We are very pleased (but very relieved) to be able to say that 2016 passed without major changes to our No-Fault Law. We survived a last ditch effort in lame duck to enact yet another horrific demolition of our rights under the No-Fault Law. The essence of this effort, among other things, was to place a cap on No-Fault benefits of $400,000 for those who become entitled to No-Fault benefits by operation of law, but who have not paid for those benefits. Examples include: uninsured occupants of insured cars and uninsured non-occupants who claim from insured cars. Presently these uninsured people may claim full entitlement to No-Fault benefits. The defeated (for now) proposal would have limited those claimants to $400,000. Any reader of this newsletter will readily appreciate how devastating that change would have been.
While this proposal was defeated at the end of the 2016 legislative term, it is yet another stark reminder of the absolutely imperative need to remain vigilant.
The following are developments in the courts. There have been several decisions recently that merit discussion, including the Covenant case, which is probably the most important No-Fault decision in the courts in recent years.
JUDICIAL DEVELOPMENTS: THE COVENANT CASE, PART 1
In October 2015, the Court of Appeals issued a remarkable decision in the case of Covenant v State Farm. As a result of this decision, service providers have been inundated with so-called Covenant Apportionment motions. When an injured individual settles his case for No-Fault benefits, there is often a motion to have the court approve an apportionment, i.e., an allocation, of the settlement proceeds among those providers who have rendered services to the injured person. Often, the apportionment will call for the provider to take a fraction of the services rendered. It is very difficult for a provider to challenge the apportionment once a settlement has occurred. Therefore, it is strongly advised that an attorney be consulted well in advance of any such settlement.
One of the problems of course is that providers may not know if your injured patient's claim is even under insurance dispute. It is always advisable to contact the No-Fault insurer at the earliest stages to confirm coverage and that payment will be forthcoming.
JUDICIAL DEVELOPMENTS: THE COVENANT CASE, PART 2. NOTE: EXTREMELY URGENT TO REVIEW
While Covenant with its apportionment mechanism remains the law at this time, the Supreme Court has agreed to review the case. Oral arguments occurred on December 7, 2016. It is expected that the apportionment hearing mechanism will be abolished. However, this does not change the above advice to be vigilant as to collection of your claims.
The bigger problem with the Covenant case is that the Supreme Court may take away the provider's right of direct action. For many years we have been able to bring our claims for No-Fault benefits directly against the No-Fault insurers. I.e., we have not had to do any procedural gymnastics, including suing our own patients. This is known as the "Right of Direct Action." This right has been upheld by a consistent body of Court of Appeals decisions dating back at least to 2002. Upon review of the Covenant case, the Supreme Court is considering whether to retain or remove the Right of Direct Action. While it is always difficult to predict the outcome of a case based on the comments and questions of the Justices in oral argument, I believe it is prudent to plan for the demise of the direct action.
. There are many techniques and legal issues that we are contemplating as this future will be very uncertain. However, of immediate importance is the need to have your patients sign effective ASSIGNMENTS OF BENEFITS FORMS. This is not as simple as it sounds. For one, 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. Here is my 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."
There is very little law on the effectiveness of such Assignments. That is because we have used the Right of Direct Action for so long. Now that the Right is in jeopardy it is absolutely imperative to obtain these Assignments on discharge. I am sure that we face procedural uncertainty as the use of this device expands. However, if we do not use Assignments, we may face the prospect of litigating directly against patients. That is a most unpleasant prospect indeed. We conclude by once again urging in the strongest possible way that discharge procedures be amended to include the above Assignment.
JUDICIAL DEVELOPMENTS: FARM BUREAU V BLUE CROSS BLUE SHIELD
Though not at the Supreme Court level, the Court of Appeals issued a really unfortunate opinion earlier this year that merits mention. In Farm Bureau v Blue Cross Blue Shield, et al, 314 Mich App 12 (2016), one Julie Klein was catastrophically injured in a motor vehicle accident. Klein received treatment at a skilled nursing care facility. Klein had medical insurance coverage with Blue Cross/Blue Shield (BCBS), and No-Fault auto insurance coverage with Farm Bureau. BCBS paid for the first 14 days of the nursing facility's services, but denied everything thereafter pursuant to its internal criterion. The nursing facility did not appeal or otherwise contest BCBS' decision. Rather, the nursing facility simply looked to Farm Bureau for payment. The Court of Appeals noted a provision in the BCBS policy that the nursing facility assumed "full financial responsibility" for claims denied by BCBS as being medically unnecessary under the circumstances of this case. The Court interpreted this clause as relieving Farm Bureau of responsibility for payment:
"...the effect of [the nursing facility's] participating provider agreement is to relieve Klein from responsibility for paying for [the nursing facility's] services, and, because Klein has no legal responsibility for the medical costs, Farm Bureau has no obligation to pay for these expenses under MCL 500.3107(1)(a)."
The Court criticized the nursing facility for taking no action to context BCBS's denial, noting that "[the nursing facility] had any number of options open to it under the participating provider agreement to avoid assuming liability for Klein's expenses." Id at fn3.
So the result of the Court's analysis in Farm Bureau is that the nursing facility goes without payment for substantial services rendered, even though the nursing facility's patient had 2 separate insurance coverages! The Court in Farm Bureau noted that purpose of No-Fault §3109a "...is to eliminate duplicative recovery for services and to contain insurance and health care costs." While certainly the Farm Bureau holding will serve to contain costs (nonpayment will tend to do that), is a holding that eliminates payment altogether consistent with an intent to eliminate duplicative payment? The main lesson of the decision is clear: do not simply accept without challenge the determination of the primary insurer.
JUDICIAL DEVELOPMENTS: THE "LAWFULLY RENDERED" REQUIREMENT AS TO AFC HOMES AND MASSAGE THERAPY
An important but unpublished decision in this area is 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! Dan Richardson was severely injured as a pedestrian. He could not return to his previous residence, as it was a basement room. Instead, he was referred to a facility called "Group 1 Home." Group 1 was not licensed as an adult foster care (AFC) home, but claimed it wasn't providing AFC services. The Court cited MCL 400.703(4)(h) to define AFC facilities as including "...foster care family homes for adults who are aged, mentally ill, developmentally disabled, or physically disabled who require supervision on an ongoing basis but who do not require continuous nursing care." "The term 'foster care' is 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). The Court found that there was no question of fact to contest that Richardson required AFC services and that Group1 provided those services without a license. Therefore, the plaintiff's services were not compensable under the No-Fault Law.
In Revive Therapy v State Farm, Ct App #324378 (April 28, 2016), the Court of Appeals discussed the new licensure requirements for massage therapy services contained in MCL 333.17959 and regulations promulgated thereunder. The Court made clear that the failure to be properly licensed will prevent the massage therapist from lawfully rendering service under §3157 of the No-Fault Law.