219 Mich. App. 46 | Mich. Ct. App. | 1996
Defendant Auto Club Insurance Association (hereinafter defendant) appeals by leave granted from the circuit court’s protective order barring discovery. Plaintiffs sued defendant and other no-fault insurers to recover the full amount charged for medical services provided on behalf of patients whose medical treatment was covered under automobile no-fault insurance policies issued by the various defendants. Defendant sought discovery of amounts actually paid for the same medical services by other third-party payers such as Medicare, Medicaid, Blue Cross-Blue Shield (Blue Cross), worker’s compensation insurers, health maintenance organizations (hmos), and preferred provider organizations (ppos). Plaintiffs moved for a protective order pursuant to MCR 2.302(C) on the basis that the information sought was beyond the scope of discovery. The circuit court granted plaintiffs’ motion, and this Court granted defendant leave to appeal. We affirm the order of the circuit court.
This case involves a dispute over the amount a no-fault insurer must pay for medical services under § 3157 of the no-fault act, MCL 500.3157; MSA 24.13157. Plaintiffs are nonprofit organizations that operate three hospitals located in Pontiac, Port Huron, and Mt. Clemens. Plaintiffs’ hospitals provided medical care for patients injured in automobile accidents and routinely billed no-fault automobile insurers directly for the medical care provided to their insureds. Defendant was the no-fault insurer for a number of these patients. Starting about the spring of 1992, defendant and several other no-fault insurers stopped paying the full amounts billed for services provided by plaintiffs and, instead, began tendering
Plaintiffs sued defendant and the other no-fault insurers who engaged in this practice to recover the full amounts charged. As an affirmative defense to plaintiffs’ claims, defendant alleged that the charges sought by plaintiffs violated § 3157 of the no-fault statute, which provides that a health-care provider may charge a reasonable amount but the amount cannot be more than it customarily charges. Defendant alleged that “[i]n this context, ‘charge’ means the amount customarily accepted by a plaintiff as payment in full.” In support of this affirmative defense, defendant sought to depose a witness provided by plaintiffs, who knew the billing and payment practices of the hospitals involved, concerning
the percentages of the hospitals)’ revenue represented by various third party payers, such as Medicare, Medicaid, Blue Cross, workers’ compensation, hmos, ppos, etc.; what percentage of the bill and what percentage of costs that each of the third party payers pay during a fiscal period; the financial information submitted by the State of Michigan for Medicaid purposes; the G-2 worksheet, and the facilities’ cost-to-charge ratio as is used in the workers compensation system.
In response to this notice, plaintiffs moved for a protective order pursuant to MCR 2.302(C). Plaintiffs argued that under § 3157 their charges could not exceed the amount customarily charged for such services “in cases not involving insurance.” Plaintiffs
Defendant raises two issues on appeal, neither of which merits reversal of the circuit court’s order.
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Defendant first argues that it was entitled to discovery of the requested information because the circuit court misinterpreted § 3157 of the no-fault act. Defendant maintains that the reference to “insurance” in § 3157 of that act should be read to refer to no-fault insurance only, rather than all types of insurance that provide payment for medical care. We disagree.
We review a trial court’s decision to grant or deny discoveiy for abuse of discretion. Linebaugh v Sheraton Michigan Corp, 198 Mich App 335, 343; 497 NW2d
The words “in cases not involving insurance” in § 3157 should not be interpreted to mean “in cases not involving no-fault insurance.” Section 3107(l)(a) of the no-fault act, MCL 500.3107(l)(a); MSA 24.13107(l)(a), provides that personal protection insurance benefits are payable for “[a]llowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery, or rehabilitation.” Under § 3107, a no-fault insurer is liable only for medical expenses that constitute a reasonable charge for necessary medical services. McGill v Automobile Ass’n of Michigan, 207 Mich App 402, 405; 526 NW2d 12 (1994). Section 3157 of the act prohibits medical-care providers from charging more than a reasonable fee. Id. Section 3157, MCL 500.3157; MSA 24.13157, provides:
A physician, hospital, clinic or other person or institution lawfully rendering treatment to an injured person for an accidental bodily injury covered by personal protection insurance, and a person or institution providing rehabilitative occupational training following the injury, may charge a reasonable amount for the products, services and accommodations rendered. The charge shall not exceed the amount the person or institution customarily charges for like products, services and accommodations in cases not involving insurance. [Emphasis added.]
Defendant’s interpretation of § 3157 is inconsistent with prior rulings by this Court. In Hofmann v Auto Club Ins Ass’n, 211 Mich App 55, 107; 535 NW2d 529 (1995), this Court interpreted the word “insurance” in § 3157 to include health insurance as well as no-fault insurance, noting that the relevant inquiry under § 3157 “is not the amount that is customarily charged to other health insurers, but rather the amount that is customarily charged ‘in cases not involving insurance.’ ” In Munson Medical Center v Auto Club Ins Ass’n, 218 Mich App 375; 554 NW2d 49 (1996), this Court concluded that Auto Club’s asserted definition of “customary charges” under § 3157 was legally erroneous. Munson followed the reasoning in Hofmann that the words “customary charges” as used in § 3157 does not mean the amounts that a hospital accepts from health insurers as payment in full for services rendered. Id., p 383. Although Hofmann and Munson differ factually and procedurally from the instant case, their interpretation of § 3157 applies to the instant case.
Defendant seeks to prove that plaintiffs’ bills for medical services are unreasonable and exceed the amount plaintiffs customarily charge for such services by showing that plaintiffs accept lower amounts as payment in full from such entities as Medicare, Medicaid, Blue Cross, worker’s compensation, hmos,
In Hofmann, supra, this Court rejected this defendant’s argument that the payments from Blue Cross for services, as opposed to the original charges made by the health-care providers, were the proper criteria for determining the “customary charge” for those services under § 3157. The Court explained:
*54 [A] cia’s position ignores the fact that the amounts that plaintiffs [health-care providers] receive in payment from bcbsm are subject to contractual limitations, whereas the amounts that acia must pay for covered medical expenses are not limited contractually. [Id., p 113.]
The Court pointed out that while health and accident insurers were free to establish limits that they would pay for particular medical services, no-fault insurers were not, and that this distinction was justified by the fact that the obligation of a no-fault insurer was secondary to that of a health or accident insurer where both types of coverage exist. Id., pp 113-114. This Court concluded:
In essence, acia is asking this Court to establish a rule that, in situations where other health or accident coverage does not exist, the obligation of a no-fault carrier must be limited to what a health insurer would have had to pay if health insurance existed, notwithstanding that the health insurer’s obligation might be controlled by contract, whereas the no-fault carrier’s is not. This position does not find support in the no-fault act. [Id., p 114.]
Defendant sought to obtain information regarding payments accepted by plaintiffs from third-party payers such as Medicare, Medicaid, worker’s compensation, Blue Cross, hmos, and PPOs in order to prove that plaintiffs’ customary charges for medical services were in fact significantly lower than the amounts they charged defendant. Reimbursement from Medicare, Medicaid, and worker’s compensation insurance is set by statutoxy and regulatory limitations. Reimbursement from Blue Cross, hmos, and PPOs is set by contracts between those entities and health-care providers. Under Munson, Hofmann, Hicks, and Johnson, such information is not admissible to prove the cus
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Plaintiff next argues that the circuit court committed legal error because the payments made by Medicare, Medicaid, worker’s compensation, Blue Cross, hmos, and ppos did not constitute “insurance” under § 3157 of the no-fault act. We disagree.
Regardless of whether third-party health-coverage providers such as Medicare, Medicaid, worker’s compensation, Blue Cross, hmos, and ppos are technically insurance carriers, the amounts that plaintiffs accepted as payment in full from those entities cannot be used to prove the customary charge for those services under § 3157 of the no-fault act. In prior cases this Court has treated such third-party health coverage as health insurance to be excluded from consideration when determining the customary charge under § 3157. Hofmann, supra, p 109; Johnson, supra, pp 321-322. For the purposes of § 3157,
Affirmed.
However, this Court reached the opposite conclusion in Sheeks v Farmers Ins Exchange, 146 Mich App 361, 365; 379 NW2d 493 (1985).