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Michigan Ambulatory Surgical Center, LLC v. State Farm Mutual Automobile Insurance Co.

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

March 30, 2018

MICHIGAN AMBULATORY SURGICAL CENTER, LLC, Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

          OPINION AND ORDER GRANTING PLAINTIFF'S MOTION TO AMEND THE COMPLAINT (ECF NO. 17) AND DENYING DEFENDANT'S MOTION TO DISMISS (ECF NO. 10)

          PAUL D. BORMAN, UNITED STATES DISTRICT JUDGE

         This case involves Plaintiff Michigan Ambulatory Surgery Centers, LLC's (“Michigan Ambulatory” or “Plaintiff”) claims for the payment of no-fault insurance benefits stemming from an August 19, 2014 motor vehicle accident in which car driven by Defendant State Farm Mutual Automobile Insurance Company's (“State Farm”) insured, Tamika R. Burrell, was struck in the rear by a hit and run driver and Ms. Burrell sustained accidental bodily injuries. Michigan Ambulatory originally filed its claims in Wayne County Circuit Court on or about December 2, 2016, and Defendant State Farm removed the case to this Court on December 30, 2016, based upon diversity jurisdiction. (ECF No. 1, Notice of Removal.)

         Michigan Ambulatory, a healthcare provider that claims to have provided Plaintiff with services related to her care and recovery from the August 19, 2014 accident (specifically a single surgical procedure on February 9, 2016), sought in its original Complaint to recover no-fault benefits under Michigan's No-Fault statute for unpaid medical expenses for the surgical services it provided to Ms. Burrell. As a result of the Michigan Supreme Court's May 25, 2017 decision in Covenant Medical Center, Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191, 895 N.W.2d 490 (2017), which established that medical providers such as Michigan Ambulatory do not have a statutory claim under the Michigan No-Fault Act to recover personal protection insurance benefits from no-fault insurers, Michigan Ambulatory now seeks to amend its complaint to rely instead on two separate assignments, one executed by Ms. Burrell on the day of her February 9, 2016 surgery and one executed by her on June 12, 2017, after the Covenant decision was issued.

         Defendant State Farm filed its motion to dismiss this action on June 13, 2017. (ECF No. 10.)[1] Plaintiff filed a Response (ECF No. 12) and State Farm filed a Reply (ECF No. 15). On October 9, 2017, Plaintiff filed a Motion for Leave to Amend the Complaint. (ECF No. 17.) State Farm filed a Response (ECF No. 21) and Plaintiff filed a Reply (ECF No. 22). The Court held a hearing on both motions on January 25, 2018. For the reasons that follow, the Court GRANTS Plaintiff's Motion to Amend and DENIES Defendant's Motion to Dismiss.

         I. FACTUAL BACKGROUND

         On or about August 19, 2014, Tamika Burrell was insured with Defendant State Farm under a no-fault insurance policy. (ECF No. 1, Notice of Removal Ex. E, Amended Compl. ¶ 14.) On August 19, 2014, Plaintiff Burrell was involved in a motor vehicle accident in which she sustained accidental bodily injuries. (Id. ¶ 16.) Plaintiff Burrell was struck in the rear of her vehicle by a hit and run driver, pushing her into the vehicle in front of her, and therefore seeks uninsured motorist benefits in the amount of the policy limits of $50, 000. (Id. ¶ 17.) Plaintiff Burrell claims to have suffered permanent disfigurement that has affected her ability to lead a normal life, specifically but not limited to post-concussion syndrome, disc herniation at multiple levels compressing the thecal sac, myofascial syndrome in the spine, closed head injury, cervical and lumbar radiculopathy, anxiety, and depression. (Id. ¶ 21.) Plaintiff Burrell also claims to have lost wages and suffered diminished earning capacity, as well as having incurred economic expenses and medical expenses. (Id. ¶¶ 22-23.)

         This action is related to another case against State Farm, arising out of the same motor vehicle accident, filed by the insured, Ms. Burrell, and two other healthcare providers also seeking to recover no-fault benefits related to services provided related to Ms. Burrell's August 19, 2014 accident. See ZMC Pharmacy, LLC v. State Farm Mutual Auto. Ins. Co., No. 16-10508 (E.D. Mich. 2016). In ZMC, Plaintiffs Burrell and Intervening Plaintiff MMT Integrative Services (“MMT”) accepted case evaluation awards on May 9, 2017, and stipulated to dismiss their claims against Defendant State Farm with prejudice. Intervening Plaintiff ZMC participated in the case evaluation proceeding but did not accept the case evaluation award and did not dismiss its claims against State Farm. At the time that ZMC elected not to accept the case evaluation award, the Michigan Supreme Court had just issued its May 25, 2017 decision in Covenant, establishing that healthcare providers such as Michigan Ambulatory have no statutory claim under the Michigan No-Fault Act to recover personal protection insurance benefits from no-fault insurers. Michigan Ambulatory, the Plaintiff in this action, did not participate in the Burrell/ZMC case evaluation process, although it was aware of the Burrell/ZMC litigation, which State Farm noted as a possible companion in its removal papers. In its recent Opinion and Order in ZMC, this Court granted State Farm's motion to dismiss based upon Ms. Burrell's dismissal with prejudice of her claims against State Farm in that action following her acceptance of case evaluation. See ZMC Pharmacy, LLC v. State Farm Auto. Ins. Co., No. 16-10508 (E.D. Mich. 2016) (3/29/18 Opinion and Order).

         In light of Covenant, Michigan Ambulatory now seeks to amend its Complaint and to assert a claim to enforce its rights under an assignment of rights executed by Ms. Burrell on February 9, 2016, the day of her surgical procedure and under a second assignment that Michigan Ambulatory obtained from Ms. Burrell on June 12, 2017.

         II. STANDARD OF REVIEW

         “Motions for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) are analyzed under the same de novo standard as motions to dismiss pursuant to Rule 12(b)(6).” Sensations, Inc. v. City of Grand Rapids, 526 F.3d 291, 295 (6th Cir. 2008) (citing Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension Corp., 399 F.3d 692, 697 (6th Cir. 2005)). “[T]he legal standards for adjudicating Rule 12(b)(6) and Rule 12(c) motions are the same . . . .” Lindsay v. Yates, 498 F.3d 434, 437 n. 5 (6th Cir. 2007). The Sixth Circuit has defined the pleading requirements necessary to withstand a challenge under Rule 12(c):

We recently explained the pleading requirements that are necessary to survive a Rule 12(c) motion:
In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court explained that “a plaintiff's 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.... Factual allegations must be enough to raise a right to relief above the speculative level....” Id. at 1964-65 (internal citations omitted). In Erickson v. Pardus, 550 U.S. ___, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007), decided two weeks after Twombly, however, the Supreme Court affirmed that “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief.' Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.'” Id. at 2200 (quoting Twombly, 127 S.Ct. at 1964). The opinion in Erickson reiterated that “when ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint.” Id. (citing Twombly, 127 S.Ct. at 1965). We read the Twombly and Erickson decisions in conjunction with one another when reviewing a district court's decision to grant a motion to dismiss for failure to state a claim or a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12. Sensations, Inc., 526 F.3d at 295-96 (footnote omitted).

Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 550 (6th Cir. 2008) (quoting Sensations, 526 F.3d at 295 (6th Cir. 2008)).

         When reviewing a motion to dismiss under Rule 12(b)(6), and therefore under Rule 12(c), a court must “‘construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.'” Handy-Clay v. City of Memphis, 695 F.3d 531, 538 (6th Cir. 2012) (quoting Directv Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007)). The court “need not accept as true a legal conclusion couched as a factual allegation, or an unwarranted factual inference.” Handy-Clay, 695 F.3d at 539 (internal quotation marks and citations omitted). See also Eidson v. State of Tenn. Dep't of Children's Servs., 510 F.3d 631, 634 (6th Cir. 2007) (“Conclusory allegations or legal conclusions masquerading as factual allegations will not suffice.”).

         In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court explained that “a plaintiff's 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. Factual allegations must be enough to raise a right to relief above the speculative level . . . .” Id. at 555 (internal quotation marks and citations omitted) (alteration in original). “To state a valid claim, a complaint must contain either direct or inferential allegations respecting all the material elements to sustain recovery under some viable legal theory.” LULAC v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007).

         The Supreme Court clarified the concept of “plausibilty” in Ashcroft v. Iqbal, 556 U.S. 662 (2009), explaining that “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 678.” Thus, “[t]o survive a motion to dismiss, a litigant must allege enough facts to make it plausible that the defendant bears legal liability. The facts cannot make it merely possible that the defendant is liable; they must make it plausible. Bare assertions of legal liability absent some ...


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