928 N.W.2d 726
Mich. Ct. App.2018Background
- On July 3, 2014, Caleb Casanova was injured in an auto accident and treated by Compass Healthcare/Lansing Neurosurgery (defendants); defendants billed $1,859.00.
- Casanova’s no-fault insurer, Home-Owners (with Auto-Owners involved), paid $1,076.14 on August 5, 2014 as the insurer’s determination of a "reasonable" charge; defendants repeatedly sent balance-bill invoices (~$782.86) directly to Casanova despite insurer demands to cease.
- Plaintiffs (Casanova and the insurers) sued for a declaratory judgment and injunctive relief under the No-Fault Act and alleged MRCPA violations; Casanova sought MRCPA damages and attorney fees; insurers sought declaratory relief and fees under MCL 500.3148(2).
- Defendants moved for summary disposition arguing (1) the balance debt was unenforceable under the no-fault one‑year‑back rule, (2) any contractual claim against Casanova survived Covenant, and (3) plaintiffs’ claims were frivolous.
- The trial court granted plaintiffs summary disposition, found defendants willfully violated the MRCPA by continued collection attempts, awarded Casanova MRCPA statutory damages and attorney fees, and awarded fees to the insurers; defendants sought reconsideration after Covenant.
- The court of appeals affirmed summary disposition for plaintiffs (rejecting an implied-contract escape), held the one‑year‑back rule barred defendants’ claim, and reversed the award of MRCPA fees to the insurers (only Casanova sued under the MRCPA).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a medical provider can pursue a patient for a balance bill after an insurer paid a partial amount | Providers cannot collect from insureds once insurer audited and paid a reasonable amount; disputes belong between provider and insurer | Covenant permits providers to seek payment from the injured person (contract claim) | Providers may seek payment from patients but cannot circumvent the No‑Fault Act’s reasonableness/audit framework; here defendants failed to timely challenge reasonableness and may not collect the balance |
| Effect of Covenant Med. Ctr. on the dispute | Covenant does not change insurer duty to audit or limit the reasonableness standard; it does not give providers unfettered rights against insureds | Covenant allows providers to sue patients directly (contract claim) | Covenant removed statutory cause of action against insurers but did not alter the need to litigate reasonableness; providers still bear the burden to prove charges reasonable when suing a patient |
| Applicability of the No‑Fault one‑year‑back rule (MCL 500.3145) to a provider’s claim against a patient | The one‑year‑back rule applies to claims for PIP benefits; the balance bill constitutes such benefits and is subject to the rule | Provider’s claim is a standalone contract claim governed by a longer (6‑year) limitations period | The one‑year‑back rule applies; because insurers made payment Aug 5, 2014, defendants had to sue within one year and did not, so the balance claim is time‑barred |
| Entitlement to MRCPA attorney fees and costs for the insurers | Insurers were awarded fees below | Defendants argued only Casanova sued under the MRCPA; insurers shouldn’t get MRCPA fees | Trial court erred to award MRCPA fees to Auto‑Owners and Home‑Owners; only Casanova (the MRCPA plaintiff) is entitled to MRCPA damages/fees; insurers withdrew their fee request on appeal |
Key Cases Cited
- Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191 (2017) (providers lack statutory cause of action against no‑fault insurers; may seek payment from injured person for reasonable charges)
- Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 257 Mich. App. 365 (2003) (providers may challenge insurer determinations but bear burden to prove charges reasonable)
- Bronson Methodist Hosp. v. Auto‑Owners Ins. Co., 295 Mich. App. 431 (2012) (insurers must assess reasonableness; providers may litigate reasonableness and bear burden of proof)
- Douglas v. Allstate Ins. Co., 492 Mich. 241 (2012) (application of the one‑year‑back rule and its timing rules)
- Nasser v. AutoClub Ins. Ass'n, 435 Mich. 33 (1990) (discusses nature of provider obligations and limits on imposing unreasonable charges on insureds)