This сase involves various parties' claims for the payment of no-fault insurance benefits stemming from an August 19, 2014 motor vehicle accident in which a car driven by Tamika R. Burrell, the original Plaintiff in this action, was struck in the rear by a hit and run driver and sustained
I. BACKGROUND
A. Procedural History
Ms. Burrell originally filed her claims in Wayne County Circuit Court on or about September 3, 2015. On or about November 18, 2015, ZMC, an entity that claims to have provided Plaintiff with products and services (pharmaceuticals) related to her care and recovery from the August 19, 2014 accident, sought to intervene in the state court action and filed an Intervening Complaint in that court on November 18, 2015. ZMC's Intervenor Complaint claimed a right to payment from State Farm under the Michigan No-Fault statute based upon services/products (pharmaceuticals) rendered to Ms. Burrell between September 22, 2015 to October 30, 2017, allegedly in connection with her August 19, 2014 motor vehicle accident. On February 11, 2016, Defendant State Farm removed the case to this Court, based upon diversity jurisdiction, after Burrell filed an amended complaint in state court on or about February 4, 2016, adding a claim for uninsured motorist benefits up to the policy limits of $50,000. The newly asserted claim for uninsured motorist benefits, when combined with Plaintiff's original claim of damages in excess of $25,000, resulted in an amount in controversy in excess of $75,000. (ECF No. 1, Notice of Removal ¶¶ 2-15, Exs. 5, 6.) Intervenor Plaintiff MMT Integrаtive Services, Inc. ("MMT"), an entity that claims to have provided Plaintiff with products and services (physical therapy) related to her care and recovery from the August 19, 2014 accident, was granted permission to intervene by this Court and filed an Intervenor Complaint in this Court on June 21, 2016. (ECF Nos. 10, 12.) On July 19, 2017, both Ms. Burrell and MMT were dismissed from this action by Stipulated Order of Dismissal after participating in a state court case evaluation proceeding and accepting their respective awards. (ECF Nos. 22, 23.) Intervening Plaintiff ZMC participated in the case evaluation process, but did not accept an award or dismiss its claims against State Farm.
B. Factual Background
On August 19, 2014, Ms. Burrell was involved in a motor vehicle accident in which she sustained accidental bodily injuries. Ms. Burrell was insured with Defendant State Farm under a no-fault insurance policy at the time of the accident. (ECF No. 1, Notice of Removal Ex. E, Amended Compl. ¶¶ 14, 16.) Ms. Burrell was struck in the rear of her vehicle by a hit and run driver, pushing her into the vehicle in front of her, and seeks uninsured motorist benefits in the amount of the policy limits of $50,000. (Id. ¶ 17.) Ms. Burrell
Intervenor Plaintiff ZMC claims to have provided products and services to Ms. Burrell in the amount of $8,685.71, which were reasonable and necessary products and services for Ms. Burrell's care and recovery, and to have incurred all reasonable charges for those products and services. (ECF No. 1, Notice of Removal Ex. 6, ZMC Intervening Complaint ¶ 7.) ZMC claims in its Intervening Complaint that State Farm has failed to pay for the outstanding $8,685.71, in violation of the Michigan No-Fault Act. (Id. ¶ 12.) ZMC now claims to have incurred a total of $221,260.09 in unpaid charges for pharmaceuticals provided to Ms. Burrell beginning on September 22, 2015 and continuing through May 8, 2017. Because the unpaid no-fault benefits are оverdue, ZMC claims entitlement to interest at the rate of 12% per annum and reasonable attorney fees, both as provided under the Michigan No-Fault statute.
On February 2, 2017, the parties to this action stipulated to submit the matter to State Court Case Evaluation. (ECF No. 20.) On May 9, 2017, a case evaluation hearing was held in state court. Plaintiff Burrell and Intervening Plaintiff MMT accepted the case evaluation awards and dismissed their claims against State Farm on July 19, 2017, pursuant to stipulated orders of dismissal. (ECF Nos. 22, 23.) Intervenor Plaintiff ZMC participated in, but did not accept, the case evaluation award and did not dismiss its claims against State Farm.
On July 27, 2017, State Farm filed this motion to dismiss ZMC's claims against it based upon Covenant , which established that medical providers such as ZMC do not havе a statutory cause of action under the Michigan No-Fault Act to recover personal protection insurance benefits from no-fault insurers. ZMC responded that Covenant left open a healthcare provider's right to proceed against an insurer based upon an assignment of rights from an insured. ZMC argues that it has obtained such an assignment from Ms. Burrell, dated June 12, 2017, which ZMC claims entitles it to recover payment from State Farm for pharmaceuticals provided to Burrell, allegedly in connection with her August 19, 2014 motor vehicle accident, from September 22, 2015 through May 8, 2017, which totals $221,260.09. State Farm disputes both the validity of the June 12, 2017 Assignment and its timeliness with respect to ZMC's claims.
II. STANDARD OF REVIEW
State Farm would do well to study Federal Rules of Civil Procedure 12 and 56 and understand the imрortant differences
While State Farm captions its motion as one "for summary judgment," seemingly invoking Fed. R. Civ. P. 56, it рroceeds to cite in the Standard of Review section of its brief only Fed. R. Civ. P. 12, in specific, two subsections of that rule, 12(b)(1) and 12(b)(6), neither of which is applicable here. First, a motion under Fed. R. Civ. P. 12(b)(1), which State Farm first lists in its Standard of Review, applies to challenges to the Court's subject matter jurisdiction. State Farm does not articulate a challenge to the Court's subject matter jurisdiction and this subsection of Rule 12 is inapt. Second, it is axiomatic that a motion to dismiss under Fed. R. Civ. P. 12(b)(6) can only be filed before an answer is filed. "A motion asserting any of these defenses [under 12(b) ] must be made before pleading if a responsive pleading is allowed." Fed. R. Civ. P. 12(b). State Farm answered ZMC's Intervening Complaint in state court on or about November 30, 2015. (ECF No. 1-7, Defendant's Answer to Intervening Plaintiff's Complaint, PgID 130.) Therefore, Rule 12(b)(6), also cited by State Farm in its Standard of Review section, is likewise inapplicable and an inappropriate procedural vehicle for the relief State Farm seeks, i.e. dismissal of Plaintiff's Complaint. The appropriate procedural vehicle for a motion under Rule 12 to dismiss after an answer has been filed is Fed. R. Civ. P. 12(c) for judgment on the pleadings. Regrettably, State Farm does not even mention Rule 12(c), and continues throughout its briefing to refer to its motion as one for "summary judgment," despite the fact that State Farm does not mention or refer to Fed. R. Civ. P. 56 and its applicable standards of review at all.
Perplexed by this procedural puzzle, the Court asked State Farm's counsel at the hearing on the motion to identify which rule of Federal Civil Procedure State Farm it was asking the Court to apply. Counsel responded, after some hesitation that he "believed" it "should be 12(b)(6)." In light of State Farm's affirmation at the hearing of its intention to move under Rule 12, and because Rule 12(b)(6) is procedurally inapplicable in light of State Farm's answer to the Intervening Complaint, the Court construes the motion as one under Rule 12(c) for judgment on the pleadings, which applies the same standard of review applicable to motions under Rule 12(b)(6).
"Motions for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) are analyzed under the same de novo standard as motions to dismiss pursuant to Rule 12(b)(6)." Sensations, Inc. v. City of Grand Rapids ,
We recently explained the pleading requirements that are necessary to survive a Rule 12(c) motion:
InBell Atlantic Corp. v. Twombly , , 550 U.S. 544 , 127 S.Ct. 1955 (2007), the Supreme Court explained that "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.... Factual allegations must be enough to raise a right to relief above the speculative level...." Id. at 1964-65 (internal citations omitted). In Erickson v. Pardus , 167 L.Ed.2d 929 , 551 U.S. 89 , 127 S.Ct. 2197 (2007), decided two weeks after Twombly , however, the Supreme Court affirmed that " Federal Rule of Civil Procedure 8(a)(2) requires only 'a short and plain statement of the claim showing that the рleader is entitled to relief.' Specific facts are not necessary; the statement need only 'give the defendant fair notice of what the ... claim is and the grounds upon which it rests.' " Id. at 2200 (quoting Twombly , 167 L.Ed.2d 1081 127 S.Ct. at 1964 ). The opinion in Erickson reiterated that "when ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Id. (citing Twombly ,127 S.Ct. at 1965 ). We read the Twombly and Erickson decisions in conjunction with one another when reviewing a district court's decision to grant a motion to dismiss for failure to state a claim or a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12. Sensations, Inc. ,(footnote omitted). 526 F.3d at 295-96
Tucker v. Middleburg-Legacy Place ,
When reviewing a motion to dismiss under Rule 12(b)(6), and therefore under Rule 12(c), a court must " 'construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.' " Handy-Clay v. City of Memphis ,
In Bell Atlantic Corp. v. Twombly ,
The Supreme Court clarified the concept of "plausibilty" in Ashcroft v. Iqbal ,
In ruling on a motion to dismiss, the Court may consider the complaint as well as (1) documents that are referenced in the plaintiff's complaint and that are central to plaintiff's claims, (2) matters of which a court may take judicial notice (3) documents that are a matter of public record, and (4) letters that constitute decisions of a governmental agency. Thomas v. Noder-Love ,
III. ANALYSIS
A. ZMC's Intervening Complaint Seeks Statutory Relief That is Now Barred by Covenant , Prompting ZMC's Request to Amend to Rely on an Assignment of Rights in Favor of ZMC Executed by Ms. Burrell on June 12, 2017.
The parties agree that Michigan substantive law governs the issues presented in State Farm's motion. There is no dispute, after the Michigan Supreme Court's decision in Covenant , that medical providers such as ZMC do not have a statutory cause of action under the Michigan No-Fault Act to recover personal protection insurance benefits from no-fault insurers. Further, the Michigan Court of Appeals decision in Foote Memorial Hosp. v. Michigan Assigned Claims Plan ,
ZMC argues, however, in response to State Farm's motion,
Likely acknowledging the legal insufficiency of its original Intervening Complaint, ZMC suggests that it should be entitled to amend its intervening complaint to assert claims under the June 12, 2017 Assignment. Again ignoring the Federal Rules of Civil Procedure (Rule 15(a)(2) ) and this Court's local rules regarding the filing of motions for leave to amend a complaint (E.D. Mich. L.R. 15.1), ZMC simply states in its Response to State Farm's motion that it "now seeks to amend their Complaint to include their claim for benefits arising out of the aforementioned assignment." (ECF No. 26, ZMC's Resp. 8, PgID 395.) ZMC attaches to its Response a copy of its Proposed First Amended Intervening Complaint, attempting to assert the June 12, 2017 Assignment as a basis for their claim. (ZMC's Resp. Ex. B.)
This is not the appropriate prоcedure for seeking leave to amend. "Although requests to amend should be freely given under Federal Rule of Civil Procedure 15(a), the requesting party must at least file a motion to that effect. The Sixth Circuit has condemned the practice of incorporating such informal requests in opposition briefs." Alliance for Children, Inc. v. City of Detroit Public Schools ,
But ZMC did not file such a motion and did not follow the Federal Rules of Civil Procedure or this Court's local rules. However, because ZMC did attach a copy of its Proposed Amended Intervening Complaint to its Response, giving fair notice of the basis for the proposed amendment, and because State Farm has vigorously responded to the argument regarding the June 12, 2017 Assignment, the Court will excuse this procedural failing and will consider the request for leave to amend and will analyze the validity of the assignment-based argument set forth in ZMC's propоsed amended intervening complaint against State Farm's motion to dismiss.
"Although Rule 15(a)(2) provides that '[t]he court should freely give leave when justice so requires,' leave may be denied on the basis of undue delay, bad
The Court concludes that ZMC's proposed amendment would be futile, and could not withstand a motion to dismiss, because Ms. Burrell settled her claims against State Farm in this action in May, 2017, in a stаte court case evaluation proceeding in which ZMC participated, and dismissed her claims against State Farm in this action, in advance of the execution of her assignment of rights to ZMC on June 12, 2017. ZMC's derivative claim for benefits from State Farm therefore fails, as discussed infra .
B. Notwithstanding the Failure of Many of State Farm's Arguments Against the Effectiveness of the June 12, 2017 Assignment, That Assignment Does Not Give ZMC Safe Harbor From the Covenant Ruling.
It is now established that Covenant , which expressly declined to alter the rights of an insured to assign her rights to a medical provider, did not bar claims based on contractual assignments for presently or past due benefits. "[O]ur conclusion today is not intended to alter an insured's ability to assign his or her right to past or presently due benefits to a healthcare provider." Covenant ,
State Farm argues, however, that this particular June 12, 2017 Assignment from Ms. Burrell to ZMC is ineffective to resurrect ZMC's failed statutory claim for benefits because: (1) Ms. Burrell's policy with State Farm contained an "assignment approval" clause, which provided that "[n]o assignment of benefits or other transfer of rights is binding upon us unless approved by us," and Ms. Burrell did not request or receive approval of assignment; (2) the attempted assignment is partial and therefore unenforceable under Michigan law; (3) ZMC stands in the shoes of its assignor, Ms. Burrell, who accepted a case evaluation award on May 9, 2017, that dismissed with prejudice all of Burrell's claims against State Farm and therefore ZMC has no rights against State Farm and/or such rights are limited by the one-year back rule and by the proscription against assignment of future benefits. The Court addresses these arguments in turn and concludes that ultimаtely Ms. Burrell's
1. The assignment approval clause in Burrell's State Farm Policy does not bar the June 12, 2017 Assignment.
State Farm argues that Plaintiff's attempt to rely on the June 12, 2017 Assignment must fail because Burrell's State Farm Policy contained a clause expressly providing that: "No assignment of benefits or other transfer of rights is binding upon us unless approved by us ." (ECF No. 24, Def.'s Mot. Ex. E, Certified Copy of Burrell Policy, State Farm Car Policy Booklet, General Terms ¶ 9 Assignments) (Emphasis in original). There is no dispute that Burrell did not seek, and State Farm did not grant, approval of the June 12, 2017 Assignment to ZMC. State Farm submits that under Michigan law, non-assignmеnt clauses are enforceable provided that the contractual prohibition against assignment is clear and unequivocal, which this clause is. A number of cases, however, decided in the wake of the Covenant decision, have addressed this very issue and have concluded that because an assignment of no-fault benefits can only assign present or past due (but not future) benefits, see Professional Rehab. ,
Relatedly, Michigan courts have held post- Covenant that the Michigan Uniform Commercial Code prohibits restrictions on assignments of healthcare insurance receivables. Michigan Brain and Spine , Aug. 9, 2017 Slip Op. at 6 ("The UCC plainly prohibits all restrictions on a health care provider's receiving and relying on a patient assignment of a benefit due in payment for services from an insurance company....").
2. The June 12, 2017 Assignment assigns "present or past" rights and does not purport to assign "future" rights and is not void as a "partial" assignment.
It is well established that the Michigan No-Fault statute "serves only to ban the assignment of benefits payable in
Nor is the Assignment invalid as a partial assignment. "[T]he Michigan No-Fault Act contemplates that an injured person may be entitled to various types of benefits, including wage loss, replacement services, or medical bills, and not all of those benefits may accrue at the same time." Advanced Surgery Ctr., LLC v. Allstate Ins. Co. , No. 17-cv-12492,
3. Does the relation back doctrine apply to an assignment first executed after ZMC's original intervening complaint was filed?
The issue of relation back (or not) is significant because the Michigan No-Fault statute contains a damages limitation provision (referred to as the "one-year back rule") which precludes recovery of no-fault benefits from an insurer for any portion of the loss that is incurred more than one year before the date on which the action is commenced.
Plaintiff concedes that it did not plead a right to payment in its Intervenor Complaint based upon assignment because at the time, the law in Michigan permitted a healthcare provider to proceed with such claims directly under the Michigan No-Fault statute. As discussed supra , Michigan courts have demonstrated a willingness to allow healthcare providers whose statutory claims were pending at the time Covenant was issued the opportunity to seek leave to amend their complaints to assert theories based upon an assignment. See, e.g. Foote ,
With Covenant's clear rejection of a statutory right on behalf of healthcare providers, and equally clear preservation of a healthcare provider's right to proceed against an insurer based upon a valid assignment of rights from the insured, some courts have permitted the "relation back" of assignments executed in pending lawsuits post- Covenant to the filing of the original complaint. See, e.g., Spine Specialists of Michigan,
In this case, however, there was no assignment executed at the time of any of the services rendered. The only assignment on which ZMC purports to rely was executed on June 12, 2017. ZMC provides no authority to support its argument that, in the wake of Covenant and Foote , Michigan courts would permit relation back in such an instance. As the Michigan Court of Appeals noted in Foote in ultimately determining that Covenant should be applied retroactively, there is question whether the decision made by many healthcare providers to rely solely on a statutory claim to benefits was reasonable.
This Court need not resolve the relation-back issue here however because Ms. Burrell released all claims that she had against State Farm for no-fault benefits when she accepted the case evaluation award in this action on May 9, 2017 and dismissed her claim against State Farm for no-fault benefits related to her August 19, 2014 accident. Therefore, as discussed infra , her sole assignment to ZMC, executed on June 12, 2017, could not have assigned rights that she did not possess, thus defeating ZMC's derivative claim for benefits based on that Assignment.
4. Plaintiff's May 9, 2017 acceptance of a case evaluation award and subsequent dismissal of all claims for no-fault benefits against State Farm related to her August 19, 2014 accident, defeats any derivative claim ZMC may have based on a June 12, 2017 Assignment.
There is no dispute that ZMC's claims are derivative of Burrell's claims as the insured is the only person entitled to claim benefits under the Michigan No-Fault statute. Foote ,
There are many other ways plaintiff or her lawyer could have settled her claim besides a universal settlement that wiped the slate clean of any claims incurred before the date of settlement. But they did not do so. Instead, they settled for a complete waiver of claims for $78,000, and Progressive paid this sum to buy its peace and achieve finality in this litigation.
United States District Judge Thomas Ludington, in Auto-Owners , touched on this issue because the plaintiff there had executed a release agreement in a sepаrate action which purported to release the insurer from any liability under the policy for no-fault benefits "through June 6, 2016."
Here, Plaintiff's acceptance of the case evaluation award on May 9, 2017, and subsequent dismissal her claims against State Farm in this action, which are matters of record in this Court, forever barred any claim that ZMC, who also participated in the case evaluation process but did not accept the award, would present for payment from State Farm for no-fault benefits provided to Ms. Burrell prior to that date. ZMC's last reported claim for payment is dated May 8, 2017. It's proposed First Amended Intervening Complaint seeks to recover for losses incurred (pharmaceuticals provided to Burrell) from September 22, 2015 through May 8, 2017. These claims are foreclosed by Ms. Burrell's acceptance of the May 9, 2017 case evaluation award and subsequent dismissal with prejudice of her claims against State Farm arising out of her August 19, 2014 accident.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS State Farm's motion to dismiss аnd DENIES Plaintiff's requests to file an amended complaint based on the June 12, 2017 Assignment as futile. ZMC's claims against State Farm in this action are DISMISSED WITH PREJUDICE. This Order closes this case.
IT IS SO ORDERED.
Notes
The Court takes judicial notice, as it is permitted to do in resolving the instant motions, of its own docket (ECF Nos. 20-23), which reflects these undisputed facts regarding the state court evaluation and its results. "It is well established that a court can take judicial notice of its own files and records under Rule 201 of the Federal Rules of Evidence." Gerritsen v. Warner Bros. Entm't Inc. ,
Equally perplexing is ZMC's "Standard of Review" section of its brief, which simply cites to both Fed. R. Civ. P. 12(b)(6) and Fed. R. Civ. P. 56, without suggesting which Rule applies to the motion under consideration or what evidence the Court may consider.
As discussed supra , ZMC participated in the case evaluation process but did not accept an award. ZMC chose instead to continue this lawsuit, notwithstanding that Covenant had rendered its statutory claim a nullity and that Ms. Burrell had fully released her claims against State Farm. Counsel for ZMC maintains that State Farm did not "challenge ZMC's standing" until after the time to accept the case evaluation award had passed. But it is undisputed that Covenant was issued on May 25, 2017 and that acceptance of the case evaluation award was due on or before June 6, 2017. ZMC's counsel nonetheless did not accept case evaluation and chose instead to proceed ahead in very uncharted waters.