If this opinion indicates that it is “FOR PUBLICATION,” it is subject to 

revision until final publication in the Michigan Appeals Reports.

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S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

WATERWORKS PHYSICAL THERAPY, PC,

Plaintiff-Appellee,

UNPUBLISHED

August 17, 2023

v No. 361864

Wayne Circuit Court

AUTO CLUB GROUP INSURANCE COMPANY, LC No. 22-004612-AV

Defendant-Appellant.

Before: O’BRIEN, P.J., and CAVANAGH and MARKEY, JJ.

PER CURIAM.

Plaintiff, Waterworks Physical Therapy, PC, brought this healthcare provider’s action in 

district court against defendant, Auto Club Group Insurance Company, for recovery of personal 

protection insurance (PIP) benefits under the no-fault act, MCL 500.3101 et seq. Defendant moved 

for summary disposition under MCR 2.116(C)(4) (lack of subject-matter jurisdiction), (C)(8) 

(failure to state a claim on which relief can be granted), and (C)(10) (no genuine issue of material 

fact), arguing that the court lacked subject-matter jurisdiction because defendant had previously 

denied benefits after conducting a utilization review under MCL 500.3157a, and plaintiff failed to 

appeal that determination to the Department of Insurance and Financial Services (DIFS) before 

bringing this action in court. The district court denied defendant’s motion. Defendant then filed 

an interlocutory application for leave to appeal the district court’s order to the circuit court, which 

denied the application. This Court thereafter granted defendant’s application for leave to appeal. 

We affirm the district court’s decision.

I. FACTS AND PROCEEDINGS

Plaintiff provided physical therapy services to defendant’s insured for injuries the insured 

sustained in a motor vehicle accident. After conducting a utilization review of plaintiff’s 

treatments under MCL 500.3157a, defendant determined that the number of treatments exceeded 

recommended guidelines for patients with the insured’s condition. Defendant concluded that 

plaintiff failed to establish the insured’s continued need for services and discontinued payment of 

PIP benefits.
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Plaintiff thereafter filed this provider’s action in district court, pursuant to MCL 500.3112, 

for recovery of PIP benefits. Defendant moved for summary disposition under MCR 2.116(C)(4), 

(C)(8), and (C)(10). Defendant argued that because it denied benefits after conducting a utilization 

review of plaintiff’s claim, MCL 500.3157a(5) required plaintiff to appeal that adverse decision to 

DIFS before filing a judicial action for recovery of benefits. Defendant asserted that plaintiff’s 

failure to exhaust its administrative remedies deprived the court of subject-matter jurisdiction. The 

district court denied defendant’s motion, holding that an administrative appeal under MCL 

500.3157a(5) was not mandatory. Defendant applied to the circuit court for leave to review the 

district court’s order, but the circuit court denied defendant’s application. This Court thereafter 

granted defendant’s application for leave to appeal. Waterworks Physical Therapy PC v Auto Club 

Group Ins Co, unpublished order of the Court of Appeals, entered September 12, 2022 (Docket 

No. 361864).

II. ANALYSIS

This Court reviews de novo a trial court’s decision regarding a motion for summary 

disposition. Broz v Plante & Moran, PLLC, 331 Mich App 39, 45; 951 NW2d 64 (2020). 

Summary disposition is appropriate under MCR 2.116(C)(4) when a trial court lacks subjectmatter jurisdiction. McKenzie v Dep’t of Corrections, 332 Mich App 289, 296; 957 NW2d 341 

(2020). “When viewing a motion under MCR 2.116(C)(4), this Court must determine whether the 

pleadings demonstrate that the defendant was entitled to judgment as a matter of law, or whether 

the affidavits and other proofs show that there was no genuine issue of material fact.”1 Weishuhn 

v Catholic Diocese of Lansing, 279 Mich App 150, 155; 756 NW2d 483 (2008) (quotation marks 

and citation omitted). Issues concerning the interpretation of a statute present questions of law, 

which are reviewed de novo. Sherman v City of St Joseph, 332 Mich App 626, 632; 957 NW2d 

838 (2020). “The primary goal when interpreting a statute is to discern the intent of the Legislature 

by focusing on the most ‘reliable evidence’ of that intent, the language of the statute itself.” 

Fairley v Dep’t of Corrections, 497 Mich 290, 296-297; 871 NW2d 129 (2015) (citation omitted).

At issue in this case are MCL 500.3112 and MCL 500.3157a, which were enacted by 2019 

PA 21, as part of a package of amendments to the no-fault act. MCL 500.3112 permits a healthcare 

provider to “make a claim and assert a direct cause of action against an insurer . . . to recover 

overdue [PIP] benefits payable for charges for products, services, or accommodations provided to 

an injured person.” MCL 500.3157a permits an insurer to conduct a “utilization review” to 

determine whether a provider’s services, treatments, and products are appropriate for a patient with 

symptoms such as the insured’s. “Utilization review” is defined as “the initial evaluation by an 

insurer . . . of the appropriateness in terms of both the level and the quality of treatment . . . based 

on medically accepted standards.” MCL 500.3157a(6). Of significance to this case is MCL 

 

1 Although defendant also moved for summary disposition under MCR 2.116(C)(8) and (C)(10), 

all of defendant’s arguments are premised on its claim that the trial court lacked subject-matter 

jurisdiction because plaintiff did not pursue an appeal to DIFS under MCL 500.3157a(5). 

Defendant does not present separate arguments in support of summary disposition under MCR 

2.116(C)(8) or (C)(10).
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500.3157a(5), which provides a mechanism for appealing an insurer’s utilization review decision 

to DIFS.

The issue presented in this appeal is whether a healthcare provider is required to 

administratively appeal an adverse utilization review decision to DIFS before bringing an action 

in circuit court for recovery of PIP benefits. This Court recently decided this identical issue in 

True Care Physical Therapy, PLLC v Auto Club Group Ins Co, ___ Mich ___; ___ NW2d ___ 

(2023) (Docket No. 362094), and held that “the administrative appeal provided by MCL 

500.3157a(5) . . . [is] permissive, not mandatory,” and therefore, a healthcare provider may “file 

suit under MCL 500.3112 without exhausting the permissive, nonexclusive administrative 

appeal.” Id. at ___; slip op at 11. This Court’s decision in True Care Physical Therapy is 

dispositive of the instant appeal.

In True Care Physical Therapy, this Court discussed the legislative history related to the 

no-fault utilization review procedure in MCL 500.3157a, explaining:

The no-fault act is Michigan’s statutory framework for insurance coverage, 

compensation, and dispute resolution related to motor vehicle accidents. See MCL 

500.3101 et seq. Its goals are to provide individuals injured in motor vehicle 

accidents with assured, adequate, and prompt recovery, minimize administrative 

delays and factual disputes, and moderate the costs to the individual and to the 

system. Spectrum Health Hosp v Farm Bureau Mut Ins Co of Mich, 333 Mich App 

457, 479-480; 960 NW2d 186 (2020). In June 2019, our Legislature passed 

comprehensive reforms to the no-fault act. Two of those reforms are at issue in this 

case: (1) amendments that allow insurers to conduct a utilization review, see MCL 

500.3157a; and (2) amendments that provide healthcare providers with a direct 

cause of action against insurers for the collection of PIP benefits, see MCL 

500.3112. [True Care Physical Therapy, ___ Mich App at ___; slip op at 5.]

MCL 500.3157a(1)(a) provides that a healthcare provider “is considered to have agreed” 

that it will “[s]ubmit necessary records and other information concerning treatment, products, 

services, or accommodations provided for utilization review under this section.” The provider also 

“is considered to have agreed” to “[c]omply with any decision of the department under this 

section.” MCL 500.3157a(1)(b). DIFS is required to promulgate rules under the APA to 

“[e]stablish criteria or standards for utilization review that identify utilization of treatment . . . 

above the usual range of utilization for the treatment . . . based on medically accepted standards.” 

MCL 500.3157a(3)(a). DIFS also is required to “[p]rovide procedures related to utilization 

review,” including procedures for appealing determinations. MCL 500.3157a(3)(b)(iii). If the 

insurer finds that the provider’s treatments “are longer in duration than, are more frequent than, or 

extend over a greater number of days than the treatment . . . usually require[s] for the diagnosis or 

condition for which the patient is being treated,” the insurer may require the provider “to explain 

the necessity or indication for the treatment . . . in writing under the procedures provided under 

subsection (3).” MCL 500.3157a(4). At issue in this appeal is MCL 500.3157a(5), which states:

If an insurer or the association created under section 3104 determines that a 

physician, hospital, clinic, or other person overutilized or otherwise rendered or 

ordered inappropriate treatment, products, services, or accommodations, or that the 

cost of the treatment, products, services, or accommodations was inappropriate 
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under this chapter, the physician, hospital, clinic, or other person may appeal the 

determination to the department under the procedures provided under subsection 

(3). [Emphasis added.]

Mich Admin Code, R 500.61-500.69, prescribes procedures for utilization reviews. Rule 500.65 

governs appeals to the DIFS. Rule 500.65(1) provides:

A provider may appeal a determination made by an insurer or the 

association. The appeal must be filed within 90 days of the date of the disputed 

determination and must be made on a form prescribed by the department. 

[Emphasis added.]

In True Care Physical Therapy, the plaintiff physical therapy facility provided ongoing 

services to the insured over a two-year period. True Care Physical Therapy, ___ Mich App at 

___; slip op at 1. The defendant no-fault insurer discontinued paying for the treatments after it 

conducted a utilization review. “The utilization review concluded that True Care’s treatment 

exceeded the American College of Occupational and Environmental Medicine (ACOEM) 

guidelines’ recommendations for the frequency and duration of treatment for injuries” such as the 

insured’s. Id. at ___; slip op at 2. The defendant issued explanation of benefit statements to the 

plaintiff indicating that the plaintiff could submit an appeal “to the Department of Insurance and 

Financial Services pursuant to Utilization Review Rule 500.65,” but the plaintiff did not appeal 

the utilization review decision. Id. at ___; slip op at 2. The plaintiff filed a complaint against the 

defendant in circuit court, alleging that the defendant breached its contractual obligation to pay 

PIP benefits for the insured’s treatment. This Court summarized the trial court proceedings as 

follows:

All of Auto Club’s arguments stemmed from its core position that MCL 500.3157a 

of the no-fault act and Rule 500.65 of the Michigan Administrative Code required 

True Care to appeal to the DIFS before filing suit. True Care responded, arguing 

that it had a valid enforceable assignment of PIP benefits from [the insured], and 

that MCL 500.3112 of the no-fault act explicitly granted it the right to pursue a 

direct cause of action against the insurer in the trial court. An administrative appeal 

to the DIFS was not mandatory, True Care insisted, and that if it were, that rule 

would conflict with other portions of the no-fault act, including MCL 500.3112, 

500.3142, and 500.3145. [True Care Physical Therapy, ___ Mich App at ___; slip 

op at 2-3.]

This Court noted that although the defendant moved for summary disposition under MCR 

2.116(C)(4), (C)(8), and (C)(10), Subrule (C)(4) was the only pertinent subrule because the 

primary issue was whether the trial court had subject-matter jurisdiction. The defendant insurer 

did not present a meaningful argument regarding MCR 2.116(C)(8) or (C)(10). Id. at ___; slip op 

at 4 n 4. This Court concluded that “the unambiguous language of MCL 500.3157a(5), its related 

regulations, and MCL 500.3112 compel a conclusion that the administrative appeal provided under 

MCL 500.3157(a)(5) and Rule 500.65 is permissive, not mandatory.” Id. at ___; slip op at 6. This 

Court stated that the phrase in MCL 500.3157a(5), that the provider “ ‘may appeal the 

determination’ to the DIFS” indicated “that both the Legislature and the DIFS intended subsection 

3157a(5) and Rule 500.65 to provide an alternative and discretionary way to appeal a utilization 
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review determination to the DIFS, not an exclusive or mandatory method for challenging denial 

of benefits.” True Care Physical Therapy, ___ Mich App at ___; slip op at 7. This Court rejected 

the defendant’s argument that “may” should be construed as “shall” or “must.” Id. This Court 

further concluded that the Legislature in MCL 500.3112 “did not use language expressing an intent 

to grant the DIFS exclusive jurisdiction.” True Care Physical Therapy, ___ Mich App at ___; slip 

op at 10. Accordingly, the plaintiff healthcare provider “remained free to pursue its action in 

circuit court without exhausting this permissive administrative process.” Id.

The instant case is not materially distinguishable from True Care Physical Therapy. This 

Court’s analysis in True Care Physical Therapy is equally applicable to this case and compels the 

conclusion that the district court correctly ruled that the appeal procedure in MCL 500.3157a is 

voluntary, not mandatory. Therefore, the district court did not err by denying defendant’s motion 

for summary disposition.

Defendant raises additional arguments that its interpretation of MCL 500.3157a(5) is 

consistent with the Legislature’s intentions in reforming the no-fault system with the 2019 

statutory amendments. Defendant argues that a provider’s right to bring a direct action against a 

no-fault insured is a right created by statute, and therefore is subject to the Legislature’s statutory 

scheme for pursuing remedies. Defendant offers an analysis disputing plaintiff’s argument that a 

mandatory administrative appeal under § 3157a(5) conflicts with a provider’s right to bring a direct 

action against a no-fault insurer under § 3112. These arguments do not undermine this Court’s 

analysis of the statutory language in True Care Physical Therapy. In interpreting a statute, this 

Court “must give effect to every word, phrase, and clause in a statute, to avoid rendering any part 

of the statute nugatory or surplusage.” SBC Health Midwest, Inc v City of Kentwood, 500 Mich 

65, 71; 894 NW2d 535 (2017). “Judicial construction is not permitted when the language is clear 

and unambiguous.” Barrow v Detroit Election Comm, 301 Mich App 404, 414; 836 NW2d 498 

(2013). “Courts apply unambiguous statutes as written.” Id. In True Care Physical Therapy, this 

Court concluded that the language of MCL 500.3157a(5) and Rule 500.65 plainly state that the 

DIFS appeal process is voluntary, not mandatory. Because defendant’s arguments look beyond 

the statutory language to infer that the Legislature must have intended a meaning different from

the meaning expressed by the statute’s plain language, we must reject those arguments.

Affirmed.

/s/ Colleen A. O’Brien

/s/ Mark J. Cavanagh

/s/ Jane E. Markey