Mich Institute of Pain and Headache, et al v State Farm Mutual Automobile Insurance Company (COA – UNP 6/24/2021; RB #4288)


Michigan Court of Appeals; Docket #353033; Unpublished
Judges Gleicher, Cavanagh, and Letica; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Allowable Expenses: Incurred Expense Requirement [§3107(1)(a)]

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

In this unanimous unpublished per curiam decision, the Court of Appeals reversed the trial court’s summary disposition order dismissing Plaintiff Michigan Institute of Pain and Headache, PC’s (“Metro Pain Clinic”) first-party action against Defendant State Farm Mutual Automobile Insurance Company (“State Farm”). State Farm remitted only partial payment of the total amounts Metro Pain Clinic charged its patient and assignor, Bassam Honeini, for the treatment he received after he was injured in a motor vehicle collision, then argued that Metro Pain Clinic could not pursue the outstanding balance in litigation because Honeini had not “incurred” those charges for purposes of the no-fault act. Essentially, State Farm argued that, because Honeini had not personally suffered any damage or loss by the partial payments—i.e. been sued by Metro Pain Clinic for the outstanding balance—he had no basis, himself, to pursue the outstanding balance from State Farm, and thus neither did Metro Pain Clinic as his assignee. The Court of Appeals disagreed, holding that Honeini “incurred” the full amounts charged by Metro Pain Clinic once he accepted treatment, and that Metro Pain Clinic, as his assignee, could therefore pursue the balance of what was paid and what was charged from State Farm.

Honeini was injured in a motor vehicle collision and, after receiving treatment from Metro Pain Clinic, assigned his right to PIP benefits for that treatment to Metro Pain Clinic. Metro Pain Clinic submitted Honeini’s bills to State Farm for reimbursement, but State Farm remitted only partial payment of what was originally charged by Metro Pain Clinic, claiming that the charged amounts were not reasonable and the treatments not all necessary. Metro Pain Clinic then filed the underlying lawsuit against State Farm seeking to recover the balance between what State Farm paid and what Metro Pain Clinic charged, and State Farm moved for summary disposition, arguing that “Honeini could not have sued defendant for payment of the balance of the bills because he suffered no loss or damages (he was not sued [by Metro Pain Clinic] for the outstanding bills), and therefore [Metro Pain Clinic], as Honeini’s assignee, had no cause of action for payment of the balance of the bills.” Metro Pain Clinic argued in response that Honeini incurred the charges for his treatment the moment he accepted treatment, and that it was not required to first sue Honeini in order to establish some sort of loss or damage on Honeini’s part. Ultimately the trial court granted summary disposition for State Farm.

The Court of Appeals reversed the trial court’s summary disposition order, holding that State Farm’s “argument that Honeini had to be sued by [Metro Pain Clinic] in order to ‘incur’ ” the charges at issue was without merit. Honeini “incurred” the charges at issue once he accepted treatment from Metro Pain Clinic, and he, himself, “could challenge as unreasonable [State Farm’s] partial payments of [his] charges.” Therefore, Metro Pain Clinic, as his assignee, could also challenge State Farm’s partial payments.

"In summary, there is no dispute that Honeini received medical services from plaintiff and defendant paid amounts it deemed reasonable for those services pursuant to the no-fault act. In other words, defendant acknowledged with its payments that Honeini incurred—and became liable for—plaintiff’s healthcare services once those services were rendered but defendant disputed the reasonableness of those charges. Defendant does not dispute that plaintiff obtained a valid assignment of rights from Honeini and Honeini had the right under the no-fault act to have his reasonable medical expenses arising from the accident paid by defendant. Thus, plaintiff had the legal right to pursue reasonable medical expenses to which Honeini was entitled under the no-fault act. And plaintiff could challenge as unreasonable defendant’s partial payments of plaintiff’s charges for its healthcare services. Accordingly, the trial court’s order granting defendant’s motion for partial summary disposition of plaintiff’s claims challenging defendant’s partial payment of its charges for healthcare services provided to Honeini is reversed."

Notably, in reaching its holding, the Court of Appeals distinguished the circumstances in this case from the circumstances that existed in Auto-Owners v Compass Healthcare PLC, 326 Mich App 595 928 NW2d 726 (2018). The Court explained that, in Compass, the medical provider pursuing its balance was not acting upon an assignment and was relying upon the theory of implied contract.

"Similarly, there was no assignment of rights in Auto-Owners Ins Co v Compass Healthcare PLC, 326 Mich App 595; 928 NW2d 726 (2018). In that case, the healthcare provider contested the reasonableness of an insurer’s reimbursement for an insured-patient’s medical bills by repeatedly invoicing the insured-patient directly for payment of the unpaid balances under a contract theory, disputing the fact that the no-fault act precluded such action. Id. at 600-603. This Court disagreed, id. at 608-609, holding that '[t]o conclude that [healthcare providers] could prevail on the theory of an implied contract is contrary to the purpose of the no-fault act, and its implications would allow medical providers to circumvent the protective nature of the act[.'] [I]d. at 611. Again, in that case the insured had not executed an assignment of his right under the no-fault act to the payment of reasonable medical expenses incurred for medical services provided by that particular healthcare provider."