In the matter of Phase One Rehab, LLC v Allstate Insurance Company, Wayne County Circuit Case No. 25-000123-AV, Mark L. Nawrocki of Anselmi, Mierzejewski, Ruth & Sowle, successfully argued the Plaintiff/Appellant’s appeal from District Court to the Circuit Court. Allstate Insurance Company was the assigned servicing insurer of the Michigan Assigned Claims Plan, which is managed by the Michigan Automobile Insurance Placement Facility (“MAIPF”). The issue on appeal is whether a medical provider’s cause of action is derivative of an ineligible human claimant when the human claimant’s claim is barred due to knowingly providing false information pursuant to MCL 500.3173a(4).
In a separate, but related lawsuit, the human claimant brought his own claim for reimbursement of No-Fault benefits. Sec. 3173a(4) of the No-Fault Act, bars claim filed with the MAIPF when false information is knowingly provided to the MAIPF in support of the claim. It was learned during discovery, that the human claimant made numerous material misrepresentations regarding his claim. This resulted in his case being dismissed due to the trial court granting MAIPF’s dispositive motion on the issue.
Phase One Rehab, LLC filed a lawsuit for reimbursement of medical treatment allegedly provided to the human claimant in the District Court. Its lawsuit was dismissed by the trial court based upon MAIPF’s dispositive motion that the underlying claim was dismissed based upon numerous material misrepresentations.
Thereafter, Phase One Rehab, LLC appealed the matter to the Wayne Circuit Court arguing that the trial court erred when it granted MAIPF’s dispositive motion. In its brief, the Appellant medical provider argued that MCL 500.3112 provides it an independent right to bring and maintain a cause of action for reimbursement of No-Fault benefits. It argued that any material misrepresentation that may have rendered the human claimant ineligible for No-Fault benefits, did not extend to the medical provider as it has an independent cause of action. The Appellant conflated the issues of “the right to make a claim” with “the right to maintain a claim.”
In response, the Appellee/MAIPF argued that a claim filed with the MAIPF must satisfy certain conditions precedent prior to the claim being deemed eligible for benefits. Those conditions are; 1) provide timely notice, 2) submit an application for benefits, 3) provide contemporaneous, independent proof of loss, 4) appear for an examination under oath, if requested, 5) cooperate with the MAIPF investigation, and 6) do not submit false information concerning the claim. MCL 500.3173a. Because the underlying human claimant provided numerous material misrepresentations to the MAIPF, the claim was barred.
Applicable case law holds that a claim for certain benefits is part of – and not separate from – the claim that a person submits to the MAIPF, a request for a different benefit is not a new claim separate from the prior claim to the MAIPF. Regardless whether the misrepresentation was only to a certain benefit, the entire claim is barred. Also, the case law relied upon by the Appellant applied to cases where an insurer was rescinding a policy and clearly not applicable to the MAIPF where there is no policy. Additionally, Appellant’s argument that the insurer’s rescission did not automatically defeat the medical provider’s claim was distinguishable as the MAIPF did not argue that the medical provider’s claim is automatically dismissed, nor did the MAPF rely upon res judicata or collateral estoppel in its dispositive motion, nor was there a rescission of a policy. Instead the MAIPF set forth all facts and arguments as to why the claimant and Plaintiff/Appellant would be barred under Sec. 3173a(4).
Lastly, the MAIPF argued that the medical provider’s right to maintain a case is derivative upon there being a valid underlying claimant’s claim. The MAIPF relied upon the wording in statute and case law that held where PIP benefits are payable to or for the benefits of an injured person … and a medical provider can assert a direct cause of action to recover overdue benefits provided to an injured person. As such, there must be a valid underlying human claim for the medical providers to maintain its action. To argue otherwise is nonsensical and contrary to the statute and case law.
The Wayne County Circuit Court agreed with the Appellee/MAIPF and denied the Appellant’s appeal. The Court found that a medical provider cannot maintain a case against the MAIPF where the underlying human’s claim was found to be ineligible based on material misrepresentation.
Nothing in this post shall be construed as legal advice. If you would like any additional information, please feel free to reach out to Mr. Nawrocki.