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W A Foote Memorial Hospital v. Michigan Assigned Claims Plan

Court of Appeals of Michigan

August 31, 2017

W A FOOTE MEMORIAL HOSPITAL, doing business as ALLEGIANCE HEALTH, Plaintiff-Appellant,
v.
MICHIGAN ASSIGNED CLAIMS PLAN and MICHIGAN AUTOMOBILE INSURANCE PLACEMENT FACILITY, Defendants-Appellees, and JOHN DOE INSURANCE COMPANY, Defendant.

         Kent Circuit Court LC No. 15-008218-NF

          Before: Boonstra, P.J., and Ronayne Krause and Swartzle, JJ.

          BOONSTRA, P.J.

         Plaintiff appeals by right the trial court's order denying its motion for summary disposition and granting the cross-motion for summary disposition filed by defendants Michigan Assigned Claims Plan and Michigan Automobile Insurance Placement Facility (collectively, "defendants"). We affirm, and remand for further proceedings consistent with this opinion.

         I. PERTINENT FACTS AND PROCEDURAL HISTORY

         This case arises out of an automobile accident that occurred on September 4, 2014. Zoie Bonner was a passenger in a 2003 Ford Taurus driven by her boyfriend, Philip Kerr, when it rear-ended another vehicle. The Taurus was owned by Bonner's aunt or uncle, and was insured under an automobile insurance policy issued by Citizens Insurance Company of the Midwest ("Citizens"). The police report generated by the Jackson City Police Department concerning the accident identified the applicable insurance for the Taurus as "Citizens Insurance." It also contained Kerr's name, a description of the vehicle, the vehicle registration number, and the vehicle identification number. It did not, however, identify Bonner as a passenger in the Taurus or as an injured party. Bonner did not seek immediate medical attention, but was treated for rib pain by plaintiff's emergency department the following day. Bonner's emergency department chart indicates that she told medical providers that she was involved in a motor vehicle accident the previous day in which she was a passenger in a vehicle that had rear-ended another vehicle. It does not appear that any employees of plaintiff asked Bonner about applicable automobile insurance. Plaintiff provided Bonner with medical services valued at $9, 113.

         During the year following the accident, plaintiff repeatedly attempted to contact Bonner to obtain information concerning applicable insurance coverage. Plaintiff sent letters, telephoned Bonner, and hired a private investigator eight months after the accident. The private investigator eventually made contact[1] with Bonner in June 2015. Bonner stated that neither she nor her boyfriend had automobile insurance but that her aunt owned the vehicle that Kerr had been driving. Neither plaintiff nor its investigator obtained any contact information for Bonner's aunt or boyfriend, apparently failing even to obtain Bonner's aunt's or Kerr's name. They also did not obtain the police report from the accident.

         On September 3, 2015 (one day before the one-year anniversary of the accident), plaintiff filed a claim with defendants, seeking no-fault personal protection insurance benefits (also called personal injury protection benefits or PIP benefits) on Bonner's behalf under Michigan's no-fault insurance act, MCL 500.3101 et seq. Under the no-fault act, an injured person may seek PIP benefits from defendants within one year of the injury when no personal protection insurance applicable to the injury can be identified. MCL 500.3172(1); MCL 500.3145.[2] The following day, and before any response from defendants, plaintiff filed suit requesting that the trial court enter a judgment declaring that defendants had a duty to promptly assign its claim to an insurer and that, upon assignment, the insurer would be responsible to process and pay the claim.

         On September 17, 2015, defendants responded to plaintiff's claim with a letter indicating that it was unable to process the claim without additional information. The letter requested that additional information be forwarded to defendants and stated that the claim would be reviewed once complete information was received. In October 2015, defendants answered plaintiff's complaint, asserting, among other defenses, that plaintiff had failed to state a claim for which relief could be granted, that plaintiff had not submitted a completed claim for PIP benefits, that defendants did not owe benefits because they were not "incurred" by Bonner, and that plaintiff was precluded from obtaining relief because plaintiff had "failed to obtain primary coverage within the obligation of the primary carrier(s)" to the detriment of defendants.

         Bonner was deposed in December 2015. She testified that her aunt owned the vehicle and maintained insurance on it, [3] although she did not know the name of the insurer. Citizens was subsequently identified as the insurer of the vehicle. Plaintiff attempted to submit a claim for PIP benefits to Citizens, but Citizens denied the claim as being beyond the one-year deadline contained in MCL 500.3145.

         Defendants moved for summary disposition under MCR 2.116(C)(10), arguing that plaintiff's claim was ineligible for assignment because applicable insurance had been identified, and because plaintiff could have recovered PIP benefits from Citizens if it had acted in a timely fashion. Plaintiff responded and also moved for summary disposition, arguing that defendants were required to promptly assign plaintiff's claim at the time of the claim application unless the claim was obviously ineligible, and that they had failed to do so. Plaintiff argued that the subsequent discovery of information concerning the Citizens policy did not alter this obligation.

         After a hearing on the parties' motions, the trial court denied plaintiff's motion for summary disposition and granted defendants' motion for summary disposition, reasoning that plaintiff had failed to demonstrate that it could not have identified applicable insurance at the time it submitted its application for PIP benefits to defendants. Further, plaintiff could have learned of the Citizens policy if it had filed suit directly against Bonner for the unpaid medical bills, if it had obtained proper information from Bonner at the time of treatment, if it had obtained the police report concerning the automobile accident, or if it had followed up on information that Bonner's aunt owned the vehicle in question.

         This appeal followed. During the pendency of this appeal, our Supreme Court issued its opinion in Covenant Med Ctr, Inc v State Farm Mut Ins Co, ___ Mich. ___; 895 N.W.2d 490 (2017) (Docket No. 152758). Covenant reversed decisions of this Court that had recognized that healthcare providers could maintain direct causes of action against insurers to recover PIP benefits, and held that no such statutory cause of action exists. Id., slip op at 2. On August 1, 2017, defendants filed motions with this Court for immediate consideration and for leave to file a nonconforming supplemental authority brief addressing Covenant and its effect on this case. This Court granted the motions, and accepted the supplemental briefs that had been submitted by both plaintiff and defendants.[4]

         II. STANDARD OF REVIEW

         This Court reviews de novo the grant or denial of motions for summary disposition under MCR 2.116(C)(10). See Johnson v Recca, 492 Mich. 169, 173; 821 N.W.2d 520 (2012). MCR 2.116(C)(10) provides that a trial court may grant judgment on all or part of a claim where "[e]xcept as to the amount of damages, there is no genuine issue as to any material fact, and the moving party is entitled to judgment or partial judgment as a matter of law." "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." West v Gen Motors Corp, 469 Mich. 177, 183; 665 N.W.2d 468 (2003). We also review de novo questions of statutory interpretation, see Saffian v Simmons, 477 Mich. 8, 12; 727 N.W.2d 132 (2007), as well as whether a judicial decision applies retroactively, McNeel v Farm Bureau Gen Ins Co of MI, 289 Mich.App. 76, 94; 795 N.W.2d 205 (2010).

         III. ANALYSIS

         Plaintiff argues that the trial court improperly granted defendants' motion for summary disposition, and instead should have granted summary disposition in favor of plaintiff, because defendants were obligated to assign its claim to an insurer under MCL 500.3172(1). Because we hold that Covenant controls this issue and applies to this case, we disagree. We therefore affirm the trial court's grant of summary disposition in favor of defendants, albeit for reasons other than those stated by the trial court. We further remand this case to the trial court for further proceedings consistent with this opinion.

         A. GENERAL LEGAL PRINCIPLES UNDER THE NO-FAULT ACT

         Michigan's no-fault insurance act, MCL 500.3101 et seq., requires motor vehicle owners or registrants to carry no-fault insurance coverage that provides for PIP benefits. PIP benefits are payable "for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle." MCL 500.3105(1). When a person suffers injury as the result of a motor vehicle accident, the person typically has one year to commence an action to recover PIP benefits. MCL 500.3145(1). The injured person must look first to his or her own no-fault policy or to a no-fault policy issued to a relative with whom he or she is domiciled. MCL 500.3114(1); see also Corwin v DaimlerChrysler Ins Co, 296 Mich.App. 242, 262; 819 N.W.2d 68 (2012). If neither the injured person nor any relatives with whom the person is domiciled have no-fault coverage, the person may seek to recover benefits from "the [i]nsurer of the owner or registrant of the vehicle occupied" and "[t]he insurer of the operator of the vehicle occupied, " in that order. MCL 500.3114(5). If the person is unable to recover under any of these options, the person may seek PIP benefits through Michigan's assigned claims plan[5] under MCL 500.3172(1), which provides:

A person entitled to a claim because of accidental bodily injury arising out of the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle in this state may obtain personal protection insurance benefits through the assigned claims plan if no personal protection insurance is applicable to the injury, no personal protection insurance applicable to the injury can be identified, the personal protection insurance applicable to the injury cannot be ascertained because of a dispute between 2 or more automobile insurers concerning their obligation to provide coverage or the equitable distribution of the loss, or the only identifiable personal protection insurance applicable to the injury is, because of financial inability of 1 or more insurers to fulfill their obligations, inadequate to provide benefits up to the maximum prescribed. In that case, unpaid benefits due or coming due may be collected under the assigned claims plan and the insurer to which the claim is assigned is entitled to reimbursement from the defaulting insurers to the extent of their financial responsibility.

         Accordingly, a person may recover PIP benefits from the assigned claims plan where (1) no personal protection insurance is applicable to the injury; (2) no personal protection insurance applicable to the injury can be identified; (3) the applicable insurance cannot be ascertained due to a dispute among insurers; or (4) the only applicable insurance is inadequate due to financial inability. See MCL 500.3172(1); Spectrum Health v Grahl, 270 Mich.App. 248, 251; 715 N.W.2d 357 (2006).[6]

         B. THE COVENANT DECISION

         MCL 500.3112 states in pertinent part that "[p]ersonal protection insurance benefits are payable to or for the benefit of an injured person or, in case of his death, to or for the benefit of his dependents." Before our Supreme Court's decision in Covenant, this Court had held that this language permitted a healthcare provider who had provided services to an insured to seek recovery of those benefits directly from the insurer. See Wyoming Chiropractic Health Clinic, PC v Auto-Owners Ins Co, 308 Mich.App. 398, 401; 864 N.W.2d 598 (2014), overruled by Covenant, ___ Mich. at ___, slip op at 3. In Covenant, our Supreme Court examined the language of MCL 500.3112 and held that the statute did not create an independent cause of action for healthcare providers to pursue PIP benefits from an insurer. Id. at, slip op at 2. Our Supreme Court also determined that no other provision of the no-fault act grants a statutory cause of action to a healthcare provider for recovery of PIP benefits from an insurer:

And further, no other provision of the no-fault act can reasonably be construed as bestowing on a healthcare provider a statutory right to directly sue no-fault insurers for recovery of no-fault benefits. We therefore hold that healthcare providers do not possess a statutory cause of action against no-fault insurers for recovery of personal protection insurance benefits under the no-fault act. The Court of Appeals caselaw concluding to the contrary is overruled to the extent that it is inconsistent with this holding.
In sum, a review of the plain language of the no-fault act reveals no support for plaintiff's argument that a healthcare provider possesses a statutory cause of action against a no-fault insurer. This conclusion does not mean that a healthcare provider is without recourse; a provider that furnishes healthcare services to a person for injuries sustained in a motor vehicle accident may seek payment from the injured person for the provider's reasonable charges. However, a provider simply has no statutory cause of action of its own to directly sue a no-fault insurer. [Id. at ___, ___; slip op at 2-3, 23-24 (footnotes omitted).]

         Although our Supreme Court did not specifically address MCL 500.3172(1) in its analysis, it is clear from the opinion in Covenant that healthcare providers such as plaintiff cannot pursue a statutory cause of action for PIP benefits directly from an insurer. Nothing in Covenant or the language of MCL 500.3172(1) suggests a different outcome where a healthcare provider seeks benefits from an insurer assigned by defendants as opposed to a known insurer.[7]Indeed, it would seem nonsensical to prohibit direct actions by healthcare providers seeking PIP benefits from known insurers while permitting such direct actions by healthcare providers where there is no known or applicable insurer. See Turner v Auto Club Ins Assoc, 448 Mich. 22, 28; 528 N.W.2d 681 (1995). ("[W]hen courts interpret a particular phrase in a statute, they must, whenever possible, construe the phrase in such a way that the interpretation does not conflict with, or deny effect to, other portions of the statute."). Accordingly, because our Supreme Court has determined that a healthcare provider cannot maintain a direct action for personal protection benefits under the no-fault act and nothing in MCL 500.3172(1) creates an exception to that rule, Covenant bars plaintiff's claim if its holding is applicable in this case. The question then becomes whether Covenant applies only prospectively, or applies to cases pending on appeal when it was issued. This question was the subject of the parties' supplemental briefing.

         C. WAIVER AND PRESERVATION

         Before reaching that question, we must decide whether it is properly before us. We conclude that it is. We find unpersuasive plaintiff's assertion that defendants waived or failed to preserve the issue of whether plaintiff possessed a statutory cause of action against them. First, the defense of "failure to state a claim on which relief can be granted" is not waived even if not asserted in a responsive pleading or motion. MCR 2.111(F)(2). Second, defendants asserted such an affirmative defense in this case and also asserted the defenses that plaintiff lacked standing to sue and that defendants did not owe benefits to plaintiff because plaintiff was not the one who had "incurred" them. This in essence is an assertion that plaintiff did not have a statutory right to sue defendants directly, in recognition of our holding that MCL 500.3112 "confers a cause of action on the injured party and does not create an independent cause of action for the party who is legally responsible for the injured party's expenses." Hatcher v State Farm Mut Auto Ins Co, 269 Mich.App. 596, 600; 712 N.W.2d 744 (2005). Rather, "the right to bring a personal protection insurance action . . . belongs to the injured party." Id.[8] Third, given the state of the caselaw at the time of the proceedings below, and defense counsel's statements at the summary disposition motion hearing, it is clear that counsel was aware that then-applicable Court of Appeals precedent likely would have rendered any such argument futile at the time. Finally, and while plaintiff cites Dell v Citizens Ins Co of America, 312 Mich.App. 734, 751 n 40; 880 N.W.2d 280 (2015), for the proposition that "[g]enerally, an issue must be raised, addressed, and decided in the trial court to be preserved for review, " this Court said in its very next breath that "[t]his Court may [nonetheless] address the issue because it concerns a legal issue and all of the facts necessary for its resolution are present." Id. The same is true here. We therefore conclude that the issue has not been waived and has been adequately preserved.[9]

         D. RETROACTIVITY VERSUS PROSPECTIVITY

         1. GENERAL PRINCIPLES

         " '[T]he general rule is that judicial decisions are to be given complete retroactive effect." McNeel, 289 Mich.App. at 94, quoting Hyde v Univ of Mich. Bd of Regents, 426 Mich. 223, 240; 393 N.W.2d 847');">393 N.W.2d 847 (1986) (citations omitted).[10] "We have often limited the application of decisions which have overruled prior law or reconstrued statutes. Complete prospective application has generally been limited to decisions which overrule clear and uncontradicted case law.' " Id. quoting Hyde, 426 Mich. at 240. If a rule of law announced in an opinion is held to operate retroactively, it applies to all cases still open on direct review. Id. at 94, citing Harper v Virginia Dep't of Taxation, 509 U.S. 86, 97; 113 S.Ct. 2510; 125 L.Ed.2d 74 (1993). On the other hand, a rule of law that applies only prospectively does not apply to cases still open on direct review and does "not even apply to the parties in the case" where the rule is declared. Id.

         2. SUMMARY OF THE PARTIES' POSITIONS

         Plaintiff would have us follow a line of cases that employ a "flexible approach" to determining whether a judicial decision has retroactive effect. See e.g., Bezeau v Palace Sports & Entertainment, Inc, 487 Mich. 455; 795 N.W.2d 797 (2010), citing Pohutski v City of Allen Park, 465 Mich. 675, 696; 641 N.W.2d 219 (2002) ("In general, this Court's decisions are given full retroactive effect. . . . However, there are exceptions to this rule. This Court should adopt a more flexible approach if injustice would result from full retroactivity. . . . Prospective application may be appropriate where the holding overrules settled precedent."); see also Tebo v Havlik, 418 Mich. 350, 360; 343 N.W.2d 181 (1984) ("Although it has often been stated that the general rule is one of complete retroactivity, this Court has adopted a flexible approach.") (footnote omitted). Under this line of reasoning, "resolution of the retrospective-prospective issue ultimately turns on considerations of fairness and public policy." Riley v Northland Geriatric Center, 431 Mich. 632, 644; 433 N.W.2d 787 (1988); see also Placek v Sterling Heights, 405 Mich. 638, 665; 275 N.W.2d 511 (1979). Plaintiff argues that it would be unfair to apply Covenant retroactively because plaintiff and others have relied on a long line of pre-Covenant decisions from this Court that recognized a healthcare provider's statutory right to bring suit against an insurer under MCL 500.3112. Plaintiff further argues that Covenant satisfies the initial threshold question for determining whether prospective application is warranted, i.e., "whether the decision clearly established a new principle of law." Pohutski, 465 Mich. at 696. Having thus satisfied the threshold question, plaintiff argues the resulting three-factor test for prospective application is also satisfied. See id. ("[T]hree factors [are] to be weighed in determining when a decision should not have retroactive application. Those factors are: (1) the purpose to be served by the new rule, (2) the extent of reliance on the old rule, and (3) the effect of retroactivity on the administration of justice.").

         Defendants concede that a certain level of unfairness exists whenever judicial decisions alter the actual or perceived state of the law, but counter that such a flexible approach would turn every court into a court of equity. Defendants further recognize that the threshold question and three-factor test have been often repeated in Michigan caselaw. But defendants characterize prospective judicial decision-making as "a relatively new and somewhat novel concept that conflicts with the traditional fundamental understanding of the nature of the judicial function." Defendants therefore advance a line of cases that recognize that the general and usual rule is that of retroactivity. Under this line of reasoning, "[p]rospective application is a departure from [the] usual rule and is appropriate only in 'exigent circumstances, ' " Devillers v Auto Club Ins Assoc, 473 Mich. 562, 586; 702 N.W.2d 539');">702 N.W.2d 539 (2005) (retroactively overruling a 19-year-old legal precedent determined to be inconsistent with plain statutory language) warranting "the 'extreme measure' of prospective application, " Wayne Co v Hathcock, 471 Mich. 445, 484 n 98; 684 N.W.2d 765');">684 N.W.2d 765 (2004) (retroactively overruling a 23-year-old legal ...


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