Michigan Court of Appeals; Docket # 339766; Unpublished
Judges Murray, Meter, and Gleicher per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Medical Provider Standing (Post-Covenant)
In this unanimous unpublished per curiam opinion, the Court of Appeals found that the Circuit Court improperly denied Plaintiff Michigan Head and Spine Institute’s (“MHSI”) motion to amend its complaint. The Court of Appeals reversed the Circuit Court because MHSI still had standing to bring a cause of action based on assignment of benefits, MHSI did not cause undue burden on Defendant Home-Owners Insurance Company (“Home-Owners”), MHSI did not cause an undue delay, MHSI did not have an opportunity to rectify its problem before filing its amended complaint, and MHSI did not split its actions.
MHSI had provided services to Maureen Calcatera (“Calcatera”) and initially brought an action for the recovery of benefits from Michigan Assigned Claims Plan (“MACP”). After MACP discovered that Home-Owners may be a no-fault provider of higher priority, MHSI motioned to have Home-Owners brought in as a defendant. The Circuit Court allowed Home-Owners to be brought in as a defendant. Home-Owners initially argued that Calcatera was disqualified under MCL 500.3113(b) as an owner driving a vehicle without required no-fault coverage under MCL 500.3101 or MCL 500.3103. However, during the trial the Michigan Supreme Court decided Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich 191; 895 NW2d 490 (2017), and the Circuit Court found that MHSI did not have standing to bring an action. MHSI argued that it had a cause of action from an assignment of benefits Calcatera had assigned to the organization on August 15, 2016. MHSI motioned to amend its complaint to reflect its status as an assignee from Calcatera. The Circuit Court refused to allow MHSI to amend its complaint because it found MHSI had caused undue delay, undue prejudice, and failed to rectify the deficiency in a previous amendment.
Based on Shah v State Farm Mut Auto Ins Co, ___ Mich App ___; ___ NW2d ___ (Docket No. 340370, issued May 8, 2018), the Court explained that MHSI should have filed a motion for a supplemental complaint, rather than an amended complaint. The supplemental complaint would be based on Calcatera’s August 15, 2016 assignment and MSHI would have the same rights that Calcatera held on August 15, 2016. The Court decided to treat MHSI’s amended pleading as a supplemental pleading and analyzed it in that context.
The Court of Appeals then turned its attention to the Circuit Court’s argument that Plaintiff failed to cure its deficiencies in an earlier amended complaint. At the time of the complaint, MHSI had standing to bring an independent action because Covenant had not been decided. There was no need for Plaintiff to raise an argument for standing based on the assignment of benefits. Thus, no deficiency existed at the time of the amended complaint and the circuit court was wrong to deny the motion based on a failure to cure the deficiency.
“When MHSI filed suit, caselaw stated that healthcare providers had standing in their own right to pursue recovery claims. See Covenant, 500 Mich at 203 n 23. That still held true when MHSI filed its first amended complaint to name Home-Owners as a defendant. The circuit court abused its discretion in denying MHSI’s motion to file a second amended complaint based on its failure “to cure deficiencies” in the first amendment. No “deficiency” existed at that time.”
The Court of Appeals then examined the Circuit Court’s argument that Plaintiff caused an undue delay. Defendant filed its motion to dismiss based on Covenant the day after Covenant was decided. The Court found it to be “fundamentally unfair” to require MHSI to file before Home-Owners, when MHSI did not have time to read the Covenant opinion, much less analyze it. Thus, the Court found that denial based on undue delay was wrong.
“The circuit court’s ruling suggests that Covenant was the starting pistol for a filing race—MHSI was required to file a motion to amend or supplement its complaint based on its assignee status before Home-Owners or be deemed to have caused delay and prejudice. Only MHSI could not win because Home-Owners sought to enforce Covenant before the ink had time to dry. Home-Owners had run its lap and was waiting at the finish line before the filing race could begin. It is fundamentally unfair to punish MHSI for not beating Home-Owners in a filing contest that began and ended only one day after a significant change in the law.”
The Court of Appeals then examined Home-Owners argument that MHSI fundamentally changed its cause of action. The Court explained that MHSI sought to gain standing in the case, not alter its underlying cause of action. The fundamental argument of insurance priority remained the same for MHSI. Because MHSI sought to gain standing in the case and not alter its underlying theory of liability, the Court found that MHSI did not fundamentally change its cause of action.
“In the original and first amended complaints, MHSI asserted that Calcatera had been injured in a motor vehicle accident, either Home-Owners was first in priority to provide coverage or the MACP was required to assign an insurer to provide coverage, and it was entitled to payment for the services it had provided to Calcatera. MHSI would raise the same claims as before, only as Calcatera’s assignee to collect for the services rendered. Contrary to Home-Owners’ objections, this was not a radical change in legal theories requiring additional discovery or significant work.”
Alternatively, Home-Owners argued that MHSI sought to improperly split its cause of action. The Court cited to the unpublished opinion of Michigan Head & Spine Institute, Inc v Hastings Mut Ins Co, unpublished per curiam opinion of the Court of Appeals, issued September 18, 2018 (Docket No. 340656), lv pending, where a defendant made a similar splitting argument, which was ultimately denied. Like the Hasting case, there was no showing that any other party requested to be a party to the action or that either party sought to bring in another party to the action. Because no other party was trying to become a party to the action, the Court found that summary disposition on the splitting of actions would be improper.
“Here, as in Hastings, there is no record indication that any other person or entity who provided services to Calcatera has filed or will file a separate lawsuit in connection with Calcatera’s accident. Neither the MACP nor Home-Owners has requested joinder of McLaren Macomb or any other individual as a necessary party plaintiff. Accordingly, we follow Hastings’s example and conclude that denial of MHSI’s motion to amend or supplement its complaint or granting Home-Owners’ summary disposition motion on this ground would be improper.”
Thus, the Court of Appeals reversed the circuit court because it found that the court abused its discretion when it denied MHSI motion for an amended (or supplemental) complaint and granted summary disposition for Home-Owners due to lack of standing.