Michigan Ambulatory Surgical Center, LLC v. State Farm Mutual Automobile Insurance Company, 2:16-cv-14507

Background

On Aug. 19, 2014 Tamika Burrell was in a motor-vehicle collision; State Farm paid ~$31,000 in no-fault (PIP) benefits through Mar. 13, 2015 and later discontinued benefits. Burrell later underwent surgery at Michigan Ambulatory on Feb. 9, 2016 (bill $123,467).
On Feb. 9, 2016 (pre-op) Burrell signed an "Assignment of Rights and Guarantee" purporting to assign her right to collect no-fault benefits to the surgical center but reserving certain rights and guaranteeing payment from any settlement.
Burrell sued State Farm (removed to federal court). The case went to state-court case evaluation on May 9, 2017; Burrell and State Farm accepted the award by June 6, 2017 and the case was dismissed with prejudice, resolving Burrell’s PIP claims arising from the Aug. 2014 accident.
On June 12, 2017 Burrell signed a second assignment purporting to assign any present or past no-fault benefits to Michigan Ambulatory (after she had accepted the case-evaluation award).
Michigan Ambulatory sued State Farm to recover for the Feb. 9, 2016 services relying on the two assignments; State Farm moved for summary judgment arguing (1) Covenant v. State Farm eliminated providers’ independent statutory PIP claims and (2) the assignments do not vest Michigan Ambulatory with enforceable rights against State Farm.
The Court granted summary judgment for State Farm: (a) under Covenant providers lack independent statutory PIP claims and can only sue via valid present/past assignments from insureds, (b) the Feb. 9, 2016 assignment did not unconditionally transfer Burrell’s right to sue, and (c) the June 12, 2017 assignment was ineffective because Burrell had no PIP rights left to assign after accepting the case-evaluation award.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Feb. 9, 2016 assignment transferred present right to pursue PIP benefits against State Farm	The Feb. 9 assignment transferred Burrell’s rights (including suit rights) to Michigan Ambulatory for the Feb. 9 services	The assignment reserved control to Burrell (guarantee, notice, and retained suit authority), so it did not unconditionally assign the right to sue State Farm	Court: Assignment did not unconditionally transfer the right; Burrell retained the right to sue and therefore Michigan Ambulatory has no independent right against State Farm
Whether the June 12, 2017 assignment conveyed enforceable PIP rights to Michigan Ambulatory	The June 12 assignment assigned present/past benefits to Michigan Ambulatory	Burrell had already accepted the case-evaluation award and settled her PIP claims by the time of the June 12 assignment, so she had no rights left to assign	Court: Assignment ineffective because Burrell had no remaining PIP rights to assign after settlement
Effect of Covenant and derivative-rights doctrine on provider suits	Michigan Ambulatory contends it can recover via valid assignments from insured	State Farm: Covenant bars providers’ independent statutory PIP claims; providers can only sue on assigned present/past rights and must receive a valid transfer	Court: Covenant controls; providers have no independent statutory action—only derivative rights via valid present/past assignments (which are lacking here), so recovery from insurer is barred

Key Cases Cited

Covenant Medical Center, Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191 (Mich. 2017) (providers lack independent statutory PIP cause of action; insureds may assign present or past benefits)
Foote Memorial Hosp. v. Michigan Assigned Claims Plan, 321 Mich. App. 159 (Mich. Ct. App. 2017) (Covenant applies retroactively)
Burkhardt v. Bailey, 260 Mich. App. 636 (Mich. Ct. App. 2004) (assignment principles: assignee stands in assignor’s shoes; intent to transfer must be clear and unconditional)
ZMC Pharmacy, LLC v. State Farm Mut. Auto. Ins. Co., 307 F. Supp. 3d 661 (E.D. Mich. 2018) (court applied Covenant and rejected a post-settlement assignment where insured had no rights to assign)
Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment standards)