Lena Brown v. Anthony Ayers ( 2024 )

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
LENA BROWN, UNPUBLISHED
February 22, 2024
Plaintiff-Appellant,
v No. 363949
Wayne Circuit Court
ANTHONY AYERS and LEGACY MEDICAL LC No. 18-013956-NI
TRANSPORTATION LLC,
Defendants,
and
CITIZENS INSURANCE COMPANY OF THE
MIDWEST,
Defendant/Cross-Plaintiff,
and
BERKSHIRE HATHAWAY HOMESTATE
INSURANCE COMPANY,
Defendant/Cross-Defendant-Appellee.
Before: GADOLA, C.J., and BORRELLO and BOONSTRA, JJ.
PER CURIAM.
In this action involving the no-fault act, MCL 500.3101 et seq., plaintiff challenges the trial
court’s order denying her motion for declaratory relief. For the reasons set forth in this opinion,
we affirm.
I. BACKGROUND
This is not the first time this case has been before this Court. See Brown v Ayers,
unpublished per curiam opinion of the Court of Appeals, issued December 21, 2021 (Docket No.
354730). The factual circumstances of the underlying motor vehicle accident are not in dispute
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for purposes of the instant appeal, and the circumstances of the accident were succinctly stated by
this Court in the previous appeal as follows:
On January 8, 2018, plaintiff was walking on a crosswalk, when she was
struck by a vehicle owned by defendant, Legacy Medical Transportation, LLC,
(Legacy), and driven by defendant, Anthony Ayers (Ayers). Plaintiff did not
identify any insurer for the vehicle that hit her. Therefore, on March 16, 2018, she
applied for personal protection insurance (PIP) benefits with the Michigan
Assigned Claims Plan (MACP). MACP assigned the claim to [defendant/cross-
plaintiff Citizens Insurance Company of the Midwest (Citizens)] and Citizens
initially paid over $140,000 in benefits. [Brown, unpub op at 2.]1
On October 26, 2018, plaintiff filed suit against Ayers, Legacy, and Citizens. She alleged
negligence-related claims against Ayers and Legacy, and plaintiff sought first-party no-fault
benefits from Citizens. It was subsequently discovered that Ayers and Legacy actually had no-
fault insurance coverage provided by defendant/cross-defendant Berkshire Hathaway Homestate
Insurance Company (Berkshire). Berkshire was added to this action by way of a first amended
complaint filed by plaintiff on May 7, 2019, and a cross-claim filed by Citizens.
Citizens subsequently moved for summary disposition on its cross-claim against Berkshire,
arguing that the undisputed evidence showed that Berkshire was the insurer of Legacy, which was
the owner and registrant of the van that allegedly struck plaintiff, and that Berkshire was therefore
highest in priority under MCL 500.3115(1)(a) for payment of plaintiff’s PIP benefits. The trial
court granted Citizens’ motion, determined that Berkshire was the higher insurer in the order of
priority, and dismissed Citizens with prejudice. This Court affirmed this order on plaintiff’s
interlocutory appeal. Brown, unpub op at 2-3, 6.
Berkshire also filed a motion for partial summary disposition, arguing that it was not liable
for any benefits incurred before May 6, 2018, pursuant to the one-year-back rule in MCL 500.3145.
The trial court granted this motion, barring plaintiff’s claims against Berkshire for no-fault benefits
incurred before May 6, 2018.
During the course of the proceedings below, an issue arose regarding liability for medical
expenses related to the accident that were initially paid by plaintiff’s Employee Retirement Income
Security Act, 29 USC 1001 et seq., (ERISA) health benefits plan. It is the parties’ dispute over
this issue that forms the central basis for the instant appeal. Plaintiff submitted evidence that her
ERISA plan, which was administered by UnitedHealthcare, had paid approximately $165,000 in
medical bills for treatment she received for her injuries from the accident between January 8, 2018,
and approximately May 6, 2018. There was also evidence that the ERISA plan held a lien for
reimbursement of that amount based on a coordination-of-benefits provision in the plan, which
provided in relevant part as follows:
1
Plaintiff did not have no-fault insurance of her own or through a household member. Brown,
unpub op at 3.
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The Plan has a right to subrogation and reimbursement.
Subrogation applies when the plan has paid Benefits on your behalf for a Sickness
or Injury for which a third party is alleged to be responsible. The right to
subrogation means that the Plan is substituted to and shall succeed to any and all
legal claims that you may be entitled to pursue against any third party for the
Benefits that the Plan has paid that are related to the Sickness or Injury for which a
third party is alleged to be responsible.
* * *
The right to reimbursement means that if a third party causes or is alleged to have
caused a Sickness or Injury for which you receive a settlement, judgment, or other
recovery from any third party, you must use those proceeds to fully return to the
Plan 100% of any Benefits you received for that Sickness or Injury.
* * *
• The Plan has a first priority right to receive payment on any claim against a third
party before you receive payment from that third party. Further, the Plan’s first
priority right to payment is superior to any and all claims, debts or liens asserted by
any medical providers, including but not limited to Hospitals or emergency
treatment facilities, that assert a right to payment from funds payable from or
recovered from an allegedly responsible third party and/ or insurance carrier.
• The Plan’s subrogation and reimbursement rights apply to full and partial
settlements, judgments, or other recoveries paid or payable to you or your
representative, no matter how those proceeds are captioned or characterized.
Payments include, but are not limited to, economic, non-economic, and punitive
damages. The Plan is not required to help you to pursue your claim for damages or
personal injuries and no amount of associated costs, including attorneys’ fees, shall
be deducted from the Plan’s recovery without the Plan’s express written consent.
No so-called “Fund Doctrine” or “Common Fund Doctrine” or “Attorney’s Fund
Doctrine” shall defeat this right.
• Regardless of whether you have been fully compensated or made whole, the Plan
may collect from you the proceeds of any full or partial recovery that you or your
legal representative obtain, whether in the form of a settlement (either before or
after any determination of liability) or judgment, no matter how those proceeds are
captioned or characterized. Proceeds from which the Plan may collect include, but
are not limited to, economic, non-economic, and punitive damages. No “collateral
source” rule, any “Made-Whole Doctrine” or “Make-Whole Doctrine,” claim of
unjust enrichment, nor any other equitable limitation shall limit the Plan’s
subrogation and reimbursement rights.
After this Court issued its opinion resolving the previous interlocutory appeal, plaintiff
filed a motion for declaratory relief in the trial court, in which she advanced a new theory for
determining that Berkshire was obligated to reimburse plaintiff, as a PIP benefit, for the amount
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represented by UnitedHealthcare’s lien and any other amounts she might be required to reimburse
her ERISA plan,2 for charges related to the January 8, 2018 accident. Plaintiff now argued that
this expense was not “incurred” any earlier than September 17, 2018, when UnitedHealthcare
asserted its right to reimbursement under the ERISA plan.3 According to plaintiff, she did not
incur this expense before September 17, 2018, because she did not have a legal obligation to pay
the charge until UnitedHealthcare made its demand asserting its right to reimbursement. Plaintiff
had apparently settled her claims against defendants Ayers and Legacy, and she also settled with
UnitedHealthcare for $110,280.06. She apparently paid this settlement from funds recovered in
her settlement with Ayers and Legacy.
In her motion, plaintiff sought a declaration that Berkshire was obligated to reimburse this
amount to plaintiff as a PIP benefit, as well as any other amounts she might be required to
reimburse her ERISA plan for charges related to the January 8, 2018 accident. Although plaintiff
did not directly challenge the trial court’s order limiting Berkshire’s liability to expenses incurred
after May 6, 2018, plaintiff argued that this ruling did not preclude plaintiff from obtaining
reimbursement for the amount represented by UnitedHealthcare’s lien since that expense was
“incurred” after May 6, 2018.
In response, Berkshire maintained that the expenses for which UnitedHealthcare was
reimbursed by plaintiff represented expenses for treatment plaintiff received before May 7, 2018,
and that plaintiff was therefore barred from obtaining reimbursement from Berkshire for those
expenses. Berkshire argued that these expenses were incurred on the dates plaintiff received the
services and not on the date when plaintiff received notice of UnitedHealthcare’s lien.
The trial court ruled that the expenses were incurred at the time plaintiff received medical
treatment and denied plaintiff’s motion in an August 12, 2022 order. On November 11, 2022, the
trial court entered a stipulated order stating that plaintiff’s complaint against Berkshire “is
Dismissed with Prejudice consistent with the terms of the release and without costs to any party.”
The order further stated, “nothing in this Order shall preclude Plaintiff from appealing the Court’s
Order of August 12, 2022, only.” (Order, 11/11/2022, LCF.)
This appeal followed.
II. STANDARD OF REVIEW
The trial court stated that it was treating plaintiff’s motion as one for declaratory relief or
summary disposition. The decision to grant declaratory relief is within the sound discretion of the
trial court. PT Today, Inc v Comm’r of Office of Fin & Ins Servs, 270 Mich App 110, 126; 715
NW2d 398 (2006). A trial court’s summary disposition ruling, as well as matters of statutory
2
We refer to the ERISA plan and UnitedHealthcare interchangeably for purposes of the
reimbursement lien, following what appears to be the convention followed by the parties in this
case.
3
Plaintiff attached this letter to her motion.
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interpretation and other issues of law, are reviewed de novo. Id. at 125-126; Proudfoot v State
Farm Mut Ins Co, 469 Mich 476, 482; 673 NW2d 739 (2003).
III. ANALYSIS
As an initial matter, we first must address Berkshire’s argument that this Court does not
have jurisdiction over this appeal. Berkshire argues that the November 11, 2022 order from which
plaintiff appeals was not a final order because no order has been entered by the trial court formally
dismissing Citizens’ cross-claim against Berkshire and the November 11, 2022 order therefore did
not “dispose[] of all the claims and adjudicate[] the rights and liabilities of all the parties.” MCR
7.202(6)(a)(i). Berkshire neglects the fact that the trial court entered an order on March 5, 2020,
that granted Citizens’ motion for summary disposition on its cross-claim against Berkshire. This
ruling has already been affirmed on appeal by this Court. The trial court was not incorrect to
characterize its November 11, 2022 order as a final order that disposed of all the remaining claims
and adjudicated the rights and liabilities of all the parties. MCR 7.202(6)(a)(i). This Court has
jurisdiction over this appeal by right. MCR 7.203(A)(1). Moreover, even if the November 1, 2022
order is not properly considered a final order, we would treat the claim of appeal as an application
for leave to appeal and grant it. See In re Beatrice Rottenberg Living Trust, 300 Mich App 339,
354; 833 NW2d 384 (2013).
Turning to the substantive issues presented on appeal, plaintiff argues that the trial court
erred by determining that the full $110,280.06 that plaintiff was required to reimburse
UnitedHealthcare for expenses related to the January 8, 2018 accident could not be recovered from
Berkshire, based on the trial court’s earlier ruling regarding the application of the one-year-back
rule, because the expenses included in the $110,280.06 repayment were “incurred” when plaintiff
received the respective services. Plaintiff contends that the trial court should have instead ruled
that the total amount was “incurred” on September 17, 2018, when UnitedHealthcare formally
asserted its rights to reimbursement for those expenses pursuant to the ERISA plan.
Under § 3107(1)(a) of the no-fault act, as it existed at the time of the subject accident in
this case, PIP benefits may be recovered for “[a]llowable expenses consisting of all reasonable
charges incurred for reasonably necessary products, services and accommodations for an injured
person’s care, recovery, or rehabilitation.” MCL 500.3107(1)(a), as amended by 2012 PA 542.4
As was established in this litigation, Berkshire was the highest no-fault insurer in the order of
priority under the former version of MCL 500.3115(1), which provided that “a person suffering
accidental bodily injury while not an occupant of a motor vehicle shall claim personal protection
insurance benefits from . . . (a) Insurers of owners or registrants of motor vehicles involved in the
4
The subject accident in this case occurred on January 8, 2018. Significant amendments were
made to the no-fault act that became effective in 2019. See generally 2019 PA 21. Whether these
amendments are retroactive is not at issue in this appeal. “Statutes and amendments to statutes are
presumed to operate prospectively.” Spine Specialists of Mich, PC v MemberSelect Ins Co, ___
Mich App ___, ___; ___ NW2d ___ (2022) (Docket No. 358296); slip op at 3 (quotation marks
and citation omitted). Unless otherwise noted, we will refer to the pre-amendment versions of the
applicable statutes in the no-fault act.
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accident[, or] (b) Insurers of operators of motor vehicles involved in the accident.”5 Plaintiff does
not challenge this ruling here.
Additionally, pursuant to the one-year-back rule in MCL 500.3145(1), the trial court
previously ruled that based on the date on which plaintiff added Berkshire to her amended
complaint in this case, plaintiff could not recover any PIP benefits from Berkshire for expenses
incurred before May 6, 2018. Under former MCL 500.3145(1), a claimant could not “recover
benefits for any portion of the loss incurred more than 1 year before the date on which the action
was commenced.”6 (Emphasis added.) Plaintiff also does not challenge on appeal the trial court’s
ruling regarding the general application of the one-year-back rule to her claims against Berkshire
based on the date that Berkshire was added to this litigation.
Instead, plaintiff argues that the trial court erred by concluding that the amount represented
by UnitedHealthcare’s lien (and that plaintiff was required to reimburse UnitedHealthcare under
the ERISA plan) was “incurred” at the time the services were provided, which had the effect of
preventing plaintiff for recovering from Berkshire any amounts that were paid by
UnitedHealthcare for services that were provided before May 6, 2018. Plaintiff contends that the
amount of the lien was actually incurred by her as an expense no earlier than September 17, 2018,
when UnitedHealthcare asserted its right to reimbursement. Hence, the issue becomes when these
expenses were incurred.
“Personal protection insurance benefits payable for accidental bodily injury accrue not
when the injury occurs but as the allowable expense, work loss or survivors’ loss is incurred.”
MCL 500.3110(4) (emphasis added). In Shanafelt v Allstate Ins Co, 217 Mich App 625, 638; 552
NW2d 671 (1996), after observing that the no-fault act does not define the term “incurred,” this
Court consulted a dictionary and determined that the “primary definition of the word ‘incur’ is ‘to
become liable for.’ ” (Citation omitted.) In a subsequent case, this Court further refined this
definition by noting that “liable” means “[r]esponsible or answerable in law; legally obligated.”
Bombalski v Auto Club Ins Ass’n, 247 Mich App 536, 543; 637 NW2d 251 (2001) (quotation
marks and citation omitted; alteration in original). Our Supreme Court, also relying on a
dictionary, defined “incur” for purposes of the no-fault act to mean “[t]o become liable or subject
to, [especially] because of one’s own actions.” Proudfoot, 469 Mich at 484 (quotation marks and
citation omitted; alterations in original).
This Court expressly stated in Shanafelt that for purposes of the no-fault act, the injured
person “became liable for her medical expenses when she accepted medical treatment.” Shanafelt,
217 Mich App at 638. Hence, plaintiff alleges, she was not legally obligated for these costs until
5
As this Court has explained with respect to the former version of MCL 500.3115(1), “[p]ursuant
to MCL 500.3115(1)(a), a pedestrian who is not covered under his own insurance policy or a policy
issued to a spouse or relative must first seek personal protection insurance benefits from the
‘[i]nsurers of owners or registrants of motor vehicles involved in the accident.’ ” Pioneer State
Mut Ins Co v Titan Ins Co, 252 Mich App 330, 335-336; 652 NW2d 469 (2002) (second alteration
in original).
6
This rule is now contained in MCL 500.3145(2), as amended by 2019 PA 21.
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UnitedHealthcare demanded reimbursement from her. However, this Court in Shanafelt rejected
the same argument under almost identical circumstances:
Obviously, plaintiff became liable for her medical expenses when she accepted
medical treatment. The fact that plaintiff had contracted with a health insurance
company to compensate her for her medical expenses, or to pay directly the health
care provider on her behalf, does not alter the fact that she was obligated to pay
those expenses. Therefore, one may not reasonably maintain that plaintiff did not
incur expenses. [Id.]
Accordingly, under Shanafelt, plaintiff incurred the expenses for which she sought no-fault
benefits from Berkshire on the dates she received medical treatment, notwithstanding the fact that
UnitedHealthcare initially paid those bills. Id. Plaintiff is barred, pursuant to the one-year-back
rule in former MCL 500.3145(1) and the trial court’s previous ruling on this issue, from recovering
PIP benefits from Berkshire for expenses incurred prior to May 6, 2018. Therefore, plaintiff is
barred from recovering the amount at issue that plaintiff reimbursed UnitedHealthcare to the extent
that amount represented charges for medical treatment that occurred before May 6, 2018, because
those expenses were “incurred” at the time of treatment for purposes of the no-fault act. Shanafelt,
217 Mich App at 638.
Plaintiff’s reliance on our Supreme Court’s decision in Proudfoot to support a contrary
conclusion is misplaced. In Proudfoot, the plaintiff’s injuries from a motor vehicle accident
resulted in the amputation of one of the plaintiff’s legs and the need for the use of a wheelchair.
Proudfoot, 469 Mich at 478. Following the recommendations of an occupational therapy report,
the plaintiff consulted an architect to prepare plans and provide a cost estimate for significant home
modifications. Id. Plaintiff sought no-fault benefits from the defendant insurer for the estimated
cost of the home modifications. Id. at 477-478. Our Supreme Court held that the defendant no-
fault insurer could not be ordered to pay these future home modification costs “[b]ecause the
expenses in question were not yet ‘incurred.’ ” Id. at 484. The Court reasoned:
A trial court may enter “a declaratory judgment determining that an expense is both
necessary and allowable and the amount that will be allowed[, but s]uch a
declaration does not oblige a no-fault insurer to pay for an expense until it is
actually incurred.” At the time of the judgment, plaintiff had not yet taken action
to become liable for the costs of the proposed home modifications. [Id. (citation
omitted; alteration in original).]
In Proudfoot, the plaintiff had not yet become liable for the costs of the proposed home
modifications because she had not yet paid for the work to be performed, entered into a contract
to have the work performed, or otherwise acted to actually incur the expense. In contrast, plaintiff
in this case undisputedly received medical treatment for which she was charged. Hence, the
question in instant case is not whether the expenses were incurred;7 the issue presented is merely
7
Clearly, the expenses were incurred in this case.
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one of timing and determining when the expenses were incurred. Our Supreme Court’s decision
in Proudfoot therefore does not change our analysis.
Plaintiff also relies on Palmquist v State Farm Mut Auto Ins Co, unpublished opinion and
order of the United States District Court for the Western District of Michigan, issued November
5, 2015 (No. 2:15-CV-33); 2015 WL 12591759. “Although lower federal court decisions may be
persuasive, they are not binding on state courts.” Abela v Gen Motors Corp, 469 Mich 603, 607;
677 NW2d 325 (2004), cert den 543 US 870 (2004).
We do not find Palmquist persuasive. The district court in Palmquist concluded that the
plaintiff did not “incur” his medical expenses at the time of treatment because the plaintiff’s
ERISA plan paid those medical bills and, further, that the plaintiff “incurred” the expense when
the ERISA plan sent a letter demanding reimbursement for the medical expenses. Obviously, that
conclusion, had it been adequately supported by relevant legal authority, would help plaintiff’s
argument in this case.
However, the district court’s conclusion is directly contrary to this Court’s holding in
Shanafelt that for purposes of the no-fault act, an injured party becomes liable for medical expenses
at the time medical treatment is provided and that the injured person’s obligation to pay those
medical expenses is not altered by the fact that the person “had contracted with a health insurance
company to compensate her for her medical expenses, or to pay directly the health care provider
on her behalf.” Shanafelt, 217 Mich App at 638. The district court in Palmquist did not cite or
discuss this rule from Shanafelt (or any other case applying this same rule), nor did the court cite
any authority supporting its apparent conclusion that an injured person somehow does not “incur,”
or become liable for, the medical expenses at the time of treatment if those bills are paid by an
ERISA plan rather than a “traditional” health insurer. Hence, the district court’s lack of legal
analysis and citations to its analysis coupled with its conclusory reasoning are unpersuasive
regarding the time at which medical expenses are “incurred” for purposes of the no-fault act when
an injured party’s medical expenses are initially paid by an ERISA plan. We therefore refuse to
follow Palmquist.
Based on our conclusion regarding the time at which these expenses were incurred, and the
dispositive effect of that conclusion under the circumstances as they have been presented to us in
this appeal, there is no need for further discussion of the numerous legal complexities surrounding
ERISA plans in this context. See generally Auto Club Ins Ass’n v Frederick & Herrud, Inc, 443
Mich 358; 505 NW2d 820 (1993).
Affirmed. Defendant having prevailed is entitled to costs. MCR 7.219(A).
/s/ Michael F. Gadola
/s/ Stephen L. Borrello
/s/ Mark T. Boonstra
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