DocketNumber： Docket Nos. 300566 and 300567
Citation Numbers： 295 Mich. App. 431
Judges： Beckering, Hoekstra, Kelly
Filed Date： 2/16/2012
Status： Precedential
Modified Date： 9/9/2022
Defendants, Home-Owners Insurance Company and Auto-Owners Insurance Company, appeal as of right a trial court order granting summary dispo
I. BASIC FACTS AND PROCEDURAL HISTORY
These consolidated appeals arise from disputes over the reasonableness of plaintiffs charges for surgical implant products provided to defendants’ insureds, Gavin Powell and Hector Serrano-Ruiz, each of whom were treated at plaintiff hospital after suffering serious injuries in separate and unrelated automobile accidents. At issue is whether defendants were entitled to information pertaining to the cost of the surgical implant products to plaintiff when defendants were determining whether the charges billed to defendants’ insureds for those surgical implant products were
Powell was injured on July 2, 2009, when the vehicle he was driving struck a tree. Serrano-Ruiz was injured on July 17, 2009, when the motorcycle he was driving was struck by another vehicle. Both Powell and Serrano-Ruiz suffered broken bones that were treated with surgical implant products, including screws and plates. Plaintiffs charges for the medical treatment afforded to Powell totaled $242,941.09, of which $61,237.50 was for “supply/implant” products; plaintiffs total charges for Serrano-Ruiz’s medical treatment were $143,477.76, of which $28,800 was for “supply/implant” products. Auto-Owners is responsible for payment of the insurance benefits for Powell’s medical treatment; Home-Owners is responsible for payment of the insurance benefits for Serrano-Ruiz’s medical treatment. Plaintiff provided defendants with uniform billing forms, itemized statements, and medical records identifying the medical treatment provided to Powell and Serrano-Ruiz, respectively. Defendants timely paid the portion of plaintiffs bills for all charges other than for the surgical implant products used to treat the two men. Defendants requested invoices showing the cost to plaintiff of those surgical implant products. Plaintiff refused to provide this information. Defendants did not pay the charges within the allotted statutory period, resulting in plaintiffs filing the instant actions to recover the unpaid amounts, together with statutory interest and attorney fees.
Home-Owners admitted that it did not pay the $28,800 charge for surgical implant products and denied that such payment was due and owing on the basis that plaintiff had failed to provide reasonable proof of
Defendants submitted discovery requests seeking information regarding the wholesale cost to plaintiff of the surgical implant products at issue, plaintiffs “total revenue and operating expenses and the ‘cost-to-charge ratio’ which is derived from these numbers,” the percentages of plaintiffs patients that are uninsured or covered by no-fault insurance, the average annual increase in plaintiffs charges over the last five years, and any billing manuals or guidelines used to prepare itemized charges or other billing documents. Plaintiff objected to defendants’ discovery requests, arguing that the information sought was irrelevant to the claims asserted in plaintiffs complaints and that defendants were not entitled to the information sought because the information regarding “costs of treatment” to which defendants were entitled under MCL 500.3158(2) pertained to the cost to the “injured person” of the medical care and treatment that person received, i.e., the charges incurred by the patient at plaintiffs hospital.
Plaintiff opposed defendants’ motions, again asserting that defendants were not entitled to the information sought. Plaintiff also moved for summary disposition under MCR 2.116(C)(9) on the basis that defendants had abdicated their duty to process the balance of plaintiffs claims in accordance with the no-fault act and were, instead, seeking to use the discovery process to obtain information that they were not entitled to obtain under the no-fault act: plaintiffs underlying— and often confidential — proprietary-cost data. Plaintiff
At the hearing on the motions, defendants reiterated their position that the no-fault act required them to determine whether the charges assessed were reasonable and that MCL 500.3158(2) entitled them to documentation regarding the cost to plaintiff of the surgical implant products in order to make that determination. Defendants argued that by failing to provide that information, plaintiff had not met its burden of providing reasonable proof of loss under the act so as to entitle it to payment for the surgical implant products. In response, plaintiff argued that by submitting a uniform billing form, an itemized statement, and the patient’s medical records, it had met its burden in each case to provide defendants with reasonable proof of the amount of the loss under MCL 500.3142 and that, thereafter, defendants failed to evaluate the claims, pay what they believed to be reasonable, and deny what they believed to be excessive. Plaintiff argued that defendants were required to conduct an investigation to determine whether the charges were reasonable by comparing costs among providers “similarly located geographically” for the products at issue. Plaintiff also asserted that allowing insurers to obtain providers’ cost data would undermine the goals and objectives of the no-fault act and would cause that reparation system to come to a grinding halt. Plaintiff reiterated that all it is required to do is put the insurer on notice of the charges
The trial court concluded that the no-fault statute did not require plaintiff to provide its cost of surgical implant products and denied the discovery request. The trial court afforded defendants the opportunity to amend their answers to include allegations that plaintiffs charges were unreasonable. Following the court’s ruling, defendants, through their audit consultant, CorVel Corporation, estimated a price at which the surgical implant products had been purchased and, on the basis of those estimates, paid plaintiff $34,701.02 of the outstanding $61,237.50 charges related to Powell’s treatment and $21,612.65 of the outstanding $28,800 charges related to Serrano-Ruiz’s treatment. The payments were “calculated on a basis of cost of the product to the hospital plus 50%. ” As a result of the additional payments, the balances remaining in dispute were $26,536.48 for Powell’s treatment and $7,187.35 for Serrano-Ruiz’s treatment. Defendants amended their answers to plaintiffs complaints accordingly, to specifically deny the reasonableness of the outstanding charges for surgical implant products.
Plaintiff again moved for summary disposition, this time under MCR 2.116(0(10), asserting that defendants’ method for determining whether the charges for the surgical implant products were reasonable was, itself, unreasonable as a matter of law. Plaintiff argued that calculating the reasonable rate of reimbursement on the basis of IV2 times the average wholesale implant cost, provided to defendants by a third-party auditing entity, was itself arbitrary and unreasonable as a matter of law under this Court’s decision in Advocacy Org for
II. STANDARDS OF REVIEW
This Court reviews for an abuse of discretion a trial court’s ruling on a motion to compel discovery. Cabrera v Ekema, 265 Mich App 402, 406; 695 NW2d 78 (2005).
We review de novo a trial court’s decision on a motion for summary disposition, reviewing the record in the same manner as must the trial court to determine whether the movant was entitled to judgment as a matter of law. Latham v Barton Malow Co, 480 Mich 105, 111; 746 NW2d 868 (2008). Amotion for summary disposition under MCR 2.116(0(10) tests the factual sufficiency of the complaint. Corley v Detroit Bd of Ed, 470 Mich 274, 278; 681 NW2d 342 (2004). The moving party must specifically identify the matters that have no disputed factual issues, and it has the initial burden of supporting its position by affidavits, depositions, admissions, or other documentary evidence. MCR 2.116(G)(3)(b); MCR 2.116(G)(4); Coblentz v City of Novi, 475 Mich 558, 569; 719 NW2d 73 (2006). The
We review de novo questions of statutory construction. Feyz v Mercy Mem Hosp, 475 Mich 663, 672; 719 NW2d 1 (2006). This Court’s primary task in construing a statute is to discern and give effect to the intent of the Legislature. Shinholster v Annapolis Hosp, 471 Mich 540, 548-549; 685 NW2d 275 (2004). In so doing, the Court must begin with the language of the statute, ascertaining the intent that may reasonably be inferred from its language. Lash v Traverse City, 479 Mich 180, 187; 735 NW2d 628 (2007). It is axiomatic that the words contained in the statute provide the most reliable evidence of the Legislature’s intent. Kinder Morgan Mich, LLC v City of Jackson, 277 Mich App 159, 163; 744 NW2d 184 (2007). The Legislature is presumed to have intended the meaning it plainly expressed, and clear statutory language must be enforced as written. Rowland v Washtenaw Co Rd Comm, 477 Mich 197, 219; 731 NW2d 41 (2007); Fluor Enterprises, Inc v Dep’t of Treasury, 477 Mich 170, 174; 730 NW2d 722 (2007). If the statutory language is clear and unambiguous, judicial construction is neither required nor permitted, and courts must apply the statute as written. Lash, 479 Mich at 187; Rose Hill Ctr, Inc v Holly Twp, 224 Mich
Finally, we review for an abuse of discretion a trial court’s decision whether to award attorney fees under the no-fault act. Moore v Secura Ins, 482 Mich 507, 516; 759 NW2d 833 (2008). An abuse of discretion occurs when the trial court’s decision is outside the range of reasonable and principled outcomes. Smith v Khouri, 481 Mich 519, 526; 751 NW2d 472 (2008). “The trial court’s decision about whether the insurer acted reasonably involves a mixed question of law and fact. What constitutes reasonableness is a question of law, but whether [a] defendant’s denial of benefits is reasonable under the particular facts of the case is a question of fact.” Ross v Auto Club Group, 481 Mich 1, 7; 748 NW2d 552 (2008). This Court reviews a trial court’s factual findings for clear error. Id. A decision is clearly erroneous when the reviewing court is left with a definite and firm conviction that a mistake has been made. Id.
III. ANALYSIS
A. IS THE COST OF PROVIDING MEDICAL SERVICES AND PRODUCTS DISCOVERABLE UNDER MCL 500.3158(2), MCL 500.3159, AND MCR 2.302?
The primary issue on appeal is whether defendants are permitted by the no-fault act to discover the wholesale cost to plaintiff of surgical implant products used in treating defendants’ insureds when determining whether plaintiffs charges for those surgical implant products are reasonable under the act. We conclude that, in accordance with defendants’ clear statutory right and obligation to question the reasonableness of the charges, the no-fault act permits defendants to
The Michigan court rules establish “ ‘an open, broad discovery policy ....’” Cabrera, 265 Mich App at 407 (citation omitted); MCR 2.302. Discovery is permitted for any relevant matter, unless privileged. Cabrera, 265 Mich App at 407. However, “a trial court should also protect the interests of the party opposing discovery so as not to subject that party to excessive, abusive, or irrelevant discovery requests.” Id.
The no-fault act provides for a system of mandatory no-fault automobile insurance, which requires Michigan drivers to purchase personal protection insurance. MCL 500.3101 et seq. “Under personal protection insurance^] an insurer is liable to pay benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle, subject to the provisions of [chapter 31 of the Insurance Code].” MCL 500.3105(1). MCL 500.3107(l)(a) provides that personal protection insurance benefits are payable 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.” (Emphasis added.) Though “reasonable” is not defined, MCL 500.3157 instructs:
A physician, hospital, clinic or other person or institution lawfully rendering treatment to an injured person for an accidental bodily injury covered by personal protection insurance, and a person or institution providing rehabilitative occupational training following the injury, may charge a reasonable amount for the products, services and accommodations rendered. The charge shall not exceed the*444 amount the person or institution customarily charges for like products, services and accommodations in cases not involving insurance. [Emphasis added.]
MCL 500.3158(2) further requires that
[a] physician, hospital, clinic or other medical institution providing, before or after an accidental bodily injury upon which a claim for personal protection insurance benefits is based, any product, service or accommodation in relation to that or any other injury, or in relation to a condition claimed to be connected with that or any other injury, if requested to do so by the insurer against whom the claim has been made, (a) shall furnish forthwith a written report of the history, condition, treatment and dates and costs of treatment of the injured person and (b) shall produce forthwith and permit inspection and copying of its records regarding the history, condition, treatment and dates and costs of treatment. [Emphasis added.]
Finally, MCL 500.3159 provides:
In a dispute regarding an insurer’s right to discovery of facts about an injured person’s earnings or about his history, condition, treatment and dates and costs of treatment, a court may enter an order for the discovery. The order may be made only on motion for good cause shown and upon notice to all persons having an interest, and shall specify the time, place, manner, conditions and scope of the discovery. A court, in order to protect against annoyance, embarrassment or oppression, as justice requires, may enter an order refusing discovery or specifying conditions of discovery and may order payments of costs and expenses of the proceeding, including reasonable fees for the appearance of attorneys at the proceedings, as justice requires. [Emphasis added.]
Because benefits are payable as losses accrue, benefits are considered overdue “if not paid within 30 days after an insurer receives reasonable proof of the fact and of the amount of loss sustained.” MCL 500.3142(2) (emphasis added). Similarly, “if the court finds that the insurer
Defendants argue that the cost to the providers of the products used in treating an insured is an appropriate consideration in determining whether the charge for those products is reasonable and that the trial court erred by construing the phrase “costs of treatment” in MCL 500.3158(2) as referring only to the charges of the health-care providers in their own billing to the patients and not to documentation of the cost to the providers of the products and materials used in that treatment.
In contrast, plaintiff argues that the cost of the surgical implant products, whether actual or estimated, was not a permissible consideration in determining whether plaintiffs charges were reasonable and that defendants’ method is equivalent to a fee schedule, which is not authorized under the act; rather, the act contemplates only a “charge-to-charge” comparison. Plaintiff believes that defendants were limited to comparing plaintiffs charges to those of other similar providers of the same services.
The trial court concluded that defendants were not permitted to consider either plaintiffs cost for the surgical implant products or the average cost of those products to providers generally, as calculated by a third-party auditor. Instead, defendants were restricted to comparing plaintiffs charges with the charges of other similar providers of these products. We believe the trial court erred by so concluding.
Both parties rely on our holding in AOPP, 257 Mich App 365. At issue in that case was
*446 whether, under the language of the [no-fault] act, defendant insurance companies are required to pay the full amount charged as long as the charge constitutes a “customary” one, or if defendants are entitled to independently review and audit the medical costs charged to their insureds to determine whether a particular charge is “reasonable.” [AOPP, 257 Mich App at 372.]
Citing both MCL 500.3157 and MCL 500.3107, we noted that the amount an insurer is obligated to pay to a health-care provider is limited to “a reasonable amount.” AOPP, 257 Mich App at 374. We held:
Under this statutory scheme, an insurer is not liable for any medical expense that is not both reasonable and necessary. Hofmann v Auto Club Ins Ass’n, 211 Mich App 55, 93-94; 535 NW2d 529 (1995), quoting Nasser v Auto Club Ins Ass’n, 435 Mich 33, 49-50; 457 NW2d 637 (1990). The reasonableness of the charge is an explicit and necessary element of a claimant’s recovery against an insurer, and, accordingly, the burden of proof on this issue lies with the plaintiff. Id. “Where a plaintiff is unable to show that a particular, reasonable expense has been incurred for a reasonably necessary product and service, there can be no finding of a breach of the insurer’s duty to pay that expense, and thus no finding of liability with regard to that expense.” Nasser, [435 Mich] at 50.
As the United States Court of Appeals for the Sixth Circuit recognized, these statutory provisions leave open the questions of (1) what constitutes a reasonable charge, (2) who decides what is a reasonable charge, and (3) what criteria may be used to determine what is reasonable. See Advocacy Organization for Patients & Providers (AOPP) v Auto Club Ins Ass’n, 176 F3d 315, 320 (CA 6, 1999). [Id. at 374-375.]
We rejected the provider’s claim that insurers must pay all reasonable necessary medical expenses incurred for accidental bodily injuries as long as the charges did not exceed the amount the provider customarily charged for
In fact, this Court in McGill [v Auto Ass’n of Mich, 207 Mich App 402; 526 NW2d 12 (1994)] discussed at length the policy considerations underlying the act in rejecting the plaintiffs’ argument that the defendant insurers were required to pay the full amount of medical expenses billed by health-care providers:
“It is to be recalled that the public policy of this state is that ‘the existence of no-fault insurance shall not increase the cost of health care.’ Indeed, ‘[t]he no-fault act was as concerned with the rising cost of health care as it was with providing an efficient system of automobile insurance.’ To that end, the plain and ordinary language of § 3107 requiring no-fault insurance carriers to pay no more than reasonable medical expenses, clearly evinces the Legislature’s intent to ‘place a check on health care providers who have “no incentive to keep the doctor bill at a minimum.” ’
“For the above reasons, we reject plaintiffs’ argument that, pursuant to the no-fault act, defendants are obligated to pay the entire amount of plaintiffs’ medical bills. Such an interpretation would require insurance companies to accept health care providers’ unilateral decisions regarding what constitutes reasonable medical expenses, effectively*448 eliminating insurance companies’ cost-policing function as contemplated by the no-fault act. This result would directly conflict with the Legislature’s purpose in enacting the no-fault system in general and § 3107 in particular. ‘[I\t is clear that the Legislature did not intend for no-fault insurers to pay all claims submitted without reviewing the claims for lack of coverage, excessiveness, or fraud.’ ” [Id. at 407-408 (citations omitted; emphasis added).] [AOPP, 257 Mich App at 377-378.]
Thus, insurers are required to challenge the reasonableness of charges, and providers should expect no less. Id. at 378-379.
In concluding that insurers were only obligated to pay benefits for reasonable charges, we acknowledged that what was “reasonable” had yet to be defined. “[Consequently, insurers must determine in each instance whether a charge is reasonable in light of the service or product provided.” Id. at 379. Ultimately, the determination of what is a reasonable charge is for the trier of fact. Id. In a footnote, we acknowledged that the case had policy ramifications, but that those should not be overstated:
We believe both sides overstate the effects of either side prevailing. Under the statute, plaintiffs necessarily make the initial determination of reasonableness by charging the insured for the services. Once plaintiffs charge the insured, the insurer then makes its own determination regarding what is reasonable and pays that amount to plaintiffs. Although, as plaintiffs argue, the cost-benefit analysis may cause fewer legal actions over the disputed amount, the fact-finder will ultimately decide what is reasonable. Whether this procedure is the best is a matter for the Legislature. [Id. at 379 n 4 (citations omitted).]
Naturally, “[p]laintiffs may challenge defendants’ failure to fully reimburse them for medical bills as a violation of the act, but they have the burden of
While AOPP supports an insurer’s practice of determining the reasonableness of a provider’s charges for surgical implant products by comparing those charges to the amounts charged for those products by other, similar providers, AOPP does not suggest that this is the only permissible approach under the act. In AOPP, we specifically declined to “delineate the permissible factors” that defendants may consider when determining whether a charge is reasonable, while specifically rejecting the notion that providers are permitted to “unilaterally determine the ‘reasonable’ charge to be paid by the insurer” by way of their customary charges or that the act should be interpreted in a manner that effectively eliminates the cost-policing function of insurance companies as contemplated by the no-fault act. Id. at 377, 379. To limit assessing the reasonableness of provider charges solely to a comparison of such charges among similar providers would be to leave the determi
In keeping with the insurer’s obligation to determine the reasonableness of a provider’s charges, we believe that defendants were entitled to discover the wholesale cost of the surgical implant products for which the insureds were charged. The no-fault act, MCL 500.3158(2), permits defendants to discover plaintiffs “costs of treatment of the injured person,” not the “costs of treatment to the injured person,” which presumably are plaintiffs customary charges. (Emphasis added.) Accordingly, defendants are permitted to consider the cost to plaintiff of providing that treatment
We find further support in our recent opinion in Hardrick v Auto Club Ins Ass’n, 294 Mich App 651; 819 NW2d 28 (2011). At issue in that case was the reasonable rate for family-provided attendant-care services under MCL 500.3107(l)(a). The plaintiff believed that agency rates constituted a material and probative measure of the general value of attendant-care services, whereas the insurance company claimed that agency rates were irrelevant to establish the reasonable rate for care provided by an unlicensed family member. Instead, the insurance company argued, the reasonable rate should have been based on a similar worker’s wage, which would not include an agency’s overhead and additional expenses not related to the worker’s wages. Hardrick, 294 Mich App at 664-665. We held that, while rates charged by an agency to provide attendant-care services were not dispositive of the reasonable rate chargeable by a relative caregiver, they were certainly a relevant consideration for the jury in deciding what was
Here, the question presented is not whether an agency rate is reasonable per se under the circumstances, but whether evidence of an agency rate may assist a jury in determining a reasonable charge for family-provided attendant-care services. The fact that an agency charges a certain rate for precisely the same services that [the] parents provide does not prove that the rate should apply to the parents’ services. However, an agency rate for attendant-care services, routinely paid by a no-fault carrier, is a piece of evidence that throws some light, however faint, on the reasonableness of a charge for attendant-care services. In other words, an agency rate supplies one measure of the value of attendant care and is worthy of a jury’s consideration. A jury may ultimately decide that an agency rate carries less weight than the rate charged by an independent contractor, or no weight at all. But the fact that different charges for the same service exist in the marketplace hardly renders one charge irrelevant as a matter of law. [Id. at 669 (citation omitted).]
Similarly, in this case, plaintiffs actual cost for surgical implant products is but one piece of information that a jury might find relevant in determining whether plaintiff’s charges were reasonable. Hardrick stresses what we have already discussed at length — the jury is charged with the responsibility of determining the reasonableness of plaintiffs charges. Because actual costs to plaintiff would most certainly “throw some light on” the reasonableness of the charges, the trial court should have compelled plaintiff to provide the information.
Hardrick also confirms the notion that a hospital’s itemized bills and records do not, standing alone, satisfy the “reasonableness” requirement. We analogized a “charge” to an attorney’s bill for services. When an
Given that many factors influence the determination of a “reasonable charge” for attendant-care services, a jury may consider a provider’s wage as one piece of evidence relevant to this calculation. We view the reasonableness inquiry as encompassing any evidence bearing on fair compensation for the particular services rendered. The principles supporting the relevancy of agency rates equally support the relevancy of other evidence. For example, [the expert witness] testified that an agency would pay its employees less than the $25 to $45 hourly rate charged to the patient. Evidence of the employee’s hourly wage throws some light, however faint [,] on the reasonableness of a charge for attendant-care services. [The insurance company] correctly notes that the jury should hear such evidence to more fully and accurately calculate a reasonable rate for the services rendered.
... Limiting a family member’s “reasonable charge” to a wage ignores ... other costs. In the end, the Legislature commanded that no-fault insurers pay a “reasonable charge” for attendant-care services, thereby consigning to a juiy the necessary economic-value choices.
None of the evidence proffered by [either party], or even mentioned by this Court, is dispositive of the reasonable-charge issue. Rather, the evidence provides a collage of factors affecting the reasonable rate that may be charged by [the] parents for the services they provide. [Id. at 675-678 (citation omitted).]
Accordingly, given our conclusion that defendants were entitled to discover the actual cost of the surgical implant products to plaintiff under MCL 500.3158 and MCL 500.3159, the trial court erred when it denied defendants’ motion to compel discovery. Because of the error, it follows that summary disposition in plaintiffs favor was prematurely and improvidently granted, as discussed hereinafter.
B. DID THE TRIAL COURT ERR BY GRANTING PLAINTIFF SUMMARY DISPOSITION?
Defendants argue that, considering the cost data presented by defendants, which is a permissible consideration under the no-fault act in determining reasonableness, and considering plaintiffs lack of admissible evidence supporting the reasonableness of its charges, a rational fact-finder could conclude that plaintiffs charges for surgical implant products were not reasonable and, therefore, summary disposition in plaintiffs favor was not warranted. We agree.
Plaintiff sought summary disposition on the basis that defendants’ method of determining that plaintiffs charges for the surgical implant products were excessive was arbitrary and unreasonable. Plaintiff did not proffer anything to support its assertion that its
Plaintiffs position is at odds with established case-law. The burden of proof on the reasonableness of its fees lies with plaintiff. Hofmann, 211 Mich App at 93-94, quoting Nasser, 435 Mich at 49-50. “[I]t is the insurance company that has the right to deny a claim (or part of a claim) for unreasonableness under § 3107. The insured then has the burden to prove that the charges are in fact reasonable.” United States Fidelity & Guaranty Co v Mich Catastrophic Claims Ass’n (On Rehearing), 484 Mich 1, 18; 795 NW2d 101 (2009). Moreover, as the moving party, plaintiff bore the burden of establishing the absence of any genuine issue of material fact in the first instance. MCR 2.116(G)(4); Coblentz, 475 Mich at 569. Plaintiff had to provide the trial court with some basis for concluding that its charges were reasonable and that there was no factual issue for trial, despite defendants’ arguments otherwise. Plaintiff wholly failed to do this. Considering that this Court has explicitly held that a provider’s customary charges are not necessarily reasonable, AOPP, 257 Mich App at 377, the mere fact that plaintiff believed its charges to be reasonable does not make it so. Accordingly, there was no basis for the trial court to conclude
C. DID THE TRIAL COURT ERR BY REFUSING TO AWARD ATTORNEY FEES UNDER MCL 500.3148?
In its cross-appeal, plaintiff argues that the trial court clearly erred by failing to award plaintiff its attorney fees after defendants refused to pay for the surgical implant products. We disagree.
The no-fault act provides for an award of reasonable attorney fees when an insurer unreasonably withholds benefits. MCL 500.3148(1). Our Supreme Court has held:
MCL 500.3148(1) establishes two prerequisites for the award of attorney fees. First, the benefits must be overdue, meaning “not paid within 30 days after [the] insurer receives reasonable proof of the fact and of the amount of loss sustained.” MCL 500.3142(2). Second, in postjudgment proceedings, the trial court must find that the insurer “unreasonably refused to pay the claim or unreasonably delayed in making proper payment.” MCL 500.3148(1). Therefore, assigning the words in MCL 500.3142 and MCL 500.3148 their common and ordinary meaning, “attorney fees are payable only on overdue benefits for which the insurer has unreasonably refused to pay or unreasonably delayed in paying.” Proudfoot v State Farm Mut Ins Co, 469 Mich 476, 485; 673 NW2d 739 (2003) (emphasis omitted). [Moore, 482 Mich at 517.]
“The purpose of the no-fault act’s attorney-fee penalty provision is to ensure prompt payment to the insured.” Ross v Auto Club Group, 481 Mich 1, 11; 748 NW2d 552 (2008). Therefore, when an insurer refuses or delays payment of personal protection insurance benefits, it has the burden of justifying its refusal or delay under MCL 500.3148(1). Ross, 481 Mich at 11.
Defendants asserted in the trial court, as they do here, that the refusal to pay the full amount of plaintiffs charges for surgical implant products was based on both a legitimate question of statutory construction and factual uncertainty regarding the reasonableness of those charges. The trial court determined that defendants’ conduct was based on a legitimate question of statutory construction. We agree and conclude that the trial court did not abuse its discretion by declining to award plaintiff attorney fees.
As discussed earlier in this opinion, an insurer is not foreclosed from assessing the reasonableness of a provider’s charges merely because those charges are the provider’s customary charges; rather, insurers have a duty under the act to “ ‘audit and challenge the reasonableness’ ” of charges submitted for payment. AOPP, 257 Mich App at 378, quoting LaMothe v Auto Club Ins Ass’n, 214 Mich App 577, 582 n 3; 543 NW2d 42 (1995). Thus, defendants were required to assess the reasonableness of plaintiffs charges for surgical implant products. In AOPP, this Court found it unnecessary to “delineate the permissible factors for determining what is ‘reasonable’ . . . .” AOPP, 257 Mich App at 379.
Because we conclude that the no-fault act permits defendants to discover the wholesale cost to plaintiff of the surgical implant products for which the insureds were charged, we reverse that portion of the trial court’s order that granted plaintiff summary disposition, af
Following our decision in AOPP, our Supreme Court granted the providers’ application for leave to appeal, directing that “defendants are to explain in detail the computations they use in determining whether a particular charge meets the ‘80th percentile test.’ ” Advocacy Org for Patients & Providers v Auto Club Ins Ass’n, 470 Mich 881 (2004). Thereafter, the Supreme Court affirmed the case in a memorandum opinion and concurring opinions for the reason that “we agree with the Court of Appeals resolution of this issue ....” Advocacy Org for Patients & Providers v Auto Club Ins Ass’n, 472 Mich 91, 95; 693 NW2d 358 (2005).