Covenant Medical Center Inc v. State Farm Mutual Automobile Ins Co ( 2017 )

Michigan Supreme Court
Lansing, Michigan
Syllabus
Chief Justice: Justices:
Stephen J. Markman Brian K. Zahra
Bridget M. McCormack
David F. Viviano
Richard H. Bernstein
Joan L. Larsen
Kurtis T. Wilder
This syllabus constitutes no part of the opinion of the Court but has been Reporter of Decisions:
prepared by the Reporter of Decisions for the convenience of the reader. Kathryn L. Loomis
COVENANT MEDICAL CENTER, INC v STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY
Docket No. 152758. Argued December 7, 2016 (Calendar No. 5). Decided May 25,
2017.
Covenant Medical Center, Inc., brought suit in the Saginaw Circuit Court against State
Farm Mutual Automobile Insurance Company to recover payment under the no-fault act,
MCL 500.3101 et seq., for medical services it provided to State Farm’s insured, Jack Stockford,
following an automobile accident in which Stockford was injured. Covenant sent bills totaling
$43,484.80 to State Farm for healthcare services it provided to Stockford. State Farm denied
payment on November 15, 2012. In the meantime, Stockford had filed suit against State Farm
for no-fault benefits, including personal protection insurance (PIP) benefits. Without Covenant’s
knowledge, Stockford and State Farm settled Stockford’s claim for $59,000 shortly before
Covenant initiated its action against State Farm. As part of the settlement, Stockford released
State Farm from liability for all allowable no-fault expenses and any claims accrued through
January 10, 2013. State Farm moved for summary disposition under MCR 2.116(C)(7)
(dismissal due to release) and MCR 2.116(C)(8) (failure to state a claim). The court, Robert L.
Kaczmarek, J., granted State Farm’s motion under MCR 2.116(C)(7), explaining that Covenant’s
claim was dependent on State Farm’s obligation to pay no-fault benefits to Stockford, an
obligation that was extinguished by the settlement between Stockford and State Farm. Covenant
appealed by right in the Court of Appeals, and in a published per curiam opinion, the Court of
Appeals, M. J. KELLY, P.J., and MURRAY and SHAPIRO, JJ., reversed the circuit court’s decision.
313 Mich. App. 50 (2015). According to the Court, the settlement with Stockford did not
discharge State Farm’s liability to Covenant because State Farm had notice of Covenant’s claim
for no-fault benefits for the benefit of Stockford. Because State Farm had notice of Covenant’s
claim, State Farm’s settlement with Stockford was not a good-faith payment of no-fault benefits
it owed. The Court of Appeals concluded that the circumstances of this case were addressed in
MCL 500.3112, which required State Farm to seek a court order directing the proper allocation
of benefits when, in addition to a first-party claim for benefits, there was also a third-party claim
for payment of no-fault benefits. The Supreme Court granted State Farm’s application for leave
to appeal. 499 Mich. 941 (2016).
In an opinion by Justice ZAHRA, joined by Chief Justice MARKMAN and Justices
MCCORMACK, VIVIANO, and LARSEN, the Supreme Court held:
The plain language of the no-fault act, MCL 500.3101 et seq., governs the administration
of Michigan’s no-fault laws regarding claims and benefits involving automobile accidents. Only
two sections of the no-fault act mention healthcare providers, MCL 500.3157 and
MCL 500.3158, and neither of those sections confers on a healthcare provider a right to sue for
reimbursement of the costs of providing medical care to an injured person. Those sections
address, respectively, the charges a healthcare provider may assess for treatment of an insured
and the requirement that a healthcare provider make an insured’s medical records and treatment
information available to the insurer. Two additional relevant provisions, MCL 500.3105 and
MCL 500.3107, address, respectively, an insurer’s obligation to pay personal protection
insurance (PIP) benefits and the allowable expenses for which PIP benefits must be paid.
Nothing in the language of those two provisions authorizes a healthcare provider to bring a direct
action against an insurer for payment of PIP benefits. Nor does the language appearing in
MCL 500.3107(1)(a), which makes benefits payable for allowable expenses consisting of all
reasonable charges incurred, create a right of action on behalf of healthcare providers because
healthcare providers do not incur the charges or become liable for them; charges for healthcare
are incurred most commonly by patients, who are the ones that become liable for paying those
charges. Furthermore, although MCL 500.3112 allows no-fault insurers to directly pay PIP
benefits to a healthcare provider for expenses incurred by an insured, MCL 500.3112 does not
entitle a healthcare provider to bring a direct action against an insurer for payment of PIP
benefits. That statutory provision simply allows a no-fault insurer to satisfy its obligation to an
insured by direct payment to the injured person or direct payment to the healthcare provider for
the benefit of an injured person. MCL 500.3112 also provides that a no-fault insurer’s payment
made in good faith either to or for the benefit of an insured satisfies its obligation to the insured
to the extent of the payment if the insurer did not previously receive written notice of a third-
party’s claim for benefits. The remainder of MCL 500.3112 addresses an interested party’s right
to apply to the circuit court for an order awarding and apportioning payment to entitled persons,
and it authorizes the circuit court to designate payees and make an equitable apportionment
among those payees, including dependents and survivors of the injured person. Finally, no
language appearing in MCL 500.3114 or MCL 500.3115 contemplates a statutory cause of action
for healthcare providers against a no-fault insurer. MCL 500.3114 and MCL 500.3115 concern
the priority of insurers from which an injured person is entitled to receive benefits when multiple
insurers are involved. In short, under the language of the no-fault act, a healthcare provider does
not possess a statutory cause of action against a no-fault insurer for the payment of no-fault
benefits.
Reversed and remanded for entry of summary disposition in defendant’s favor.
Justice BERNSTEIN, dissenting, concluded that although the no-fault act does not
expressly grant a healthcare provider a direct cause of action against a no-fault insurer for the
payment of PIP benefits, MCL 500.3112 supports the existence of such a cause of action. The
language of the no-fault act nowhere expressly defines “claimant” but provisions of the no-fault
act, like MCL 500.3112, state which parties may receive no-fault benefits, and the right to
receive benefits is necessary in order for a party to claim those benefits. MCL 500.3112
provides that PIP benefits are payable either to the injured person or to someone else for the
benefit of the injured person; payment to a healthcare provider is payment for the benefit of the
injured person. To conclude that injured persons are entitled to a claim for benefits and that
healthcare providers are not is inconsistent with the language of MCL 500.3112. The language
of the no-fault act does not expressly confer on any party the right to directly sue a no-fault
insurer for no-fault benefits. If an express provision giving a party the right to sue an insurer is
required, then no party—not even the injured person—is authorized to sue a no-fault insurer to
compel payment of no-fault benefits. But to hold that an injured person is the only party entitled
to make a claim to enforce his or her right to receive benefits renders surplusage the language in
the no-fault act that permits payment to a third party.
Justice WILDER did not participate in the disposition of this matter.
©2017 State of Michigan
Michigan Supreme Court
Lansing, Michigan
OPINION
Chief Justice: Justices:
Stephen J. Markman Brian K. Zahra
Bridget M. McCormack
David F. Viviano
Richard H. Bernstein
Joan L. Larsen
Kurtis T. Wilder
FILED May 25, 2017
STATE OF MICHIGAN
SUPREME COURT
COVENANT MEDICAL CENTER, INC.,
Plaintiff-Appellee,
v No. 152758
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant-Appellant.
BEFORE THE ENTIRE BENCH (except WILDER, J.)
ZAHRA, J.
This case presents the significant question of whether a healthcare provider
possesses a statutory cause of action against a no-fault insurer to recover personal
protection insurance benefits for allowable expenses incurred by an insured under the no-
fault act, MCL 500.3101 et seq. Relying on several of its previous decisions, the Court of
Appeals concluded that it is “well settled that a medical provider has independent
standing to bring a claim against an insurer for the payment of no-fault benefits.” 1 The
insurer sought leave to appeal in this Court, and we granted the application to consider in
part that conclusion, which this Court has never addressed. 2
A thorough review of the statutory no-fault scheme reveals no support for an
independent action by a healthcare provider against a no-fault insurer. In arguing that
healthcare providers may directly sue no-fault insurers, plaintiff primarily relies on MCL
500.3112, which provides, in pertinent part, that “[p]ersonal protection insurance benefits
are payable to or for the benefit of an injured person or, in case of his death, to or for the
benefit of his dependents.” While this provision undoubtedly allows no-fault insurers to
directly pay healthcare providers for the benefit of an injured person, its terms do not
grant healthcare providers a statutory cause of action against insurers to recover the costs
of providing products, services, and accommodations to an injured person. Rather, MCL
500.3112 permits a no-fault insurer to discharge its liability to an injured person by
paying a healthcare provider directly, on the injured person’s behalf. And further, no
other provision of the no-fault act can reasonably be construed as bestowing on a
healthcare provider a statutory right to directly sue no-fault insurers for recovery of no-
fault benefits. We therefore hold that healthcare providers do not possess a statutory
cause of action against no-fault insurers for recovery of personal protection insurance
benefits under the no-fault act. The Court of Appeals caselaw concluding to the contrary
1
See Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 313 Mich. App. 50, 54; 880
NW2d 294 (2015), and cases cited therein.
2
Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 499 Mich. 941 (2016).
2
is overruled to the extent that it is inconsistent with this holding. We reverse the
judgment of the Court of Appeals in this case and remand the case to the Saginaw Circuit
Court for entry of an order granting summary disposition to defendant.
I. FACTS AND PROCEDURAL HISTORY
On June 20, 2011, Jack Stockford was injured in a motor vehicle accident. His no-
fault insurer was defendant, State Farm Mutual Automobile Insurance Company.
Stockford was treated on at least three occasions by plaintiff, Covenant Medical Center, a
healthcare provider. Plaintiff sent defendant bills on July 3, August 2, and October 9,
2012, for medical services it provided to Stockford. It is undisputed that defendant
received the bills, which totaled $43,484.80. Defendant denied coverage on or about
November 15, 2012, and refused to pay the bills.
On June 4, 2012, Stockford filed suit against defendant for no-fault benefits,
including personal protection insurance (PIP) benefits. 3 Stockford settled his case with
defendant on April 2, 2013, for $59,000. In connection with the settlement, Stockford
executed a broad release, which encompassed all allowable no-fault expenses, including
medical bills, and “any and all past and present claims incurred through January 10,
2013[.]”
3
No-fault benefits are broader than PIP benefits. For instance, no-fault benefits include,
inter alia, property-protection benefits and work-loss benefits. See Turner v Auto Club
Ins Ass’n, 448 Mich. 22, 30; 528 NW2d 681 (1995). The instant case concerns healthcare
providers and, in turn, only PIP benefits.
3
Plaintiff brought the instant suit against defendant on April 25, 2013, seeking
payment of its billed expenses. 4 Plaintiff asserted that it learned of the settlement and
release when defendant answered its complaint in May 2013. In September 2013,
defendant moved for summary disposition under MCR 2.116(C)(7) (dismissal due to
release) and MCR 2.116(C)(8) (failure to state a claim). Defendant maintained that
plaintiff’s claim for benefits was derivative of Stockford’s claim, which was extinguished
by the release. Therefore, defendant argued, plaintiff no longer possessed a claim against
it.
In an opinion dated May 15, 2014, the circuit court granted summary disposition
to defendant pursuant to MCR 2.116(C)(7). The court agreed with defendant that
Stockford’s release was dispositive, holding that any claim plaintiff may have had against
Stockford’s insurer was “dependent on the insurer being obligated to pay benefits to the
provider on behalf of its insured” and that the “release end[ed] the insurer’s obligation to
pay benefits to or on behalf of its insured under its contract of insurance.”
Plaintiff appealed by right in the Court of Appeals. In a published per curiam
opinion, the panel reversed the circuit court’s decision, concluding that defendant’s
liability to plaintiff could not be discharged by defendant’s settlement with Stockford
because defendant had received written notice of plaintiff’s claim before the settlement,
presumably from the bills that plaintiff mailed to defendant. 5 The panel opined that, in
4
Though initially filed in the Kent Circuit Court, the case was transferred to the Saginaw
Circuit Court in July 2013.
5
Covenant, 313 Mich. App. at 53.
4
this situation, the settlement could not constitute a “good faith” payment covering the
noticed third-party claim for purposes of MCL 500.3112. The panel reasoned in part:
[W]hile a provider’s right to payment from the insurer is created by the
right of the insured to benefits, an insured’s agreement to release the insurer
in exchange for a settlement does not release the insurer with respect to the
provider’s noticed claims unless the insurer complies with MCL
500.3112.[6]
According to the panel, in order to discharge liability under these circumstances,
MCL 500.3112 “requires that the insurer apply to the circuit court for an appropriate
order directing how the no-fault benefits should be allocated.” 7 The Court of Appeals
therefore reversed the circuit court’s order granting summary disposition in favor of
defendant and remanded the case for further proceedings.
Defendant applied for leave to appeal in this Court. As previously mentioned, this
Court granted leave to consider in part “whether a healthcare provider has an independent
or derivative claim against a no-fault insurer for no-fault benefits[.]” 8
II. STANDARD OF REVIEW AND RULES OF STATUTORY INTERPRETATION
The circuit court granted summary disposition under MCR 2.116(C)(7), which
applies when “[e]ntry of judgment, dismissal of the action, or other relief is appropriate
because of release . . . .” This Court reviews de novo a court’s decision to grant summary
disposition. 9
6
Covenant, 313 Mich. App. at 54.
7
Id. at 53.
8
Covenant, 499 Mich. 941.
9
Horace v Pontiac, 456 Mich. 744, 749; 575 NW2d 762 (1998).
5
This Court also reviews de novo questions of statutory interpretation. 10 The role
of this Court in interpreting statutory language is to “ascertain the legislative intent that
may reasonably be inferred from the words in a statute.” 11 “The focus of our analysis
must be the statute’s express language, which offers the most reliable evidence of the
Legislature’s intent.” 12 When the statutory language is clear and unambiguous, judicial
construction is not permitted and the statute is enforced as written. 13 “[A] court may read
nothing into an unambiguous statute that is not within the manifest intent of the
Legislature as derived from the words of the statute itself.” 14
III. ANALYSIS
The Court of Appeals concluded that the release executed between Stockford and
defendant did not release defendant from liability regarding plaintiff’s claim. This
conclusion was premised on the notion that a healthcare provider who provides services
to a person injured in a motor vehicle accident possesses its own statutory claim against
the injured person’s no-fault insurer to compel payment for services rendered on behalf
of the insured. The Court of Appeals panel in the instant case did not critically dissect
the pertinent statutory provisions of the no-fault act to find support for this premise but
10
Hannay v Dep’t of Transp, 497 Mich. 45, 57; 860 NW2d 67 (2014).
11
People v Couzens, 480 Mich. 240, 249; 747 NW2d 849 (2008).
12
Badeen v PAR, Inc, 496 Mich. 75, 81; 853 NW2d 303 (2014).
13
People v Gardner, 482 Mich. 41, 50; 753 NW2d 78 (2008).
14
Roberts v Mecosta Co Gen Hosp, 466 Mich. 57, 63; 642 NW2d 663 (2002).
6
instead followed previous decisions of the Court of Appeals, which it was bound to do. 15
Plaintiff urges us to likewise follow the long line of cases from the Court of Appeals
recognizing that a healthcare provider may sue a no-fault insurer to recover PIP benefits
under the no-fault act. We decline plaintiff’s invitation, relying instead on the language
of the no-fault act to conclude that a healthcare provider possesses no statutory cause of
action against a no-fault insurer for recovery of PIP benefits.
A. COURT OF APPEALS CASELAW
The foundation of any opinion interpreting a statutory provision is the parsing of
the words of the pertinent act or statute under review. This case is no exception.
Nonetheless, we are presented with decades of Court of Appeals caselaw concluding that
a healthcare provider may assert a direct cause of action against a no-fault insurer to
recover no-fault benefits. Although this Court is not in any way bound by the opinions of
the Court of Appeals, we nevertheless tread cautiously in considering whether to reject a
long line of caselaw developed by our intermediate appellate court. That being said, the
longevity of a line of Court of Appeals caselaw will not deter this Court from intervening
when that caselaw clearly misinterprets the statutory scheme at issue. Correcting
erroneous interpretations of statutes furthers the rule of law by conforming the caselaw of
this state to the language of the law as enacted by the representatives of the people. And
it is imperative that this Court aim to conform our caselaw to the text of the applicable
15
MCR 7.215(J)(1) (“A panel of the Court of Appeals must follow the rule of law
established by a prior published decision of the Court of Appeals issued on or after
November 1, 1990, that has not been reversed or modified by the Supreme Court, or by a
special panel of the Court of Appeals as provided in this rule.”).
7
statutes to ensure that those to whom the law applies may look to those statutes for a clear
understanding of the law. 16 We therefore begin our analysis with a brief discussion of
how this issue developed in the Court of Appeals.
There are three cases on which the Court of Appeals has frequently relied when
concluding that a healthcare provider may directly sue a no-fault insurer. The first is
LaMothe v Auto Club Ins Ass’n, 17 in which the panel opined that it could “anticipate that
health care services providers, as practical litigants, would bypass the insured and directly
sue, pursuant to third-party beneficiary theories, the entity with prospects identical to
their own for engendering jury sympathy—the insurer.” Significantly, the LaMothe
parties did not litigate whether the no-fault act permits such a direct cause of action
because the insurer had agreed via contractual provision “to fully defend and indemnify
the insured from liability . . . .” 18
The following year, in Munson Med Ctr v Auto Club Ins Ass’n, 19 the Court of
Appeals stated that the defendant insurer’s “obligation to pay” and the plaintiff healthcare
16
Robinson v Detroit, 462 Mich. 439, 467; 613 NW2d 307 (2000) (stating that “it is to the
words of the statute itself that a citizen first looks for guidance in directing his actions,”
because “the essence of the rule of law” is “to know in advance what the rules of society
are”).
17
LaMothe v Auto Club Ins Ass’n, 214 Mich. App. 577, 586; 543 NW2d 42 (1995).
18
Id. at 583. The Court of Appeals quoted a letter that the insurer sent the insured’s
attorney, which stated in part that “[i]f any of the medical providers bring a claim against
[the insured], [the insurer] will defend and indemnify him. In fact, [the insurer] will
waive any technical defects and allow the provider to sue the [insurer] directly so that
[the insured] won’t even have to be a party to the litigation.” Id. at 583 n 4.
19
Munson Med Ctr v Auto Club Ins Ass’n, 218 Mich. App. 375, 381; 554 NW2d 49
(1996).
8
provider’s “right to be paid for the injureds’ no-fault medical expenses arise pursuant to
MCL 500.3105, 500.3107, and 500.3157 . . . .” But there was no indication that this
“right” was in dispute; the central issue in the case concerned the meaning of “customary
charges.” Moreover, while the panel cited particular statutory provisions, it did not parse
the language of those provisions or provide any meaningful analysis to support the
implication that a healthcare provider possesses a direct cause of action against a no-fault
insurer for PIP benefits.
Also frequently cited for the proposition that a healthcare provider may directly
sue a no-fault insurer is Lakeland Neurocare Ctrs v State Farm Mut Auto Ins Co. 20 But
as in LaMothe, the issue was neither presented nor decided in Lakeland because the
defendant insurer in Lakeland “did not dispute that plaintiff had the legal right to
commence this action for payment of medical services rendered to defendant’s
insured.” 21 Instead, the litigated issue was whether the provider could recover penalty
interest under MCL 500.3142 and attorney fees under MCL 500.3148. 22
None of these cases decided whether healthcare providers possess a statutory
cause of action against no-fault insurers. Despite this, subsequent panels of the Court of
Appeals have, in published and unpublished cases alike, consistently relied on one or
more of the cases just discussed as if they had decided the issue, generally failing to
20
Lakeland Neurocare Ctrs v State Farm Mut Auto Ins Co, 250 Mich. App. 35; 645 NW2d
59 (2002).
21
Id. at 37.
22
Id. at 44.
9
engage in any statutory analysis of their own to ground a healthcare provider’s cause of
action in the text of the no-fault act. This is aptly illustrated by the cases cited by the
Court of Appeals in the instant case for the proposition that “it is . . . well settled that a
medical provider has independent standing to bring a claim against an insurer for the
payment of no-fault benefits.” 23 Like LaMothe, Munson, and Lakeland, none of the cases
cited by the Court of Appeals provides any textual analysis of the no-fault act to support
this proposition. 24
23
Covenant, 313 Mich. App. at 54, citing Wyoming Chiropractic Health Clinic, PC v
Auto-Owners Ins Co, 308 Mich. App. 389, 396-397; 864 NW2d 598 (2014); Moody v
Home Owners Ins Co, 304 Mich. App. 415, 440; 849 NW2d 31 (2014), rev’d sub nom on
other grounds by Hodge v State Farm Mut Auto Ins Co, 499 Mich. 211; 884 NW2d 238
(2016); Mich Head & Spine Institute, PC v State Farm Mut Auto Ins Co, 299 Mich. App.
442, 448 n 1; 830 NW2d 781 (2013); Lakeland Neurocare, 250 Mich. App. at 42-43;
Regents of the Univ of Mich v State Farm Mut Ins Co, 250 Mich. App. 719, 733; 650
NW2d 129 (2002).
24
The panel in the instant case cited Wyoming Chiropractic, 308 Mich. App. at 396-397,
in which the Court of Appeals did not itself analyze any section of the no-fault act to
conclude that the no-fault act established a cause of action for healthcare providers.
Instead, the panel in Wyoming Chiropractic relied on prior cases leading back to Munson
and Lakeland as already having established this premise as “fact.” The instant panel also
cited Moody, 304 Mich. App. 415, and Regents of the Univ of Mich, 250 Mich. App. 719,
both of which stated in a cursory manner that healthcare providers possess a claim or
cause of action against no-fault insurers without citing any statutes or otherwise
substantively addressing the issue. In Moody, the Court of Appeals recognized, without
analyzing, that a provider could “bring an independent cause of action against a no-fault
insurer,” but that the provider’s claim was “completely derivative of and dependent on”
the claim of the patient insured. Moody, 304 Mich. App. at 440. In Regents of the Univ of
Mich, the panel concluded that while the claims of the medical providers were “derivative
claims, they also ha[d] direct claims for personal protection insurance benefits.” Regents
of the Univ of Mich, 250 Mich. App. at 733, citing Munson, 218 Mich. App. 375, and
LaMothe, 214 Mich. App. at 585-586. This language in Regents of the Univ of Mich
appears in a passage discussing whether MCL 600.5821(4) or MCL 500.3145(1) governs
the statute of limitations applicable when a political subdivision of the state is the
plaintiff in a no-fault action; the opinion did not itself analyze the issue of a provider’s
10
In sum, the Court of Appeals’ decision in this case was premised on the notion that
a healthcare provider possesses a statutory cause of action against a no-fault insurer for
payment of no-fault benefits. The panel gleaned this notion not from the text of the no-
fault act, but from previous decisions of the Court of Appeals that are likewise devoid of
the statutory analysis necessary to support that premise. We find this caselaw
unconvincing, and unlike the Court of Appeals panel, we are not bound by the conclusion
that a healthcare provider possesses a right to bring a direct cause of action against a no-
fault insurer to recover PIP benefits under the no-fault act. We instead rely on the
language of the no-fault act itself to answer the question presented in this case.
B. STATUTORY ANALYSIS
It bears repeating that completely absent from the analysis in the Court of Appeals
cases discussed earlier is a meaningful explanation of what language in the no-fault act
creates a cause of action for healthcare providers against insurers. And indeed, the no-
fault act does not, in any provision, explicitly confer on healthcare providers a direct
cause of action against insurers. In fact, only two sections of the act, MCL 500.3157 and
MCL 500.3158, even mention healthcare providers. MCL 500.3157 states:
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
right to directly sue a no-fault insurer. The only other case cited by the Court of Appeals
is Mich Head & Spine Institute, 299 Mich. App. at 448 n 1, but the panel in that case
merely referred to the phrase “for the benefit of” in MCL 500.3112 and added “which
this Court has recognized creates an independent cause of action for healthcare
providers.” The Court cited only Lakeland, without providing any statutory analysis of its
own.
11
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.
MCL 500.3158(2) states:
A physician, hospital, clinic or other medical institution providing,
before or after an accidental bodily injury upon which a claim for personal
protection insurance benefits is based, any product, service or
accommodation in relation to that or any other injury, or in relation to a
condition claimed to be connected with that or any other injury, if requested
to do so by the insurer against whom the claim has been made, (a) shall
furnish forthwith a written report of the history, condition, treatment and
dates and costs of treatment of the injured person and (b) shall produce
forthwith and permit inspection and copying of its records regarding the
history, condition, treatment and dates and costs of treatment.
The former provision, MCL 500.3157, merely sets forth a limitation on the
charges that may be assessed by a healthcare provider for treatment of an injured person.
That a provider has the right to charge a reasonable amount for its products, services, or
accommodations in no way obligates an insurance carrier to directly reimburse the
provider for those charges. The latter provision, MCL 500.3158(2), simply requires that
a healthcare provider make the injured person’s medical records and certain treatment
information available to the insurer. Neither of these provisions, by their express terms
or by implication, confers on a healthcare provider a right to sue a no-fault insurer for
reimbursement of the amounts it charged for treatment. Therefore, any such statutory
right must be found in the sections of the no-fault act that do not explicitly refer to
healthcare providers.
Plaintiff urges us to find support for a healthcare provider’s direct cause of action
in MCL 500.3105 and MCL 500.3107. MCL 500.3105(1) makes a no-fault insurer liable
12
for the payment of PIP benefits. MCL 500.3105(1) states that “[u]nder personal
protection insurance an insurer is liable to pay benefits for accidental bodily injury
arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor
vehicle, subject to the provisions of this chapter.” MCL 500.3107 provides that “personal
protection insurance benefits are payable for” certain costs, including “[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,”
MCL 500.3107(1)(a), and “[w]ork loss consisting of loss of income from work,” MCL
500.3107(1)(b). According to plaintiff, because benefits are payable for “reasonable
charges” under MCL 500.3107(1)(a), including charges incurred for services rendered by
healthcare providers under MCL 500.3157, the no-fault insurer must directly pay the
provider’s reasonable charges.
MCL 500.3105 and MCL 500.3107, when taken together, provide that an insurer
is liable to pay benefits for certain listed costs. Yet these provisions do nothing more
than define the scope and nature of the requisite coverage. They do not identify to whom
the insurer is liable or who has the right to assert a claim for benefits. Further, the
language of MCL 500.3107(1)(a), which pertains to allowable expenses like those at
issue here, is not amenable to an interpretation that would allow a healthcare provider to
sue an insurer for reimbursement. MCL 500.3107(1)(a) provides that benefits are
“payable” for “[a]llowable expenses consisting of all reasonable charges incurred . . . .”
In the context of the no-fault act, this Court has defined “incur” as “ ‘[t]o become liable
13
or subject to, [especially] because of one’s own actions.’ ” 25 Charges for healthcare
services rendered are not “incurred” by a healthcare provider because a provider is not
subject to charges for the products, services, and accommodations it delivers to others.
Nor do providers become “liable” for allowable expenses. Rather, charges for healthcare
are incurred by others, most commonly patients, and those patients are the ones who
become liable for payment of those charges. Therefore, because a healthcare provider
does not incur reasonable charges and is not liable for allowable expenses, plaintiff’s
argument that MCL 500.3107(1)(a) permits a provider to directly sue an insurer for
reimbursement is not persuasive. 26 Moreover, plaintiff’s interpretation of MCL
500.3107(1)(a) improperly requires the Court to read into MCL 500.3107(1)(a) a
meaning that the Legislature did not manifest through the words of MCL 500.3107(1)(a)
itself. 27
Plaintiff, like previous panels of the Court of Appeals, 28 largely relies on MCL
500.3112 in support of its argument that healthcare providers possess a direct cause of
action against no-fault insurers. That provision states in full:
25
Proudfoot v State Farm Mut Ins Co, 469 Mich. 476, 484; 673 NW2d 739 (2003),
quoting Webster’s II New College Dictionary (2001) (alterations in original).
26
Plaintiff also points to the word “payable” in MCL 500.3107 to argue that no-fault
benefits are to be paid to a healthcare provider for all reasonable charges for medical
treatment. But MCL 500.3107 is silent regarding to whom the benefits are payable.
Plaintiff does not explain how this provision vests a provider with rights against an
insurer or otherwise indicates that benefits are payable to a provider.
27
See Roberts, 466 Mich. at 63.
28
See, e.g., Chiropractors Rehab Group, PC v State Farm Mut Auto Ins Co, 313 Mich
App 113; 881 NW2d 120 (2015); Wyoming Chiropractic, 308 Mich. App. 389.
14
Personal protection insurance benefits are payable to or for the
benefit of an injured person or, in case of his death, to or for the benefit of
his dependents. Payment by an insurer in good faith of personal protection
insurance benefits, to or for the benefit of a person who it believes is
entitled to the benefits, discharges the insurer’s liability to the extent of the
payments unless the insurer has been notified in writing of the claim of
some other person. If there is doubt about the proper person to receive the
benefits or the proper apportionment among the persons entitled thereto, the
insurer, the claimant or any other interested person may apply to the circuit
court for an appropriate order. The court may designate the payees and
make an equitable apportionment, taking into account the relationship of
the payees to the injured person and other factors as the court considers
appropriate. In the absence of a court order directing otherwise the insurer
may pay:
(a) To the dependents of the injured person, the personal protection
insurance benefits accrued before his death without appointment of an
administrator or executor.
(b) To the surviving spouse, the personal protection insurance
benefits due any dependent children living with the spouse. [MCL
500.3112.]
While this section, which addresses to whom PIP benefits are payable, undoubtedly
allows for the common practice of no-fault insurers directly paying healthcare providers,
its text does not require direct payment of healthcare providers or give providers any right
to directly sue a no-fault insurer, as will be evidenced through a sentence-by-sentence
examination of the provision.
The first sentence, which provides that PIP benefits “are payable to or for the
benefit of an injured person or, in the case of his death, to or for the benefit of his
dependents,” addresses both allowable expenses and survivor’s loss and sets forth the
groups of persons to whom an insurer may direct payment to discharge its liability to the
insured. The Legislature’s use of the disjunctive word “or” indicates “an alternative or
15
choice between two things.” 29 The word immediately preceding the disjunctive options
is “payable,” which is defined by the Merriam-Webster’s Collegiate Dictionary to mean
“that may, can, or must be paid.” 30 Therefore, according to the first sentence of MCL
500.3112, PIP benefits, which are paid by the insurer, “may, can, or must be paid” either
(1) to the injured person or (2) for the benefit of the injured person. In the case of the
injured person’s death, PIP benefits “may, can, or must be paid” either (1) to the
decedent’s dependents or (2) for the benefit of those dependents. This sentence does
nothing more than allow a no-fault insurer to satisfy its obligation to the insured by
paying the injured person directly or by paying a party providing PIP services on the
injured person’s behalf. That a third party may receive payment directly from an insurer
for PIP benefits does not mean that the third party has a statutory entitlement to that
method of payment.
Plaintiff urges us to find, like previous Court of Appeals panels have, a provider
cause of action in MCL 500.3112’s phrase, “for the benefit of the injured person.” This
language, however, does not state that benefits are payable “to the provider,” or otherwise
indicate that a provider itself has an entitlement to benefits. To the contrary, it expressly
29
See People v Kowalski, 489 Mich. 488, 499 n 11; 803 NW2d 200 (2011) (“ ‘Or’ is . . . a
disjunctive [term], used to indicate a disunion, a separation, an alternative.”) (quotation
marks and citation omitted; alteration in original).
30
Merriam-Webster’s Collegiate Dictionary (11th ed). “Payable” is not defined in the
no-fault act. We therefore presume that the Legislature intended for the word to have its
common and ordinary meaning. MCL 8.3a. To assist in determining the ordinary
meaning of relevant words, this Court may consult a dictionary. Klooster v Charlevoix,
488 Mich. 289, 304; 795 NW2d 578 (2011).
16
leaves that entitlement with the injured person and merely recognizes that one who does
not have a direct cause of action against a no-fault insurer may be paid directly by the
insurer, but only in order to benefit the injured person. Simply stated, nothing in the first
sentence is properly construed as bestowing a statutory cause of action on the injured
person’s healthcare provider.
The second sentence of MCL 500.3112 reads:
Payment by an insurer in good faith of personal protection insurance
benefits, to or for the benefit of a person who it believes is entitled to the
benefits, discharges the insurer’s liability to the extent of the payments
unless the insurer has been notified in writing of the claim of some other
person.
This sentence allows a no-fault insurer to discharge its liability through payment to
or for the benefit of a person it believes is entitled to benefits, as long as the payment is
made in good faith and the insurer has not been previously “notified in writing of the
claim of some other person.” Plaintiff argues that healthcare providers qualify as “some
other person” for purposes of this sentence. Even if this were so, plaintiff still has not
demonstrated a legal right of action against a no-fault insurer. The phrase “claim of some
other person” does not itself confer on any person a “claim” 31 or “right” to recover
benefits. Rather, it presupposes that “some other person” otherwise possesses a claim for
31
Because the no-fault act does not define “claim,” we may consult a dictionary
definition. Klooster, 488 Mich. at 304. The relevant dictionary definitions of “claim”
include “a demand for something due or believed to be due” and “a right to something.”
Merriam-Webster’s Collegiate Dictionary (11th ed). Therefore, to have a “claim” under
the no-fault act, a provider must have a right to payment of PIP benefits from a no-fault
insurer.
17
PIP benefits against the insurer. 32 Significantly, plaintiff is unable to demonstrate that the
no-fault act elsewhere confers on a healthcare provider a right to claim benefits from a
no-fault insurer.
The third sentence of MCL 500.3112 reads, “If there is doubt about the proper
person to receive the benefits or the proper apportionment among the persons entitled
thereto, the insurer, the claimant or any other interested person may apply to the circuit
court for an appropriate order.” This sentence merely provides a procedure for resolving
doubts about which persons are entitled to benefits; it does not itself confer a right or
entitlement on any person, including a healthcare provider, to sue a no-fault insurer.33
And the sentence’s reference to “apportionment” cannot logically pertain to allowable
expenses like the reasonable charges incurred for healthcare services, because an injured
32
We need not decide precisely to whom this sentence applies in order to conclude that it
does not confer on a healthcare provider the right to sue for payment of benefits. It
seems, however, that this sentence is likely applicable primarily to dependents and
survivors given that the end of the statute pertains to the allocation of benefits to those
groups of persons.
33
Plaintiff argues that a healthcare provider qualifies as a “person” for purposes of the
third sentence of MCL 500.3112 given that the Insurance Code, in MCL 500.114, defines
the word “person” to include corporate entities, like healthcare providers. But this Court
long ago recognized that, given its inconsistent use throughout the no-fault act, “the term
‘person’ must be construed in the exact context in which it is used to ascertain its precise
meaning.” Belcher v Aetna Cas and Surety Co, 409 Mich. 231, 258; 293 NW2d 594
(1980). Plaintiff has not explained why “person,” in the context of the third sentence of
MCL 500.3112, refers to a corporate entity like a healthcare provider. In any event, even
if a healthcare provider were a “person” for purposes of this sentence, the sentence itself,
as discussed, does not purport to create or confer any rights with respect to the “persons”
covered by its doubt-resolution procedure.
18
person owes the provider, and is entitled to PIP benefits for, the entirety of those
allowable expenses under MCL 500.3107(1)(a), not an apportioned amount. 34
Finally, the fourth sentence provides, “The court may designate the payees and
make an equitable apportionment, taking into account the relationship of the payees to the
injured person and other factors as the court considers appropriate.” And the fifth
sentence addresses the payment of dependent and survivor benefits in the absence of a
court order. These sentences contain no language that can be reasonably understood as
creating a right for a healthcare provider to directly sue a no-fault insurer. As in the third
sentence, the reference to “apportionment” in the fourth sentence is inapplicable in the
context of charges for services rendered by a healthcare provider. Similarly, the fourth
sentence’s call for the court to take into account “the relationship of the payees to the
34
See Douglas v Allstate Ins Co, 492 Mich. 241, 257; 821 NW2d 472 (2012) (noting that
MCL 500.3107(1) allows “unlimited lifetime benefits” for allowable expenses). In
contrast, apportionment of benefits is necessary when the allowable benefits are finite in
amount, as is the case with survivor’s loss benefits. See MCL 500.3108(1).
Again, we need not decide precisely to whom this sentence pertains in order to
conclude that it does not confer on a healthcare provider the right to sue for payment of
benefits. Nonetheless, we note that it would seem to primarily pertain to dependent and
survivor benefits. There are several scenarios in which there could be doubt regarding
the proper dependent or survivor to receive benefits. For example, under MCL
500.3110(1), doubt could emerge about whether a surviving spouse or a minor child is a
proper person to receive benefits if it were unclear whether they were living in the same
house as the victim. Doubt could also emerge under MCL 500.3110(2) regarding the
proper apportionment of benefits because “the extent of [one’s] dependency shall be
determined in accordance with the facts as they exist at the time of death.” Similarly,
doubt could emerge under MCL 500.3110(3) because this subsection conditions
“dependent” status on particular factual inquiries. In those circumstances, a hearing
might be necessary for the circuit court to “designate the payees and make an equitable
apportionment” of benefits. MCL 500.3112.
19
injured person” is inapt in the context of a healthcare provider’s bill for services
rendered. If the injured person qualifies for benefits, the insurer is liable under MCL
500.3107(1)(a) to pay “all reasonable charges incurred” by the injured person; no further
inquiry into the “relationship” between the injured person and the provider is relevant. 35
And the fifth sentence on its face pertains only to payment to dependents and survivors.
Therefore, the fourth and fifth sentences clearly do not create a statutory cause of action
for healthcare providers.
While plaintiff primarily cites MCL 500.3112 as establishing a healthcare-
provider cause of action under the no-fault act, there is nothing in the language of this
provision that can reasonably be interpreted as vesting a healthcare provider with a right
to demand reimbursement from a no-fault insurer for services the provider rendered to an
insured. Although this provision allows insurers to pay a provider of no-fault services
directly “for the benefit of” the insured, it does not establish a concomitant claim
enforceable by an insured’s benefactors. 36 Plaintiff has not pointed to any other
35
In contrast, the relationship between a payee and an injured person is relevant when
survivor and dependent benefits are at issue. Certain individuals are conclusively
presumed to be dependents under MCL 500.3110(1) but when one of those conclusive
relationships is not at issue, “questions of dependency and the extent of dependency shall
be determined in accordance with the facts as they exist at the time of death” under MCL
500.3110(2), which may require an inquiry into the parties’ relationship.
36
The dissent asserts that this conclusion “renders surplusage the possibility of payment
to a third party like a healthcare provider.” This is not so. By permitting insurers to
directly pay healthcare providers on the injured person’s behalf, MCL 500.3112 allows
the insurer to eliminate the insured as a conduit in the payment process, relieving the
insured from having to redirect to the healthcare provider payment received from the
insurer. It is not surplusage for the statute to expressly permit an insurer to directly pay
its insured’s healthcare bills in order to discharge its obligation to its insured. The fact
20
provision in the no-fault act that bestows on healthcare providers a right to directly sue a
no-fault insurer. 37
that the statute grants that permission does not create a right in the providers to sue the
insurer for payment.
37
Other provisions cited by plaintiff in support of its argument that healthcare providers
have a direct claim of their own are MCL 500.3145(1) and MCL 500.3148.
MCL 500.3145(1), the no-fault statute of limitations provision, provides that “[a]n
action for recovery of personal protection insurance benefits payable under this chapter
for accidental bodily injury may not be commenced later than 1 year after the date of the
accident causing the injury . . . .” Plaintiff argues that this provision does not only permit
the injured person to bring a lawsuit, but that it plainly allows a timely lawsuit for
recovery of PIP benefits “payable under this chapter” and that under MCL 500.3107,
MCL 500.3157, and MCL 500.3112, allowable expenses are payable to healthcare
providers. Consequently, plaintiff contends that MCL 500.3145(1) contemplates that
providers will bring lawsuits to recover benefits. According to plaintiff, the third
sentence of MCL 500.3145(1) confirms this interpretation by stating that “the claimant
may not recover benefits for any portion of the loss incurred more than 1 year before the
date on which the action was commenced.” Under plaintiff’s interpretation, the
Legislature’s use of the word “claimant,” instead of “injured person,” demonstrates that
other persons, like providers, may bring lawsuits to recover PIP benefits.
MCL 500.3148, which pertains to attorney fees, states in part that “[a]n attorney is
entitled to a reasonable fee for advising and representing a claimant in an action for
personal or property protection insurance benefits which are overdue.” MCL
500.3148(1). Plaintiff similarly argues that the statute’s reference to “claimant” rather
than “injured person” indicates that healthcare providers have the right to bring an
independent lawsuit for payment of PIP benefits.
Plaintiff’s reliance on the references to “claimant” rather than “injured person” in
MCL 500.3145(1) and MCL 500.3148 is helpful to plaintiff’s argument only if healthcare
providers are proper claimants under the no-fault act. The provisions cited by plaintiff do
not establish that providers possess a claim under the act. Because MCL 500.3145(1) and
MCL 500.3148 do not create rights to PIP benefits that do not otherwise exist, plaintiff’s
reliance on these provisions is misplaced.
21
Two textual clues found elsewhere in the no-fault act support the conclusion that a
healthcare provider does not possess a statutory cause of action against a no-fault insurer.
The priority statutes, MCL 500.3114 and MCL 500.3115, define against whom an
individual may make a claim for benefits. The default rule for priority is found in MCL
500.3114(1), which states, in part, that “a personal protection insurance policy . . . applies
to accidental bodily injury to the person named in the policy, the person’s spouse, and a
relative of either domiciled in the same household . . . .” “Person” in this instance cannot
mean a healthcare provider because providers are not named in the PIP insurance policy
and quite simply do not sustain accidental bodily injuries. MCL 500.3114(2) states that
“[a] person suffering accidental bodily injury . . . shall receive the [PIP] benefits to which
the person is entitled from the insurer of the motor vehicle,” and MCL 500.3114(4), (5),
and (6) prioritize the order in which “a person suffering accidental bodily injury arising
from a motor vehicle accident . . . shall claim personal protection insurance benefits from
[multiple] insurers[.]” MCL 500.3115(1) similarly sets forth the insurer priority for “a
person suffering accidental bodily injury while not an occupant of a motor vehicle,” and
it provides that those persons “shall claim [PIP] benefits” in the order provided in MCL
500.3115(1). In both of these provisions, the Legislature specifically contemplates that
the entitlement or claim belongs to the person who has “sustained accidental bodily
injury,” and the statutory language goes into great detail regarding the priority of insurers
for claims by a person suffering such injury. Notably lacking from these entitlement
22
provisions is any arguable reference to or contemplation of a healthcare provider’s
entitlement to benefits under the no-fault act. 38
In sum, a review of the plain language of the no-fault act reveals no support for
plaintiff’s argument that a healthcare provider possesses a statutory cause of action
38
This conclusion is consistent with Belcher, 409 Mich. at 236, in which this Court
considered whether “no-fault insurance benefits [are] to be paid to the surviving
dependent(s) of a deceased uninsured motorist[.]” (Quotation marks and citation
omitted.) In analyzing this issue, this Court opined that the no-fault act “operates to
compensate only a limited class of persons for economic losses sustained as a result of
motor vehicle accidents. Under personal protection insurance, benefits are made payable
only to injured persons or surviving dependents of the injured person.” Id. at 243-244.
The Court further described MCL 500.3114 and MCL 500.3115 as the no-fault act’s only
entitlement provisions “in the sense that they are the only sections where persons are
given the right to claim personal protection insurance benefits from a specific insurer.”
Id. at 252. Belcher is not directly applicable in this case because it did not examine
whether a healthcare provider possesses a cause of action under the no-fault act.
Contrary to the dissent’s assertion, we do not rely on Belcher to exclude the possibility of
a provider claim, nor do we contend that an injured person’s cause of action under the no-
fault act derives entirely from MCL 500.3114 and MCL 500.3115. Instead, we simply
note that Belcher’s holding is consistent with our independent conclusion that healthcare
providers possess no statutory cause of action because, just like the remainder of the no-
fault act, neither MCL 500.3114 nor MCL 500.3115 contemplate that a healthcare
provider may directly claim recovery for the cost of providing PIP benefits.
Moreover, in Belcher this Court concluded that, while the text of the entitlement
provisions gives only injured persons the right to assert a claim for benefits against a no-
fault insurer, the Legislature clearly intended that surviving dependents recover certain
losses in the event that the injured person dies, as evidenced by the provision of benefits
for survivors in MCL 500.3108 and MCL 500.3112. Id. at 254-255. To effectuate the
intent made explicit in the statutory language, the Court inferred from the language of
MCL 500.3114 and MCL 500.3115 that when an injured person is given the right to
recover benefits from a specific insurer, the surviving dependents have the same right of
recovery for their losses. Id. at 255. Contrary to the dissent’s belief, no similar statutory
basis exists for recognizing this type of claim on the part of an injured person’s
healthcare provider. We will not infer a cause of action for healthcare providers when the
language of the no-fault act indicates no such desire on the part of the Legislature.
23
against a no-fault insurer. 39 This conclusion does not mean that a healthcare provider is
without recourse; a provider that furnishes healthcare services to a person for injuries
sustained in a motor vehicle accident may seek payment from the injured person for the
provider’s reasonable charges. 40 However, a provider simply has no statutory cause of
action of its own to directly sue a no-fault insurer. Accordingly, we overrule all Court of
Appeals caselaw inconsistent with this conclusion.
IV. APPLICATION
Given our conclusion that healthcare providers possess no statutory cause of
action under the no-fault act, it is unnecessary to consider the substance of the Court of
Appeals’ opinion. Because a healthcare provider possesses no statutory right to sue a no-
fault insurer, we need not examine whether a release executed between an insured and an
insurer releases an insurer’s liability for a healthcare provider’s “claim.” Further, the
39
We conclude today only that a healthcare provider possesses no statutory right to sue a
no-fault insurer. While defendant argues that a provider likewise possesses no
contractual right to sue a no-fault insurer given that healthcare providers are incidental
rather than intended beneficiaries of a contract between the insured and the insurer, this
Court declines to make such a blanket assertion. That determination rests on the specific
terms of the contract between the relevant parties. See Schmalfeldt v N Pointe Ins Co,
469 Mich. 422, 428; 670 NW2d 651 (2003) (“A person is a third-party beneficiary of a
contract only when that contract establishes that a promisor has undertaken a promise
‘directly’ to or for that person.”) (citations omitted; emphasis added). This Court need
not consider whether plaintiff possesses a contractual right to sue defendant in the instant
case because plaintiff did not allege any contractual basis for relief in its complaint.
40
See Miller v Citizens Ins Co, 490 Mich. 904 (2011). Moreover, our 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. See MCL 500.3143; Professional Rehab Assoc v State
Farm Mut Auto Ins Co, 228 Mich. App. 167, 172; 577 NW2d 909 (1998) (noting that only
the assignment of future benefits is prohibited by MCL 500.3143).
24
release executed in this case between Stockford and defendant does not appear to
extinguish Stockford’s liability to plaintiff. And nothing in this opinion would bar
plaintiff from seeking reimbursement of the amount due it directly from Stockford, the
person to whom services were provided. 41
V. CONCLUSION
The Court of Appeals’ opinion in this case is premised on the notion that an
injured person’s healthcare provider has an independent statutory right to bring an action
against a no-fault insurer for payment of no-fault benefits. This premise is unfounded
and not supported by the text of the no-fault act. A healthcare provider possesses no
statutory cause of action under the no-fault act against a no-fault insurer for recovery of
PIP benefits. Plaintiff therefore has no statutory entitlement to proceed with its action
against defendant. Accordingly, we reverse the judgment of the Court of Appeals and
remand this case to the Saginaw Circuit Court for entry of an order granting summary
disposition to defendant.
Brian K. Zahra
Stephen J. Markman
Bridget M. McCormack
David F. Viviano
Joan L. Larsen
41
See Miller, 490 Mich. at 904.
25
STATE OF MICHIGAN
SUPREME COURT
COVENANT MEDICAL CENTER, INC.,
Plaintiff-Appellee,
v No. 152758
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant-Appellant.
BERNSTEIN, J. (dissenting).
I respectfully disagree with the majority’s conclusion that healthcare providers do
not possess a cause of action under Michigan’s no-fault act, MCL 500.3101 et seq., to
recover personal protection insurance (PIP) benefits from a no-fault insurer for services
provided to an insured. I believe that MCL 500.3112 establishes that an independent
action may be brought by a healthcare provider against a no-fault insurer and that the
majority’s contrary construction is not supported by the plain language of the statute.
Accordingly, I would affirm the judgment of the Court of Appeals.
I. FACTS AND PROCEDURAL HISTORY
Jack Stockford, who held no-fault insurance through defendant, State Farm Mutual
Automobile Insurance Company, was injured in a motor vehicle accident on June 20,
2011. Plaintiff, Covenant Medical Center, Inc., provided medical services to Stockford
on multiple occasions in the following months. Plaintiff sent defendant bills for these
services totaling $43,484.80 on July 3, 2012, August 2, 2012, and October 9, 2012.
Defendant sent plaintiff a written denial of payment on November 15, 2012.
Meanwhile, apparently unbeknownst to plaintiff, Stockford had filed suit against
defendant on June 4, 2012, seeking PIP benefits for expenses arising out of the June 20
accident. Stockford entered into an agreement with defendant on April 2, 2013, by which
defendant consented to pay Stockford $59,000 in exchange for a full and final release
“regarding all past and present claims incurred through January 10, 2013, for what are
commonly referred to as first party benefits or personal injury protection benefits . . . .”
As part of this broad release, Stockford agreed to indemnify defendant against claims
made by any providers. Plaintiff was specifically named in this portion of the release
agreement.
Plaintiff did not learn of the release until it filed suit against defendant on April 25,
2013. Defendant was granted summary disposition pursuant to MCR 2.116(C)(7) under
the theory that Stockford’s release barred plaintiff’s claim. The Court of Appeals
reversed in a published per curiam opinion, concluding that defendant’s settlement
agreement with Stockford had not been a “good faith” payment that could discharge its
liability to plaintiff under MCL 500.3112. Covenant Med Ctr, Inc v State Farm Mut Auto
Ins Co, 313 Mich. App. 50; 880 NW2d 294 (2015).
II. ANALYSIS
I agree with the majority that none of the caselaw relied on by the Court of
Appeals directly addressed the question of whether healthcare providers have an
independent cause of action for PIP benefits under the no-fault act. However, this does
2
not necessarily mean that the Court of Appeals’ longstanding interpretation of the no-
fault act was inconsistent with the plain language of the statute. While no provision of
the no-fault act confers a direct cause of action specific to healthcare providers, the plain
language of MCL 500.3112 suggests that such a cause exists. Furthermore, although no
provision of the no-fault act explicitly states that a healthcare provider may have a claim
for PIP benefits, healthcare providers are no different in this regard from any other
would-be claimant under the no-fault act, including injured people themselves.
No provision of the no-fault act expressly defines “claimant.” However,
provisions such as MCL 500.3112 contemplate who may receive PIP benefits under the
no-fault act, and the ability to receive benefits is necessary in order to claim them.
Absent any specific statement establishing who may bring a claim for PIP benefits, we
must consider the plain language of MCL 500.3112, which provides:
Personal protection insurance benefits are payable to or for the
benefit of an injured person or, in case of his death, to or for the benefit of
his dependents. Payment by an insurer in good faith of personal protection
insurance benefits, to or for the benefit of a person who it believes is
entitled to the benefits, discharges the insurer’s liability to the extent of the
payments unless the insurer has been notified in writing of the claim of
some other person. If there is doubt about the proper person to receive the
benefits or the proper apportionment among the persons entitled thereto, the
insurer, the claimant or any other interested person may apply to the circuit
court for an appropriate order. The court may designate the payees and
make an equitable apportionment, taking into account the relationship of
the payees to the injured person and other factors as the court considers
appropriate. In the absence of a court order directing otherwise the insurer
may pay:
(a) To the dependents of the injured person, the personal protection
insurance benefits accrued before his death without appointment of an
administrator or executor.
3
(b) To the surviving spouse, the personal protection insurance
benefits due any dependent children living with the spouse.
The first sentence of MCL 500.3112 suggests that healthcare providers have a
claim for PIP benefits. It provides that PIP benefits “are payable to or for the benefit of
an injured person or, in the case of his death, to or for the benefit of his dependents.”
MCL 500.3112. As the majority notes, this plainly means that insurers may pay benefits
directly to healthcare providers, because such a payment would be “for the benefit of” the
injured person or the injured person’s dependents. Id. The majority clearly believes that
an injured person is entitled to bring an action to recover these benefits, hanging its hat
on the “shall claim” language of MCL 500.3114 and MCL 500.3115. But this language
no more establishes an entitlement to make a legal claim than does the “payable to or for
the benefit of” language of MCL 500.3112.
In the absence of any express entitlement provision in MCL 500.3112, the
majority insists that MCL 500.3114 and MCL 500.3115 function as entitlement
provisions for injured persons. However, as the majority admits, these are priority
statutes that govern the order of priority among insurers rather than explicitly defining
who may be a claimant under the no-fault act. The majority asserts that these two
provisions are entitlement provisions because they include language to the effect that an
injured person “ ‘shall claim [PIP] benefits,’ ” ante at 22 (alteration in original), but this
interpretation ignores the context in which that language appears. The “shall claim”
language appears in MCL 500.3114(4) and (5) and MCL 500.3115(1). In each of those
provisions, the “shall claim” language is part of the longer phrase “shall claim [PIP]
benefits from insurers in the following order of priority,” immediately followed by a list
4
of the insurers that may be required to pay benefits. MCL 500.3114(4) and (5); MCL
500.3115(1). The mandate of these statutes is not to define who must receive benefits,
but who must pay them.
Indeed, MCL 500.3114 and MCL 500.3115 cannot possibly define the bounds of
who can bring an action for PIP benefits. The majority’s reliance on Belcher v Aetna Cas
& Surety Co, 409 Mich. 231, 251-252; 293 NW2d 594 (1980), for the proposition that
MCL 500.3114 and MCL 500.3115 are entitlement provisions that exclude the possibility
of a provider claim is inapt. Although the Belcher Court referred to MCL 500.3114 and
MCL 500.3115 as entitlement provisions in some sense, it rejected the notion that these
two sections of the no-fault act constituted the be-all and end-all of potential PIP benefit
claimants, remarking that neither provision gave survivors an express right to claim
benefits even though survivors’ benefits are clearly recognized in MCL 500.3108 and
MCL 500.3112. Belcher, 409 Mich. at 254-255.
The Belcher Court was right. A finding that MCL 500.3114 and MCL 500.3115
are the only statutes in the no-fault act that establish an entitlement to a legal claim would
render nugatory the language in MCL 500.3112 that permits payment of benefits to
dependents and to other parties for the benefit of the injured person (a group of recipients
that the majority concedes would include healthcare providers). See ante at 15. Such a
reading would run counter to the rule of statutory interpretation barring us from
interpreting statutes in a manner that would render any portion of a statute surplusage or
nugatory. Wyandotte Electrical Supply Co v Electrical Tech Sys, Inc, 499 Mich. 127, 140;
881 NW2d 95 (2016). Therefore, I cannot interpret MCL 500.3114 and MCL 500.3115
5
as the only provisions in the no-fault act that establish an entitlement to a legal claim for
PIP benefits.
Nor can I conclude that MCL 500.3112 supports the notion that injured persons
have a cause of action for PIP benefits but healthcare providers do not. MCL 500.3112
makes PIP benefits “payable”—that is, benefits “that may, can, or must be paid” 1—to
either the injured person or to someone else for that person’s benefit, e.g., a healthcare
provider. The statute does not treat these options differently. It is inconsistent to
conclude that healthcare providers do not have an entitlement to PIP benefits while an
injured person does. Healthcare providers cannot be barred from seeking to enforce their
right to payment under this provision. 2
The remainder of MCL 500.3112 does not undercut the conclusion that providers
have an entitlement to a legal claim for PIP benefits. Indeed, the remainder of this
provision does not discuss entitlement to benefits, but rather delineates procedures to be
followed when there is some dispute among claimants to benefits. The second sentence
of MCL 500.3112 explains that a good-faith payment of PIP benefits discharges an
insurer’s liability unless the insurer has received written notice of “the claim of some
other person.” The third sentence allows an insurer, claimant, or other interested party to
seek a court order determining the proper person to receive benefits or the proper
1
Merriam-Webster’s Collegiate Dictionary (11th ed).
2
To the extent that the majority argues that healthcare providers are not entitled to
benefits because they do not “incur” charges within the meaning of MCL 500.3107(1)(a),
it is incorrect. Healthcare providers clearly become liable for expenses arising out of the
treatment of injured persons, expenses that include, among other things, human labor
(and associated wages and salaries) and the cost of medical equipment and its operation.
6
apportionment of benefits. The fourth permits a court to designate payees or apportion
benefits as it considers appropriate, while the remainder of the provision directs an
insurer’s payment of benefits in the absence of a court order.
The majority suggests that these aspects of MCL 500.3112 are inconsistent with
the notion that the no-fault act establishes a healthcare provider’s entitlement to a legal
claim, but this is simply not the case. Although the directives in MCL 500.3112 do not in
themselves entitle healthcare providers to benefits, they do not derogate the entitlement to
make a legal claim alluded to in the first sentence of MCL 500.3112. The majority
suggests that the bulk of MCL 500.3112 cuts against the notion of a provider claim and
must be limited to dependent and survivor benefits, but this is not true. For example,
contrary to the majority’s assertion, the reference to apportionment in the third sentence
is not limited in this fashion. “Apportionment” as used in that sentence could certainly
apply to expenses incurred for healthcare services if, for example, an injured person
received treatment from multiple providers resulting in PIP-qualifying charges. Nor do
the fourth and fifth sentences suggest that the entirety of MCL 500.3112 is limited to
dependent and survivor benefits. These sentences instead provide purely discretionary
rubrics a trial court may follow when issuing an order. These sentences do not prevent
the distribution of benefits to a healthcare provider.
In sum, the no-fault act does not expressly grant healthcare providers the right to
directly sue insurers for PIP benefits. But it does not expressly grant that right to any
party, not even an insured party injured in a motor vehicle accident. If we are to require
an express statutory provision in order to create a cause of action, and no such provision
appears in the no-fault act, it would follow that no party could ever bring suit to compel
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an insurer to pay PIP benefits. But it simply cannot be that the Legislature created a
statutory scheme for the distribution of PIP benefits that no party could ever recover if an
insurer denied coverage. MCL 500.3112 permits payment of PIP benefits to either an
injured person or to a healthcare provider because direct payment to the provider would
be for the benefit of the injured person. To hold that only an injured person is entitled to
enforce this right to payment renders surplusage the possibility of payment to a third
party like a healthcare provider. To avoid such an interpretation of the language of the
no-fault act, healthcare providers must have a claim for PIP benefits.
III. APPLICATION
Because the no-fault act gives healthcare providers a claim for PIP benefits, I
believe that the Court of Appeals reached the correct result in this case. In theory, an
agreement like the one between Stockford and defendant could extinguish an insurer’s
liability for PIP benefits arising out of a particular accident. However, the second
sentence of MCL 500.3112 provides:
Payment by an insurer in good faith of personal protection insurance
benefits, to or for the benefit of a person who it believes is entitled to the
benefits, discharges the insurer’s liability to the extent of the payments
unless the insurer has been notified in writing of the claim of some other
person.
As the Court of Appeals found, the release executed by Stockford and defendant was not
in good faith. Defendant had been made aware of plaintiff’s claim through the bills
plaintiff transmitted to it. However, defendant entered into the settlement with Stockford
and sought to permanently foreclose plaintiff’s claim for PIP benefits without informing
8
plaintiff.3 The Court of Appeals’ conclusion that the settlement with Stockford did not
constitute a good-faith payment was eminently reasonable, as was the Court’s
concomitant conclusion that the payment did not discharge defendant’s liability as
contemplated by the second sentence of MCL 500.3112.
IV. CONCLUSION
I disagree with the majority’s conclusion that the no-fault act does not give
healthcare providers the right to bring an action against a no-fault insurer for PIP
benefits. That reading renders nugatory the first sentence of MCL 500.3112, which
permits payment of PIP benefits to healthcare providers. Because I believe that
healthcare providers like plaintiff are entitled to enforce the receipt of payment due and
that the Court of Appeals correctly concluded that defendant’s liability for PIP benefits
under MCL 500.3112 was not discharged, I would affirm the judgment of the Court of
Appeals.
Richard H. Bernstein
WILDER, J., did not participate in the disposition of this matter.
3
It is, of course, interesting that in this settlement agreement defendant demanded
indemnification against provider claims that it now insists cannot exist under the no-fault
act.
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