Michigan Coverage Decisions, Issue 185

Wyoming Chiropractic Health Clinic, PC v. Auto-Owners Ins. Co.

Published December 9, 2014 Michigan Court of Appeals Docket No. 317876., Leave Denied May 28, 2015 Supreme Court Docket No. 150868

A healthcare provider sought payment for services rendered to parties injured in an auto accident. The insurance carrier argued that the healthcare provider did not have standing to bring an action for the purpose of obtaining personal injury protection benefits under the relevant provision in the no-fault act. The basis for this argument was that the healthcare provider was not a real party in interest because it was improperly asserting rights of the insured individuals and the Court lacked subject matter jurisdiction. The Trial Court denied the insurance carrier’s motion for summary disposition and entered judgment in favor of the healthcare provider.

The Court affirmed, holding that the trial court properly denied the insurer’s motion for summary disposition, because a healthcare provider had standing to bring an action against the insurer to obtain personal injury protection (PIP) benefits under the plain language of MCL 500.3112. The Court further determined that PIP benefits are payable to or for the benefit of an injured person and MCL 500.3112 permits an insurer to pay another person or entity for the benefit of the insured individual. The Court found that a hospital that provides medical care is to be reimbursed by the injured person’s no-fault insurance company and the no-fault act creates an independent cause of action for healthcare providers. The Court of Appeals conducted a detailed analysis of prior decisions to address each of the arguments presented by the insurance carrier and rejected each of the arguments based on the prior decisions reviewed and noted that public policy favored such an outcome. The Court noted that healthcare provider standing provides a remedy when an individual insured does not sue for unpaid benefits.

Kallas & Henk Note
The Court of Appeals relied heavily on the “for the benefit of” portion of the statute in its holdings which allow a third-party (healthcare provider) to seek recovery under a no-fault insurance contract which is contrary to contract construction principles which normally do not allow a stranger to the contract to enforce it. The Supreme Court declined to review the issues relating to the standing of a healthcare provider to bring a separate action.

Depositors Ins. Co. v. Dahlia Luera-Harris et. al.

Unpublished. Decided January 13, 2015, Michigan Court of Appeals Docket No. 318269

This is a declaratory action concerning homeowners policy coverage. On January 29, 2011, the insured’s son had a party at his college apartment at which alcohol was served, including to a minor. The minor left the party and drove into a tree, killing the three passengers in the vehicle. The insurance carrier argued that the son’s actions did not constitute an occurrence as defined, motor vehicle liability was excluded as well as other exclusions. The Trial Court agreed that there was no occurrence and/or coverage was precluded under the motor vehicle exclusion and determined that there was no duty to defend and that the policy did not apply to the claims at issue.

On appeal, the Court of Appeals affirmed relying on a prior decision issued which involved the service of alcohol to minors. The Court noted that it only had to be shown that enough alcohol was served to reasonably foresee that anyone’s driving ability might be impaired, creating a direct risk of harm. The Court did not address the motor vehicle exclusion in its decision.

Kallas & Henk Note
The decision is supported by well-established, long-standing coverage principles and several prior Michigan decisions, and is based on the premise that when the actions create a direct risk of harm, such actions are not accidental and therefore, not an occurrence within the policy’s meaning.

 

Lewis E. Maley et. al. v. AAA a/k/a Auto Club Insurance Assoc.

Unpublished. Decided January 20, 2015 Michigan Court of Appeals Docket No. 318669

On May 20, 2011, the Plaintiff was injured in a motorcycle accident. The insurer had issued a motorcycle policy, which explicitly stated that medical benefits were not included. The Trial Court denied summary disposition to the motorcycle insurance carrier based on the policyholder’s affidavit that they had requested “full coverage” and did not discuss medical benefits, which contradicted prior deposition testimony given by this party.

On appeal, the insurer argued that the policy unambiguously excluded medical benefits and the reasonable expectations of the insured could not affect the unambiguous policy terms. The policy holder argued that the carrier’s sales agent made representations which required ensuring appropriate medical benefits coverage. The Court of Appeals overturned the lower court denial of summary disposition on the basis that a factual question could not be created by an affidavit which contradicted prior deposition testimony and granted summary disposition in favor of the insurance carrier.

Kallas & Henk Note
This case follows the line of prior Michigan decisions which uphold standards for application of unambiguous policy language and re-enforces this requirement.

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