Zamarano M.D. PLC v. State Farm Mut. Auto. Ins. Co. (COA – UNP 3/28/2019; RB #3874)


Michigan Court of Appeals; Docket # 341327; Unpublished
Judges Murray, Gadola, and Tukel; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Not Applicable

Assignments of Benefits—Validity and Enforceability
Medical Provider Standing (Post-Covenant)

In this unanimous unpublished per curiam decision, the Court of Appeals reversed the trial court’s grant of summary disposition for defendant State Farm Mutual Automobile Insurance Company (“State Farm”), because the anti-assignment clause in the insured’s policy did not bar him from assigning his rights to PIP benefits to plaintiff medical providers, Lucia Zamarano, M.D., PLC (“Zamarano”) and Omic, LLC (“Omic”). Nor were the assignments impermissible partial assignments.

Sergio Machado was injured in an automobile accident, and subsequently treated by Zamarano and Omic. Machado assigned his rights to PIP benefits to Zamarano and Omic, who brought this action against State Farm to recover said benefits. State Farm denied payment, and moved for summary disposition The trial court granted State Farm’s motion, because “Machado’s assignments were barred by the anti-assignment clause in defendant’s policy . . . [and] the assignment was invalid because it was a partial assignment.”

The Court of Appeals reversed the trial court’s grant, analogizing the facts in the case at bar to those in Shah, in which a similar anti-assignment clause was held to be unenforceable. Similarly, the Court relied on its opinion in Henry Ford in finding that the partial assignments in this case were not invalid. An insured does not need to assign “an entire cause of action in order for an assignment to be enforceable.” The Court’s reasoned as follows, as to both arguments:

The facts of this case are remarkably similar to those in Shah and Henry Ford. The insured in this case was allegedly injured in an automobile accident, allegedly received medical treatment from a health care provider, and the treatment allegedly represented allowable expenses under the policy and the act. Thereafter, the insured assigned his right to payment under his insurance policy to the healthcare provider, though the policy included an antiassignment provision. That provision, as it relates to an agreement assigning a claim that has already accrued, is unenforceable as violative of Michigan public policy. Shah, 324 Mich App at 200. Following the precedent of Shah and Henry Ford, we conclude in this case that the antiassignment provision in the policy issued to the insured by defendant does not operate to bar assignment of the insured’s accrued cause of action. To the extent that defendant invites this Court to declare a conflict with Shah, we decline to do so for prudential reasons.

Intervening plaintiff also contends that the trial court erred in concluding that the assignment of PIP benefits was an impermissible partial assignment, and therefore invalid. Again, we agree. In Henry Ford, this Court addressed whether an assignment of less than an entire cause of action for PIP benefits is invalid as a partial assignment in light of the prohibition at common law against splitting a cause of action. Henry Ford, ___ Mich App at ___; slip op at 4-5. This Court concluded that the court rule governing the necessary joinder of parties, MCR 2.205, “replaced the common-law rule against splitting a cause of action[,]” and it does not require an insured to assign an entire cause of action in order for an assignment to be enforceable. Id. at ___; slip op at 4, quoting United Servs Auto Ass’n v Nothelfer, 195 Mich App 87, 89; 489 NW2d 150 (1992). This Court further reasoned that this analysis is supported by MCL 500.3142, which provides that PIP benefits are payable as the loss accrues, and therefore, the no-fault act “contemplates and requires a multitude of performances (i.e., payments) by the insurer[.]” Henry Ford, ___ Mich App at ___; slip op at 4. Joinder, rather than dismissal, is the proper remedy if “a proper disposition of the benefits sought by the healthcare provider requires the presence of an additional party or parties[.]” Id. at ___; slip op at 4. We therefore conclude in this case that intervening plaintiff’s cause of action is not invalid merely because Machado did not assign his entire cause of action to intervening plaintiff. 2 Henry Ford, ___ Mich App at ___; slip op at 4-5.