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Health Call of Detroit, Inc. v. Farmers Insurance Exchange

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

June 14, 2018




         This matter is before the Court on Farmers Insurance Exchange's motion for summary judgment [docket entry 69]. This motion is fully briefed. Pursuant to E.D. Mich. LR 7.1(f)(2), the Court shall decide it without a hearing.


         In July 2011, six-year-old Jaden Sears was in a terrible car accident when a car going seventy miles per hour smashed into his family's car. He was thrown from the back seat underneath the dashboard. He suffered skull and sacral fractures and a hemorrhagic contusion in his right temporal lobe. Medics unsuccessfully tried to resuscitate him several times. He was airlifted to the University of Michigan Hospital, where he spent a week in a coma and was diagnosed with a severe traumatic brain injury. Because Jaden still suffers many side effects, his physicians prescribed 24-hour attendant care services, primarily for supervision purposes.

         In October 2011, Jaden's mother Velma Sears-Roddy (“Sears”)-acting on Jaden's behalf-assigned to Health Call “any rights [Jaden] may have as a result of Health Call providing services.” Def.'s Mot. Ex. 2. This included the right to “collect any and all benefits.” Id.

         In July 2012, Sears-acting as Jaden's next friend-filed a complaint against Farmers, who was refusing to pay no-fault benefits. In January 2014, the case was settled, and Sears-acting on Jaden's behalf-signed a partial release of claims against Farmers. The release explicitly did not apply to Health Call's services. For the next year, Farmers paid for Jaden's attendant care. But in January 2015, Farmers sent a letter to Sears, stating that based on the analysis of its physician, Dr. O'Leary, it would no longer pay for Jaden's attendant care. In response, Jaden's longtime physician, Dr. Pelshaw, wrote to Farmers, explaining Jaden's need for attendant care, but to no avail.

         In February 2015, Health Call began providing services to Jaden. In February 2016, Health Call filed the instant complaint against Farmers, asserting a violation of Michigan's No. Fault Act (“the Act”). Health Call claimed the right to sue under the Act based on two theories: a contractual theory grounded in the 2011 assignment and a statutory theory grounded in the Act itself. Health Call's statutory cause of action had been recognized by the Michigan Court of Appeals for decades. In May 2017, however, the Michigan Supreme Court overruled that line of cases in Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., 895 N.W.2d 490, 493 (Mich. 2017), stating “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.” In June 2017, Sears signed another assignment of benefits to Health Call, which states: “In consideration for the services provided to [Jaden] by Health Call, [Jaden] assigns and transfers to Health Call all of [his] rights and interest in his[] insurance benefits for services rendered by Health Call” and “further grants to Health Call the full power and authority . . . to pursue claims directly against” Farmers. Def.'s Mot. Ex. 1.

         The case was scheduled for trial in late March 2018. The morning of trial, however, the parties agreed that rather than try the case, they would file a “Stipulated Order and Partial Judgment” and have the Court decide the case on a motion for summary judgment. They stipulated that the motion would “argue the applicability of the ‘one year back' rule [and] . . . whether HealthCall is entitled to interest . . . and/or attorney fees.” Partial J. ¶ 3.

         To set the stage, Farmers stipulated to failing to pay invoices “more than 30 days past due from the date Farmers received reasonable proof”; to a “partial judgment in the amount of $252, 158.00 . . . in favor of Health Call and against Farmers, which represents the full amount of Health Call's principal damages for its claim brought pursuant to the No-Fault Act”; and to penalty interest and attorney fees, if the Court held that they were recoverable. Id. ¶¶ 1, 2, 5-6.

         Critically, Farmers also stipulated that Health Call's “claim was raised pursuant to valid assignments from Velma Sears on behalf of Jaden Sears, ” that all of the Court's prior rulings “stand, ” and that the 2011 and 2017 assignments are “valid.” Id. ¶¶ 1, 7.


         Federal Rule of Civil Procedure 56(a) states that any party moving for summary judgment must identify “each claim or defense . . . on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”


         There is no genuine dispute as to the material facts-Farmers admits that it did not remit insurance benefits to Health Call for reasonably necessary medical services Health Call provided. They disagree only about whether Farmers is entitled to judgment as a matter of law.

         Michigan law establishes a system of mandatory no-fault automobile insurance. Mich. Comp. Laws §§ 500.3101-3179. One subset of this insurance is personal protection insurance. Id. § 500.3105(1). “Under personal protection insurance an insurer is liable to pay benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle . . . without regard to fault.” Id. § 500.3105(1)-(2). Personal protection benefits cover “reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person's care, recovery, or rehabilitation.” Bronson Methodist Hosp. v. Auto-Owners Ins. Co., 814 N.W.2d 670, 677-78 (Mich. 2012) (discussing § 500.3107(1)(a)).

         A. One-Y ...

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