Spectrum Health Hospitals v. Farm Bureau Mutual Ins Co of Michigan ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
SPECTRUM HEALTH HOSPITALS, UNPUBLISHED
April 10, 2018
Plaintiff-Appellee,
No. 336244
Kent Circuit Court
LC No. 14-010519-NF
v
FARM BUREAU MUTUAL INSURANCE
COMPANY OF MICHIGAN and FARM
BUREAU GENERAL INSURANCE COMPANY
OF MICHIGAN,
Defendants-Appellants.
SPECTRUM HEALTH HOSPITALS,
Plaintiff-Appellee,
No. 337477
Kent Circuit Court
LC No. 14-010519-NF
v
FARM BUREAU MUTUAL INSURANCE
COMPANY OF MICHIGAN and FARM
BUREAU GENERAL INSURANCE COMPANY
OF MICHIGAN,
Defendants-Appellants.
Before: GADOLA, P.J., and K. F. KELLY and RIORDAN, JJ.
PER CURIAM.
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In these consolidated cases, defendants Farm Bureau Mutual Insurance Company of
Michigan and Farm Bureau General Insurance Company of Michigan appeal as of right the
judgment entered by the trial court on the jury verdict in favor of plaintiff Spectrum Health
Hospitals. On appeal, defendants challenge various pretrial orders and evidentiary rulings of the
trial court, and also challenge the trial court’s order awarding plaintiff attorney fees under MCL
500.3148(1) and MCR 2.403(O). We remand to the trial court for consideration of whether
plaintiff has standing to bring this action.
This case involves a healthcare provider suit for personal protection insurance (PIP)
benefits under Michigan’s no-fault act, MCL 500.3101 et seq. The parties do not dispute that
plaintiff provided healthcare services for several individuals, each of whom were insured by one
of the defendants, and after each was injured in various motor vehicle accidents. In each
instance, plaintiff requested payment from the respective defendant for the healthcare services
provided to the insured, and, specifically, for surgical implants provided in each instance.
Defendants disagreed with the amounts charged by plaintiff for the surgical implants and sought
additional justification for the cost from plaintiff. In some instances, defendants refused to pay
the amount billed; in other cases, defendants paid plaintiff in an amount less than what plaintiff
had billed.
Plaintiff brought this suit to compel defendants to pay the disputed charges. Defendants
contended before the trial court that plaintiff’s charges were in excess of a “reasonable charge”
within the meaning of MCL 500.3107(1)(a) and MCL 500.3157. Plaintiff contended that the
charges were reasonable and that defendants were statutorily obligated to pay plaintiff under the
no-fault act. At the conclusion of trial, the jury entered a verdict finding plaintiff’s charges to be
reasonable. The trial court thereafter entered judgment on the verdict in the amount of
$395,229.85, and also entered an order awarding plaintiff attorney fees under MCL 500.3148(1)
and MCR 2.403(O).
On appeal to this Court, defendants raise several evidentiary issues related to the issue of
what is a “reasonable charge” by a healthcare provider. Defendants contend that the trial court
erred by not permitting discovery of what plaintiff actually receives in payment from various
sources for particular services in contrast to what plaintiff actually bills, arguing that the
information was relevant for purposes of determining what is a “reasonable charge.” Similarly,
defendants argue that the trial court erred by excluding evidence of what plaintiff actually is
paid, particularly the testimony of defendants’ expert witness on that issue. Defendants also
contend on appeal that they were entitled to summary disposition because plaintiff failed in its
burden to establish that its charges were reasonable, and had failed to provide requested
information related to plaintiff’s costs. Defendants further argue that the trial court erred in
instructing the jury regarding whether plaintiff’s charges were reasonable. Plaintiff contends that
defendants’ arguments are without merit and that the jury’s verdict should be affirmed.
The first of these consolidated cases was initiated on November 6, 2014, and the final
judgment was appealed to this Court on December 21, 2016. On May 25, 2017, the Michigan
Supreme Court issued its decision in Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500
Mich. 191; 895 NW2d 490 (2017). Before our Supreme Court’s decision in Covenant, this Court
had specifically held that the language of MCL 500.3112 permitted a healthcare provider who
had provided healthcare services to an insured to maintain a direct cause of action against an
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insurer to recover PIP benefits under the no-fault act. See Wyoming Chiropractic Health Clinic,
PC v Auto-Owners Ins Co, 308 Mich. App. 389, 401; 864 NW2d 598 (2014), overruled by
Covenant Med Ctr, Inc, 500 Mich. at 196. In Covenant, however, our Supreme Court held that
healthcare providers do not have an independent statutory cause of action against insurers for PIP
benefits to recoup the cost of healthcare services provided to insureds. The Court stated:
A thorough review of the statutory no-fault scheme reveals no support for
an independent action by a healthcare provider against a no-fault insurer. In
arguing that healthcare providers may directly sue no-fault insurers, plaintiff
primarily relies on MCL 500.3112, which provides, in pertinent part, that
“[p]ersonal protection insurance benefits are payable to or for the benefit of an
injured person or, in case of his death, to or for the benefit of his dependents.”
While this provision 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.
[Covenant, 500 Mich. at 195-196.]
Our Court has since held that Covenant applies retroactively to cases pending before this
Court on appeal when Covenant was decided, applying our Supreme Court’s reasoning in
Spectrum Health Hosps v Farm Bureau Mut Ins Co of Mich, 492 Mich. 503; 821 NW2d 117
(2012), that judicial decisions regarding statutory interpretation apply retroactively to all cases
pending on direct review when the rule is announced. W A Foote Mem Hosp v Mich Assigned
Claims Plan, 321 Mich. App. 159, 196; ___ NW2d ___ (2017). Although this Court in W A Foote
Mem Hosp did not specifically address whether Covenant applies to pending cases in which the
issue of provider standing has not been raised, we note that, in general, the decisions of our
Supreme Court are given full retroactive effect. Bezeau v Palace Sports & Entertainment, Inc,
487 Mich. 455, 462; 795 NW2d 797 (2010) (opinion by Weaver, J.). Exceptions exist when
injustice would result from full retroactivity. Id.
We remand this case for further proceedings consistent with this opinion, but without
prejudice to plaintiff’s ability to establish an alternative basis for standing to bring these claims.
We do not retain jurisdiction.
/s/ Michael F. Gadola
/s/ Kirsten Frank Kelly
/s/ Michael J. Riordan
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