After an auto accident, you want your medical providers to be thinking about giving you the best care possible, not who is going to pay the bill. But a recent Michigan Supreme Court case is changing the way no-fault medical provider lawsuits work, and it could put you, the patient, right in the middle.
The Michigan No-Fault Act requires auto insurance providers to pay for all reasonably necessary medical care, among other benefits. However, insurance companies have aggressively denied and defended against claims from injured motorists and their doctors. For years, this has resulted in medical provider lawsuits in which doctors, hospitals, and therapists sued the insurance companies directly for the billing related to their professional services. But now, a recent Michigan Supreme Court case is changing the rules.
On June 20, 2011, Jack Stockford was injured in a motor vehicle accident. He was treated by Covenant Medical Center. But when Covenant submitted his bills to his insurance provider, State Farm, the insurer denied coverage. Covenant filed suit in what likely seemed to be a routine medical provider lawsuit.
However, in the course of litigation, Stockford settled his claim with State Farm and signed a broadly worded release. State Farm said this release applied to Covenant's claims as well and asked the court to dismiss the matter. It did so, finding that Covenant's medical provider lawsuit was "dependent on the insurer being obligated to pay benefits to the provider on behalf of its insured." Since the release ended that obligation, it also ended the lawsuit.
The Michigan Court of Appeals disagreed, calling State Farm's position "bad faith." Because State Farm knew about Covenant's claims before it made the deal, the appellate court said it couldn't bargain away Covenant's rights without the medical provider knowing.
But on May 25, 2017, the Michigan Supreme Court went even deeper. In Covenant Med Ctr Inc v State Farm Mut Auto Ins Co, the court questioned whether Covenant, or other medical providers, had a right to sue under the No-Fault Act at all. It challenged the "long-settled" position of the Court of Appeals that medical providers have an independent right to sue which derives from an insured's injury claim. After carefully reviewing the language of several provisions within the No-Fault Act, the Court determined that no such right existed:
"While this provision undoubtedly allows no-fault insurers to directly pay healthcare providers for the benefit of an injured person, its terms do not grant healthcare providers a statutory cause of action against insurers to recover the costs of providing products, services, and accommodations to an injured person. Rather, MCL 500.3112 permits a no-fault insurer to discharge its liability to an injured person by paying a healthcare provider directly, on the injured person’s behalf. And further, no other provision of the no-fault act can reasonably be construed as bestowing on a healthcare provider a statutory right to directly sue no-fault insurers for recovery of nofault benefits. We therefore hold 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."
At first, it may not seem like this decision has much to do with patients at all. However, a contract for medical services is between the doctor (or other medical provider) and the patient. If a medical provider is not able to collect benefits from an insurance company, it will have to collect payment from the patient. That means that doctors, hospitals, and other treating professionals will need to sue their patients for unpaid medical bills when the insurance company denies the claim.
To keep from paying the high medical costs out of pocket, patients will then have to bring the insurance providers into the lawsuits as third part defendants. This is a complicated legal procedure. It requires a skilled personal injury attorney to make sure everything is handled correctly.
And while under contracts law they have 5 years to file their lawsuit, a patient's suit against his or her insurance company has to be filed within one year. This creates the possibility that if a medical provider lawsuit filed too late, it could leave the patient holding the debt. That means it will be up to patients to make sure their doctors are being paid on time, and to be proactive in suing the insurance companies when they are not.
It remains to be seen how the Covenant decision will affect patients and their medical providers. But what is certain is that the decision puts significant pressure on injured motorists to recover their own costs from insurance providers who are quick to say no.
At Sachs Waldman, we have extensive experience helping auto accident victims recover PIP benefits from no-fault insurance providers. We know how to work with medical providers and keep up to date on the latest changes to the law. We can help you get your medical costs covered and make sure you are not left paying for your own injuries. Contact our Detroit personal injury law office at 1-800-638-6722.