Michigan Court of Appeals; Docket # 340205; Unpublished
Judges Jansen, Kelly, and Borrello per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
One-Year Notice Rule Limitation [§3145(1)]
Medical Provider Standing (Post-Covenant)
In this unanimous unpublished per curiam opinion, the Court of Appeals reversed and remanded the trial court’s grant of summary disposition for Plaintiff Attendant Care Co. (“Attendant Care”) and ordered it to grant summary disposition for Defendant Farm Bureau General Insurance (“Farm Bureau”) regarding Attendant Care’s independent cause of action and the one year back rule. The Court reversed the trial court’s grant of summary disposition for Attendant Care because the Michigan Supreme Court decided Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich 191; 895 NW2d 490 (2017), which denied medical providers an independent cause of action. Further, the Court had previously decided in Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, ___ Mich App ___, ___; ___ NW2d ___ (2018) (Docket No. 340370); slip op at 10-12 that an assignment of benefits only relates back to one year before the assignment and therefore Attendant Care could not collect more than the money owed one year prior to the assignment.
Milad Ishaq (“Ishaq”) was involved in a motor vehicle accident and suffered a traumatic brain injury. Because of this injury he required 24-hour one-on-one care. Ishaq was admitted to Attendant Care on June 18 or 19, 2015. He stayed at the facility and received care until November 27, 2015 when he was moved to a different facility. Ishaq incurred many bills during his stay at Attendant Care and Attendant Care sought reimbursement from Ishaq’s no-fault provider, Farm Bureau, for the bills. Farm Bureau apparently did not pay all of the bills and Attendant Care instituted this action to get reimbursement from Farm Bureau.
During the pendency of the trial the Michigan Supreme Court issued Covenant and declared that medical providers do not have an independent cause of action. On May 30, 2017 Attendant Care executed an assignment of benefits from Ishaq to Attendant Care. Farm Bureau moved for summary disposition arguing that Attendant Care lacked an independent cause of action and it was only entitled to payment for benefits from May 30, 2016 onward. Because Attendant Care incurred its bills in 2015, Farm Bureau argued that Attendant Care was barred from recovery by the one year back rule. The trial court disagreed and denied Farm Bureau’s motion for summary disposition. Farm Bureau appealed.
The Court of Appeal found that Attendant Care was barred from recovery by the one year back rule and it subsequently denied Attendant Care’s motion to file an amended complaint because it would be futile. In W A Foote Mem Hosp v Mich Assigned Claims Plan, 321 Mich App 159, 176; 909 NW2d 38 (2017) the Court determined that Covenant applied retroactively to cases on appeal. Thus, Covenant barred Attendant Care’s independent cause of action since it was pending when Covenant was decided. Further, the Court determined in Shah, that an assignment of benefits only allows an assignee to recover benefits for one year prior to the assignment. Therefore, Attendant Care could not receive any benefits because its assignment only related back to May 30, 2016, and its bills were all incurred in 2015. Thus, refiling a new pleading would be futile under MCR 2.118.
“On [May 30, 2017], had Ishaq initiated an action against defendant, he would have been unable to recover benefits for any portion of the loss incurred more than one year before May 30, 2017, and plaintiff, as assignee, thus cannot rely on the assignment to recover the benefits it seeks in this action from defendant because the losses at issue were incurred well more than one year before May 30, 2017. . . .Because Ishaq did not have any right to recover the benefits at issue from defendant on the date the assignment was executed, plaintiff did not obtain via the assignment any right to recover these benefits from defendant.”
The Court also found that Farm Bureau did not waive its ability to challenge Attendant Care’s standing. Attendant Care alleged that Farm Bureau’s failure to raise the issue of standing in its responsive pleading waived the issue. However, the Court found that a lack of standing argument was controlled by MCR 2.116(c)(8) or (10), which does not require an issue to be raised in a responsive pleading. Thus, Farm Bureau was not barred from raising the issue because it failed to raise it in its responsive pleading.
“In other words, the lack of capacity to sue refers to a party’s inherent inability to initiate any lawsuit, while standing refers to whether a party who possesses the legal capacity to sue has the requisite interest in the lawsuit to be allowed to maintain it. Accordingly, the issue of standing is properly considered under MCR 2.116(C)(8) or MCR 2.116(C)(10) rather than MCR 2.116(C)(5). Leite, 439 Mich at 920; Stillman, 172 Mich App at 237; Moorhouse, 147 Mich App at 419 n 1.”
Thus, the Court overruled the trial court and found that Attendant Care could not recover from Farm Bureau because it was not entitled to greater benefits than Ishaq.