Michigan Supreme Court Upholds Right of No-fault Insurers to Directly Pay Medical Providers

Posted on April 01, 2019

The University of Michigan Regents challenged and prevailed in its appeal of a recent lower court decision that erroneously awarded a lawyer more than $98,000 from a portion of his client’s no-fault auto insurance settlement designated for medical treatment. The patient later filed for bankruptcy, and the hospital was unable to recover the payment for medical services that were not disputed by the insurance company, which the insurance company made payable to both the patient and the hospital.

The MHA filed a friend-of-the-court brief in support of the hospital in the case, University of Michigan Regents v. Victor P. Valentino, J.D., before the Michigan Supreme Court to oppose the Michigan Court of Appeals decision. In the words of the hospital’s legal counsel, “the Court of Appeals decision rewards a plaintiff’s attorney for doing nothing, while at the same time, misappropriating payment of the healthcare provider that did life-saving work, and forcing the attorney’s client into bankruptcy.”

The Michigan Supreme Court agreed with the hospital and ordered that the Michigan Court of Appeals decision be vacated and that the case be remanded, or returned, to the trial court to proceed according to the ruling. In its decision, the Michigan Supreme Court stated that, although its earlier holding in Covenant Medical Center v. State Farm found that “a healthcare provider has no statutory cause of action against an insurer to compel payment under the no-fault act, the act permits insurers to directly pay healthcare providers on the insured person’s behalf,” which is what happened in this case.

This ruling is a victory for healthcare providers concerned about receiving payment for undisputed services after the Covenant decision. For more information, contact Amy Barkholz at the MHA.



Tags: no-fault, Covenant, State Farm, University of Michigan, Supreme Court

Posted in: Member News

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