Court Opinion

ID: 4645880
Source: CourtListenerOpinion
Date Created: 2020-12-23 10:06:54.429086+00
Date Added: 2024-06-11T08:00:55.005669
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                   revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                            COURT OF APPEALS

STERLING HEIGHTS PAIN MANAGEMENT,                                    FOR PUBLICATION
PLC,                                                                 December 22, 2020
                                                                     9:05 a.m.
                Plaintiff-Appellant,

v                                                                    No. 350979
                                                                     Oakland Circuit Court
FARM BUREAU GENERAL INSURANCE                                        LC No. 2019-175102-NF
COMPANY OF MICHIGAN,

                Defendant-Appellee.

Before: CAVANAGH, P.J., and JANSEN and SHAPIRO, JJ.

SHAPIRO, J.

        This is an action to recover personal protection insurance (PIP) benefits under the no-fault
act, MCL 500.3101 et seq. Defendant insurance company moved for summary disposition on the
ground that plaintiff healthcare provider was incorporated in violation of the Michigan Limited
Liability Company Act (MLLCA), MCL 450.4101 et seq., and so plaintiff’s services were not
“lawfully rendered.” Consistent with Miller v Allstate Ins Co, 481 Mich 601; 751 NW2d 463
(2008), we hold that defendant lacks standing to challenge whether plaintiff was properly
incorporated or organized. Accordingly, we reverse the trial court’s decision to grant defendant
summary disposition.

                                       I. BACKGROUND

        This case arises out of injuries sustained by Hiba Abdulrazzaq in a motor vehicle accident.
At the time of the accident, defendant was Abdulrazzaq’s no-fault insurer. Abdulrazzaq received
medical treatment from plaintiff for injuries arising from the accident and executed an assignment
of no-fault benefits in plaintiff’s favor. Plaintiff then filed an action against defendant for
nonpayment of the medical services rendered to Abdulrazzaq.

       Defendant moved for summary disposition under MCR 2.116(C)(10) (no genuine issue of
material fact), arguing that plaintiff had not lawfully rendered treatment to Abdulrazzaq.

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Plaintiff’s articles of organization state that it was organized for the sole purpose of rendering
medical services by a licensed physician. Defendant argued that because plaintiff’s 2019
Department of Licensing and Regulatory Affairs (LARA) annual report listed Kristy Coleman and
Jonathan Maffia as plaintiff’s members or managers—neither of whom are licensed physicians—
plaintiff violated the MLLCA’s requirement that all members and managers of a professional
limited liability company (PLC) be licensed to render the same professional service as the
corporate entity. See MCL 450.4904(2). In response, plaintiff argued that defendant did not have
standing to challenge whether plaintiff was properly incorporated or organized and that all
treatment rendered to Abdulrazzaq was done so by licensed physicians.

        In an opinion and order, the trial court determined that defendant had standing to argue that
plaintiff violated the MLLCA. On the basis of the LARA annual report, the trial court concluded
that plaintiff failed to show that its services were lawfully rendered and granted defendant’s motion
for summary disposition. Plaintiff appeals that decision.

                                          II. ANALYSIS

      We agree with plaintiff that defendant does not have statutory standing to challenge
whether an entity is properly incorporated or organized under the MLLCA.1

        The no-fault act entitles claimants to PIP benefits, which include “[a]llowable expenses
consisting of reasonable charges incurred for reasonably necessary products, services and
accommodations for an injured person’s care, recovery, or rehabilitation.” MCL 500.3107(1)(a).
“[A] physician, hospital, clinic, or other person that lawfully renders treatment to an injured person
for an accidental bodily injury covered by personal protection insurance . . . may charge a
reasonable amount for the treatment or training.” MCL 500.3157(1) (emphasis added). Thus, an
insurer is required to pay benefits only for treatment lawfully rendered. Psychosocial Serv Assoc,
PC v State Farm Mut Auto Ins Co, 279 Mich App 334, 338; 761 NW2d 716 (2008).

        Plaintiff is incorporated as a PLC under the MLLCA. Because plaintiff was formed to
provide services in a learned profession, it was required to comply with Article 9 of the Act. See
MCL 450.4201. Article 9 provides, in relevant part, that if a PLC renders a professional service
covered by the public health code, as plaintiff does, “then all members and managers of the
company must be licensed or legally authorized in this state to render the same professional
service.” MCL 450.4904(2).

        Defendant argues that the treatment plaintiff rendered to Abdulrazzaq was unlawful and
therefore not compensable because neither of the two members and managers listed in plaintiff’s

1
  We review de novo a trial court’s decision to grant summary disposition. Richardson v Allstate
Ins Co, 328 Mich App 468, 471; 938 NW2d 749 (2019). “Whether a party has standing is a
question of law subject to review de novo.” Can IV Packard Square, LLC v Packard Square, LLC,
328 Mich App 656, 661; 939 NW2d 454 (2019) (quotation marks and citation omitted).
Questions of statutory interpretation are also reviewed de novo. Estes v Titus, 481 Mich 573, 578-
579; 751 NW2d 493 (2008).

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most recent annual report to LARA are licensed physicians. Relying on Miller, 481 Mich 601,
plaintiff argues that defendant lacks statutory standing to make that argument.

        In Miller, the defendant insurance company argued that the healthcare provider did not
lawfully render treatment because it was improperly incorporated under the Business Corporation
Act (BCA), MCL 450.1101 et seq., rather than the Professional Services Corporations Act
(PSCA).2 Id. at 605. The Supreme Court did not reach the substantive argument, however,
because it held that the insurer lacked statutory standing3 to challenge the provider’s corporate
statute under the BCA. Id. at 604, 608. The Court primarily relied on the BCA provision providing
that “[f]iling is conclusive evidence that all conditions precedent required to be performed under
this act have been fulfilled and that the corporation has been formed under this act, except in an
action or special proceeding by the attorney general.” Id. at 610, quoting MCL 450.1221. The
Court reasoned that this statutory provision precludes anyone besides the Attorney General from
challenging an entity’s corporate status under the BCA:

       This statute indicates that once articles of incorporation under the BCA have been
       filed, such filing constitutes “conclusive evidence” that: (1) all the requirements for
       complying with the BCA have been fulfilled and (2) the corporation has actually
       been formed in compliance with the BCA. Thus, the statute generally creates an
       irrebuttable presumption of proper incorporation once the articles of incorporation
       have been filed. The statute then creates a single exception to this general rule by
       granting the Attorney General the sole authority to challenge whether a corporation
       has been properly incorporated under the BCA. That is, only the Attorney General
       is not affected by the irrebuttable presumption in favor of legality. By naming only
       the Attorney General in this respect, the Legislature has indicated that the Attorney
       General alone has the authority to challenge corporate status[.] [Id. at 611.]

Because “only the Attorney General may pursue a claim that a corporation . . . improperly
incorporated under the BCA,” Miller reversed the grant of summary disposition to the insurer. Id.
at 612. Although the Court’s holding rested solely on statutory interpretation, it also noted that
“Michigan courts have long held that the state possesses the sole authority to question whether a
corporation has been properly incorporated under the relevant law.” Id. at 615.

         Defendant contends that Miller does not govern this case because it does not challenge
plaintiff’s corporate form, but instead argues that plaintiff is organized in violation of the MLLCA.
We conclude that, for purposes of statutory standing, this is a distinction without a difference. The
MLLCA contains a provision identical to the one relied on in Miller. MCL 450.4202(2) provides
in part:

2
 The PSCA, MCL 450.221 et seq., was repealed effective January 2, 2013. 2012 PA 569. The
BCA now contains a chapter pertaining to professional corporations. See MCL 450.1281 et seq.
3
 Statutory standing asks whether the Legislature authorized the injured party to sue the other party
for the alleged statutory violation. Miller, 481 Mich at 608.

                                                -3-
       Filing is conclusive evidence that all conditions precedent required to be performed
       under this act are fulfilled and that the company is formed under this act, except in
       an action or special proceeding by the attorney general.

The filing of the required documents for incorporation was conclusive evidence that plaintiff met
the conditions precedent for formation of a PLC, including the requirement that all members and
managers be licensed persons. Only the Attorney General has standing to contest that
presumption. Thus, although the alleged incorporation defect is different than the one alleged in
Miller, defendant lacks statutory standing for the reasons stated in that opinion. As in Miller,
because defendant does not have standing to argue that plaintiff is improperly incorporated or
organized under the MLLCA, we need not reach the substantive issue of whether the alleged
violation of the MLLCA rendered the treatment to Abdulrazzaq unlawful.

         Defendant’s reliance on caselaw holding that treatment is not lawfully rendered unless the
provider was properly licensed is misplaced. See Life Skills Village, PLLC v Nationwide Mut Fire
Ins Co, ___ Mich App ___, ___; ___ NW2d ___ (2019) (Docket No. 345237); slip op at 3 (“In
order for treatment to be lawfully rendered, and thus recoverable under the no-fault act, a
healthcare provider must be in compliance with licensing requirements.”). In Healing Place at
North Oakland Med Ctr v Allstate Ins Co, 277 Mich App 51, 58; 744 NW2d 174 (2007), for
instance, this Court held that because the plaintiffs were not licensed to provide the services
rendered, they were not lawfully rendering treatment under MCL 500.3157(1). In contrast,
defendant does not argue, and there was no evidence presented, that plaintiff as an institution was
not licensed to provide the type of treatment rendered to Abdulrazzaq. Nor does defendant dispute
that licensed physicians provided the actual treatment rendered to Abdulrazzaq. Accordingly, the
caselaw requiring compliance with licensing requirements is irrelevant. Defendant’s argument
that plaintiff was organized in violation of the MLLCA is squarely controlled by Miller, which
held on the basis of an identical statutory provision to one found in the MLLCA that only the
Attorney General has standing to bring claims alleging incorporation defects.

        Reversed and remanded for proceedings consistent with this opinion. We do not retain
jurisdiction. Plaintiff, as the prevailing party, may tax costs. MCR 7.219(A).

                                                             /s/ Douglas B. Shapiro
                                                             /s/ Mark J. Cavanagh
                                                             /s/ Kathleen Jansen

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