Michigan Court of Appeals; Docket #357148; Unpublished
Judges Boonstra, Gadola, and Hood; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Payments in Good Faith Defense [§3112]
Assignments of Benefits – Validity and Enforceability
Releases and Settlements
In this unanimous, unpublished, per curiam decision, the Court of Appeals reversed the trial court’s denial of Defendant State Farm Mutual Automobile Insurance Company’s (“State Farm”) motion for summary disposition, in which it sought dismissal of Plaintiff New Horizon Chriopractic PLLC’s (“New Horizon”) first-party action, and remanded for entry of an order granting State Farm’s motion. The Court of Appeals held that New Horizon, Darryl White’s assignee, was barred from bringing its action against State Farm because State Farm and White settled all White’s claims for no-fault PIP benefits related to the subject motor vehicle accident before New Horizon notified State Farm of the assignments.
In June 2017, Darryl White was injured in a motor vehicle accident while traveling as a passenger in a vehicle driven by State Farm’s insured. In April 2018, White filed suit against State Farm seeking to recover various unpaid no-fault PIP benefits, then proceeded to receive auto-related treatment from New Horizon on at least four occasions, after which, in December 2018, he assigned his right to pursue PIP benefits related to said treatment to New Horizon. In October 2019, White and State Farm reached a settlement with respect to all White’s PIP claims related to the subject accident. The settlement agreement covered ‘all PIP claims or possible claims of every kind for PIP benefits against [defendant], made by or on behalf of Mr. White, whether known or unknown . . . with the exception of only those claims for PIP benefits by or for [two other providers, neither of which was New Horizon].’ The next day, White executed a new assignment in favor New Horizon, after which New Horizon filed suit against State Farm. State Farm moved for summary disposition, arguing that New Horizon’s action “was barred by [State Farm’s] settlement with White because [State Farm] had discharged its liability through its good-faith payment to White.” The trial court denied State Farm’s motion, finding that the settlement agreement did not encompass New Horizon’s bills.
The Court of Appeals reversed the trial court’s summary disposition order, holding that New Horizon’s action was barred by MCL 500.3112, which “operates to discharge an insurer’s liability for PIP benefits assigned to a third party when it settles the PIP claims of the assignor without having been provided notice of the assignment.” In this case, State Farm settled all White’s claims for PIP benefits relative to the subject accident—save for those of two providers other than New Horizon—before New Horizon notified State Farm of the assignments it possessed. Thus, under MCL 500.3112, the settlement discharged State Farm’s liability for those assigned claims.
“In this case, the trial court was presented with undisputed evidence that defendant had entered into a settlement agreement with White before plaintiff filed its complaint, and that White had released ‘any and all’ PIP claims against defendant as part of that settlement. While plaintiff offered copies of the two assignments it had obtained from White, plaintiff did not offer any evidence that defendant had notice of any assignment of rights to plaintiff at the time defendant and White executed their settlement agreement on October 16, 2019. Indeed, the second of White’s two assignments to plaintiff was dated October 17, 2019, which indicates that it would have been impossible for defendant to have been aware of that assignment on October 16, 2019.
The first assignment, in December 2018, was executed after White had filed his complaint against defendant. MCR 2.209(A)(3) permitted plaintiff to file an application to intervene in White’s lawsuit, but plaintiff did not do so. The record is devoid of any evidence that defendant was aware, before entering into the settlement agreement, of any assignment to plaintiff of White’s right to PIP benefits. Although defendant was given notice, through the case evaluation process, that plaintiff had provided services to White, defendant’s mere awareness of plaintiff’s services and bills did not itself establish awareness by defendant of any right for plaintiff to receive payment for PIP-related services. See Covenant Med Ctr, 500 Mich at 211.”
Notably, this decision was released a week before the Michigan Supreme Court’s decision in MeCosta Co Med Ctr v Metropolitain Group Prop Cas Ins Co, wherein the Supreme Court held that “[w]hen the litigation involving the assignor occurs after the assignment, the rights could not yet have been affected by the litigation at the time they were transferred to the assignee.” The decision in this case is not inconsistent with Mecosta, given that the assignment in this case was executed after litigation between the injured person and State Farm commenced.