Court Opinion

ID: 4400209
Source: CourtListenerOpinion
Date Created: 2019-05-24 09:05:36.769181+00
Date Added: 2024-06-11T14:49:18.891738
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

VHS HARPER-HUTZEL HOSPITAL INC, doing                          UNPUBLISHED
business as DETROIT MEDICAL CENTER,                            May 23, 2019

           Plaintiff-Appellant,

v                                                              No. 340923
                                                               Wayne Circuit Court
MICHIGAN ASSIGNED CLAIMS PLAN,                                 LC No. 16-003010-NF

           Defendant,
and

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

           Defendant-Appellee.

LUCIA ZAMORANO MD, PLC,

           Plaintiff-Appellant,

v                                                              No. 340969
                                                               Wayne Circuit Court
STATE FARM MUTUAL AUTOMOBILE                                   LC No. 16-000391-NF
INSURANCE COMPANY,

           Defendant-Appellee.

SUMMIT PHYSICIANS GROUP and SUMMIT
MEDICAL GROUP,

           Plaintiffs-Appellants,

v                                                              No. 341385

                                           -1-
                                                                   Wayne Circuit Court
STATE FARM MUTUAL AUTOMOBILE                                       LC No. 15-016965-NF
INSURANCE COMPANY,

              Defendant-Appellee.

LANELL OLIVER,

              Plaintiff,
and

OAKWOOD HEALTHCARE INC, THE PAIN
CENTER PLLC, and INTERVENTIONAL PAIN
CENTER PLLC,

              Intervening Plaintiffs,
and

OAKLAND MRI,

              Intervening Plaintiff/Appellant,

v                                                                  No. 341408
                                                                   Wayne Circuit Court
STATE FARM MUTUAL AUTOMOBILE                                       LC No. 16-008468-NF
INSURANCE COMPANY,

              Defendant-Appellee.

Before: MURRAY, C.J., and STEPHENS and RIORDAN, JJ.

PER CURIAM.

        In these consolidated appeals healthcare providers challenge the circuit court’s decision
denying their motions to amend their complaints to comply with Covenant Med Ctr, Inc, v State
Farm Mut Auto Ins Co, 500 Mich. 191, 218; 895 NW2d 490 (2017). The ruling in Covenant
determined that the plaintiffs herein had no independent right to sue for personal injury
protection (PIP) benefits. In Docket No. 340923, VHS Harper-Hutzel Hospital Inc., doing
business as Detroit Medical Center (DMC), appeals by right the circuit court’s October 18, 2017
Order Denying VHS Harper-Hutzel Hospital’s Motion to File First Amended Complaint. In
Docket No. 340969, Lucia Zamorano MD PLC (Zamorano), and Docket No. 341385, Summit
Physicians Group PLLC (Summit), appeal by right the circuit court’s October 17, 2017 Order
Denying Provider’s Motions for Leave to File Amended Complaint. In Docket No. 341408,

                                                 -2-
Oakland MRI (Oakland) appeals by right the circuit court’s November 11, 2017 Order Denying
Oakland MRI’s Motion for Leave to File Amended Complaint. We affirm in all four cases.

                                       I. BACKGROUND

        The facts are undisputed. On March 7, 2015, pedestrian Lanell Oliver (the decedent) was
struck by a Dodge Dakota truck while walking across the street at the crosswalk. The decedent
did not have no-fault insurance. The driver of the Dodge Dakota, Carolyn Cook-Richards, was
insured with a no-fault policy through defendant State Farm Mutual Automobile Insurance
Company (State Farm). The decedent submitted a claim to State Farm for medical expenses and
lost wages that was denied. On July 6, 2016, the decedent filed a breach of contract complaint
for PIP benefits against State Farm under the No-Fault Act, MCL 500.3101 et seq. The
healthcare providers also submitted their bills for services and treatment to State Farm for direct
payment. The healthcare providers individually filed suit against State Farm when payment was
not forthcoming. On September 3, 2016, the decedent died.

       On January 9, 2017, State Farm filed a Motion to Dismiss Pursuant to MCR 2.202
wherein State Farm argued that the decedent’s claims had to be dismissed because the decedent
died on September 3, 2016, and as of the date of the motion, there was no substitution of a
representative or other party to continue the decedent’s claims. On February 28, 2017, the court
granted partial summary disposition to State Farm ordering that only the decedent’s claims be
dismissed without prejudice pursuant to MCR 2.202. The healthcare providers’ claims were
allowed to continue.

        On May 25, 2017, our Supreme Court decided Covenant, supra, which held that “[a]
healthcare provider possesses no statutory cause of action under the no-fault act against a no-
fault insurer for recovery of PIP benefits.” The Court determined that, while MCL 500.3112
“undoubtedly allows no-fault insurers to directly pay healthcare providers for the benefit of an
injured person, its terms do not grant healthcare providers a statutory cause of action against
insurers to recover the costs of providing products, services, and accommodations to an injured
person.” Id. at 195–196. The Court footnoted that its 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.

        On July 28, 2017, an order was issued consolidating the healthcare provider’s cases in the
trial court. On August 16, 2017, a personal representative was appointed to the decedent’s
estate. Accordingly, the healthcare providers obtained assignments of benefits from the personal
representative of decedent’s estate, and then moved the trial court for leave to amend their
complaints to pursue payment from State Farm as assignees. The trial court denied the motions
to amend on the ground that amendment would be futile.

                                    II. LEAVE TO AMEND

                                 A. STANDARD OF REVIEW

       “Decisions concerning the meaning and scope of pleading, and decisions granting or
denying motions to amend pleadings, are within the sound discretion of the trial court and
reversal is only appropriate when the trial court abuses that discretion.” Weymers v Khera, 454
                                                -3-
Mich 639, 654; 563 NW2d 647 (1997). “An abuse of discretion occurs when the trial court's
decision is outside the range of reasonable and principled outcomes.” Bronson Methodist Hosp v
Auto-Owners Ins Co, 295 Mich. App. 431, 442; 814 NW2d 670 (2012). Leave to amend “shall be
freely given when justice so requires.” MCR 2.118(A)(2). A motion to amend a complaint
“should be denied only for particularized reasons, such as undue delay, bad faith, or dilatory
motive on the part of the movant, a repeated failure to cure deficiencies in the pleadings, undue
prejudice to the opposing party by virtue of allowing the amendment, or futility of amendment.”
Boylan v Fifty Eight, LLC, 289 Mich. App. 709, 728; 808 NW2d 277 (2010). “The trial court
must specify its reasons for denying leave to amend, and the failure to do so requires reversal
unless the amendment would be futile.” PT Today, Inc v Comm’r of Office of Fin & Ins Servs,
270 Mich. App. 110, 143; 715 NW2d 398 (2006), lv den 477 Mich. 868 (2006), recon den 477
Mich. 1035 (2007).

        “[Q]uestions involving the proper interpretation of a contract or the legal effect of a
contractual clause are ... reviewed de novo.” Rory v Continental Ins Co, 473 Mich. 457, 464; 703
NW2d 23 (2005). Questions of statutory interpretation are also reviewed de novo. Ligons v
Crittenton Hosp, 490 Mich. 61, 70; 803 NW2d 271 (2011).

                                         B. ANALYSIS

                            1. THE ANTI-ASSIGNMENT CLAUSE

        The healthcare providers first argue that the trial court erred in finding that State Farm’s
anti-assignment clause barred the estate’s assignment of rights. We agree.

        Insurance policies are contracts and are thus “subject to the same contract construction
principles that apply to any other species of contract.” Rory, 473 Mich. at 461. “In ascertaining
the meaning of a contract, we give the words used in the contract their plain and ordinary
meaning that would be apparent to a reader of the instrument.” Id. “[T]he judiciary is without
authority to modify unambiguous contracts or rebalance the contractual equities struck by the
contracting parties....” Id. Absent ambiguity, contractual provisions are “to be enforced as
written unless the provision would violate law or public policy.” Id. at 468-469. Determining
whether a contract provision violates “Michigan’s public policy is not merely the equivalent of
the personal preferences of a majority of this Court; rather, such a policy must ultimately be
clearly rooted in the law.” Id. at 470-471 (quotation marks and citation omitted). “In
ascertaining the parameters of our public policy, we must look to policies that, in fact, have been
adopted by the public through our various legal processes, and are reflected in our state and
federal constitutions, our statutes, and the common law.” Id. at 471 (quotation marks and
citation omitted).

       An assignment is defined as “[t]he transfer of rights or property.” Black’s Law
Dictionary (7th ed), p 115. “An assignee stands in the shoes of the assignor and acquires the
same rights as the assignor possessed.” First of Am Bank v Thompson, 217 Mich. App. 581, 587;
552 NW2d 516 (1996). ‘‘Under general contract law, rights can be assigned unless the
assignment is clearly restricted.” Burkhardt v Bailey, 260 Mich. App. 636, 652; 680 NW2d 453
(2004). Further, Michigan law will enforce unambiguous contractual provisions against
assignments. See Employers Mut Liab Ins Co v Mich Mut Auto Ins Co, 101 Mich. App. 697, 702;

                                                -4-
300 NW2d 682 (1980) (finding that an anti-assignment provision was enforceable to void
coverage under the policy). State Farm argues that the anti-assignment clause in its insurance
policy prohibited the assignment from the personal representative to the healthcare providers.
The insurance policy states, ‘‘No assignment of benefits or other transfer of rights is binding
upon us [State Farm] unless approved by us.” This language clearly prohibits the assigning of
benefits or the transfer of rights to anyone without State Farm’s approval. It is uncontroverted
that State Farm did not approve the assignments from the personal representative to the
healthcare providers.

        The healthcare providers contend that the anti-assignment clause did not apply to the
decedent because he was not a “named insured” under the policy, the decedent’s benefits derived
from statute and not contract, and the clause violates public policy. The policy defines “named
insured” as the first person named on the Declarations Page and his or her spouse. The policy
further states,

         Insured for Personal Injury Protection Coverage means:

         1. you or any resident relative; and

         2. any other person while occupying or injured as a pedestrian by:

                a. your car . . .

Under the policy, “pedestrian” is defined as “a person who is not occupying a motor vehicle.”
According to the plain language of the policy, the decedent, as a pedestrian, was an insured
under the policy and therefore subject to the anti-assignment clause. In this case, however the
decedent’s benefits derive from both statute, MCL 500.3115(1)(a)1, and contract. Given that the
language of the policy is clear and that the contract applies to this decedent, the clause must be
enforced against the healthcare providers, who as assignees stand in the decedent’s position,
unless the clause would violate the law or public policy, which it does. Rory, 473 Mich. at 468-
469.

       In Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, 324 Mich. App. 182, 200; 920
NW2d 148 (2018), the Court held that an anti-assignment clause that sought to prohibit the
assignment of an accrued cause of action after the loss occurred was unenforceable as a violation

1
    MCL 500.3115(1)(a):
         (1) Except as provided in subsection (1) of section 3114,1 a person suffering
         accidental bodily injury while not an occupant of a motor vehicle shall claim
         personal protection insurance benefits from insurers in the following order of
         priority:

         (a) Insurers of owners or registrants of motor vehicles involved in the accident.
         (b) Insurers of operators of motor vehicles involved in the accident.

                                                 -5-
of public policy. In this case, there is no dispute that the estate’s assignments to the healthcare
providers occurred after the loss and accrual of the claim. The decedent was injured on March 7,
2015. The healthcare providers rendered medical services for which they sought payment before
the decedent’s death on September 3, 2016. The first assignment was not issued until August 22,
2017, to healthcare provider DMC. The assignment was otherwise valid in so far that it sought
only to assign past and present benefits and not those in the future, in accord with MCL
500.3143.2 Applying Shah’s holding here, the trial court erred in finding that the insurance
policy’s anti-assignment clause was enforceable against the healthcare providers. The clause
violated Michigan’s public policy by preventing the post-loss assignment of an accrued cause of
action.

      The Court’s holding was grounded in the following holding from our Supreme Court in
Roger Williams Ins Co v Carrington, 43 Mich. 252; 5 N.W. 303 (1880):

       The assignment having been made after the loss, did not require consent of the
       company. The provision of the policy forfeiting it for an assignment without the
       company’s consent is invalid, so far as it applies to the transfer of an accrued
       cause of action. It is the absolute right of every person—secured in this State by
       statute—to assign such claims, and such a right cannot be thus prevented. It
       cannot concern the debtor, and it is against public policy. [Id. at 254 (emphasis
       added)].

State Farm challenges the Court’s decision in Shah on the basis that the Court wrongly analyzed
Roger Williams. State Farm additionally argues that the holding in Roger Williams is
inapplicable because Roger Williams involved an absolute assignment and the healthcare
providers have partial assignments, that under Roger Williams there was no continuing
obligations by an insured party, and that the assignments would expand State Farm’s liability
with the request for no-fault attorney fees. This Court is bound to follow the decisions of our
Supreme Court “except where those decisions have clearly been overruled or superseded.”
Assoc Builders & Contractors v City of Lansing, 499 Mich. 177, 191-192; 880 NW2d 765 (2016).
State Farm has not demonstrated that some 183 years later, Roger Williams has been clearly
overruled or superseded. Further, these arguments are necessarily new on appeal as they are in
response to the Shah decision that was not decided until after the trial court’s dismissal of the
healthcare providers’ claims and their claims of appeal. State Farm’s additional arguments to
defeat Roger Williams’ application are moot given our final disposition of this case.

        State Farm’s contention that the assignments seek to expand its liability by seeking no-
fault attorney fees is disingenuous where State Farm was exposed to the same liability pre-
Covenant when the healthcare providers had a direct statutory cause of action as it is post-
Covenant where insureds are permitted to assign their benefits to medical providers. We further
find this issue waived where it could have been, but was not raised below. See Walters v Nadell,

2
  “An agreement for assignment of a right to benefits payable in the future is void.” MCL
500.3143.

                                                -6-
481 Mich. 377, 38; 751 NW2d 431 (2008) (citation omitted) (‘‘Michigan generally follows the
‘raise or waive’ rule of appellate review.”).

                                     2. RELATION BACK

        The healthcare providers next argue that the trial court erroneously found that their
amendments were in fact supplemental pleadings that did not relate back to the date of the
original complaint. We disagree. The rule concerning the relation back of amended pleadings is
in MCR 2.118(D), and provides, in pertinent part, that

       an amendment that adds a claim or 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.

There is no relation back for supplemental pleadings. Grist v Upjohn Co, 1 Mich. App. 72, 84;
134 NW2d 358 (1965).

       MCR 2.118(E) governs supplemental pleadings and provides, in pertinent part, that

       [o]n 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.

Further, the “relation-back doctrine does not apply to the addition of new parties.” Miller v
Chapman Contracting, 477 Mich. 102, 106; 730 NW2d 462 (2007) (quotation marks and citation
omitted).

        The healthcare providers’ motions to amend were supplemental pleadings. The
healthcare providers did not intend for the pleadings to add a new claim or defense, but rather to
assert an alternative theory of standing to pursue their actions for payment against State Farm.
As such, in filing the pleadings, the healthcare providers sought to state an event, i.e. the
assignment, which had happened since the date of the original pleading. Further, the healthcare
providers sought to file the pleading as a different party. The healthcare providers brought their
original actions on their own behalf. After the filing, Covenant held that they could not sue State
Farm directly. The assignments substituted the healthcare providers in the decedent’s place. The
healthcare providers were no longer pursuing the claim on their own behalf, but as assignees—a
different party. The pleading in this case would not relate back because it was a supplemental
pleading and added a new party.

                               3. THE ONE-YEAR-BACK RULE

        Even had there been no determination that the healthcare providers sought to file a
supplemental pleading, their amendments were barred by the one-year-back rule. The one-year-
back rule in MCL 500.3145(1) provides, in pertinent part, that ‘‘the claimant may not recover
benefits for any portion of the loss incurred more than 1 year before the date on which the action

                                                -7-
was commenced.’’ The rule ‘‘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). Further, the one-year-
back rule is not subject to tolling. Devillers v Auto Club Ins Ass’n, 473 Mich. 562, 593; 702
NW2d 539 (2005).

        “[A]n assignee stands in the shoes of the assignor and acquires the same rights as the
assignor possessed.” Professional Rehab Assocs v State Farm Mut Auto Ins Co, 228 Mich. App.
167, 177; 577 NW2d 909 (1998). According to Shah, the date of the assignment is the
controlling date for purposes of applying the one-year-back rule. 324 Mich. App. at 205
(“Through the assignment, plaintiffs only obtained the rights Hensley actually held at the time of
the execution of the assignment . . .”). In the case of each healthcare provider, the last date of
treatment was more than one year before the date of the assignment. As assignees, the healthcare
providers were “entitled to recover only and just as . . . [the] assignor, might had no assignment
been made.” Ward v Alpine Tp, 204 Mich. 619, 631; 171 N.W. 446 (1919). Thus, even had the
decedent filed a direct cause of action, for example on September 28, 2017, he would not be
entitled to recover any benefits for treatment he received from Summit before September 28,
2016. The same conclusion is reached for each healthcare provider. To quote our Supreme
Court in Jones v Chambers, 353 Mich. 674, 681-682; 91 NW2d 889 (1958):

       The assignment created nothing. It simply passed to plaintiffs’ insurer rights
       already in existence, if any. If plaintiffs’ insured had no rights, then plaintiffs’
       insurer acquired none by virtue of the assignment. To rule otherwise would be to
       give such an assignment some strange alchemistic power to transform a dross and
       worthless cause of action into the pure gold from which a judgment might be
       wrought. [Quotation marks omitted.]

The trial court’s conclusion that it would have been futile to grant the healthcare providers’
motions to amend was not an abuse of discretion. The proposed pleadings were legally
insufficient to state a viable cause of action.

                                           4. EQUITY

        Zamorano and Summit additionally raise equity arguments that were not preserved
below. This Court need not review issues raised for the first time on appeal. Polkton Charter
Twp v Pellegrom, 265 Mich. App. 88, 95; 693 NW2d 710 (2005). “[T]his Court may overlook
preservation requirements if the failure to consider the issue would result in manifest injustice, if
consideration is necessary for a proper determination of the case, or if the issue involves a
question of law and the facts necessary for its resolution have been presented.” Smith v
Foerster-Bolser Constr, Inc, 269 Mich. App. 424, 427; 711 NW2d 421 (2006) (citations omitted).
Zamorano and Summit fail to argue any of these considerations apply; therefore, we decline
review.

                                                -8-
Affirmed.

                  /s/ Christopher M. Murray
                  /s/ Cynthia Diane Stephens
                  /s/ Michael J. Riordan

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