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I. SUPREME COURT DECISION ON ASSIGNMENT OF BENEFITS
On July 3, 2025, the Supreme Court issued C-Spine Orthopedics v Progressive Michigan Insurance Company, et al. The case involves a technical issue on the use of assignments in no-fault litigation. But review of the case allows us to provide a status report on how service providers may access the litigation process for no-fault benefits.
By way of background, up until the Supreme Court’s decision in the Covenant case in 2017, it was generally understood that service providers had a right to sue no-fault insurers directly and without the approval or authorization of their patients. However, the Supreme Court in Covenant held that providers did not have a right of direct action. Fortunately, the Covenant decision left open the door just a little bit: the Court allowed providers to proceed on the basis of a right to sue authorized by their patients. This patient-authorized right to sue is known as an “Assignment.” So, after Covenant, service providers commonly sought assignments from their patients. Litigation based on assignments proliferated.
Then, in 2019, the no-fault reform legislation included a new right of direct action for service providers (section 3112). I.e., Assignments were no longer necessary for providers to pursue their collection claims. Nevertheless, no-fault litigation continued to feature claims brought by providers on the basis of assignments from their patients. This produced confusion in a variety of different circumstances of litigation.
The C-Spine case considered two separate cases from the lower courts. In one case, the plaintiff provider both obtained a right to sue by way of assignment from the patient, and then in turn assigned that right to a “factoring” company. i.e., the provider sold its account for cash. Notwithstanding this assignment, the provider later sought to sue on the accounts that it assigned. In the other case, the patient likewise assigned her right to sue to several service providers.
Later, both the provider and the patient sued their respective no-fault insurers, even though they had assigned their rights to sue. The insurers objected, arguing that both of these plaintiffs had divested themselves of the ability to sue, because they had both assigned their rights to other parties. The Court ultimately determined that their assignments did indeed result in divesting the plaintiffs of their right to sue. However, the Court also ruled that the plaintiffs could re-acquire the right to sue by validly rescinding their Assignments.
In the wake of C-Spine, it is appropriate to consider the future use of assignments in no-fault litigation. Remember that Assignments were kind of a backwater in no-fault litigation until Covenant in 2017. Because Covenant held that providers did not have a right of direct action against no-fault insurers, providers were forced to obtain that right to sue on assignment from their patients. Patients of course had both the right to sue, and the right to assign their right to sue. But since providers were also given the right to sue in the 2019 reforms, do assignments continue to be necessary? The Court in C-Spine answered this question in the negative:
“Under the current no-fault act, before any assignments are executed, both the policyholder and the medical provider hold independent statutory causes of action. See MCL 500.3112. Therefore, such assignments are no longer strictly necessary.”
Accordingly, we believe that the “Age of Assignments” is now over. For the most part, providers no longer need to obtain assignments from their patients. Rather, if litigation becomes necessary, providers may access the courts by way of their right of direct action found in section 3112 of the no-fault law.
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