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DeLuca v. Amica Mutual Insurance Co.

United States District Court, E.D. Michigan, Southern Division

January 30, 2018

ELIZABETH DeLUCA, and EDS CARE MANAGEMENT, INC., Plaintiffs/Counter-Defendants,
v.
AMICA MUTUAL INSURANCE COMPANY, Defendant/Counter-Plaintiff.

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS AS MOOT (Doc. 55) AND HOLDING MOTION FOR SUMMARY JUDGMENT IN ABEYANCE (Doc. 52) AND SETTING DEADLINES FOR FILINGS

          AVERN COHN UNITED STATES DISTRICT JUDGE

         I. Introduction

         This is an insurance dispute. Plaintiffs/Counter-defendants, Elizabeth DeLuca (DeLuca) and EDS Care Management, LLC (EDS) (collectively, where appropriate, EDS) sued defendant/counter-plaintiff Amica Mutual Insurance Company (Amica) seeking payment of personal protection insurance (PIP) benefits under Michigan's No-Fault Act from defendant. The PIP benefits are for the care of Stephanie Rudd, the insured.

         Before the Court is Amica's motion for summary judgment on the grounds that EDS is not a licensed “adult foster care facility” as required under the Adult Foster Care Facility Licensing Act, M.C.L. § 400.701 and is therefore not entitled to payment of PIP benefits for the “adult foster case services” it provided. (Doc. 52)

         Also before the Court is Amica's motion to dismiss on the grounds that EDS, as a service provider, is not entitled to seek benefits on behalf of the insured. (Doc. 55) This motion is based on the Michigan Supreme Court's decision in Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191 (2017) that medical service providers, such as EDS, have no statutory cause of action to collect PIP benefits directly from no-fault insurers, such as Amica.

         For the reasons that follow, Amica's motion to dismiss is DENIED AS MOOT. Amica's motion for summary judgment is HELD IN ABEYANCE. The parties shall file additional papers as outlined below.

         II. Background

         A. Factual Background

         This dispute arises from an automobile accident that occurred on December 26, 2002 in which then 14 year old Stephanie Rudd (Rudd or the insured) suffered what was later to be determined as a traumatic brain injury. Rudd requires around the clock care. At the time of the accident, Rudd was insured under an automobile policy held with Amica, through her father. As an insured, Rudd is entitled to PIP benefits.

         Eventually, DeLuca was appointed Rudd's legal guardian. DeLuca owns EDS. At some point, Amica stopped paying EDS's claims for PIP benefits.

         Amica then filed the instant motion for summary judgment based on its amended answer and counterclaim. (Doc. 52) and a separate motion to dismiss based on Covenant. (Doc. 55).

         III. Motion to Dismiss

         Amica contends that EDS cannot make out a plausible claim against it in light of the decision in Covenant. The Court recently explained the holding in Covenant.

The Michigan Supreme Court explicitly stated in Covenant that “our conclusion today is not intended to alter an insured's ability to assign his or her right to past or presently due benefits to a healthcare provider.” Covenant, 500 Mich. at 217 n.40. Thus, while a health care provider no longer has a statutory cause of action against insurers, it may still have a contract-based cause of action if there has been a valid assignment of rights. See Id. at 217 n.39 (acknowledging that contractual causes of action may still exist). An insurer has standing to “challenge an assignment if that challenge would render[ ] the assignment absolutely invalid or ineffective, or void.” Conlin v. Mortg. Elec. Registration Sys., Inc., 714 F.3d ...

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