Chiropractors Rehabilitation Group, PC v. State Farm Mutual Automobile Insurance Co.
313 Mich. App. 113
| Mich. Ct. App. | 2015Background
- Two consolidated appeals by State Farm contest district court denials of summary disposition in providers’ suits seeking no-fault PIP reimbursement for treatment of alleged auto-accident victims (Docket Nos. 320288, 322317).
- Docket No. 320288: Patient Jackson allegedly injured as passenger; missed two insurer-ordered medical exams (MEs) and an examination under oath (EUO); State Farm suspended benefits; chiropractor sued for unpaid bills.
- Docket No. 322317: Patient Johnson allegedly a passenger but gave a false name; missed multiple EUOs; two provider-plaintiffs (clinic and imaging) sought ≈ $20,000 for treatment; State Farm moved to add affirmative defense that providers’ claims are barred by insured’s noncooperation.
- District courts denied State Farm’s (C)(10) summary-disposition motions, finding genuine factual disputes about causation, entitlement, and whether insureds’ failures conclusively barred provider claims; district court also denied leave to amend affirmative defenses in Docket No. 322317.
- On appeal, this Court (Wilder, P.J.) affirmed denials of summary disposition, held providers have statutory standing to sue for PIP benefits, but reversed the denial of leave to amend affirmative defenses in Docket No. 322317 and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do healthcare providers have standing to sue insurer for PIP benefits? | Providers: statute (MCL 500.3112 and related) and precedent permit direct provider suits. | State Farm: only insured may sue for PIP, providers lack standing. | Held: Providers have standing; statute and case law allow direct actions. |
| Does insured’s failure to submit to MEs/EUOs bar providers’ claims as a matter of law? | Providers: insured noncompliance does not automatically preclude provider recovery; factual issues remain. | State Farm: insureds’ failures establish ineligibility and defeat providers’ claims. | Held: Failure to attend MEs/EUOs may justify suspension but does not conclusively bar recovery; genuine factual disputes preclude summary disposition. |
| Can an EUO provision be enforced as a condition precedent to payment? | Providers: policy cannot make EUO an absolute condition precedent to timely PIP payment. | State Farm: policy EUO requirement should bar payment when claimant refuses. | Held: Per Cruz, EUO provisions are enforceable only to the extent they do not conflict with statute; they cannot operate as an absolute condition precedent to payment. |
| Was denial of leave to amend affirmative defenses in Docket No. 322317 proper? | Providers: amendment unnecessary and would be futile. | State Farm: should be allowed to plead that insured’s ineligibility defeats providers’ claims. | Held: Trial court abused discretion by denying leave; amendment should have been allowed (not futile). |
Key Cases Cited
- Cruz v. State Farm Mut. Auto. Ins. Co., 466 Mich 588 (2002) (EUO clauses valid only if consistent with no-fault statute; cannot make EUO noncompliance an absolute bar to prompt payment)
- Muci v. State Farm Mut. Auto. Ins. Co., 478 Mich 178 (2007) (court may dismiss or order other sanctions for refusal to submit to statutorily authorized IMEs)
- Roberts v. Farmers Ins. Exch., 275 Mich App 58 (2007) (insurer may suspend benefits pending claimant’s completion of repeated IMEs)
- TBCI, PC v. State Farm Mut. Auto. Ins. Co., 289 Mich App 39 (2010) (where insured’s claim adjudicated as fraudulent, provider—standing as insured’s privy—barred from recovery)
- Munson Med. Ctr. v. Auto Club Ins. Ass’n, 218 Mich App 375 (1996) (recognizes providers’ right to be paid under MCL 500.3105, 500.3107, 500.3157)
- Michigan Head & Spine Inst. v. State Farm Mut. Auto. Ins. Co., 299 Mich App 442 (2013) (insured’s release can bar provider recovery when release discharges insurer’s liability for future services)
- Lakeland Neurocare Ctrs. v. State Farm Mut. Auto. Ins. Co., 250 Mich App 35 (2001) (MCL 500.3112 contemplates payment to party other than injured person; insurers commonly reimburse providers)
- Detroit Med. Ctr. v. Progressive Mich. Ins. Co., 302 Mich App 392 (2013) (provider’s claim depends on insured’s entitlement to PIP benefits)
- Douglas v. Allstate Ins. Co., 492 Mich 241 (2012) (two threshold requirements for entitlement to PIP: causal connection to accidental bodily injury and relation to motor vehicle use)