By A. Vince Colella
The law allowing physicians to directly seek payment from an auto insurance company for medical services rendered to an accident victim has seen major changes over time. When doctors and hospitals began to suspect that their statutory right to file their own action to recover their outstanding bills was threatened by the Covenant Med Ctr v State Farm decision in 2015, providers began requiring that their patients sign an assignment of benefits guaranteeing the provider's right to protect and pursue recovery of its balances and barring the patient from seeking to recover the expenses for themselves. In 2019, the "reformation" of the automobile No Fault Act solidified a medical provider's statutory right to directly file a claim (and suit) against an insurance company without an assignment of benefits executed by the patient. [MCL 500.3112] However, physicians and hospitals continued the practice of securing assignments in order to ensure that their rights are best represented by their own counsel. Unfortunately, this has laid the groundwork for an unsettling conundrum for accident victims and their lawyers.
In a typical auto accident claim, a person injured in a crash files their claim against his or her own insurance company to enforce the payment of unpaid medical expenses, together with other benefits they are entitled to under the statute. However, in many cases, at various times during the course of litigation, medical providers will seek to intervene in a case on their own behalf to collect their own bill, "carving out" a portion, or in some cases all of the claim. While this may be a perfectly acceptable practice where a provider intervenes at the appropriate time and accepts responsibility for collection of their own bill, there are times when the provider is beyond the "one year back" (a rule precluding the right to recover a medical expense more than one year after the service has been rendered) and risks the possibility of asserting a claim barred by the limitations period. Under this scenario, where the claimant's lawyer has timely filed their suit, the attorney can protect the interest of the medical provider. More importantly, claimant's attorney can protect the interest of their client by making certain that the auto carrier pays the bill, thereby eliminating the possibility of exposing their client to personal liability for the outstanding medical expense.
Unfortunately, a recent decision by the Michigan Court of Appeals has muddied the waters for auto collision victims who have executed assignments with their medical providers, Robinson v Suburban Mobility Auth for Regional Transp, ____ Mich App ___ (2023), involved a plaintiff who was involved in a motor vehicle crash while occupying a city (SMART) bus. As a result of the accident, plaintiff sought medical treatment from a number of providers for which she executed assignments of benefits. Plaintiff filed suit against SMART to collect personal injury protection (PIP) benefits, including unpaid medical expenses. The defendant filed a motion for partial summary disposition to dismiss plaintiff's claims to recover expenses incurred with providers with whom she had executed an assignment. The court granted the motion, holding that, when the claimant executed the providers' assignments, she gave up her status as a "real party in interest" to aseert any right to recover the bills. Notably, the court reached this conclusion even though, after the lawsuit was filed, the plaintiff and her providers signed "Mutual Revocations of Assignments," seeking to treat them as though they had never existed. The Court acknowledged that this was a "creative" attempt to recover the balances, but ineffective. At the time plaintiff and her providers attempted to revoke the assignments, more than one year had elapsed since the bills were incurred. As a result, the court held, the providers had lost their right to recover the bills under the No Fault Law and had no right of recovery left to transfer back to the claimant. Although it is unclear if the court would have reached this same result if there had been time left on the one-year period, in this case, the providers, and by extension the claimant, were unable to recover the bills from the no fault carrier.
This case should serve as a cautionary tale for providers and plaintiffs' counsel alike. Most patients are not in a position to understand the legal effect of all of the documents they sign when they visit their doctors for treatment. Many providers may not understand that, by requiring their patients to sign assignments without a specific intention to file suit, they may be limiting rather than protecting their prospects of recovery. Going forward, in light of the protections built into the newly amended No Fault law, providers should be judicious in their use of assignments to avoid placing themselves and their patients in an unnecessarily precarious financial position.
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A. Vince Colella is a co-founder of personal injury and civil rights law firm Moss & Colella.
