Bronson Methodist Hospital v. Auto-Owners Insurance
295 Mich. App. 431
| Mich. Ct. App. | 2012Background
- Consolidated no-fault cases involve Powell and Serrano-Ruiz treated at Bronson Methodist Hospital; implants/supply charges for the treated injuries are disputed.
- Defendants sought invoices and wholesale-cost data for the surgical implant products to assess reasonableness under MCL 500.3157–3159; plaintiff declined.
- Insurers paid non-implant portions and withheld the implant charges, prompting lawsuits for unpaid amounts, interest, and fees.
- Trial court denied discovery of provider costs, then granted summary disposition for plaintiff under MCR 2.116(C)(10) that implants charges were reasonable.
- Plaintiffs moved for attorney fees; defendants appealed the discovery ruling and summary disposition, plaintiff cross-appealed denial of attorney fees.
- Court ultimately reverses part of the ruling on discovery, affirms in part, and remands for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can insurers discover the provider’s wholesale cost for durable medical implants under MCL 500.3158(2) and 500.3159? | Powell/ Serrano-Ruiz contend costs are discoverable to test reasonableness. | Powell/ Serrano-Ruiz argue cost data are relevant to reasonableness and burden of proof. | Yes; cost data are discoverable, with ultimate burden on provider to prove reasonableness. |
| Was the trial court's summary disposition in favor of plaintiff proper given cost-data access and reasonableness standards? | Plaintiff argues reasonableness supported by own data; defendants improperly limited to comparisons. | Defendants contend cost data and broader factors render charges not necessarily reasonable. | No; summary disposition was improvidently granted; cost data and other evidence could show unreasonableness. |
| Did the court abuse its discretion in denying attorney fees under MCL 500.3148? | Defendant insurers delayed payment; attorney fees warranted. | Delay/denial based on legitimate statutory construction questions. | Not warranted; insurer reasonably refused payment pending further determinations. |
| Who bears the burden to prove reasonableness of charges for surgical implant products? | Provider bears burden to prove reasonableness; insurer audits claims. | Insurer has right to audit and challenge reasonableness. | Provider bears the burden to prove reasonableness; insurer may challenge and investigate. |
Key Cases Cited
- Advocacy Org for Patients & Providers v Auto Club Ins Ass’n, 257 Mich App 365 (2003) (no-fault reasonableness factors; insurer burden to challenge charges; AOPP not limiting factors)
- Advocacy Org for Patients & Providers v Auto Club Ins Ass’n, 472 Mich 91 (2005) (Supreme Court affirmed appellate reasoning on reasonableness and insurer cost-policing function)
- Hofmann v Auto Club Ins Ass’n, 211 Mich App 55 (1995) (no-fault reasonableness and burden on plaintiff to prove reasonable expenses)
- Nasser v Auto Club Ins Ass’n, 435 Mich 33 (1990) (limits insurer payment to reasonable and necessary expenses)
- McGill v Auto Club Ins Ass’n, 207 Mich App 402 (1994) (policy against no-fault costs increasing; insurer cost-policing function)
- Hardrick v Auto Club Ins Ass’n, 294 Mich App 651 (2011) (agency rates as evidence in determining reasonable attendant-care charges)
- Moore v Secura Ins, 482 Mich 507 (2008) (attorney-fee penalties; standards for overdue benefits and unreasonable delay)
- Ross v Auto Club Group, 481 Mich 1 (2008) (reasonableness as mixed question of law and fact; burden on insurer to justify delay)
- Attard v Citizens Ins Co of America, 237 Mich App 311 (1999) (rebuttable presumption on insurer’s delay to pay benefits)