United States District Court, E.D. Michigan, Northern Division
COVENANT MEDICAL CENTER, INC., a Michigan non-profit corporation, and MICHIGAN SPINE AND BRAIN INSTITUTE, P.C., Plaintiff,
AUTO-OWNERS INSURANCE COMPANY, and HOME-OWNERS INSURANCE COMPANY Defendants.
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO
AMEND AND DIRECTING FILING OF AMENDED COMPLAINT
L. LUDINGTON UNITED STATES DISTRICT JUDGE
Foor (“Insured” or “Ms. Foor”) was
injured in an automobile accident on March 16, 2010. Am.
Compl. at 3, ECF No. 11-2. Plaintiffs Covenant Medical Center
(Covenant) and Michigan Spine and Brain Institute (Michigan
Spine) provided Ms. Foor medical care for injuries allegedly
arising from the automobile accident. Id. Covenant
provided Ms. Foor medical care on May 24, 2016, August 16,
2016, from August 24-27, 2016, October 18-26, 2016, November
3-8, 2016, November 22, 2016, and February 6, 2017.
Id. Michigan Spine provided Ms. Foor medical care on
August 24, 2016 and December 5, 2016. Id. at 5.
time of the accident, Ms. Foor was insured under a no-fault
policy issued by Defendant Home-Owners Insurance Company
(“Defendant” or “Insurer”).
Id. at 3. Between December 2016 and February 2017,
Plaintiffs billed Defendant and furnished itemized charges
and medical records documenting healthcare services provided
to Ms. Foor. Id. at 4. Plaintiffs filed a Complaint
on February 21, 2017 in Saginaw County Circuit Court against
Home-Owners Insurance Company, and Auto-Owners Insurance
Company, who was dismissed on July 19, 2017. Compl., ECF No.
1-2. Defendant removed the action to this Court on April 14,
2017. Not. Rem., ECF No. 1. Plaintiffs filed the instant
Motion to Amend Complaint on July 14, 2017. ECF No. 11.
Plaintiffs Covenant and Michigan Spine seek damages in a
principal amount of $39, 560.95 and $2, 455.00, respectively,
pursuant to the Michigan No-Fault Act, M.C.L 500.3101 et
seq., plus interest, costs, and attorney fees, for medical
bills in connection with treatment provided to Sandra Foor.
Am. Compl. at 3. Plaintiffs also seek to double their
principal damages pursuant to the Medicare Secondary Payer
Act (“MSPA”), 42 U.S.C. § 1395y et seq.
original complaint and proposed amended complaint sought to
recover no-fault damages on a direct cause of action as a
healthcare provider against the Defendant insurance company
for non-payment of the insured's health benefits. At the
time of the original complaint, the direct cause of action
was permissible under Michigan law. However, on May 25, 2017,
the Michigan Supreme Court decided Covenant Medical
Center, Inc. v. State Farm Mutual Automobile Insurance
Co., 895 N.W.2d 490 (Mich. 2017). In Covenant
the court held that a healthcare provider possesses no
statutory cause of action under the Michigan no-fault act
against an insurer for recovery of Personal Injury Protection
(“PIP”) benefits owed to its insured, overruling
a long line of appellate precedent. Id.
filed the instant Motion to Amend on July 14, 2017. ECF No.
11. The proposed amended complaint retained the direct cause
of action against insurers, as Plaintiffs asserted in their
Motion that Covenant should not be applied
retroactively. Mot. Am. at 2. At the hearing on the Motion,
however, Plaintiffs' counsel explained that Plaintiffs
will no longer pursue the direct action under the no-fault
act, based on the decision of the Michigan Court of Appeals
on August 31, 2017 regarding retroactivity. W A Foote
Mem'l Hosp. v. Michigan Assigned Claims Plan. 2017
WL 3836645 (Mich. Ct. App. Aug. 31, 2017). The proposed
amended complaint asserts three additional causes of action:
two derivative causes of action for breach of contract, and
one cause of action for declaratory relief. The viability of
these three alternative causes of action are at issue in the
instant motion to amend.
two derivative causes of action for breach of contract arise
out of an assignment agreement. Roughly one month after the
Michigan Supreme Court's decision in Covenant,
Ms. Foor entered into an agreement dated June 23, 2017,
assigning to Plaintiffs her rights, benefits, and causes of
action arising out of her automobile injury and subsequent
medical care. Br. Ex. A (Assignment), ECF No. 11-3. The
Assignment also designated Plaintiffs as Ms. Foor's
authorized representative “for the purpose of pursuing
payment” of her hospital bills. Id.
response to the Motion to Amend, Defendant contends that
amendment would be prejudicial and futile. Defendant contends
that amendment would be prejudicial because the proposed
amended complaint alleges “alternative parties rather
than alternative claims” by asserting a “direct
action, as well as on behalf of Ms. Foor.” Resp. at 11.
Defendant contends that amendment would be futile to the
extent the proposed amendment complaint seeks to recover for
healthcare services provided to Ms. Foor prior to June 6,
2016 that have allegedly been released by Ms. Foor. Resp. at
Defendant contends that amendment would also be futile with
respect to dates of healthcare service not covered by the
release because the assignment of benefits was invalid, and
the proposed amended claims are time barred. Resp. at 9-12.
Rule of Civil Procedure 15(a)(2) provides that a party may
amend its pleading with the court's leave and that
“the court should freely give leave when justice so
requires.” Denial of a motion to amend is appropriate,
however, “‘where there is ‘undue delay, bad
faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, futility of the amendment,
etc.'” Morse v. McWhorter, 290 F.3d 795,
800 (6th Cir. 2002) (quoting Foman v. Davis, 371
U.S. 178, 182 (1962)).
in the context of Rule 15 means more than the inconvenience
of having to defend against a claim. See Monahan v.
N.Y.C. Dept. of Corr., 214 F.3d 275, 284 (2d Cir. 2000).
It requires something more substantial. In some situations,
the closing of discovery is sufficient to warrant a finding
of prejudice to the opponent. See R.S.W.W., Inc. v. City
of Keego Harbor, 397 F.3d 427, 441 (6th Cir. 2005).
amendment would be futile if the amended complaint does not
state a claim upon which relief can be granted. Midkiff
v. Adams Cty. Reg'l Water Dist., 409 F.3d 758, 767
(6th Cir. 2005). A pleading fails to state a claim under Rule
12(b)(6) if it does not contain allegations that support
recovery under any recognizable legal theory. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). In considering a Rule
12(b)(6) motion, the Court construes the pleading in the
non-movant's favor and accepts the allegations of facts
therein as true. See Lambert v. Hartman, 517 F.3d
433, 439 (6th Cir. 2008). The pleader need not provide
“detailed factual allegations” to survive
dismissal, but the “obligation to provide the
‘grounds' of his ‘entitle[ment] to
relief' requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do.” Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 555 (2007). In essence, the pleading
“must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its
face” and “the tenet that a court must accept as
true all of the allegations contained in a complaint is
inapplicable to legal conclusions.” Iqbal, 556
U.S. at 678-79 (quotations and citation omitted).