In Covenant Med Ctr, Inc. v. State Farm Mut Auto Ins Co, 500 Mich. 191, 895 NW2d 490 (2017) 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 before 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.
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 Docket No. 363699, unpublished citation 2023 Mich.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 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 Appeal’s 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.”
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 took effect.
Centria reaffirms 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 before 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.
Centria surrounded a lawsuit for an automobile accident that occurred on December 1, 2018, in which Linda Frisch claimed injuries. Id. As part of her care Frische’s daughter, Diana Irons, provided attendant care to Frisch. Centria only paid Irons $10 per hour, but sought a rate beyond $10. Id. Allstate paid the rate of $10 per hour which Irons was paid. Id.
Centria obtained an assignment from Frisch and filed suit against Allstate for the difference between what they paid Diana Irons and what they claimed the rate they were entitled to recover. Id. Allstate filed a motion for summary disposition, which was granted because Frisch did not incur anything beyond the $10 rate of pay Irons was paid and the assignment only allowed Centria to sue for what was incurred by Frisch. Id. The trial court agreed and granted the motion for summary disposition. Id.
Centria appealed the lower court’s ruling. Id. Centria argued on appeal that they were entitled to seek the difference between what was paid and what they claimed because MCL 500.3112 provided them an independent cause of action that would allow them to seek benefits beyond those assigned. Id. The Michigan Court of Appeals upheld the lower court’s ruling and ruled that the no fault act in effect at the time of the accident occurred. Id.
The court noted that the only way to pursue an independent cause of action at the time pursuant to Covenant was if there was an assignment of rights. Id. They further recognized that an assignment only entitled Centria to stand in the shoes of Frisch. Therefore, because nothing more than the $10 per hour in attendant care had been incurred, Centria was not entitled to seek the difference they claimed. Id. Observing the language contained in MCL 500.3107 as well as Burris v. Allstate, 480 Mich 1081, 1085 (2008) (Corrigan, J., concurring) the court recognized that in order for something to have been incurred that Frisch would have to have a legal obligation to have paid her daughter for an amount beyond the $10 per hour, which she did not. Id. Additionally, no documentation was submitted that anything beyond the $10 had been incurred. Id.
Nationally, other jurisdictions may borrow from Michigan and take the same approach to the application of their No-Fault Act and Amendments now and in the future. Therefore, if a defense existed under a prior No-Fault Act in effect at the time of an automobile accident, it could be used to defeat a claim. Centria reaffirms the fact that the no-fault act in effect at the time of an automobile accident applies regardless of when the services are rendered in Michigan. It also reaffirms that services must be incurred to be recoverable in Michigan.
For Michigan claims, for automobile accidents that occurred prior to June 11, 2019, insurance companies should always ask for an assignment from a medical provider when they submit a bill and medical providers should always obtain an assignment.