First-Party No-Fault Auto Accident Lawsuits Explained
Any time a person receives medical treatment or rehabilitative services as the result of a motor vehicle accident, he or she is entitled to benefits from a no-fault auto insurance provider. Often, this is the insurance provider that person has a contract with, although in other cases it could be the plan of a spouse, other driver, vehicle owner, or even an insurance company randomly assigned by the assigned claims facility. Whichever insurance company is deemed to have top priority is responsible to pay for all reasonable and necessary medical expenses related to the auto accident.
Unfortunately, auto insurance providers make it a practice to deny the valid claims of their policy holders, or offer them so little that the benefit will not cover the person’s necessary medical costs. When that happens, the injured party has the right to file a first-party no-fault auto accident lawsuit against the insurance company.
Medical Providers And No-Fault Benefits
The Michigan No-Fault Act allows insurance companies to pay medical providers directly for the care administered to their policy holders. By doing so, the insurance companies satisfy their obligation to pay no-fault benefits, even though the injured party never receives the money.
For decades, Michigan courts have understood this arrangement to allow medical providers to sue insurance companies directly when their bills went unpaid. These “medical provider suits” often occurred side-by-side with the injured party’s first-party auto accident lawsuits. This allowed patients and their doctors to work together against the insurance companies to get their medical expenses covered.
Covenant v State Farm And The End Of Medical Provider Suits
Then, in May 2017, the Michigan Supreme Court changed the process for collecting medical benefits. In Covenant v State Farm, the court said:
“We therefore hold that healthcare providers do not possess a statutory cause of action against no-fault insurers for recovery of personal protection insurance benefits under the no-fault act.”
In other words, doctors, hospitals, and other medical professionals are no longer allowed to sue insurance companies to get their bills paid. Now, injured parties bear the sole responsibility of bringing an auto accident lawsuit against the insurance company to avoid having their medical debt go into collections.
The practical effect of Covenant pits doctors against their own patients. While doctors can no longer sue the insurance companies, they do have the right to enforce their contracts with their patients. The Michigan No-Fault Act limits recovery of benefits to one year before the lawsuit was filed. Rather than losing access to those insurance benefits, doctors are now forced to sue their own patients, sometimes while treatment is still ongoing, to make sure those auto accident lawsuits start on time. Once the doctor versus patient lawsuit begins, the injured party can bring in the insurance company as a third party responsible for paying the medical bill in question.
Some medical providers are also considering an “assignment” to take back their ability to sue directly. If you have been injured in a motor vehicle accident, your medical providers may ask you to sign paperwork signing over your right to collect benefits from the insurance company to the doctor or hospital. In theory, this would allow medical providers to file a First-Party lawsuit against the insurance company on your behalf to get the benefits paid.
It is not yet clear whether these assignments will be upheld in court, or if the Michigan No-Fault Act will be amended as a result of this ruling. What is clear is that, at least in the short-term, Michigan medical providers will be the ones initiating auto accident lawsuits. If injured parties do not respond appropriately and quickly, they could be faced with paying hundreds of thousands of dollars in medical expenses without the aid of the no-fault benefits they should have received.
The Cronin Law Firm has experienced attorneys to aid with whatever legal issue you’re facing. If you have been injured in an auto accident, contact The Cronin Law Firm today to schedule a consultation.