ZMC Pharmacy, LLC v. State Farm Mut. Auto. Ins. Co.
307 F. Supp. 3d 661
E.D. Mich.2018Background
- On August 19, 2014 Burrell was injured in a hit-and-run and was insured by State Farm under Michigan no-fault coverage.
- ZMC Pharmacy intervened seeking no-fault payment for pharmaceuticals it provided to Burrell (initially asserted as a statutory claim under the Michigan No-Fault Act).
- After the Michigan Supreme Court decided Covenant (2017) holding medical providers lack a statutory cause of action under the No‑Fault Act, ZMC attempted to rely on a June 12, 2017 assignment from Burrell to pursue assigned benefits totaling about $221,260.09.
- Burrell accepted a state-court case-evaluation award on May 9, 2017 and dismissed her claims against State Farm with prejudice before executing the June 12, 2017 assignment.
- State Farm moved for judgment on the pleadings (construed under Rule 12(c)) arguing Covenant bars ZMC’s statutory claim and that the post‑dismissal assignment cannot revive ZMC’s claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ZMC may recover under a statutory No‑Fault provider claim after Covenant | ZMC originally asserted a statutory claim for PIP benefits. | Covenant forecloses statutory provider claims. | Court: Covenant bars ZMC’s statutory claim; dismissal appropriate. |
| Whether the June 12, 2017 assignment from Burrell to ZMC is valid and revives ZMC’s claim | ZMC: assignment transfers Burrell’s rights to past/present benefits and is therefore valid; assignment was for accrued losses only. | State Farm: policy anti‑assignment clause, partial assignment, and timing invalidate assignment. | Court: assignment would not be invalid on anti‑assignment or partial‑assignment grounds per Michigan law, but is ineffective because Burrell had already released her claims. |
| Whether the assignment relates back to ZMC’s original 2015 intervening complaint (impacting the one‑year‑back rule) | ZMC implies amendment should relate back to the original filing to preserve older charges. | State Farm: no relation back where assignment executed after insured dismissed her claims; one‑year‑back limits apply. | Court: did not need to resolve relation‑back; relation back unlikely where assignment post‑dates insured’s settlement and dismissal. |
| Effect of Burrell’s acceptance of case-evaluation award (May 9, 2017) on ZMC’s derivative claim | ZMC: contends it can pursue assigned rights despite case evaluation outcome. | State Farm: Burrell’s acceptance released claims and she could not assign rights she no longer possessed. | Court: Burrell’s acceptance and dismissal extinguished her claims; ZMC, as assignee, stands in her shoes and cannot pursue benefits — dismissal with prejudice. |
Key Cases Cited
- Covenant Medical Center, Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191, 895 N.W.2d 490 (Mich. 2017) (medical providers lack statutory cause of action under Michigan No‑Fault Act)
- Foote Memorial Hosp. v. Michigan Assigned Claims Plan, 321 Mich. App. 159, 909 N.W.2d 38 (Mich. Ct. App. 2017) (Covenant applied retroactively; remand to allow amendment to assert assignments)
- Professional Rehab. Assoc. v. State Farm Mut. Auto. Ins. Co., 228 Mich. App. 167, 577 N.W.2d 909 (Mich. Ct. App. 1998) (No‑Fault Act bars assignment of future benefits but permits assignment of past/present benefits)
- Cooper v. Auto Club Ins. Assoc., 481 Mich. 399, 751 N.W.2d 443 (Mich. 2008) (one‑year‑back rule limits recovery to benefits incurred within one year before action commenced)
- Clark v. Al‑Amin, 309 Mich. App. 387, 872 N.W.2d 730 (Mich. Ct. App. 2015) (settlement by insured can bar later provider claims; insurer entitled to finality)