Court Opinion

ID: 8208655
Source: CourtListenerOpinion
Date Created: 2022-09-23 06:05:35.560373+00
Date Added: 2024-06-11T16:41:34.330351
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

TYNINA FLOWERS,                                                      UNPUBLISHED
                                                                     September 22, 2022
              Plaintiff-Appellee,

v                                                                    No. 354436
                                                                     Wayne Circuit Court
KEVIN WILSON and CHERI MICHELLA PETRI,                               LC No. 18-015328-NI

              Defendants,

and

AUTO CLUB INSURANCE ASSOCIATION and
MEMBERSELECT INSURANCE COMPANY,

              Defendants-Appellants.

Before: RONAYNE KRAUSE, P.J., and JANSEN and SWARTZLE, JJ.

SWARTZLE, J. (concurring).

        I concur with the majority’s opinion and judgment. I write separately to make clear that
but-for the continuing viability of LaMothe v Auto Club Ins Ass’n, 214 Mich App 577; 543 NW2d
42 (1995), overruled on other grounds by Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co,
500 Mich 191; 895 NW2d 490 (2017), on the dispositive issue here, I would affirm.

       As explained by the majority,

       In LaMothe, the insurer paid only the medical expenses it deemed reasonable under
       the no-fault act so the insured sued his insurer for the unpaid balance. LaMothe,
       214 Mich App at 579-580. The insurer promised to “fully defend and indemnify
       the insured from liability for necessary services priced in excess of what the insurer
       considers to be reasonable and customary.” Id. at 583. The LaMothe Court
       concluded that this promise was legally enforceable “regardless of the period of
       limitation in the policy that controls presentment of claims to the insurer” and,

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       therefore, the plaintiff was not harmed by the insurer’s actions, which required
       dismissal of the plaintiff’s case. Id. at 582-585 and 585 n 5. [Maj op at __.]

Thus, under LaMothe, so long as the insurer promised to defend and indemnify the insured patient
against the medical provider’s attempts to obtain payment, the insured patient could not pursue a
viable claim against the insurer related to any unpaid bill.

        In arriving at this conclusion, both LaMothe and its predecessor, McGill v Auto Ass’n of
Mich, 207 Mich App 402; 526 NW2d 12 (1994), placed considerable emphasis on the statutory
duty of an insurer to pay only “reasonable” charges under the state’s no-fault act. MCL 500.3107.
Based on this, the panels in the two cases concluded that it made sense that insurers would audit
medical bills and pay only what the insurers considered were reasonable charges. And, following
this line of reasoning, the panels further concluded that providers and patients could not expect
that insurers would pay in full every charge for every service, regardless of the reasonableness of
the charge or the necessity of the service.

        Fair enough. But what LaMothe and McGill both failed to recognize was that medical
providers have been under a similar statutory duty to charge only “reasonable” fees for necessary
services provided. See MCL 500.3157 (1994 and 1995) and MCL 500.3157(1) (current). Thus,
both sides of the payment equation under the no-fault act—the provider and the insurer—have
reciprocal statutory duties to charge and pay only “reasonable” fees. The panels in each case
appeared to presume that the insurer was just fulfilling its statutory obligation, but there was no
similar presumption that the provider was just fulfilling its statutory obligation as well. Moreover,
in LaMothe, the majority expressly concluded that the insurer had, in fact, paid “those charges
reasonably incurred for reasonably necessary products, services, and accommodations for
plaintiff’s care.” 214 Mich App at 581-582. Yet, this was one of the key factual claims in
dispute—i.e., whether the insurer had paid for reasonable charges—and the majority made an
inappropriate finding of fact on a motion for summary disposition under MCR 2.116(C)(10).

        Courts have cited and followed Lamothe and McGill since the mid-1990s. See, e.g., United
States Fid & Guar Co v Michigan Catastrophic Claims Ass’n, 484 Mich 1, 18; 795 NW2d 101,
110 (2009); Bronson Methodist Hosp v Auto-Owners Ins Co, 295 Mich App 431, 457; 814 NW2d
670 (2012). Although recent changes to the no-fault act permit a medical provider to sue an insurer
directly, MCL 500.3112; Spectrum Health Hosps v Mich Assigned Claims Plan, 330 Mich App
21, 28 n 4; 944 NW2d 412 (2019), LaMothe and McGill continue to bar the insured patient from
the courthouse. An insured patient is even limited in her ability to contract around LaMothe and
McGill. See, e.g., MCL 500.3143 (dealing with an assignment related to future benefits); Bronson
Health Care Group, Inc, v USAA Cas Ins Co, 335 Mich App 25; 966 NW2d 393 (2020).

        Thus, the insured patient remains caught in the middle between, on the one hand, providers
who demand payment at the risk of lost services, lawsuits, or collection agencies, and, on the other
hand, insurers who refuse payment.

       To be clear—none of this is to say that the insurer is necessarily wrong in the instant case.
Auto Club might well have paid every reasonable fee charged for every necessary service received
by plaintiff. But we cannot know this at the pleading stage. MCR 2.116(C)(8). The better
approach, in my opinion, would be to let the factual dispute about the reasonableness of bills play

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out in litigation, rather than to assume that (1) the insurer paid reasonable charges, but (2) the
provider did not charge reasonable fees for necessary services.

        As to an insurer’s promise to defend and indemnify an insured patient—the key feature
that short circuits the patient’s suit against the insurer—the details of the promise are universally
scant, at least as recounted in case law. So, for example, (1) if the insured patient is subsequently
sued by a provider for an unpaid bill, will the insurer let the patient hire an attorney of her choice
and still pay for the cost of that attorney? Or, will the insurer require that the patient use an
attorney of its choosing? (2) If the insured patient believes that the unpaid bill was for a necessary
service reasonably priced, and that patient admits this in her answer to a provider’s lawsuit against
her, will the insurer then accept the admission and cover the bill in full? (3) How will the insurer,
in actuality, rehabilitate an insured patient’s decimated credit score such that the patient’s credit is
no worse than what it was before significant medical bills went unpaid? Will the insurer, for
example, fund a patient’s lawsuit against a credit bureau under the Fair Credit Reporting Act or
similar consumer-protection law? (4) And, as a final example, if the insured patient needs a
particular service but its medical provider refuses to provide the service because of unpaid bills,
will the insurer assist the insured (and pay any necessary expenses) in finding equivalent
replacement services?

        There are too many unanswered questions and missing details to leave enforceability of the
promise on future application of judicial and promissory estoppel. Instead, if LaMothe and McGill
were set aside, the insured patient could pursue her rights in the courthouse like any other party
with a legal interest. This would leave open the option for the insurer to defend and indemnify the
insured patient through a negotiated (rather than forced) settlement.

       With the recent changes to this state’s no-fault regime, 2019 PA 21, now would be an
opportune time for our Supreme Court to consider whether LaMothe and McGill should remain
binding precedent. Insured patients have a cognizable interest in having their medical bills paid,
and they should have the opportunity to have their own day in court.

       Until and unless this happens, however, lower courts remain bound by LaMothe and
McGill. Given this, I concur in the majority’s opinion and judgment.

                                                               /s/ Brock A. Swartzle

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