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A Better Partnership
February 13, 2013

Court of Appeals finds release of no-fault claims "by or on behalf" of insured may bar first-party medical claims

In Michigan Head & Spine Institute, PC v. State Farm Mutual Automobile Insurance Co., the Court of Appeals concluded that an insured's release of all claims "by or on behalf of" the insured barred future first-party medical claims asserted by the insured's healthcare providers. Motorist Pellumbesha Biba, an insured of Defendant State Farm, was injured in an automobile accident. In exchange for $35,000, she executed a release of all claims including those asserted on her behalf. After executing the release, Ms. Biba began treatment with Michigan Head & Spine Institute. Michigan Head & Spine sought reimbursement from State Farm, which denied payment based on the release. The district and circuit courts held that Michigan Head & Spine had a separate cause of action. The Court of Appeals disagreed, relying on the broad language in the release. The Court noted that Michigan Head & Spine had a cause of action against Ms. Biba, and that upholding the lower court decisions would have a chilling effect on future no-fault settlements of claims.

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