By Lee Dryden
BridgeTower Media Newswires
DETROIT—A trial court’s decision to allow two medical providers to intervene in a no-fault suit was affirmed by a Michigan Court of Appeals panel.
In Lyle v. Farm Bureau Insurance, Michigan Head and Spine Institute PC and VHS of Michigan Inc. alleged they are owed more than $450,000 for medical services provided to decedent Mildred Lyle.
The plaintiff argued that the medical providers lack “standing” to sue independently under the no-fault act and therefore have no ability to intervene in a no-fault case.
The Wayne County Circuit Court permitted intervention and the appeals court panel affirmed.
“We reiterate that the medical providers’ intervention does not entitle them to pursue a direct claim for damages against defendants. But at the least, they may seek a declaration clarifying their right to payment in a specific amount,” Judges Douglas B. Shapiro and Elizabeth L. Gleicher stated in the unpublished per curiam opinion.
Judge Brock A. Swartzle concurred.
Lyle was struck by a tow truck as she attempted to walk across a Detroit intersection. She died from her injuries eight months after the accident.
Her personal representative, plaintiff Cheri Lyle Hudnut, brought a complaint that combined a tort action against defendant Willie Frank Williams, the truck’s driver, and defendant Motor City Towing Service, the truck’s owner, with a claim for personal injury protection (PIP) benefits. Hudnut asserted that either Progressive Michigan Insurance Company or Farm Bureau General Insurance Company of Michigan is responsible for payment of Lyle’s first-party no-fault benefits.
The medical providers moved to intervene, invoking MCR 2.209(A) (intervention as of right) and MCR 2.209(B) (permissive intervention).
“The medical providers’ intervention complaint asserts that their charges for Lyle’s care were reasonable and necessary, and that whichever insurance company was responsible for defendants’ coverage was obligated to pay them,” the opinion stated.
Hudnut argued in the trial court that because the medical providers lack “standing” to sue under Covenant v. State Farm (2017), they are precluded from intervening in this case.
“And if allowed to intervene, Hudnut asserted, the providers would bypass any order of priority established in the probate court. The providers acknowledged that they could not pursue a direct action against the insurers but insisted that they qualified for intervention under both MCR 2.209(A) and (B). Hudnut responded that allowing intervention would circumvent Covenant entirely, opening a backdoor for otherwise forbidden claims.”
The trial court granted the motion for intervention without identifying the applicable subsection of MCR 2.209.
Describing Covenant as being at the “center of the parties’ dispute,” the panel stated that the case overturned “decades of Court of Appeals caselaw concluding that a healthcare provider may assert a direct cause of action against a no-fault insurer to recover no-fault benefits” as the Michigan Supreme Court determined that “the no-fault act does not, in any provision, explicitly confer on healthcare providers a direct cause of action against insurers.”
“Covenant extinguished a health care provider’s right to sue an insurer directly,” the panel wrote. “But it also highlighted that a provider has a legally legitimate interest in being paid for the medical services it provides to an injured person.”
A footnote in the COA opinion stated, “The Legislature ‘overruled’ Covenant by enacting 2019 PA 21, which the Governor signed on May 30, 2019. Section 3112 now provides that ‘A health care provider ... may make a claim, and assert a direct cause of action against an insurer, or under the assigned claims plan ... to recover overdue benefits payable for charges for products, services, or accommodations provided to an injured person.’”
The opinion stated that Hudnut’s argument that the medical providers lack “standing” to intervene in this case is without merit.
“A trial court has jurisdiction to determine whether a potential intervenor may join an action even though the intervenor lacks a direct cause of action for damages. If a proposed intervenor has some stake in the outcome of an action, it is entitled to press its case for intervention. The language of the court rule additionally confirms that a statutory cause of action is not a prerequisite for intervention,” the COA opinion stated.
The opinion also stated, “Intervention is not an invitation for an end-run around Covenant; intervention is not a license to seek a judgment against the insurance companies.
“The providers are, however, free to seek a declaratory judgment regarding their right to payment, and to otherwise participate in the proceedings. Alternatively, the providers may seek to amend their complaint for intervention to lodge a cross-complaint against Hudnut.
“The medical providers also satisfy the grounds for permissive intervention under MCR 2.209(B)(2), as their claim and that of plaintiff share common questions of fact and law. Those questions include whether the proposed intervenors’ charges were reasonable and the services necessary, and the amount of money potentially owed by Lyle’s estate to pay the providers for the services they rendered.”
In a concurrence, Swartzle wrote that he does not agree that the medical providers have established grounds for permissive intervention under MCR 2.209(B).
“There is no suggestion that ‘a Michigan statute or court rule confers a conditional right to intervene,’ MCR 2.209(B)(1), and therefore the medical providers must rely on MCR 2.209(B)(2). Yet, the medical providers have not identified a specific, viable ‘claim or defense’ of their own, and this is a necessary condition of permissive intervention under MCR 2.209(B)(2),” he wrote, adding that he agrees that the trial court did not abuse its discretion in granting intervention under MCR 2.209(A).
Plaintiff’s counsel Richard E. Shaw said he was disappointed in the appeals court decision.
“The court held that the intervening medical providers had a right to intervene. But the practical impact is unclear,” he said. “We do not know if this means the intervenors are entitled to request a money judgment (ignoring Covenant) or are otherwise entitled to precede other creditors of the estate.
“We filed a motion for reconsideration/clarification asking the court for guidance on the nuts and bolts meaning of the decision, finding the opinion too abstract.”
Regarding the specific facts of this case, Shaw said the decision would only have an impact on older cases as Covenant is legislatively overruled.
Shaw, a solo practitioner in Troy, added that there is “no doubt the court gave very detailed attention to the abstract issue of whether a party may intervene.”
“I’m just sorry that the court did not go on to explain what relief the intervening party may seek as the case continues,” he said.
Intervening plaintiffs’ counsel Sean F. Kelly of Miller & Tischler PC in Farmington Hills said he was “very happy” with the COA decision.
After the Michigan Supreme Court’s decision in Covenant, it became confusing as to what was required for a medical provider to intervene into a patient’s lawsuit, Kelly said.
“By determining that medical providers have standing to intervene because they have a substantial interest in the litigation that would be detrimentally affected, the Court of Appeals brought clarity to the issue,” he said.
Considering the legislative overruling of Covenant, the appeal court’s opinion may have “limited influence on future medical provider cases,” Kelly said.
“However, the opinion makes it clear that having a statutory cause of action is not a prerequisite for intervention. I think this clarification will influence future cases involving intervention,” he said.
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