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Grady, et al v Wambach, et al (COA – PUB 11/9/2021; RB #4342)

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Michigan Court of Appeals; Docket #354091; Published
Judges Sawyer, Cameron, and Letica; Authored
Official Michigan Reporter Citation: Not Applicable; Link to Opinion; Link to Dissent


STATUTORY INDEXING:
Lawfully Rendered Treatment [§3157]

TOPICAL INDEXING:
Not Applicable


SUMMARY:
In this 2-1 published decision authored by Justice Cameron (Sawyer, dissenting), the Court of Appeals reversed the trial court’s summary disposition order dismissing Plaintiff Mercyland Health Services, PLLC’s (“Mercyland”) first-party action against Defendant Meemic Insurance Company (“Meemic”). Meemic argued that, because Mercyland’s owner and sole practitioner, Dr. Mohammad Abraham, was not licensed to practice medicine in Michigan, Mercyland violated the Michigan Limited Liability Company Act (MLLCA), which requires that all member of a PLLC be licensed to render the same professional services as the corporate entity. Furthermore, Meemic argued, because Mercyland violated the MLLCA, the treatments Dr. Abraham rendered to its patient/Meemic’s insured were not “lawfully rendered” for purposes the no-fault act. The Court of Appeals rejected Meemic's arguments, holding that Meemic did not have standing to challenge Mercyland’s corporate status under the MLLCA, and that, as a result, it would not be proper for the Court to reach the issue of whether Mercyland’s alleged violation of the MLLCA rendered the treatment it provided unlawful for purposes of the no-fault act. The Court reasoned that it would not be proper for it to reach that latter issue because Meemic presented no other argument as to the lawfulness of the treatments rendered other than that regarding Mercyland’s corporate form and the MLLCA.

Davina Grady, Meemic’s insured, was injured in a motor vehicle collision and thereafter received treatment from Dr. Abraham at Mercyland. Grady assigned her right to pursue no-fault PIP benefits related to her treatment to Mercyland, but Meemic denied Mercyland’s subsequent claim for benefits, arguing that, because Abraham was not licensed to practice medicine in Michigan, Mercyland violated the MLLCA, and all treatments it rendered to Grady were, therefore, not “lawfully rendered” for purposes of MCL 500.3157. The trial court agreed and granted summary disposition in Meemic’s favor.

The Court of Appeals reversed the trial court’s summary disposition order, relying on its prior decision in Sterling Heights Pain Mgt v Farm Bureau Gen Ins Co of Mich, ___ Mich App at ___ (2020). In Sterling Heights Pain Mgt, the Court of Appeals was presented with an identical argument to the one Meemic asserted in this case, and the Court of Appeals, in that case, held that, under the MLLCA, only the attorney general is allowed to challenge violations of the MLLCA. Furthermore, the MLLCA provides that mere “ ‘filing is conclusive evidence that all conditions precedent required to be performed under this act are fulfilled and that the company is formed under this act.’ ” Therefore, Meemic could not argue that “Mercyland’s medical services to Grady were not ‘lawfully rendered’ due to Mercyland’s improper corporate formation,’ ” because Meemic did not have standing to establish, preliminarily, that there was any defect in Mercyland’s corporate formation.

The Court further noted that, because Meemic’s challenge to the lawfulness of the treatments rendered to Grady hinged entirely on its argument regarding the MLLCA, it would not be proper for the Court to reach the ultimate issue in this case: whether the treatments were, in fact, lawfully rendered. In other words, “Meemic did not even argue that Mercyland was required to be licensed to provide certain services or that the individuals who provided Grady with medical care were unlicensed to render the services provided,” and, as a result, “it would be improper for [the Court of Appeals] to consider whether the alleged violation of the MLLCA rendered Mercyland’s treatment to Grady unlawful.”

“. . . Meemic argues that the MLLCA requires that all members and managers of a PLLC must be licensed and, because Mercyland’s sole member is not licensed to practice medicine in Michigan, any treatment rendered by Mercyland was not lawfully rendered under the no-fault act. This identical argument was recently addressed and rejected by this Court in Sterling Heights Pain Mgt, ___ Mich App at ___; slip op at 2-4.

In Sterling Heights Pain Mgt, the insured was injured in a motor vehicle accident and received services from the provider. Id. at ___; slip op at 1. The provider filed suit after the insurer refused to pay PIP benefits. Id. at ___; slip op at 1. The insurer moved for summary disposition, arguing that the provider had ‘violated the MLLCA’s requirement that all members and managers of a [PLLC] be licensed to render the same professional service as the corporate entity.’ Id. at ___; slip op at 1-2, citing to MCL 450.4904(2). In response, the provider ‘argued that [the insurer] did not have standing to challenge whether [the provider] was properly incorporated or organized and that all treatment rendered to [the insured] was done so by licensed physicians.’ Id. at ___; slip op at 2. After the trial court granted summary disposition in favor of the insurer, the provider appealed and argued that, under Miller, the insurance company lacked statutory standing to challenge its formation. Id. at ___; slip op at 2-3. This Court agreed because [t]he MLLCA contains a provision identical to the one relied on in Miller. MCL 450.4202(2) provides in part:

Filing is conclusive evidence that all conditions precedent required to be performed under this act are fulfilled and that the company is formed under this act, except in an action or special proceeding by the attorney general . . .

We conclude that, like in the insurer in Sterling Heights Pain Mgt, Meemic does not have standing to assert an affirmative defense that challenges Mercyland’s formation under the MLLCA.

. . .

Meemic and the dissent assert that the issue is not whether Meemic has standing to assert its affirmative defense. Instead, they assert Mercyland’s medical services to Grady were not ‘lawfully rendered’ due to Mercyland’s improper corporate formation. By reframing the issue on appeal, Meemic and the dissent would extend this Court’s holding in Healing Place at North Oakland Med Ctr v Allstate Ins Co, 277 Mich App 51; 744 NW2d 174 (2007) to affirm summary disposition. But in Healing Place, the insurer unquestionably had standing to defend its refusal to pay PIP benefits when neither the provider nor the medical institution were properly licensed to perform the services rendered. Id. at 59. But this is not the case here where the individuals who provided treatment to Grady were properly licensed. Nor is the issue, as the dissent argues, whether Mercyland itself was properly licensed. Indeed, Meemic did not even argue that Mercyland was required to be licensed to provide certain services or that the individuals who provided Grady with medical care were unlicensed to render the services provided. Simply put, the dissent puts the cart before the horse when it reaches the merits of Meemic’s affirmative defense that depends on a successful attack on the corporate formation of Mercyland without first answering the threshold question of whether Meemic has standing to assert it. We therefore conclude that Meemic’s arguments must fail under Miller and Sterling Heights Pain Mgt, which hold that the Attorney General alone has standing to challenge incorporation defects.

In sum, we conclude that the trial court erred by considering the merits of Meemic’s affirmative defense and by granting summary disposition in favor of Meemic. See Miller, 481 Mich at 608; Sterling Heights Pain Mgt, ___ Mich App at ___; slip op at 4. Because Meemic lacks standing to challenge Mercyland’s alleged improper formation, it would be improper for us to consider whether the alleged violation of the MLLCA rendered Mercyland’s treatment to Grady unlawful. See Jawad A Shaw, MD, PCC v State Farm Mut Automobile Ins Co, 324 Mich App 182, 201; 920 NW2d 148 (2018) (this Court generally does not decide moot issues). We also need not consider whether Meemic waived an affirmative defense as to whether the services provided by Mercyland were unlawful and whether the trial court erred by declining to grant summary disposition in favor of Mercyland under MCR 2.116(I)(2)."

Justice Sawyer, dissenting, argued that the majority erred by conceptualizing this case as one about standing, only. She argued that the focus should have been on the fact that “Mercyland’s sole member and manager, Mohammed Abraham, is not licensed to practice medicine in Michigan[,] [which] precludes Mercyland from lawfully rendering medical services, a requirement under the no-fault act.”


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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