No-Fault Benefits – Michigan Insurance Law – Car Accident Law

Do hospitals, doctors and other health care providers have the right to bring a direct statutory cause of action under the No-Fault Act to recover No-Fault PIP insurance benefits for allowable expenses from a No-Fault insurer?

In a decision filed May 25, 2017, the Michigan Supreme Court decided that the answer is “no” – i.e. health care providers do not have a statutory cause of action to recover No-Fault PIP benefits under Michigan’s No-Fault Act. This decision overruled many years’ worth of case law precedents in the lower courts, where the lower courts had held that hospitals and other health care providers had “independent standing to bring a claim against an insurer for the payment of no-fault benefits.” However, the Supreme Court overturned these longstanding precedents, holding that health and medical care providers do not have a statutory cause of action under Michigan’s No-Fault Act.

The Supreme Court’s new ruling may have some significant practical effects. First, it will be interesting to see if hospital associations and health care lobbies persuade the legislature to enact a statutory amendment granting them an express, direct cause of action to bring claims under the No-Fault Act. Second, the Supreme Court’s decision noted that MCL 500.3143 prohibits only assignments of rights to PIP benefits payable in the future, which could mean that contractual “assignments” of an injured person’s rights to past and present no-fault insurance benefits will be an area of increasing legal and practical interest in the health care industry, and also in future litigation. In any event, it appears that the Supreme Court’s recent decision may somewhat disrupt the expectations of hospitals, physicians, and other health care providers (as well as No-Fault insurers) that have been established over many years. The case is Covenant Medical Center Inc v State Farm Mutual Insurance Company, Supreme Court 152758, May 25, 2017.

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About the Author

Jay Zelenock

Mr. Zelenock grew up in Ann Arbor, Michigan, and earned a B.A. in history from the University of Michigan. He graduated from the Indiana University Maurer School of Law in 1998, and has practiced law in Traverse City since 1998.