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Wednesday, July 5, 2017
By Michael Nichols
Categories: Personal Injury
Watch out for more potential lawsuits by health care providers against patients. A healthcare provider possesses no statutory cause of action against a no-fault insurer for recovery of PIP benefits (medical bills) in an auto accident case.
In Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co (No. 152758) (May 2017), the Michigan Supreme Court held that the healthcare providers do not possess a statutory cause of action against no-fault insurers for recovery of personal protection insurance (PIP) benefits that were paid under the no-fault act.
In other words, the hospital that treats you after the car accident in which you were hurt, cannot sue your auto insurance company for its medical bills. Instead, the Supreme Court said that the hospital/medical care provider will have to sue the insured (in other words, you, the injured person who was treated).
On June 20, 2011, Jack Stockford was injured in a motor vehicle accident. His no-fault insurer was State Farm Mutual Automobile Insurance Company. Stockford was treated on at least three occasions by Covenant Medical Center, a healthcare provider. Covenant sent State Farm the bills for medical services it provided to Stockford. It was not contested that State Farm Mutual received the bills, which totaled $43,484.80. Allstate denied coverage and refused to pay Covenant's bills. The injured person, Stockford, sued Allstate and the case was settled.
Stockford signed a release that freed Allstate from all claims against it, including medical bills. Covenant’s bill collectors later found out about the settlement and release that Stockford entered into with Allstate. Covenant then sued Allstate for payment of its outstanding bills of $43,484.80. Covenant filed a motion for summary judgment against the insurance company, who owed the money because it covered the bills incurred under the policy.
The Circuit Court judge granted State Farm Mutual’s motion to resolve the case, known as a motion for summary judgment. The Court focused on the fact that Stockford released State Farm Mutual from liability. The Court of Appeals disagreed and reversed, holding that because Covenant sent Allstate all of its invoices prior to settlement with Stockford, Allstate was put on notice of the medical bills, therefore, Allstate's liability to Covenant could not be discharged by Allstate's settlement with Stockford.
The Michigan Supreme Court disagreed with the Michigan Court of Appeals' decision. The Court held that a healthcare provider possesses no statutory cause of action against a no-fault insurer for recovery of PIP benefits.
This outcome does not mean that a healthcare provider is without recourse. A provider that furnishes healthcare services to a person for injuries sustained in a motor vehicle accident may seek payment from the injured person for the provider’s reasonable charges. However, a provider simply has no statutory cause of action of its own to directly sue a no-fault insurer. The Supreme Court expressly overruled all Court of Appeals caselaw inconsistent with its conclusion in the Covenant case.
It has always been practice and protocol for healthcare providers to sue the insurance company when they are not paid for their medical services. This decision will be devastating to an injured person, who finds that his/her auto insurance refuses to pay medical payments that are otherwise supposed to paid through his/her auto insurance (PIP). Instead of the healthcare provider suing the insurance company, now they will be forced to sue the injured person. Also, healthcare providers could potentially be reluctant to provide the necessary healthcare to injured individuals when they do not have a statutory right to sue the insurance company.
James T. Heos, Wendy Schiller-Nichols and Matt Heos are all thoroughly familiar with the Covenant case and both its impact and limitations. They know how to protect your rights. For attorneys who are committed to results and who are experienced with first party and third-party auto accident claims, call the Nichols Law Firm at 517-432-9000