No-Fault Health Care Provider Litigation Update

By Rachael M. Sedlacek posted 10 days ago

  

The recent turn in provider litigation is a reminder when researching: even state law precedent can be really old!

Since Covenant eliminated direct actions for medical providers in PIP cases, everyone in the no-fault world has been debating how providers can bring claims. Experts offered several possibilities, but the assignment theory seemed most viable. If providers could get assignments from injured parties for services provided (future assignments run afoul of the statute), they could stand in the shoes of injured parties in court.

The problem: most no-fault policies have anti-assignment clauses, especially after Covenant. Enter an 1880 decision from the Michigan Supreme Court, Roger Williams Ins Co v Carrington. The court in Roger Williams analyzed whether there was coverage for damage from a stable fire when the insured assigned the policy after the fire. The court held that the policy’s anti-assignment clause could not be applied post-loss based on public policy. Providers have been citing this case in response to summary disposition motions, and even certain members of the insurance defense bar agreed it was valid.

In May, the court of appeals confirmed in Shah v State Farm Mut Auto Ins Co that Roger Williams is controlling regarding anti-assignment clauses. Shah also dealt with whether the providers could amend their complaint. This has been another thorny issue since Covenant. The court held that the providers' motion to amend their complaint was a supplemental pleading and did not relate back to the original complaint.

You can see this discussed in further detail in the 2018 First-Party No-Fault Update, which will be available on icle.org to Partners in October.

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