Court Opinion

ID: 4313480
Source: CourtListenerOpinion
Date Created: 2018-09-19 09:08:50.90652+00
Date Added: 2024-06-11T14:44:49.892932
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

MICHIGAN HEAD & SPINE INSTITUTE, PC,                                 UNPUBLISHED
                                                                     September 18, 2018
               Plaintiff-Appellant,

v                                                                    No. 340316
                                                                     Wayne Circuit Court
ALLSTATE PROPERTY AND CASUALTY                                       LC No. 16-014374-NF
INSURANCE COMPANY,

               Defendant-Appellee.

Before: SWARTZLE, P.J., and JANSEN and O’BRIEN, JJ.

PER CURIAM.

        Plaintiff appeals as of right the trial court’s order granting summary disposition to
defendant under MCR 2.116(C)(8) and denying plaintiff’s request for leave to amend its
complaint. We affirm in part, vacate in part, and remand for further proceedings consistent with
this opinion.

                                       I. BACKGROUND

        Lisa Christy was covered under a personal-injury-protection (PIP) policy with defendant.
Christy was injured in an automobile accident and plaintiff provided medical services to Christy
in the amount of $68,513. Plaintiff submitted claims for payment to defendant—the alleged
first-party no-fault insurer—but defendant did not fully reimburse plaintiff for the services it
provided to Christy. Plaintiff filed this action against defendant for recovery of the unpaid claim
alleging a right to do so under the no-fault act.

        Defendant moved for summary disposition under MCR 2.116(C)(8) arguing that medical
providers such as plaintiff lack an independent statutory cause of action against a no-fault insurer
such as defendant in light of Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich.
191; 895 NW2d 490 (2017). Plaintiff then moved to amend its complaint to assert a claim under
an assignment-of-benefits theory. The trial court granted summary disposition to defendant and
denied plaintiff’s motion to amend the complaint. The trial court reasoned that plaintiff did not
have a direct cause of action under Covenant and, because plaintiff did not have a direct cause of
action, plaintiff had nothing to amend or relate back to.

       This appeal followed.

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                                          II. ANALYSIS

        Defendant Was Entitled to Summary Disposition Under Covenant. A trial court’s
decision on a motion for summary disposition is reviewed de novo. Dell v Citizens Ins Co of
America, 312 Mich. App. 734, 739; 880 NW2d 280 (2015). “A motion under MCR 2.116(C)(8)
tests the legal sufficiency of the complaint.” Id.

        In Covenant, 500 Mich at 195-196, 217-218, our Supreme Court held that healthcare
providers lack an independent statutory cause of action against no-fault insurers to recover PIP
benefits. This Court has concluded that the holding in Covenant applies retroactively to pending
cases. Bronson Healthcare Group, Inc v Mich Assigned Claims Plan, ___ Mich App ___, ___;
___ NW2d ___ (2018) (Docket No. 336088); slip op at 2, citing W A Foote Mem Hosp v Mich
Assigned Claims Plan, 321 Mich. App. 159, 196; 909 NW2d 38 (2017).1 The present case was
pending in the trial court when Covenant was decided. Thus, Covenant applies to bar plaintiff’s
independent action against defendant for the recovery of PIP benefits owed to Christy. Summary
disposition was therefore appropriate on plaintiff’s independent statutory claim.

        Plaintiff’s Motion to Amend. “The grant or denial of leave to amend pleadings is within
the trial court’s discretion.” Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, ___ Mich
App ___, ___; ___ NW2d ___ (2018) (Docket No. 340370); slip op at 13 (cleaned up). “This
Court reviews for an abuse of discretion a trial court’s denial of a motion to amend a complaint.”
Tierney v Univ of Mich Regents, 257 Mich. App. 681, 687; 669 NW2d 575 (2003). “[A]n abuse
of discretion occurs only when the trial court’s decision is outside the range of reasonable and
principled outcomes.” In re Kostin, 278 Mich. App. 47, 51; 748 NW2d 583 (2008). “A trial court
necessarily abuses its discretion when it makes an error of law.” Shah, ___ Mich App at ___;
slip op at 14 (cleaned up).

          “If a trial court grants summary disposition pursuant to MCR 2.116(C)(8), (C)(9), or
(C)(10), the court must give the parties an opportunity to amend their pleadings pursuant to MCR
2.118, unless the amendment would be futile.” Id. (cleaned up); see also MCR 2.116(I)(5). “An
amendment is futile if it merely restates the allegations already made or adds allegations that still
fail to state a claim.” Id. (cleaned up). “Under MCR 2.118(A)(2), a party may amend a pleading
by leave of the court and such leave shall be freely given when justice so requires.” Id. (cleaned
up). “Amendment is generally a matter of right rather than grace” and “should ordinarily be
denied only for particularized reasons, including undue delay, bad faith or dilatory motive,
repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the
opposing party, or futility.” Id. at ___; slip op at 13 (cleaned up).

        The trial court reasoned that, because plaintiff did not have a direct statutory cause of
action, plaintiff could not amend its complaint. Yet, in Covenant, 500 Mich. at 217 n 40, our

1
  Our Supreme Court has ordered oral argument on the application to consider the retroactivity of
Covenant. W A Foote Mem Hosp v Mich Assigned Claims Plan, ___ Mich ___; 911 NW2d 470
(2018).

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Supreme Court recognized that an insured may “assign his or her right to past or presently due
benefits to a healthcare provider.” Thus, in the situation where a health-care provider’s
independent statutory claim for PIP benefits is summarily dismissed, this Court has held that the
provider should be granted leave to amend its complaint to assert a claim under an assignment-
of-benefits theory. See Bronson Healthcare Group, ___ Mich App at ___; slip op at 3, citing W
A Foote Mem Hosp, 321 Mich. App. at 196. Accordingly, the trial court erred by denying
plaintiff’s motion to amend on the basis that plaintiff did not have a direct cause of action.

        It is therefore necessary to vacate the portion of the trial court’s order denying plaintiff’s
motion to amend the complaint. The case is remanded to the trial court to determine whether
amendment to assert a claim under an assignment-of-benefits theory is proper in the present case.
Defendant has raised several theories on appeal regarding why amendment is futile in this case
despite the trial court’s error. The arguments are inherently fact-intensive and should be decided
in the first instance by the trial court rather than by this Court. See generally, Shah, ___ Mich
App at ___; slip op at 13 (noting particularized considerations pertinent to the decision whether
to allow amendment of a pleading).

        Affirmed in part, vacated in part, and remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction.

                                                              /s/ Brock A. Swartzle
                                                              /s/ Kathleen Jansen
                                                              /s/ Colleen A. O'Brien

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