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BlogsPublications | June 1, 2017
1 minute read

MSC holds that healthcare providers do not have a direct cause of action against no-fault insurers

In Covenant Medical Center, Inc. v. State Farm Mutual Automobile Insurance Company, the Michigan Supreme Court reversed the decision of the Court of Appeals and held that under the plain language of Michigan’s no-fault act for automobile accidents, MCL 500.3101 et seq., a healthcare provider does not have a statutory cause of action against a no-fault insurer to recover personal protection insurance (PIP) benefits.

In reaching its holding, the Court observed that no provision of Michigan’s no-fault act explicitly mentions the ability or right of healthcare providers to sue no-fault insurers for recovery. Additionally, the court recognized the ability of a no-fault insurer to discharge its liability to an individual by paying the healthcare provider directly under MCL 500.3112; however, it noted that situation did not apply in this case. The Court also noted that the few times healthcare providers are mentioned in the no-fault act, there is no reference to a direct right to sue a no-fault insurer.

While it declined to recognize the right of healthcare providers to sue no-fault insurers, the Court acknowledged another method of recourse for healthcare providers—to seek payment from the injured individual for the healthcare provider’s reasonable charges. Thus, in this case, the Court stated that Covenant Medical Center could directly seek payment from the injured individual for the cost of its services.