Covenant Medical Center Inc v. Employers Mutual Casualty 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
COVENANT MEDICAL CENTER, INC., UNPUBLISHED
February 11, 2021
Plaintiff-Appellee/Cross-Appellant,
v No. 342379
Bay Circuit Court
EMPLOYERS MUTUAL CASUALTY LC No. 16-003671-NF
COMPANY,
Defendant-Appellant/Cross-Appellee,
and
MICHIGAN ASSIGNED CLAIMS PLAN,
MICHIGAN AUTOMOBILE INSURANCE
PLACEMENT FACILITY, and JOHN DOE
INSURANCE COMPANY,
Defendants.
Before: BOONSTRA, P.J., and BORRELLO and RICK, JJ.
PER CURIAM.
In the main appeal, defendant Employers Mutual Casualty Company (defendant),1 appeals
by right the trial court’s order granting in part plaintiff’s motion for summary disposition and
entering judgment in favor of plaintiff. On cross-appeal, plaintiff challenges the trial court’s order
limiting plaintiff’s award of attorney’s fees to only those fees incurred after plaintiff secured an
assignment. We reverse the trial court’s orders and remand for entry of an order granting summary
disposition in favor of defendant. We dismiss plaintiff’s cross-appeal as moot.
1
The remaining defendants in the proceeding below are not parties to either the appeal or cross-
appeal.
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II. PERTINENT FACTS AND PROCEDURAL HISTORY
On October 21, 2014, Jussie Craddock (Craddock) sustained injuries in a motor vehicle
accident. Plaintiff provided healthcare services to her in October 2014, November 2014, and
March 2015. In October 2015, plaintiff filed this action to obtain reimbursement for its services
as no-fault personal protection insurance (PIP) benefits. Thereafter, 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), and held that healthcare providers do not have a direct cause of action against
no-fault insurers for recovery of PIP benefits under the no-fault act. Plaintiff then obtained an
assignment of rights from Craddock and filed an amended complaint on July 12, 2017. Defendant
subsequently moved for summary disposition under MCR 2.116(C)(8), arguing that the amended
complaint could not relate back to the date of the original pleading and that plaintiff’s claims were
therefore barred by the “one-year-back” rule of MCL 500.3145. The trial court denied defendant’s
motion, ruling that the amended complaint related back to the date of the original pleading, and
that plaintiff’s claims in the amended complaint were therefore not barred by the one-year-back
rule. The trial court subsequently granted in part plaintiff’s motion for summary disposition,
entered judgment in favor of plaintiff, and awarded plaintiff attorney’s fees, but limited the award
to fees incurred after the date of the assignment.
II. SUMMARY DISPOSITION
Defendant argues that the trial court erred by granting in part plaintiff’s motion for
summary disposition, and that it should have granted defendant’s motion for summary disposition
on the basis of the one-year-back rule. We agree.
We review de novo a trial court’s ruling on a motion for summary disposition. Nyman v
Thomson Reuters Holdings, Inc, 329 Mich App 539, 543; 942 NW2d 696 (2019).
A court may grant summary disposition under MCR 2.116(C)(8) if the opposing
party has failed to state a claim on which relief can be granted. A motion brought
under subrule (C)(8) tests the legal sufficiency of the complaint solely on the basis
of the pleadings. All well-pleaded factual allegations are accepted as true and
construed in a light most favorable to the nonmoving party. Summary disposition
on the basis of subrule (C)(8) should be granted only when the claim is so clearly
unenforceable as a matter of law that no factual development could possibly justify
a right of recovery. Questions of statutory interpretation are also reviewed de novo.
[Id. (quotation marks and citations omitted).]
At all times relevant to this case, the one-year-back rule set forth in MCL 500.3145(1)
provided that a “claimant may not recover benefits for any portion of the loss incurred more than
1 year before the date on which the action was commenced.”2 In interpreting that provision in the
context of this case, we are guided (and indeed bound) by this Court’s decision in Jawad A Shah,
2
MCL 500.3145 was amended by 2019 PA 21 and 2019 PA 22, effective June 11, 2019. The one-
year-back rule is now codified in Subsection (2) of the amended statute. The relevant events in
this case occurred before the amendment.
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MD, PC v State Farm Mut Auto Ins Co, 324 Mich App 182, 186; 920 NW2d 148 (2018). In Shah,
the healthcare-provider plaintiffs filed suit in February 2017 to recover no-fault benefits.
Following the issuance of our Supreme Court’s decision in Covenant on May 25, 2017, and as in
this case, the providers obtained an assignment of rights from the insured and sought to amend
their complaint to pursue their action under an assignment theory. Id. at 187-188, 202-203. This
Court determined that the plaintiffs could not obtain any greater rights than the insured had
possessed on the date of the assignment and that, if the insured had filed an action directly against
the defendant on that date, he would not have been permitted to recover benefits for any portion
of the loss incurred more than one year before that date. Id. at 204. Therefore, the plaintiffs could
not obtain any right to recover benefits for losses incurred more than one year before the date of
the assignment. Id. This Court further stated that because the assignment was an event that
occurred after the filing of the original complaint, the motion for leave to amend actually sought
leave to file a supplemental pleading, which could not relate back to the date of the original filing.
Id. at 204-205.
This Court’s decision in Shah is binding and mandates reversal in this case. Under Shah,
plaintiff could not obtain any greater rights than Craddock possessed on the date of the assignment.
And as of that date, Craddock would not have been permitted to recover benefits for losses incurred
more than one year before the date of the assignment. The record shows that all of the services for
which recovery was sought were provided more than one year before the date of the assignment.
Furthermore, under Shah, because the assignment was an event that occurred after the original
complaint was filed, plaintiff’s amended complaint was actually a supplemental pleading, which
could not relate back to the date of the original filing.3 Accordingly, the trial court erred by ruling
that the one-year-back rule did not bar plaintiff’s new claims and that the amended complaint
related back to the date of the original complaint.
Despite this Court’s decision in Shah, plaintiff argues that the amended complaint in this
case was an amended pleading, not a supplemental pleading. We disagree. MCR 2.118(D)
provides, in relevant part, that “[a]n amendment that adds a claim or a defense relates back to the
date of the original pleading if the claim or defense asserted in the amended pleading arose out of
the conduct, transaction, or occurrence set forth, or attempted to be set forth, in the original
pleading.” Plaintiff argues that its claim for no-fault benefits based on an assignment theory of
recovery arose out of the same transaction as the claim in the original complaint because both arose
out of plaintiff’s provision of healthcare services following the motor vehicle accident.
MCR 2.118(E), however, provides that the court may allow parties to serve a “supplemental
pleading to state transactions or events that have happened since the date of the pleading sought to
be supplemented.” As in Shah, the assignment here was an event that happened after the date of
the original complaint; we see no basis on which to reach a different result than this Court did in
Shah. Shah, 324 Mich App at 204-205.
Plaintiff additionally argues that Craddock could have filed an intervening complaint and
that the one-year-back rule would not have precluded her recovery in such an action because this
3
Although the amended complaint was actually a supplemental pleading, we will continue to refer
to it as the “amended complaint,” for consistency.
-3-
action was commenced in a timely manner by plaintiff. This argument was also rejected in Shah,
324 Mich App at 204. Plaintiff does not provide any authority to support its argument that
Craddock’s claims would not have been barred by the one-year-back rule. Plaintiff cites Botsford
Gen Hosp v Citizens Ins Co, 195 Mich App 127; 489 NW2d 137 (1992), and Perkovic v Zurich
American Ins Co, 500 Mich 44; 893 NW2d 322 (2017), in support of its argument that “no-fault
cases have long held that a patient’s satisfaction of procedural requirements can inure to the benefit
of medical providers, and vice versa.” But those cases are distinguishable from this case and from
Shah, because they did not involve the one-year-back rule; they instead involved the statute of
limitations and notice requirements set forth in MCL 500.3145(1).4
Plaintiff also argues that Shah was wrongly decided and asserts that this Court’s recent
decision in Mich Head & Spine Institute, PC v Mich Assigned Claims Plan, 331 Mich App 262;
___ NW2d ___ (2020), conflicts with Shah. Plaintiff’s asks this Court to invoke the conflict
procedure set forth in MCR 7.215(J). We disagree and decline to do so. First, we are not
persuaded that Shah was incorrectly decided. In particular, we agree that an assignment of rights
after an original suit is filed is an occurrence that takes place after the filing of the original
complaint, and that it therefore may not relate back to the original date of filing. Although the
one-year-back rule runs from the date of the commencement of the action, plaintiff, as assignee,
effectively filed a new action. Further, we disagree that Mich Head & Spine conflicts with Shah.
In Mich Head & Spine, 331 Mich App at 277, this Court concluded that the trial court erred by
denying the medical providers leave to amend their complaint to allege an assignment-based
theory. This Court stated that the amendment “to clarify that their standing was based on
assignment . . . would not have changed anything about the merits of the lawsuit or the basis on
which [the medical providers] claimed that they were entitled to relief in this case.” Id. This Court
concluded that “the trial court denied leave to amend solely because it would have preferred that
[the medical providers] had moved to amend their complaint earlier.” Id. at 277-278. This Court
did not address the one-year-back rule or the relation-back doctrine. Nonetheless, Mich Head &
Spine is critically distinguishable from this case and Shah because the first assignment was
executed before the original complaint was filed. Id. at 267. Accordingly, the amended complaint
would not have alleged a transaction or occurrence after the date of the original filing. Because
we conclude that Shah was correctly decided and that Mich Head & Spine does not conflict with
Shah, we reject plaintiff’s request to invoke the conflict procedure set forth in MCR 7.215(J).5
4
At the time relevant to this case, the relevant language of MCL 500.3145(1) provided:
An action for recovery of personal protection insurance benefits payable
under this chapter for accidental bodily injury may not be commenced later than 1
year after the date of the accident causing the injury unless written notice of injury
as provided herein has been given to the insurer within 1 year after the accident or
unless the insurer has previously made a payment of personal protection insurance
benefits for the injury.
5
Moreover, to the extent plaintiff may suggest that we would be free to disregard Shah in favor of
Mich Head & Spine, assuming that we were to agree that they are in conflict, it is incorrect. See
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III. ATTORNEY’S FEES
In the cross-appeal, plaintiff argues that the trial court erred by limiting its award of
attorney’s fees to those fees incurred after the assignment was obtained. Because we conclude in
the main appeal that the trial court erred by granting in part plaintiff’s motion for summary
disposition and by denying defendant’s motion for summary disposition, we must necessarily
reverse the trial court’s award of attorney’s fees to plaintiff. Plaintiff’s cross-appeal is therefore
moot.
Reversed in the main appeal and remanded for the entry of an order granting summary
disposition in favor of defendant. The cross-appeal is dismissed as moot. We do not retain
jurisdiction.
/s/ Mark T. Boonstra
/s/ Stephen L. Borrello
/s/ Michelle M. Rick
Romain v Frankenmuth Mut Ins Co, 483 Mich 18, 21; 762 NW2d 911 (2009). Instead, under the
“first out” rule of MCR 7.215(J)(1), we would still be required to follow Shah and declare a conflict
under MCR 7.215(J)(2). For the reasons indicated, we decline to do so.
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