Farm Bureau General Insurance Company v. Blue Cross & Blue Shield
314 Mich. App. 12
Mich. Ct. App.2015Background
- Julie Klein was injured in an auto accident; she had both Blue Cross health insurance (primary) and Farm Bureau coordinated no-fault coverage (secondary).
- Klein received care at Spectrum, a participating skilled nursing facility under a provider participation agreement with Blue Cross.
- Blue Cross preapproved 14 days of care, then denied further preauthorization as not medically necessary; Spectrum and Klein did not appeal and Spectrum did not obtain a written assumption of financial responsibility from Klein.
- Spectrum continued treatment and billed Farm Bureau; Farm Bureau paid under protest and sued Blue Cross and Spectrum seeking reimbursement and declaratory relief.
- Spectrum’s participation agreement with Blue Cross required compliance with preauthorization, limited Spectrum to accept BCBS payment as full payment, and made Spectrum financially responsible for services denied as not medically necessary unless the member had signed an advance written agreement to assume liability.
- The trial court held Blue Cross responsible and ordered reimbursement to Farm Bureau; the Court of Appeals reversed, holding Spectrum assumed liability and neither Blue Cross nor Farm Bureau had to pay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Spectrum waived liability to Blue Cross and Farm Bureau by providing services after BCBS denial | Farm Bureau: Blue Cross, as primary insurer, must pay; Spectrum should have billed Blue Cross first | Blue Cross & Spectrum: Spectrum’s contract made Spectrum financially responsible for services BCBS denied as not medically necessary | Held: Spectrum assumed financial responsibility; neither Blue Cross nor Farm Bureau liable |
| Whether services were "incurred" by the insured for no-fault coverage | Farm Bureau: Farm Bureau paid those charges and is entitled to reimbursement as secondary insurer | Blue Cross: Because Spectrum assumed liability and Klein had no legal obligation, expenses were not "incurred" by insured | Held: Expenses not "incurred" by Klein; Farm Bureau not liable under MCL 500.3107(1)(a) |
| Whether Blue Cross wrongfully denied coverage (medical necessity) such that it must pay | Farm Bureau: BCBS denial improper; BCBS remains primary | Blue Cross: Denial based on physician determination under policy; Spectrum could have appealed or obtained written waiver from member | Held: BCBS denial stands; Spectrum did not pursue appeal or member waiver; BCBS not liable |
| Whether Farm Bureau’s voluntary payment precludes recovery from Spectrum | Spectrum: Payment was voluntary and cannot be recovered | Farm Bureau: Paid under protest based on mistaken belief Spectrum was entitled to payment; may recover | Held: Farm Bureau may recover from Spectrum because payment was made under mistake of fact that Spectrum was entitled to payment |
Key Cases Cited
- Maiden v. Rozwood, 461 Mich. 109 (contract-construction and summary disposition standards)
- Tousignant v. Allstate Ins. Co., 444 Mich. 301 (insured must seek health benefits first under coordinated coverage)
- Proudfoot v. State Farm Mut. Ins. Co., 469 Mich. 476 (meaning of "incur" in no-fault statute)
- Dean v. Auto Club Ins. Ass'n, 139 Mich. App. 266 (provider bound by contract with health insurer)
- Duckworth v. Cont'l Nat'l Indem. Co., 268 Mich. App. 129 (expenses not incurred when insured has no legal obligation)
- Bombalski v. Auto Club Ins. Ass'n, 247 Mich. App. 536 (same principle regarding "incurred")
- Williams v. AAA Mich., 250 Mich. App. 249 (payment per contract constitutes payment in full)
- Wilson v. Newman, 463 Mich. 435 (payment made under mistake of fact may be recoverable)