Estate of Mildred Lyle v. Farm Bureau General Insurance Company

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
ESTATE OF MILDRED LYLE, by CHERI LYLE UNPUBLISHED
HUDNUT, Personal Representative, September 19, 2019
Plaintiff-Appellant,
and No. 343358
Wayne Circuit Court
MICHIGAN HEAD & SPINE INSTITUTE, PC, LC No. 17-017579-NI
and VHS OF MICHIGAN, INC.,
Intervening Plaintiffs-Appellees,
v
FARM BUREAU GENERAL INSURANCE
COMPANY OF MICHIGAN, PROGRESSIVE
MICHIGAN INSURANCE COMPANY, WILLIE
FRANK WILLIAMS, and MOTOR CITY
TOWING SERVICE, INC.,
Defendants-Appellees.
Before: SHAPIRO, P.J., and GLEICHER and SWARTZLE, JJ.
PER CURIAM.
A tow truck struck Mildred Lyle as she attempted to walk across a Detroit intersection.
Lyle suffered devastating injuries and died eight months after the accident. Her personal
representative, plaintiff Cheri Lyle Hudnut, brings this lawsuit. The complaint combines a tort
action against defendant Willie Frank Williams, the truck’s driver, and defendant Motor City
Towing Service, the truck’s owner, with a claim for personal injury protection (PIP) benefits.
Hudnut asserts that either of two insurance companies (defendants Progressive Michigan
Insurance Company or Farm Bureau General Insurance Company of Michigan) are responsible
for payment of Lyle’s first-party no-fault benefits.
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Michigan Head and Spine Institute, P.C., and VHS of Michigan, Inc., filed a joint motion
to intervene in the suit, alleging that they are owed more than $450,000 for medical services
provided to Lyle. Plaintiff contended that the medical providers lack “standing” to sue
independently under the no-fault act and therefore have no ability to intervene in a no-fault case.
The trial court permitted intervention. We granted plaintiff leave to appeal, and now affirm.
I. FACTS AND PROCEEDINGS
Before her death, Lyle made a claim for first-party no-fault benefits through the Michigan
Assigned Claims Plan (MACP). The MACP allocated liability to Farm Bureau. The medical
providers filed an action against the MACP in the Oakland Circuit Court. That case was in its
infancy when the Supreme Court decided Covenant Med Ctr Inc v State Farm Mut Auto Ins, Co,
500 Mich 191; 895 NW2d 490 (2017). As discussed in greater detail below, Covenant holds
that the no-fault act, MCL 500.3101 et seq., does not afford healthcare providers a statutory
cause of action against no-fault insurers. Id. at 217 After Covenant was released, the parties
stipulated to a dismissal of the Oakland County case without prejudice.
Lyle died in August 2017, and Hudnut initiated a probate proceeding in the Wayne
Circuit Court. Because Lyle had not executed an assignment of her right to benefits in favor of
her healthcare providers before her death, the providers filed an “emergency petition for
assignment of the estate’s right to collect no-fault benefits” in the probate action. The probate
court denied the petition. Meanwhile, defendant Progressive, which insured Williams and Motor
City Towing, filed a declaratory suit seeking a judgment that it was not obligated to pay no-fault
benefits arising from the accident.
Lyle’s estate commenced this action in December 2017. Her complaint seeks payment of
first-party no-fault benefits for “reasonable and necessary expenses” related to Lyle’s care,
recovery and rehabilitation, and any other personal protection benefits that may be owed. The
complaint also states a negligence claim for wrongful death against Williams and Motor City
Towing. One week after this case was filed, the medical providers moved to intervene, invoking
MCR 2.209(A) (intervention as of right) and MCR 2.209(B) (permissive intervention). The
providers also filed a proof of claim in the probate case.
The medical providers’ intervention complaint asserts that their charges for Lyle’s care
were reasonable and necessary, and that whichever insurance company was responsible for
defendants’ coverage was obligated to pay them. The providers’ complaint requested the
following relevant relief:
a. That this Court adjudicate Defendants’ liability for services MHSI and
DMC provided LYLE;
b. That this Court grant judgment against Defendants in an amount equal
to the charge for services, together with costs, interest, and attorney’s
fees;
c. That, in accordance with MCR 2.605, this Court determine the total
amount of liability due and payable to MHSI and DMC by
Defendants[.]
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Hudnut argued in the trial court that because the medical providers lack “standing” to sue
under Covenant, they are precluded from intervening in this case. And if allowed to intervene,
Hudnut asserted, the providers would bypass any order of priority established in the probate
court. The providers acknowledged that they could not pursue a direct action against the insurers
but insisted that they qualified for intervention under both MCR 2.209(A) and (B). Hudnut
responded that allowing intervention would circumvent Covenant entirely, opening a backdoor
for otherwise forbidden claims. The court granted the motion for intervention without
identifying the applicable subsection of MCR 2.209. We granted plaintiffs’ application for leave
to appeal this decision. Estate of Mildred Lyle v Farm Bureau Gen Ins Co, unpublished order of
the Court of Appeals, entered September 20, 2018 (Docket No. 343358).
II. COVENANT
Because Covenant is at the center of the parties’ dispute, we begin with that case.
Covenant, 500 Mich at 200, overturned “decades of Court of Appeals caselaw concluding that a
healthcare provider may assert a direct cause of action against a no-fault insurer to recover no-
fault benefits.” In none of the Court of Appeals’ opinions had the judges engaged in an analysis
of whether a statutory cause of action existed. Id. at 202-203. Guided by the text, the Supreme
Court determined that “the no-fault act does not, in any provision, explicitly confer on healthcare
providers a direct cause of action against insurers.” Id. at 204-205. Although the act provides
that an insurer is liable to pay “certain listed costs” including medical expenses, the provisions
setting forth this responsibility “do nothing more than define the scope and nature of the requisite
coverage. They do not identify to whom the insurer is liable or who has the right to assert a
claim for benefits.” Id. at 206-207.
In reaching this conclusion, the Supreme Court considered various individual sections of
the act and determined that none of them specifically authorized healthcare providers to sue
insurers for reimbursement. Id. at 207. The Court paid particular attention to the text of MCL
500.3107(1)(a), which “provides that benefits are ‘payable’ for ‘[a]llowable expenses consisting
of all reasonable charges incurred . . . .’ ” Covenant, 500 Mich at 207. “Incur” means “to
become liable or subject to, especially because of one’s own actions.’ ” Id. (cleaned up). 1 A
healthcare provider does not “incur” charges for its services, the Court reasoned, and is similarly
not “liable” for allowable expenses. “Rather, charges for healthcare are incurred by others, most
commonly patients, and those patients are the ones who become liable for payment of those
charges.” Id. Nor did the text of MCL 500.3112 support a direct cause of action, the Supreme
Court held. “Although this provision allows insurers to pay a provider of no-fault services
directly ‘for the benefit of’ the insured, it does not establish a concomitant claim enforceable by
an insured’s benefactors.” Covenant, 500 Mich at 213-214. The Court summarized:
1
This opinion uses the new parenthetical (cleaned up) to improve readability without altering the
substance of the quotation. The parenthetical indicates that nonsubstantive clutter such as
brackets, alterations, internal quotation marks, and unimportant citations have been omitted from
the quotation. See Metzler, Cleaning Up Quotations, 18 J App Pract & Process 143 (2017).
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[A] review of the plain language of the no-fault act reveals no support for
plaintiff’s argument that a healthcare provider possesses a statutory cause of
action against a no-fault insurer. This conclusion does not mean that a healthcare
provider is without recourse; a provider that furnishes healthcare services to a
person for injuries sustained in a motor vehicle accident may seek payment from
the injured person for the provider’s reasonable charges. However, a provider
simply has no statutory cause of action of its own to directly sue a no-fault
insurer. [Id. at 217-218 (emphasis added).]
The italicized text reinforces that although healthcare providers may not sue no-fault
insurers directly, the act permits them to sue patients covered by no-fault policies. In addition to
this legal avenue for payment, MCL 500.3112 “undoubtedly allows for the common practice of
no-fault insurers directly paying healthcare providers,” despite that the statutory text does not
require this procedure. Covenant, 500 Mich at 208-209. Thus, when it comes to the payment of
medical expenses, no-fault insurers may satisfy their obligations to insureds “by paying the
injured person directly or by paying a party providing PIP services on the injured person’s
behalf.” Id. at 209-210. The Supreme Court cautioned, however, that while “a third party may
receive payment directly from an insurer for PIP benefits,” no statutory “entitlement” exists. Id.
at 210 (emphasis in original).
Covenant extinguished a health care provider’s right to sue an insurer directly.2 But it
also highlighted that a provider has a legally legitimate interest in being paid for the medical
services it provides to an injured person.
III. INTERVENTION AND STANDING
MCR 2.209 provides interested parties two avenues for intervening in an ongoing action.
Potential intervenors may establish a right to intervene under MCR 2.209(A), or demonstrate
circumstances supporting a need to intervene under MCR 2.209(B). The court rule provides, in
relevant part:
(A) Intervention of Right. On timely application a person has a right to intervene
in an action:
(1) when a Michigan statute or court rule confers an unconditional right to
intervene;
(2) by stipulation of all the parties; or
2
The Legislature “overruled” Covenant by enacting 2019 PA 21, which the Governor signed on
May 30, 2019. Section 3112 now provides that “A health care provider . . . may make a claim,
and assert a direct cause of action against an insurer, or under the assigned claims plan . . .to
recover overdue benefits payable for charges for products, services, or accommodations provided
to an injured person.”
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(3) when the applicant claims an interest relating to the property or
transaction which is the subject of the action and is so situated that the disposition
of the action may as a practical matter impair or impede the applicant’s ability to
protect that interest, unless the applicant’s interest is adequately represented by
existing parties.
(B) Permissive Intervention. On timely application a person may intervene in an
action
(1) when a Michigan statute or court rule confers a conditional right to
intervene; or
(2) when an applicant’s claim or defense and the main action have a
question of law or fact in common.
In exercising its discretion, the court shall consider whether the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties.
We review a trial court’s decision to grant a motion to intervene for an abuse of
discretion, and consider de novo a trial court’s interpretation of a court rule. Hill v LF Transp,
Inc, 277 Mich App 500, 507; 746 NW2d 118 (2008). Statutory construction principles guide our
interpretation of court rules; we apply the rule’s plain and unambiguous language as written.
Spine Specialists of Mich, PC v State Farm Mut Auto Ins Co, 317 Mich App 497, 501; 894
NW2d 749 (2016). The court rule permitting intervention should be construed liberally “to
allow intervention where the applicant’s interests may be inadequately represented.” Neal v
Neal, 219 Mich App 490, 492; 557 NW2d 133 (1996).
The medical providers established both a right to intervene under MCR 2.209(A) and
grounds for permissive intervention under MCR 2.209(B). Before examining the language of the
court rule in greater detail, we consider Hudnut’s arguments that intervention is prohibited
because the medical providers lack “standing” and that their involvement would be “redundant,”
as plaintiff already shares the same recovery goals.
A. The Providers Have Standing
“The purpose of the standing doctrine is to assess whether a litigant’s interest in the issue
is sufficient to ensure sincere and vigorous advocacy.” Lansing Sch Ed Ass’n v Lansing Bd of
Ed, 487 Mich 349, 355; 792 NW2d 686 (2010) (cleaned up). The medical providers have such
an interest in this case. What the providers lack is a direct, statutory cause of action against an
insurer under the no-fault act. Despite that the medical providers have no statutory cause of
action against defendant insurance companies, they do have standing to seek a declaratory
judgment under MCR 2.605. And more importantly, the plain language of MCR 2.209 does not
support that the intervenors must possess a direct cause of action against the insurers to intervene
in this case.
When the Legislature expressly provides a cause of action, it confers standing to sue. But
even when no explicit statutory cause of action exists, our Supreme Court has recognized that a
litigant may have standing to litigate a claim. In Lansing Schools, 487 Mich at 359, the Supreme
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Court recounted that before Michigan’s time-honored approach to standing was altered by Lee v
Macomb Co Bd of Comm’rs, 464 Mich 726; 629 NW2d 900 (2001), and Nat’l Wildlife
Federation v Cleveland Cliffs Iron Co, 471 Mich 608; 684 NW2d 800 (2004),
where a cause of action was not provided at law, the Court, in its discretion,
would consider whether a litigant had standing based on a special injury or right
or substantial interest that would be detrimentally affected in a manner different
from the citizenry at large, or because, in the context of a statutory scheme, the
Legislature had intended to confer standing on the litigant.
For example, standing could be “implied by the duties and obligations . . . expressly stated” in an
enactment. Romulus City Treasurer v Wayne Co Drain Comm’r, 413 Mich 728, 741; 322 NW2d
152 (1982) (emphasis added).
Lee and Cleveland Cliffs erroneously “constitutionalized” standing, the Supreme Court
held, as unlike the federal Constitution, Michigan’s Constitution has no “case or controversy”
requirement. Lansing Schools, 487 Mich at 366. In overruling those cases, the Supreme Court
reinvigorated the standing doctrine in existence before they were decided, reciting the principles
guiding standing as follows:
Where a cause of action is not provided at law, then a court should, in its
discretion, determine whether a litigant has standing. A litigant may have
standing in this context if the litigant has a special injury or right, or substantial
interest, that will be detrimentally affected in a manner different from the
citizenry at large or if the statutory scheme implies that the Legislature intended
to confer standing on the litigant. [Id. at 372.]
The Supreme Court determined that the plaintiffs in Lansing Schools had standing despite
that the relevant statute did not grant them an independent right of action: “We hold that, in this
case, plaintiffs have standing because they have a substantial interest in the enforcement of MCL
380.1311a(1) that will be detrimentally affected in a manner different from the citizenry at large
if the statute is not enforced.” Lansing Schools, 487 Mich at 373. The Supreme Court forcefully
rebuffed the notion that a statutory cause of action (or any formal cause of action) is required to
establish a justiciable claim. We repeat the Supreme Court’s words: “Where a cause of action is
not provided at law,” a litigant may nonetheless have standing “based on a special injury or right
or substantial interest that would be detrimentally affected in a manner different from the
citizenry at large[.]” Id. at 372 (emphasis added).
Here, the medical providers have standing because they possess a substantial interest in
the application of MCL 500.3107(1)(a) and MCL 500.3112 that would be “detrimentally affected
in a manner different from the citizenry at large” if those statutes are not enforced.
Fundamentally, standing to sue under Michigan law is a “prudential” doctrine, and not a bright-
line test. In other words, despite that a party may not have a direct, statutory cause of action, the
party may nonetheless have standing. To reinforce this point, we borrow from the reasoning of
the United States Supreme Court.
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In Lexmark Int’l, Inc v Static Control Components, Inc, 572 US 118, 128; 134 S Ct 1377;
188 L Ed 2d 392 (2014), the Supreme Court considered whether Static Control Components
could sue Lexmark International, Inc., for false advertising under the Lanham Act, 15 USC
1125(a): “[T]he question this case presents is whether Static Control falls within the class of
plaintiffs whom Congress has authorized to sue under § 1125(a). In other words, we ask whether
Static Control has a cause of action under the statute.” In a footnote, the Supreme Court
explained that “[w]e have on occasion referred to this inquiry as ‘statutory standing’ and treated
it as effectively jurisdictional.” Id. at 128 n 4. This nomenclature is “misleading,” the Court
stressed, as “the absence of a valid (as opposed to arguable) cause of action does not implicate
subject-matter jurisdiction, i.e., the court’s statutory or constitutional power to adjudicate the
case.” Id. (cleaned up, emphasis in original). See also American Psychiatric Ass’n v Anthem
Health Plans, Inc, 821 F3d 352, 359 (CA 2, 2016) (cleaned up) (“Finally, a plaintiff must have a
cause of action under the applicable statute. This was formerly called ‘statutory standing.’ In
the past, we suggested that this was either a separate aspect of standing or a part of the prudential
aspect of standing. The Supreme Court has recently clarified, however, that what has been called
‘statutory standing’ in fact is not a standing issue, but simply a question of whether the particular
plaintiff has a cause of action under the statute.”).
In other words, the absence of a statutory cause of action relates to the merits of a
plaintiff’s claim rather than the jurisdiction of the court entertaining it. And this Court has
recognized that “[s]tanding in no way depends on the merits of the case.” Rogan v Morton, 167
Mich App 483, 486; 423 NW2d 237 (1988). The Supreme Court’s opinion in Lash v Traverse
City, 479 Mich 180; 735 NW2d 628 (2007), also illustrates this distinction. The plaintiff in Lash
sought employment with the Traverse City Police Department. Id. at 183-184. The department
required police officers to reside inside the city or within a certain distance from the city limits.
Id. at 184. Plaintiff resided slightly beyond the required limit but was otherwise qualified for
employment. Id. He refused to move, the police department rescinded its offer of employment,
and the plaintiff sued the city for damages, invoking MCL 15.602. Lash, 479 Mich at 184-185.
The Supreme Court held that the residency requirement violated MCL 15.602(2), but also
determined that the statute did not afford the plaintiff a private cause of action for damages.
Lash, 479 Mich at 183. Nevertheless, the Court explained, the plaintiff could have sued for
injunctive or declaratory relief. Id. at 196. Thus, despite that the plaintiff lacked statutory
“standing” to sue for damages, the Supreme Court construed the statute to permit a cause of
action if there were otherwise an actual controversy or particularized showing of harm. Had the
Court been divested of jurisdiction due to the plaintiff’s inability to bring a damages claim, the
Supreme Court would have refrained from issuing an otherwise advisory opinion addressing the
statute’s reach. And more recently, the Supreme Court observed, “Even though a statutory
private cause of action for monetary damages does not exist, a plaintiff may nonetheless
maintain a cause of action for declaratory and equitable relief.” Mich Ass’n of Home Builders v
City of Troy, __ Mich __; __ NW2d __ (Docket No. 156737, July 11, 2019), slip op at 19.
Hudnut’s argument that the medical providers lack “standing” to intervene in this case is
without merit. A trial court has jurisdiction to determine whether a potential intervenor may join
an action even though the intervenor lacks a direct cause of action for damages. If a proposed
intervenor has some stake in the outcome of an action, it is entitled to press its case for
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intervention. The language of the court rule additionally confirms that a statutory cause of action
is not a prerequisite for intervention.
B. Intervention is Justified Under MCR 2.209
While “standing” requires a substantial interest in an issue, intervention requires less.
Intervention is a pragmatic procedural device designed to permit those with some interest in the
litigation to participate in its outcome under certain circumstances. A party may intervene in an
action as of right if “a Michigan statute or court rule confers an unconditional right to intervene,”
all parties to the case stipulate to intervention, or “when the applicant claims an interest relating
to the property or transaction which is the subject of the action and is so situated that the
disposition of the action may as a practical matter impair or impede the applicant’s ability to
protect that interest, unless the applicant’s interest is adequately represented by existing parties.”
MCR 2.209(A).3 Here, the medical providers assert an interest in the proceeds of plaintiff’s tort
and first-party claims, and contend that these actions involve damages that include Lyle’s
medical bills. The providers point out that they unsuccessfully sought an assignment from
Lyle’s personal representative, which would have signaled plaintiff’s willingness to voluntarily
reimburse the providers for Lyle’s medical expenses. They contend that the personal
representative’s refusal to assign Lyle’s rights supports that the provider’s ability to protect their
interest in any damages awarded to Lyle’s estate could be impaired if Hudnut’s counsel settled
for a small amount, dismissed the first-party claim with prejudice, or failed to present the
medical expense claim to the jury in its entirety.
We agree that the providers have established an interest in the disposition of the action
that may not be adequately represented by the existing parties. “[T]he concern of inadequate
representation of interests need only exist; inadequacy of representation need not be definitely
established. Where this concern exists, the rules of intervention should be construed liberally in
favor of intervention.” Vestevich v West Bloomfield Twp, 245 Mich App 759, 762; 630 NW2d
646 (2001). We highlight that under Covenant, the providers are not empowered to pursue a
direct claim against defendants for damages. Intervention is not an invitation for an end-run
around Covenant; intervention is not a license to seek a judgment against the insurance
companies. The providers are, however, free to seek a declaratory judgment regarding their right
to payment, and to otherwise participate in the proceedings. Alternatively, the providers may
seek to amend their complaint for intervention to lodge a cross-complaint against Hudnut.
The medical providers also satisfy the grounds for permissive intervention under MCR
2.209(B)(2), as their claim and that of plaintiff share common questions of fact and law. Those
questions include whether the proposed intervenors’ charges were reasonable and the services
necessary, and the amount of money potentially owed by Lyle’s estate to pay the providers for
the services they rendered. These commonalities suffice to establish permissive intervention
3
This rule supplies two grounds for intervention in addition to the existence of “a Michigan
statute or court rule” conferring “an unconditional right to intervene.” The existence of these
additional pathways signals that an intervenor need not possess “statutory standing” to enter an
on-going lawsuit.
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under MCR 2.209(B). We reiterate that the medical providers’ intervention does not entitle them
to pursue a direct claim for damages against defendants. But at the least, they may seek a
declaration clarifying their right to payment in a specific amount. Accordingly, the trial court
did not abuse its discretion in granting the medical providers’ motion for intervention.
We affirm.
/s/ Douglas B. Shapiro
/s/ Elizabeth L. Gleicher
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