Miller v. Allstate Ins. Co.

• Citation: 751 N.W.2d 463,481 Mich. 601
• Decision Date: 02 July 2008
• Docket Number: Docket Nos. 134393, 134406.,Calendar No. 2.
• Parties: William MILLER, Plaintiff-Appellee, v. ALLSTATE INSURANCE COMPANY, Defendant/Cross-Defendant-Appellant, and PT Works, Inc., Cross-Plaintiff-Appellee. William Miller, Plaintiff-Appellee, v. Allstate Insurance Company, Defendant/Cross-Defendant-Appellee, and PT Works, Inc., Cross-Plaintiff-Appellant.
• Court: Supreme Court of Michigan

751 N.W.2d 463

481 Mich. 601

William MILLER, Plaintiff-Appellee, v. ALLSTATE INSURANCE COMPANY, Defendant/Cross-Defendant-Appellant, and PT Works, Inc., Cross-Plaintiff-Appellee.

William Miller, Plaintiff-Appellee, v. Allstate Insurance Company, Defendant/Cross-Defendant-Appellee, and PT Works, Inc., Cross-Plaintiff-Appellant.

Docket Nos. 134393, 134406.

Calendar No. 2.

Supreme Court of Michigan.

Argued April 10, 2008.

Decided July 2, 2008.

Nemier, Tolari, Landry, Mazzeo & Johnson, P.C. (by David B. Landry and Michelle E. Mathieu), Farmington Hills, for Allstate Insurance Company.

Thav, Gross, Steinway & Bennett, P.C. (by Barry A. Steinway), Bingham Farms, for PT Works, Inc.

Allan Falk, P.C. (by Allan Falk), Okemos, for Preferred Medicine, Inc., Joanna Rohl, and Fatmeh Chehab, amici curiae.

Couzens, Lansky, Fealk, Ellis, Roeder & Lazar, P.C. (by Karen W. Magdich), Farmington Hills, for the International Association of Special Investigation Units, the Michigan Chapter of the International Association of Special Investigation Units, and the Property Casualty Insurers Association of America, amici curiae.

Hall, Render, Killian, Heath & Lyman, P.L.L.C. (by Margaret Marchak, Michael J. Philbrick, and Leah Voigt Romano), Troy, for the State Bar of Michigan-Health Care Law Section, amicus curiae.

Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and David W. Silver and Amy L. Rosenberg, Assistant Attorneys General, for the Attorney General, amicus curiae.

James L. Carey, Justin G. Klimko, and Cyril Moscow, Auburn Hills, for the Business Law Section of the State Bar of Michigan, amicus curiae.

Foster, Swift, Collins & Smith, P.C. (by Richard C. Kraus and Alan T. Rogalski), Farmington Hills, for the Michigan Physical Therapy Association, amicus curiae.

Keranen & Associates, P.C. (by Gary D. Quesada), Bloomfield Hills, for the American Institute of Architects Michigan, the American Council of Engineering Companies of Michigan, and the Michigan Society of Professional Engineers, amici curiae.

Gross & Nemeth, P.L.C. (by Mary T. Nemeth), Detroit, for the Insurance Institute of Michigan, amicus curiae.

MARKMAN, J.

We granted leave to appeal to consider: (1) whether plaintiff corporation was improperly incorporated under the Business Corporations Act (BCA), MCL 450.1101 et seq.; and, if so, (2) whether an improperly incorporated entity rendering physical therapy treatment has "lawfully" rendered such treatment under MCL 500.3157. However, because defendant insurance company lacks statutory standing to challenge plaintiff's corporate status under MCL 450.1221, which grants the power to challenge corporate status solely to the Attorney General, the above questions are not properly before us. Accordingly, we affirm the judgment of the Court of Appeals in plaintiff's favor, albeit on alternative grounds, and we remand to the trial court for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

William Miller was injured in separate car accidents on February 27, 2002, and September 13, 2002.¹ Miller was diagnosed with whiplash; his doctor prescribed physical therapy, and referred Miller to plaintiff PT Works, Inc. Miller was treated by PT Works from April 2, 2003, through August 28, 2003, incurring a bill for $29,150.

Miller was insured with defendant Allstate Insurance Company (Allstate). PT Works billed Allstate for $29,150, but Allstate refused to pay. Miller then filed this lawsuit against Allstate for no-fault benefits, and subsequently assigned his claim to PT Works, who then filed a claim against Allstate as cross-plaintiff.

Allstate moved for summary disposition, arguing that PT Works was unlawfully incorporated under the BCA, because PT Works was required to incorporate under the Professional Services Corporations Act (PSCA), MCL 450.221 et seq. Allstate argued that, because it was obligated to pay no-fault benefits only for treatment "lawfully" rendered, MCL 500.3157, PT Works could not recover no-fault benefits if it was unlawfully incorporated. The trial court denied Allstate's motion, concluding that physical therapy did not constitute "professional services" under the PSCA, and hence PT Works could incorporate under the BCA.

Allstate appealed, and the Court of Appeals affirmed. Miller v. Allstate Ins. Co., 272 Mich.App. 284, 726 N.W.2d 54 (2006). The Court of Appeals held that, regardless of whether PT Works was lawfully incorporated under the BCA, the treatment rendered to Miller was "lawful" under MCL 500.3157 because it was rendered by properly licensed physical therapists. Id. at 286-287, 726 N.W.2d 54.

Allstate then filed an application for leave to appeal with this Court, and, in lieu of granting leave, we vacated the initial Court of Appeals judgment and remanded to the Court of Appeals to consider whether PT Works was lawfully incorporated and, if PT Works was unlawfully incorporated, to reconsider whether treatment was lawfully rendered. 477 Mich. 1062, 728 N.W.2d 458 (2007).

On remand, the Court of Appeals again affirmed the trial court's denial of summary disposition. Miller v. Allstate Ins. Co. (On Remand), 275 Mich.App. 649, 739 N.W.2d 675 (2007). The Court of Appeals held that PT Works could have incorporated under the PSCA, and thus was unlawfully incorporated under the BCA, citing MCL 450.1251(1).² Id. at 654, 739 N.W.2d 675. In particular, the Court of Appeals noted that physical therapy constituted a personal service to the public, and required a license under Michigan law. Id. However, the Court of Appeals adopted its prior analysis and concluded that the improper incorporation under the BCA did not render the treatment "unlawful" under MCL 500.3157. Id. at 655-658, 739 N.W.2d 675.

PT Works appealed the decision of the Court of Appeals that it was unlawfully incorporated. In a separate application, Allstate appealed the decision of the Court of Appeals that, despite the unlawful incorporation, the treatment was "lawfully rendered." This Court granted both applications for leave to appeal. 480 Mich. 938, 741 N.W.2d 19 (2007).

II. STANDARD OF REVIEW

Questions of statutory interpretation are reviewed de novo. Lash v. Traverse City, 479 Mich. 180, 186, 735 N.W.2d 628 (2007).

III. ANALYSIS

Our constitution requires that a plaintiff possess standing before a court can exercise jurisdiction over that plaintiff's claim. Rohde v. Ann Arbor Public Schools, 479 Mich. 336, 346, 737 N.W.2d 158 (2007). This constitutional standing doctrine is longstanding and stems from the separation of powers in our constitution. Nat'l Wildlife Federation v. Cleveland Cliffs Iron Co., 471 Mich. 608, 612, 684 N.W.2d 800 (2004). Because the constitution limits the judiciary to the exercise of "judicial power," Const. 1963, art. 6, § 1, the Legislature encroaches on the separation of powers by attempting to grant standing to litigants who do not meet constitutional standing requirements.³ Rohde, supra at 350, 737 N.W.2d 158.

Although the Legislature cannot expand beyond constitutional limits the class of persons who possess standing, the Legislature may permissibly limit the class of persons who may challenge a statutory violation. That is, a party that has constitutional standing may be precluded from enforcing a statutory provision, if the Legislature so provides. This doctrine has been referred to as a requirement that a party possess "statutory standing." See, e.g., Graden v. Conexant Systems, Inc., 496 F.3d 291, 294 (C.A.3, 2007). Statutory standing "simply [entails] statutory interpretation: the question it asks is whether [the Legislature] has accorded this injured plaintiff the right to sue the defendant to redress his injury." Id. at 295 (emphasis in original).

In this case, plaintiff asks this Court to conclude that, under the express terms of the BCA, defendant may not bring any challenge against plaintiff's corporate status. That is, defendant's lack of statutory standing would act as a jurisdictional bar to defendant's affirmative defense that plaintiff was unlawfully incorporated. If the BCA categorically bars defendant's claim, then the lower courts should not have considered the substance of defendant's claim, as they each did in different ways; rather, they should have simply determined that defendant may not raise the affirmative defense that plaintiff was unlawfully incorporated. Accordingly, before considering whether an entity is lawfully incorporated under the BCA, a court must consider whether the party challenging corporate status has statutory standing to raise that claim.

Statutory standing, which necessitates an inquiry into whether a statute authorizes a plaintiff to sue at all, must be distinguished from whether a statute permits an individual claim for a particular type of relief. See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 92, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (distinguishing between "whether [a statute] authorizes this plaintiff to sue" and "whether the scope of the [statutory] right of action includes past violations," and stating that the latter "goes to the merits and not to statutory standing"). The statutory standing inquiry is generally jurisdictional; the claim-for-relief inquiry is non-jurisdictional. Lerner v. Fleet Bank, NA, 318 F.3d 113, 127 (C.A.2, 2003); see also Steel Co., supra at 92, 118 S.Ct. 1003 (stating that the claim for relief inquiry is non-jurisdictional, and contrasting that inquiry with the statutory standing inquiry); Northwest Airlines, Inc. v. Kent Co., 510 U.S. 355, 365, 114 S.Ct. 855, 127 L.Ed.2d 183 (1994) ("The question whether a ... statute creates a claim for relief is not jurisdictional."); but see Canyon Co. v. Syngenta Seeds, Inc., 519 F.3d 969, 975 n. 7 (C.A.9, 2008) (rejecting the proposition that statutory standing is jurisdictional). We acknowledge that the line dividing these inquiries is not always susceptible to easy demarcation; as Steel Co points out, "the merits inquiry and...