The Richard Small Agency, Inc.

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Healthcare Providers cannot sue Michigan Auto No-Fault Insurers for unpaid fees according to the Michigan Supreme Court:  Covenant Medical Center, Inc. V. State Farm, ____ Mich _____(2017)

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The Supreme Court overturned a longstanding practice of healthcare providers suing Michigan no-fault insurers for unpaid medical bills because the no-fault statute did not provide a specific remedy.

The Supremes did state that healthcare providers could directly sue their patient, but many authors noted this was not practical in many cases.

Other potential remedies were discussed, for example:

1.      Filing a third-party beneficiary claim (A person is a third-party beneficiary of a contract when that contract establishes that a promisor has undertaken a promise directly to or for that person);

2.      The insured patient can assign his or her right to benefits to a healthcare provider under MCL 500.3143. Note that the assignment must be made after treatment in order to be enforceable. See footnotes on page 24 and Professional Rehab Assoc v State Farm Mutual, 228 Mich App 167 at 172 (1998);

3.      Healthcare providers may be able to intervene during a dispute under MCR 2.209;

4.      Healthcare providers can hire counsel to act as “co-counsel” in the patient’s suit against the no-fault insurer.

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Note: if a provider balance bills the patient or files a collection case for the balance due, the auto no-fault insurer may be duty-bound to provide the patient with a defense. See Insurance Commissioner Bulletin 92-3; LaMothe v. ACIA, 214 Mich App 577 (1995).

REFERENCE:  The Journal of Insurance and Indemnity Law, Vol. 10, No. 3, July 2017.

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