Recently, in Centria Home Rehab., LLC v. Allstate Ins. Co., ____ Mich. App. _____, Mich Ct. App. Docket No. 363699, unpublished citation 2023 Mich. App. LEXIS 7744 (October 26, 2023), approved for publication December 14, 2023, the Michigan Court of appeals clarified that Covenant Med Ctr, Inc. v. State Farm Mut Auto Ins Co, 500 Mich. 191, 895 NW2d 490 (2017) still applies to automobile accidents that occurred prior to the No-Fault amendments which took place on June 11, 2019. Further, it also reaffirmed the language contained in MCL 500.3107 and long-established case law that allowable expenses must be “incurred” to be recoverable.
In Covenant, the Michigan Supreme Court held that a medical provider did not have an independent cause of action against an insurance company for no-fault benefits it provided to its underlying patient. Therefore, under the prior no-fault act that was in place prior to the June 11, 2019 amendments the only way a medical provider had standing to maintain an independent cause of action against an insurance company was if they received an assignment of rights from its patient.
In Andary v. USAA Cas. Ins. Co., 343 Mich. App. 1, (Mich Ct. App. 2022) the Michigan Court of Appeals held that the fee schedule provisions, and attendant care (56 per week cap) provisions contained in MCL 500.3157 did not apply to automobile accidents that occurred prior to the June 11, 2019, amendments. As part of the Michigan Court of Appeals reasoning they stated, “Given the presumption against retroactive application of statutory amendments, courts commonly apply the version of the no-fault act in effect at the time of the accident.” Id. at 10 (citing to Fuller v. Geico Indemnity Co., 309 Mich App. 495, 501; 872 NW2d 504 (2015). The Michigan Supreme Court affirmed this decision in Andary V. USAA Cas. Ins. Co, 2023 Mich. LEXIS 1153 by holding “It has long been the rule in Michigan that for insurance purposes “[t]he rights and obligations of the parties vest[] at the time of the accident.” Citing Clevenger v Allstate Ins Co, 443 Mich 646, 656; 505 NW2d 553 (1993), citing Cason v Auto Owners Ins Co, 181 Mich App 600, 609; 450 NW2d 6 (1989); Madar v League Gen Ins Co, 152 Mich App 734, 742; 394 NW2d 90 (1986); Detroit Auto Inter-Ins Exch v Ayvazian, 62 Mich App 94; 233 NW2d 200 (1975).
As Andary only spoke to the fee schedule and attendant care provisions contained in the new version of the no-fault act, many were left wondering what this meant in terms of arguments pertaining to the Covenant case law applying to services rendered after the no-fault amendments taking effect.
Centria reaffirms the fact that Andary stood for the proposition that the no-fault act in effect at the time of the accident governs an injured party and their provider’s causes of action against an insurance company, in its entirety. Hence, if the accident took place prior to June 11, 2019, and a medical provider is seeking recovery for services rendered after that date they would still need to obtain an assignment to have an independent cause of action against an insurance company.
In Centria, Allstate's insured, Linda Frisch, was injured in a December 1, 2018, motor vehicle accident. Frisch's injuries allegedly left her unable to care for herself and Centria hired Frisch's daughter, Diana Irons, to provide attendant care services to Frisch. Id. Centria paid Irons $10 per hour to perform attendant care services. Frisch executed an assignment to Centria for her right to payment for personal protection insurance/personal injury protection (“PIP”) benefits. Id. Centria then billed Allstate for these services at an hourly rate which exceeded the $10 rate that Centria paid Irons. Id. Due to this Allstate only partially paid the bill, Centria filed suit against Allstate seeking payment for the unpaid portion of the bill. Id. Allstate filed a motion for summary disposition arguing that the assignment from Frisch to Centria only allowed Centria to collect PIP benefits that were provided to Frisch. Id. The assignment, Defendant argued, did not establish liability against Frisch for the increased hourly rate that had been billed to Allstate. Because Frisch did not incur charges at the increase rate that was charged to Allstate, Centria could not collect that amount. The trial court agreed and granted summary disposition. Id. Centria then appealed to the Michigan Court of Appeals.
Centria argued that the trial court erred by granting summary disposition because it was allowed to pursue the unpaid portion of Frisch’s PIP benefits. Id. The Michigan Court of appeals disagreed. The threshold question was which version of the no-fault act applied (i.e., the one in effect at the time of the motor vehicle accident or the amended version in effect at the time that services were rendered. Id. The court noted that absent explicit language to the contrary, statues are presumed to operate prospectively and because the applicable statues did not include any explicit language directing retroactive effect, that the version in effect at the time of the automobile accident applied to the case. Id.
Centria argued that the amended version was applicable and that they had an independent right of action under MCL 500.3112. Id. The court of appeals in applying the act in effect at the time of the automobile accident held that the earlier version of MCL 500.3112 did not contain an independent cause of action for a medical provider. Id. They noted that the amended MCL 500.3112 that took effect on June 11, 2019, contained an independent cause of action, but that was not the act in effect at the time of the accident in 2018.
Citing to Covenant, the Court of Appeals stated, “Before the amendments to the no-fault act, healthcare providers could seek payment for PIP benefits only via an assignment from the injured party to the provider.” Id. The court, relying on the assignment language from Frisch to Centria, noted that under the plain terms of the agreement Frisch acknowledged that she incurred some expenses for her treatment, and that Centria could seek reimbursement for allowable expenses under MCL 500.3107. Id. Therefore, Centria was permitted to stand in the shoes of Frisch and pursue a claim against Allstate.
In regard to the amounts that exceeded the $10, the Michigan Court of Appeals clarified that in order to be incurred under MCL 500.3107, that it requires some degree of liability to exist as a result of the insured actually receiving the underlying goods or services and therefore “the insured must have an obligation to pay the attendant-care-service providers for their services.” Citing Burris v. Allstate, 480 Mich 1081, 1085 (2008) (Corrigan, J., concurring). Id. In support of Allstate’s position regarding what was incurred they attached Iron’s deposition testimony stating she was paid $10 per hour to care for Frish. Id. That evidence established that the incurred expenses were only the wages paid to Irons. Id. Allstate also attached pay logs showing the difference between what Centria charged Allstate and what Allstate actually paid, to demonstrate that Allstate was billed for services that were not incurred. Id.
In its response, Centria did not provide any documentary evidence to establish that the difference in amount had been incurred. Centria simply argued that it was entitled to seek compensation on behalf of Frisch’s behalf. Id. However, this did not establish that anything beyond the $10 per hour was incurred and that the assignment gave no greater right to any amount more than what was actually incurred. The lower court’s ruling was upheld.. Id.
Centria reaffirms the language contained in MCL 500.3107 that allowable expenses must be incurred. Centria also reaffirms the fact that the no-fault act, in its entirety, in effect at the time of the automobile accident applies to a cause of action by an injured party or one of their medical providers, regardless of when the services are rendered. Therefore, for automobile accidents that occurred prior to the no-fault amendments taking effect on June 11, 2019, medical providers must obtain an assignment and without it they have no standing to sue an insurance company under Covenant.
