurred. Shah , 324 Mich. App. at 198-199, 920 N.W.2d 148. The Shah Court explained:

Our Supreme Court in Roger Williams essentially held that an accrued cause of action may be freely assigned after the loss and that an antiassignment clause is not enforceable to restrict such an assignment because such a clause violates public policy in that situation. Roger Williams , 43 Mich. at 254 . In this case, [the insured] had an accrued claim against his insurer for payment of healthcare services that had already been provided by [the healthcare providers] before [the insured] executed the assignment. Under Roger Williams , the contractual prohibition against the [insured] assigning that claim to [the healthcare providers] was unenforceable because it was against public policy. Id .

Therefore, we conclude that the antiassignment clause in the instant case is unenforceable to prohibit the assignment that occurred here—an assignment after the loss occurred of an accrued claim to payment—because such a prohibition of assignment violates Michigan public policy that is part of our common law as set forth by our Supreme Court. Roger Williams , 43 Mich. at 254 ; Rory , 473 Mich. at 469-471 . [ Shah , 324 Mich. App. at 200, 920 N.W.2d 148.]

The relevant circumstances presented in this case are identical to those at issue in Shah . That is, like the insured party in Shah , Quinn was injured in an automobile accident and received treatment that was alleged to fall within the scope of allowable expenses for which she could seek PIP benefits under the...