Court Opinion

ID: 4390048
Source: CourtListenerOpinion
Date Created: 2019-04-24 09:05:45.966813+00
Date Added: 2024-06-11T09:24:38.797731
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

RIVERVIEW MACOMB HOME &                                             UNPUBLISHED
ATTENDANT CARE, LLC, doing business as                              April 23, 2019
AVA CARE & CASE MANAGEMENT and AVA
ATTENDANT CARE & HOME HEALTH
SERVICES,

               Plaintiff-Appellee,

v                                                                   No. 339983
                                                                    Macomb Circuit Court
ALLSTATE INSURANCE COMPANY,                                         LC No. 2016-001148-NF

               Defendant-Appellant.

Before: MURRAY, C.J., and SAWYER and REDFORD, JJ.

PER CURIAM.

        Defendant, in this action for personal protection insurance (PIP) benefits under the no-
fault act, MCL 500.3101 et seq., appeals by leave granted1 the trial court’s order granting
plaintiff’s motion for leave to amend its complaint and the trial court’s order denying defendant’s
motion for partial summary disposition. We reverse both orders.

        Hana Gorgees and Basim Hubi were injured in a motor vehicle accident. At the time of
the accident, Gorgees and Hubi were both insured under a no-fault insurance policy issued by
defendant. Gorgees and Hubi sought attendant care from plaintiff, and after defendant failed to
pay plaintiff for these services, plaintiff—as Gorgees’s and Hubi’s healthcare provider—filed a
direct cause of action against defendant. After the Supreme Court’s decision in Covenant Med
Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich 191, 196; 895 NW2d 490 (2017), extinguished
plaintiff’s right to sue defendant directly, plaintiff obtained assignments of rights from Gorgees
and Hubi, seeking to allow plaintiff to recover for the services it provided to Gorgees and Hubi.

1
 Riverview Macomb Home & Attendant Care v Allstate Ins Co, unpublished order of the Court
of Appeals, entered February 22, 2018 (Docket No. 339983).
        Plaintiff, as assignee, then sought leave to amend its complaint under MCR 2.118(A)(2),
and relate back its claims to the date of its original complaint. Defendant objected, arguing that
plaintiff’s motion was actually a request to file a supplemental pleading under MCR 2.118(E), in
which case the relation-back doctrine would not apply. The trial court granted plaintiff’s motion
for leave to amend plaintiff’s complaint, holding that plaintiff’s claims (under an assignment-of-
rights theory) related back to the original complaint. Defendant filed a motion for partial
summary disposition, arguing that plaintiff’s claims were nonetheless barred by the one-year-
back rule. The trial court denied defendant’s motion for partial summary disposition, holding
that, because the relation-back doctrine applied to plaintiff’s amended complaint, plaintiff could
recover for losses incurred within one year of plaintiff’s filing of the original complaint.

                               I. RELATION-BACK DOCTRINE

       Defendant argues that the trial court erred in granting plaintiff’s motion for leave to
amend its complaint because plaintiff’s request was better characterized as a supplemental
pleading under MCR 2.118(E), in which case the relation-back doctrine would not apply.

        The standard of review for reviewing a trial court’s decision to grant a party’s motion for
leave to amend a pleading is as follows:

               The grant or denial of leave to amend pleadings is within the trial court’s
       discretion. A trial court’s decision on whether to permit a party to serve a
       supplemental pleading is also discretionary. A motion to amend should ordinarily
       be denied only for particularized reasons, including undue delay, bad faith or a
       dilatory motive, repeated failure to cure deficiencies by amendments previously
       allowed, undue prejudice to the opposing party, or futility. . . . Amendment is
       generally a matter of right rather than grace.

               This Court will not reverse a trial court’s decision regarding leave to
       amend unless it constituted an abuse of that discretion that resulted in injustice.
       An abuse of discretion occurs only when the trial court’s decision is outside the
       range of reasonable and principled outcomes. A trial court necessarily abuses its
       discretion when it makes an error of law. [Jawad A Shah, MD, PC v State Farm
       Mut Auto Ins Co, 324 Mich App 182, 207-208; 920 NW2d 148 (2018), oral
       argument gtd on the application 503 Mich 882 (2018) (Docket No. 157951)
       (quotation marks, citations, and brackets omitted).]

        Under MCR 2.118(A)(2), a party may amend a pleading by leave of the court and such
“[l]eave shall be freely given when justice so requires.”

        In Covenant, 500 Mich at 196, the Supreme Court held that “healthcare providers do not
possess a statutory cause of action against no-fault insurers for recovery of [PIP] benefits under
the no-fault act.” However, this decision was “not intended to alter an insured’s ability to assign
his or her right to past or presently due benefits to a healthcare provider.” Id. at 217 n 40.
Covenant has retroactive effect, meaning that it “applies to all cases still open on direct review.”
W A Foote Mem Hosp v Mich Assigned Claims Plan, 321 Mich App 159, 176, 196; 909 NW2d
38 (2017), oral argument gtd on the application 501 Mich 1079 (2018).

                                                -2-
       MCR 2.118(D), the rule regarding amended pleadings and the relation-back doctrine,
provides, in relevant part:

               An amendment that adds a claim or a defense relates back to the date of
       the original pleading if the claim or defense asserted in the amended pleading
       arose out of the conduct, transaction, or occurrence set forth, or attempted to be
       set forth, in the original pleading.

       “However, while an amended pleading may relate back to the date of the original
pleading, there is no provision for relating back as to supplemental pleadings[.]” Shah, 324 Mich
App at 203 (quotation marks and citation omitted). MCR 2.118(E), the rule regarding
supplemental pleadings, provides, in relevant part:

              On motion of a party the court may, on reasonable notice and on just
       terms, permit the party to serve a supplemental pleading to state transactions or
       events that have happened since the date of the pleading sought to be
       supplemented, whether or not the original pleading is defective in its statement of
       a claim for relief or a defense.

Also, “the relation-back doctrine does not apply to the addition of new parties.” Shah, 324 Mich
App at 203-204 (quotation marks and citation omitted).

        In Shah, 324 Mich App at 202-205, this Court addressed the same factual and procedural
circumstances that are presented in this case. Like plaintiff, the plaintiffs in Shah were
healthcare providers that provided medical services to Hensley (the injured, insured party). Id. at
187-189. The plaintiffs initially filed a direct lawsuit against the defendant (the insurer) under
pre-Covenant case law. Id. However, after Covenant, the plaintiffs obtained assignments to
Hensley’s rights and benefits under his insurance policy with the defendant for services that the
plaintiffs already provided to Hensley. Id. Then, pursuant to Covenant, the plaintiffs sought to
amend their complaints to bring their lawsuits under an assignment-of-rights theory. Id. at 202-
203. This Court had to determine whether plaintiff’s request was an amended complaint or a
supplemental pleading for purposes of the relation-back doctrine. Id. at 202-205.

        This Court held that, because “[a]n assignee stands in the position of the assignor,
possessing the same rights” as the assignor, the plaintiffs could not obtain any greater rights from
Hensley than those rights Hensley had on the date of the assignments. Id. at 204 ( quotation
marks and citation omitted). Moreover, this Court held that the plaintiffs’ attempt to amend their
complaints was actually an attempt to supplement their pleadings because “the procurement of
the assignments was an event that occurred after the filing of the original complaint and
provided the only means by which plaintiffs could have standing to maintain a direct action
against defendant insurer for recovery of no-fault benefits . . . .” Id. at 202-204 (emphasis
added), citing Covenant, 500 Mich at 195-196, 217 n 40. Because there is no provision for
relating back supplemental pleadings to the original complaint, the “plaintiffs did not obtain the
right to pursue no-fault benefits for any portion of the loss incurred more than one year before
[the date of the assignment] . . . .” Id. at 205, citing MCR 2.118(D) and (E). That is, the
plaintiffs could only recover for losses that Hensley incurred one year before the date of the
assignment, not the date the original complaint was filed. Id. at 202-205.

                                                -3-
        This Court’s decision in Shah, controls the outcome of this case. Plaintiff originally filed
a lawsuit against defendant on April 6, 2016, seeking recovery for the services plaintiff provided
to Gorgees and Hubi, who were both insured by defendant, for injuries they suffered in the
March 29, 2014 motor vehicle accident. After Covenant, plaintiff no longer possessed an
independent ground for recovering for the losses plaintiff incurred. However, plaintiff obtained
assignments of rights from Gorgees and Hubi on June 8, 2017. Gorgees assigned to plaintiff her
rights to collect PIP benefits for case management and attendant care services plaintiff provided
to her from April 15, 2014 through June 8, 2017. Hubi assigned to plaintiff his rights to collect
PIP benefits for case management services plaintiff provided to him from April 15, 2014 through
June 8, 2017, and his rights to collect PIP benefits for attendant care services plaintiff provided
to him from April 15, 2014 through May 15, 2017.

        However, because Shah states that these assignments constitute “an event that occurred
after the filing of the original complaint and provided the only means by which plaintiff[] could
have standing to maintain a direct action against defendant insurer for recovery of no-fault
benefits,” Shah, 324 Mich App at 204-205, plaintiff’s motion for leave to amend its complaint
was actually a request to file a supplemental pleading, id. at 204 (“Courts are not bound by a
party’s choice of labels because this would effectively elevate form over substance.”) (quotation
marks and citation omitted). Therefore, plaintiff’s June 19, 2017 filing was a supplemental
pleading, and the relation-back doctrine does not apply. Id. at 204-205, citing MCR 2.118(D)
and (E).2 The trial court’s misapplication of MCR 2.118 constitutes an error of law, and thus, an
abuse of discretion. See Shah, 324 Mich App at 204-208.

       Plaintiff’s brief on appeal only mentions Shah in passing. However, plaintiff’s arguments
in support of its position—that plaintiff’s amended complaint and claims as an assignee relate
back to the original complaint—now stand in direct conflict with Shah. In fact, plaintiff’s
motion for leave to amend its complaint relied on MCR 2.118(E)—the rule regarding
supplemental pleadings—for relief. Therefore, plaintiff’s arguments, which fail to address the
impact that Shah has on plaintiff’s claims regarding the relation-back doctrine, are unpersuasive.
Shah, 324 Mich App at 202-205.

                                  II. ONE-YEAR-BACK RULE

        Defendant also argues that the trial court erred in denying its motion for partial summary
disposition because the one-year-back rule barred plaintiff from recovering for losses incurred
before June 19, 2016—one year before plaintiff filed its amended complaint. We agree with
defendant that the trial court erred in denying defendant’s motion for partial summary
disposition, but disagree with defendant as to the correct date for purposes of the one-year-back
rule, which according to Shah is the date plaintiff obtained the assignments from Gorgees and
Hubi, not the date plaintiff filed its amended complaint.

2
  For consistency and clarity, we will continue to refer to plaintiff’s June 19, 2017 filing as an
amended complaint, despite it actually constituting a supplemental pleading under MCR
2.118(E).

                                                -4-
        “This Court reviews de novo the trial court’s decision to grant or deny summary
disposition.” Shah, 324 Mich App at 205-206 (quotation marks and citation omitted).
Defendant brought its July 10, 2017 motion for partial summary disposition pursuant to MCR
2.116(C)(10). The standard of review for reviewing a motion for summary disposition denied
pursuant to MCR 2.116(C)(10) is as follows:

              A motion under MCR 2.116(C)(10) tests the factual sufficiency of the
       complaint. In evaluating a motion for summary disposition brought under this
       subsection, a trial court considers affidavits, pleadings, depositions, admissions,
       and other evidence submitted by the parties, in the light most favorable to the
       party opposing the motion. Where the proffered evidence fails to establish a
       genuine issue regarding any material fact, the moving party is entitled to
       judgment as a matter of law. [Id. at 207 (quotation marks and citation omitted).]

        Under MCL 500.3145(1), a claimant for PIP benefits “may not recover benefits for any
portion of the loss incurred more than 1 year before the date on which the action was
commenced.” The one-year-back rule in MCL 500.3145(1) “is designed to limit the amount of
benefits recoverable under the no-fault act to those losses occurring no more than one year
before an action is brought.” Joseph v Auto Club Ins Ass’n, 491 Mich 200, 203; 815 NW2d 412
(2012).

       The trial court held that plaintiff’s claims under an assignment-of-rights theory were not
barred by the one-year-back rule, and determined that the correct date for purposes of the one-
year-back rule was April 6, 2016 (the date plaintiff filed its original complaint). This was
erroneous. As this Court stated in Shah, 324 Mich App at 205, the pertinent date for purposes of
the one-year-back rule is the date plaintiff acquired the assignments of rights from Gorgees and
Hubi—i.e., June 8, 2017. Therefore, plaintiff may only recover for losses incurred on or after
June 8, 2016—one year before plaintiff obtained the assignments of rights from Gorgees and
Hubi. See id. All of plaintiff’s claims for losses incurred before June 8, 2016, are barred by the
one-year-back rule. See id.

        Defendant argues that the pertinent date for purposes of the one-year-back rule is June
19, 2017—the date plaintiff filed its amended complaint—as this was the actual date on which
plaintiff’s “newly acquired claims” under an assignment-of-rights theory were filed. However,
defendant’s argument contradicts this Court’s express holding in Shah. Id. Therefore, with
respect to the services plaintiff provided to Gorgees and Hubi for injuries they suffered in the
March 29, 2014 motor vehicle accident, plaintiff cannot recover payment for losses incurred
before June 8, 2016—one year before plaintiff obtained Gorgees’s and Hubi’s assignments of
rights. See id.

                                               -5-
        Reversed and remanded for proceedings consistent with this opinion. We do not retain
jurisdiction.

                                                        /s/ Christopher M. Murray
                                                        /s/ David H. Sawyer
                                                        /s/ James Robert Redford

                                            -6-