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Jones, et al v State Farm Mut Auto Ins Co, et al (COA – UNP 11/23/2021; RB #4354)

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Michigan Court of Appeals; Docket #353668; Unpublished
Judges Kelly, Stephens, and Redford; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING:
Allowable Expenses: Reasonable Necessity Requirement [§3107(1)(a)]
Allowable Expenses: Claims by Service Providers [§3107(1)(a)]
Lawfully Rendered Treatment [§3157]

TOPICAL INDEXING:
Not Applicable


SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order dismissing Intervenor-Plaintiff EQMD, Inc.’s (“EQMD”) first-party action against State Farm Mutual Automobile Insurance Company (“State Farm”). The Court of Appeals held that EQMD, a “pharmacy management organization,” qualified as a pharmaceutical “manufacturer” and/or “wholesale distributor” requiring licensure under the Public Health Code, and that, because EQMD was not so licensed, its services were not lawfully rendered for purposes of the no-fault act. The Court of Appeals held, alternatively, that EQMD’s services as a “pharmacy management organization” were not reasonably necessary products, services, or accommodations for the care, recovery, or rehabilitation of injured persons, and therefore not compensable under the no-fault act.

Maurika Jones and Willie Davis, III were injured in a car crash and thereafter received treatment from various medical providers. Certain of those medical providers contracted with EQMD, “a ‘pharmacy management organization’ that performs ‘billing and collections for medications dispensed by physicians,’ ” and purportedly “ ‘saves physician resources, assists the physician office to operate more efficiently, lowers the cost of medications to insurers, and ultimately provides a better service to patients.’ ” Jones and Davis, III were billed by their providers for EQMD’s services, which they sought reimbursement for in their subsequent first-party action against State Farm. State Farm moved for summary disposition, arguing that EQMD was a pharmaceutical “manufacturer” and/or “wholesale distributor” that was not licensed as such under the Public Health Code. Therefore, State Farm argued, the services EQMD rendered to Jones and Davis, III were not lawfully rendered for purposes of the no-fault act. State Farm further argued that EQMD’s services were not compensable under the no-fault act because, based on EQMD’s president’s own testimony, EQMD’s clients were doctors, not injured persons, and EQMD's services, therefore, were not related to the care, recovery, or rehabilitation of injured persons. Ultimately, the trial court granted summary disposition in State Farm’s favor.

The Court of Appeals affirmed the trial court’s summary disposition order, observing preliminarily that “ ‘only treatment lawfully rendered, including being in compliance with licensing requirements, is subject to payment as a no-fault benefit.’ ” The Court then concluded that EQMD qualified as a pharmaceutical “manufacturer” and/or “wholesale distributor” under the Public Health Code, and was therefore required to maintain proper licensure. Central to this conclusion was evidence that EQMD “ ‘offer[s] a line of custom compounded topicals’ and provides physicians with various medications through a mail-order program.” Thus, the Court held that, because EQMD failed to comply with the Public Health Code’s licensing requirements, any services or “treatments” they provided were not lawfully rendered for purposes of the no-fault act.

"In support of its motion for partial summary disposition, State Farm presented evidence from EQMD’s website that EQMD ‘offer[s] a line of custom compounded topicals’ and provides physicians with various medications through a mail-order program. State Farm asserted that the statement on EQMD’s website established that EQMD qualified as a ‘manufacturer’ for licensing purposes because it offered for sale at least one drug to another person for dispensing. State Farm also argued that EQMD qualified as a ‘wholesale distributor’ as demonstrated by EQMD’s bills related to plaintiffs, and the assertions on its website. State Farm contended that EQMD had to be licensed for pharmaceutical involvement and, because it lacked such license, its services were not lawfully rendered and were not compensable under the no-fault act.

Aside from the LARA letter, EQMD presented nothing refuting the evidence that EQMD offered ‘compounded topical[]’ products on its website. EQMD argued that it did not qualify as a ‘manufacturer’ under the Public Health Code, and that, ‘[a]t most, EQMD’s website language is suggesting that it has the ability to suggest medication management and logistical solutions to physicians but makes no representation that EQMD actually buys or sells the products.’ EQMD also asserted that a ‘significant legal distinction’ existed ‘between this national company’s website language and the services it performs in Michigan’ and performed in this case. None of these statements are supported by evidence. Regarding whether it constitutes a ‘wholesale distributor,’ EQMD contends, again without evidentiary support, that it does not purchase or sell medications and simply assists physicians with EQMD’s ‘sophisticated computer system in ensuring that the physician has adequate medications and amounts in the physician’s in-office pharmacy.’ Even assuming EQMD’s website merely served as an advertisement, as EQMD claims, the website clearly stated that EQMD ‘offer[s] a line of custom compounded topicals . . . to help further manage your patients’ pain.’ The trial court erred in concluding that the LARA letter created a factual issue regarding whether EQMD had to be licensed. Further, EQMD failed to rebut State Farm’s evidence that EQMD offered topical compounds for sale on its website. Accordingly, EQMD failed to establish that it did not serve as a manufacturer or wholesale distributor requiring licensure in Michigan, and summary disposition would have been proper on this ground.”

The Court of Appeals further held that EQMD’s services were not compensable under the no-fault act because they did not constitute “reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation.” EQMD admitted as much in a response brief, and EQMD’s president admitted as much when he testified that, “ ‘the company has nothing to do with an injured person’s care and that its clients are the doctors.’ ”

“The trial court concluded that EQMD’s services were ‘not a No-Fault benefit provided for the care, recovery, or rehabilitation of an injured person.’ The trial court based its determination on EQMD’s admission that it provides software to doctors, and the testimony from May, EQMD’s president, admitting that ‘the company has nothing to do with an injured person’s care and that its clients are the doctors.’ The trial court also noted EQMD’s admission in its response brief that its services were not a reasonably necessary product, service, or accommodation for an injured person’s care, recovery or rehabilitation.3 May’s testimony, and EQMD’s own admission precluded a finding that EQMD’s bills were ‘reasonably necessary’ as articulated by ZCD Transp, Inc, 299 Mich App at 342. Although EQMD asserts that Dr. Griesser and Dr. Galloway lawfully rendered treatment to plaintiffs, and that it served as a bill collector on their behalf, EQMD failed to provide evidence of that relationship with the doctors. Further, EQMD failed to attach any sort of assignment from the doctors or plaintiffs allowing EQMD to collect those bills. Given EQMD’s admissions, and the testimony of its president, EQMD failed to carry its burden of proving the reasonable necessity of its service or that it provided such for an injured person’s care, recovery, or rehabilitation. Accordingly, the trial court did not err in concluding that EQMD did not provide a compensable no-fault benefit and correctly granted State Farm summary disposition and also did not abuse its discretion by denying EQMD’s motion for reconsideration.”


Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit SinasDramis.com.

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