For the last many years, No-Fault reform has been a "Sword of Damocles" hanging over our heads. Our magnificent No-Fault system has endured ceaseless attacks. These have included the draconian "D-Insurance" offered by Mayor Duggan. We are pleased to once again report that we continue to survive with our No-Fault system largely intact. We are told that no serious voting will take place until the fall. However, and in the interim, legislative efforts continue to develop. So this is no time to be complacent. On the contrary, we urge continued efforts to work with your professional organizations and legislators to maintain the uniquely excellent Michigan No-Fault system.
JUDICIAL DEVELOPMENTS PART I: RESIGNATION OF JUSTICE YOUNG; APPOINTMENT OF JUSTICE LARSON
By Wayne J. Miller
Justice Robert Young resigned from the Michigan Supreme Court effective April 30, 2017. Justice Young served on the Court for over 18 years. His was a conservative perspective that resulted in joining or authoring many seriously anti-consumer decisions. Interestingly, his resignation comes while several significant decisions remain pending, including Covenant, discussed in the next section. These decisions will be rendered with a vacancy, much like the United States Supreme Court operated for over a year following the death of Justice Scalia. Governor Snyder has not announced a replacement at this time.
In addition, President Trump has appointed Justice Larson (on the Court for less than 2 years) to the federal Sixth Court of Appeals. If approved, Governor Snyder will also have to appoint a replacement. Because Governor Snyder will appoint the successors, the composition of the Court will no doubt continue on a very conservative path.
JUDICIAL DEVELOPMENTS PART II: WHAT'S HAPPENING WITH COVENANT?
Service providers have long been able to protect their rights under the No-Fault law by "direct action" suits against the insurers. This means that providers may directly sue the insurer without having to involve the injured patient. This long-standing right has been reaffirmed by our courts many times over the years. However, the issue had never been specifically discussed by our Supreme Court. In our last edition of this newsletter, we warned about the "Covenant" case, where the Supreme Court has decided to hear the issue. Oral arguments were heard on December 7, 2016. As of this writing in early May 2017, the Supreme Court has still not released its decision. As warned in the previous edition of this newsletter, it is prudent to plan for the demise of the direct action. We continue to recommend the use of Assignment of Benefits. Remember that the No-Fault Law renders void any Assignments of the right to future benefits. So any Assignments that are executed on admission are suspect. It will be far better to have Assignments that are executed upon discharge. Certainly, it is often easier to obtain an Assignment on the way in, than on the way out. However, the effort to get Assignments on discharge must still be made. Here is some suggested language:
"I, ____________________, do hereby assign my right to collect No-Fault insurance benefits, for unpaid services rendered by __________ to date, to _______________. This is not an assignment for benefits payable in the future or after the date of this document."
JUDICIAL DEVELOPMENTS PART III: AFC HOMES AND THE "LAWFULLY RENDERED" REQUIREMENT
In the last edition we mentioned Riverview Macomb Home and Attendant Care et al v State Farm, Ct App #327030 (October 20,2016). This case is another in a long line of cases discussing the No-Fault requirement that services must be "lawfully rendered." In this case, the question was whether a residential facility was required to be licensed as an adult foster care (AFC) home. The Court answered YES!
The Court of Appeals has now issued another unpublished opinion with a very similar result: Keys of Life et al v Auto Owners Ins Co, Ct App #328227 (December 27, 2016).
These cases highlight the kind of scrutiny that No-Fault insurers apply to AFC and similar facilities. Such facilities must review their licensure status in order to confidently expect payment under the No-Fault Law.
Attorney Gregory Bator is a specialist in this area of AFC Licensure. Greg prepared the following introduction to this area of the law at our request. We hope it is useful:
To Be or Not to Be a Licensed Adult Foster Care Facility
By Attorney Gregory Bator
Adult Foster Care is a legislative creature of Public Act 218. The Adult Foster Care Facility Licensing Act is regulated by the State of Michigan's Department of Licensing and Regulatory Affairs (LARA) in its Community and Health Systems Division. LARA's regulatory enforcement is conducted by field staff called licensing consultants who report to regional area supervisors who in turn report to administrative staff in Lansing. LARA processes applications for new AFC licenses, renews existing licenses, and investigates complaints against licensed and unlicensed facilities.
An "adult foster care facility" is defined as "a governmental or nongovernmental establishment that provides foster care to adults." MCL 400.703(4) "Foster care" is a term defined as "the provision of supervision, personal care, and protection in addition to room and board, for 24 hours a day, 5 or more days a week, and for 2 or more consecutive weeks for compensation." MCL 400.704(7). These terms are defined further in the statute.
Operating an 'adult foster care' setting without a license can pose multiple dangers. LARA can demand a setting to close and discharge its residents unless a license application is submitted. LARA can refer matters to Michigan's Attorney General for civil and criminal prosecution seeking up to one year imprisonment or $1000 fine for a first offense (repeat offenses subject a violator to serious felony charges.) And insurance companies have recently been empowered by an unpublished Court of Appeals decision (Keys of Life v. Auto-Owners Insurance, No. 328227) to cease No-Fault payments when a facility providing care is unlicensed. Woe be to the setting that has not armed itself with a license or as an organization properly structured to not require a license.
Today, to be or not to be a licensed AFC is complicated by a change in LARA's view of what requires a license, as well as the overreaching use of the recent Keys of Life decision by insurance companies. For years, a license was not required in settings where an individual resident maintained control over their residence (ownership or separate lease) from a party unaffiliated with a resident's personal care provider. LARA abruptly changed this long held view and now is requiring a license even though the personal care provider has nothing to do with the roof over a person's head. This regulatory change is being challenged as a violation of an individual's fair housing rights in a Federal Court proceeding, but the lawsuit remains in its early phase.
In the Michigan Court of Appeals Keys of Life matter, the Court determined that all of the AFC elements were being provided to an individual in an apartment setting without a license. The provider unsuccessfully argued that AFC services were not "treatment" as defined under the Michigan No-Fault Act MCL 500.3107 and 500.3157. The Court of Appeals held that the provider could NOT recover for unlicensed AFC services under the No-Fault Act. The Keys of Life case is a misguided and careless ruling that can be limited with careful planning and analysis.
To be or not to be a licensed care provider can present unwanted and undesirable consequences. Providing personal care services in residential settings requires careful attention in these changing times.
1 Gregory Bator is the State's leading legal expert on adult foster care licensing matters. Gregory has assisted care providers across Michigan for over 35 years with AFC licensing matters. He is the Founder of Bator Legal, P.C. in Birmingham, Michigan and can be reached at 248-642-7844 or Gregory@BatorLegal.com