United States District Court, E.D. Michigan
ORDER: GRANTING PLAINTIFF'S MOTION FOR
RECONSIDERATION [Doc. 224]; AND (2) DISMISSING SUMMIT MEDICAL
GROUP'S COUNTERCLAIM [Doc. 45]
Victoria A. Roberts United States District Judge
Farm Mutual Automobile Insurance Company (“State
Farm”) filed this suit against Summit Medical Group,
PLLC (“Summit”) and four others, alleging they
engaged in a scheme to defraud State Farm by submitting
fraudulent claims for no-fault benefits for individuals who
were in auto accidents.
a healthcare provider, filed a three-count counterclaim,
alleging: (1) fraud/fraudulent misrepresentation; (2) civil
conspiracy; and (3) declaratory relief. [Doc. 45]. Summit
alleges State Farm engaged in a scheme to fraudulently deny,
delay and diminish payment on its claims for recovery of
Farm previously moved to dismiss Summit's counterclaim.
The Court denied the motion. Citing an intervening change in
Michigan law, State Farm now moves for reconsideration of the
order denying its motion to dismiss Summit's
counterclaim. [Doc. 224]. Summit opposes State Farm's
following reasons, State Farm's motion for
reconsideration [Doc. 224] is GRANTED, and
Summit's counterclaim [Doc. 45] is
courts have authority both under common law and Rule 54(b) to
reconsider interlocutory orders . . . before entry of final
judgment.” Rodriguez v. Tennessee Laborers Health
& Welfare Fund, 89 Fed.Appx. 949, 959 (6th Cir.
2004). Justification for reconsidering an interlocutory order
exists where there is: “(1) an intervening change of
controlling law; (2) new evidence available; or (3) a need to
correct a clear error or prevent manifest injustice.”
Id. The Court has broad discretion in considering a
motion for reconsideration under this standard. Id.
at 959 n.7.
Michigan Supreme Court recently held that “[a]
healthcare provider possesses no statutory cause of action
under the no-fault act against a no-fault insurer for
recovery of . . . benefits.” Covenant Med. Ctr.,
Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191,
895 N.W.2d 490, 505 (2017). The Michigan Court of Appeals
subsequently found that Covenant applies
retroactively. See W A Foote Mem'l Hosp. v. Michigan
Assigned Claims Plan, No. 333360, 2017 WL 3836645, at
*14 (Mich. Ct. App. Aug. 31, 2017).
Summit's counterclaims for fraud and civil conspiracy are
distinct from a no-fault claim, reconsideration of the
Court's prior order denying State Farm's motion to
dismiss is justified based on the conclusion in
Covenant that healthcare providers have no statutory
entitlement to demand reimbursement from a no-fault insurer
for services it provided to an insured.
bases its fraud claim on a purported “statutory
duty” owed by State Farm to pay no-fault benefits to
healthcare providers who render treatment to insureds.
[See Doc. 60, PgID 1549]. Based on Covenant
and other persuasive authority, Summit's assertion of
this alleged statutory duty is insufficient to state a
plausible fraud/fraudulent misrepresentation claim.
Covenant, the Supreme Court of Michigan clarified
that healthcare providers have no statutory right to recover
no-fault benefits directly from an insurer; it, therefore,
follows that no-fault insurers do not have any statutory duty
to reimburse healthcare providers directly for services it
provided to an insured under the no-fault act. See
Covenant, 895 N.W.2d at 500-05. Because Summit's
fraud counterclaim was based on its alleged right to recover
no-fault benefits directly from insurers, the
Covenant decision undermined the basis of
Summit's claim. In addition, to the extent Summit says it
relied on/was injured by State Farm's alleged
misrepresentations by “delaying or foregoing legal
action against State Farm to collect payment, ” its
fraud claim fails because it does not have a statutory right
to sue a no-fault insurer for benefits under
even if Summit had a statutory right to collect no-fault
benefits directly from State Farm, its fraud claim would fail
because “a fraud claim does not arise from an
insurer's mere omission to perform a contractual or
statutory obligation, such as its
failure to pay all the [no-fault] benefits to which its
insureds are entitled.” Cooper v. Auto Club Ins.
Ass'n, 481 Mich. 399, 409 (2008). In this respect,
Summit's fraud claim “fails as a matter of Michigan
law because the counterclaim does not allege a breach of duty
that is separate and distinct from State Farm's
contractual [or statutory] obligations.” See State
Farm Mut. Auto. Ins. Co. v. Radden, No. 14-13299, 2016
WL 695598, at *2 (E.D. Mich. Feb. 22, 2016) (dismissing fraud
counterclaim against State Farm that is practically identical
to the fraud claim alleged by Summit).
civil conspiracy counterclaim also fails, as it is derivative
of the fraud claim. See Knight Indus. & Assocs., Inc.
v. Euro Herramientas, S.A.U., No. 2:12-CV-14405, 2013 WL
3773373, at *5 (E.D. Mich. July 17, 2013) (“[A]
plaintiff asserting civil conspiracy must demonstrate some
underlying tortious conduct, as civil conspiracy is not an
independently actionable tort.”). “Because there
is no underlying tort upon which the civil conspiracy claim
could be predicated, ” Summit's civil ...