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Med Alternatives v Auto-Owners Ins Co (COA – UNP 11/1/2018; RB #3807)

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Michigan Court of Appeals; Docket # 340561; Unpublished
Judges Beckering, Riordan, and Cameron per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING:
One-Year Notice Rule Limitation [§3145(1)]

TOPICAL INDEXING:
Medical Provider Standing (Post-Covenant) 


CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals vacated a jury award in favor of Plaintiff Med Alternatives because: (1) after the jury award was rendered, the Supreme Court decided Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich 191 (2017), which the Court concluded is to be applied retroactively; and (2) that a subsequent assignment obtained by Plaintiff Med Alternatives did not relate back to the date of the complaint and, therefore, Med Alternatives’ damages were limited to only those expenses incurred one year prior to the assignment pursuant to the one-year-back rule. 

In 1979, Mary Ann Malloy (“Mary Ann”) suffered severe lifelong injuries in an automobile accident. Defendant had a responsibility to pay long-term benefits arising from that automobile accident. Mary Ann required 16 hours of direct attendant care for her injuries, and 24 hours of available supervision. Kathern Malloy (“Kathern”), Mary Ann’s mother, provided such care to Mary Ann. As Kathern aged she grew concerned for Mary Ann’s long-term care. Kathern coordinated with Siporin and Associates to provide long-term care for Mary Ann. Siporin and Associates reached an agreement with Plaintiff, Medical Alternatives, to provide direct care to Mary Ann in her home. Siporin and Associates agreed with Kathern that it would be paid $360 a day starting in February 2015 to provide services to Mary Ann. Mary Ann subsequently assigned her benefits to Siporin and Associates on May 12, 2017.

When Defendant, Auto-Owners Insurance Company (“Auto-Owners”), received the invoices from Siporin and Associates, it refused to pay the full amount. Rather, Auto-Owners began paying $110 a day for the services rendered. Medical Alternatives sued Auto-Owners for the unpaid amounts on July 29, 2015. The parties went to trial and the jury awarded a verdict in favor of Plaintiff for $156,798.94 plus interest of $21,734.39. One week after the jury’s verdict the Michigan Supreme Court decided Covenant. Auto-Owners then filed a motion arguing that it be granted summary disposition and it be granted judgment notwithstanding the jury’s verdict. Plaintiff argued that Auto-Owners had waited too long to raise its issue and, alternatively, it should be allowed to amend its complaint pursuant to the assignment of benefits on May 12, 2017. The trial court ultimately denied all of Defendant’s motions and granted Plaintiff’s motions to amend the complaint and enter a judgment that reflected its status as an assignee. Auto-Owners subsequently appealed.

Retroactivity
Central to the Court’s reasoning was a determination that Covenant applied retroactively to jury cases. The trial court denied the application of Covenant retroactively to this case because it was decided by a jury. The Court rejected this argument based on its prior holding in W A Foote. Because W A Foote clarified that Covenant applied to all cases still open, the fact that the jury decided this case was irrelevant. The Court also explained that the failure to initially raise the issue of standing was not fatal to the case because the Court had previously held in Bronson Healthcare Group, Inc v Mich Assigned Claims Plan, 323 Mich App 302, 305; ___ NW2d ___ (2018), that Covenant applied to cases even where the issue was not raised. Thus, the Court found that Covenant applied retroactively, and the trial court erred in denying it application to this case.

“Plaintiff, as a medical provider, brought a direct claim against defendant under the no fault act. Pursuant to Covenant, 500 Mich at 196, plaintiff had no legal authority to do so, absent the existence of an assignment of rights from the insured, the effect of which is discussed, infra.”

One-Year Back Rule
The Court next held that a plaintiff could only collect damages from one year prior to the date the benefits were assigned to it, and not the date of the original action. First, the Court found that Plaintiff should be allowed to file a supplemental pleading to reflect its status as an assignee. The Court then found that under Jawad A. Shah, MD, PC v State Farm Mut Auto Ins Co, ____ Mich App ____, ___; ___ NW2d ___ (2018), the supplemental pleading would relate to the date of the assignment of the claims, and Plaintiff could only collect damages for one-year back of the assignment. Here, the Court found that the supplemental pleading must apply to the May 12, 2017 assignment and not the earlier original action. The one-year back rule would then only allow Plaintiff to collect an award amount from May 12, 2016 onward and not from February 2015 onward.

The Court of Appeals vacated the jury award because the award amount did not explain how much was for pre-assignment claims and how much was for post-assignment claims. The jury awarded its amount from February 2015 onward, but that amount was in error because under the one-year back rule Plaintiff could only collect from May 12, 2016. The jury did not provide details about how much was awarded for what dates; so, the Court ordered a jury bench trial to determine the pro-rated rate.

“The record reflects that plaintiff never produced such an assignment until after the trial ended, nor did it argue that it was the recipient of such an assignment at trial. Consequently, plaintiff’s assertion that MCR 2.118(C)(1) is applicable to the present case contradicts the plain language of the court rule, and is thus without merit. . . . Plaintiff was permitted to move the trial court for leave to file supplemental pleadings to reflect its status as an assignee. Plaintiff was not, however, permitted to have those supplemental pleadings relate back to the original complaint. Instead, plaintiff was limited to seeking damages that were incurred on or after May 12, 2016, which was “one-year-back” from the date of the assignment of rights.”

Thus, the Court reversed the trial court’s refusal to retroactively apply Covenant, vacated the jury’s verdict with respect to damages, vacated the trial court’s order allowing Plaintiff to amend the complaint, and remanded to the trial court for a jury trial on damages.

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