Bronson Methodist Hospital v. Michigan Assigned Claims Facility

STATE OF MICHIGAN

COURT OF APPEALS

BRONSON METHODIST HOSPITAL, UNPUBLISHED
February 19, 2015
Plaintiff-Appellant,

v Nos. 317864, 317866
Kalamazoo Circuit Court
MICHIGAN ASSIGNED CLAIMS FACILITY, LC No. 2012-000600-NF

Defendant-Appellee.

Before: BECKERING, P.J., and BORRELLO and GLEICHER, JJ.

PER CURIAM.

Bronson Methodist Hospital filed suit after the Michigan Assigned Claims Plan (MACP)
(successor to the Michigan Assigned Claims Facility) peremptorily denied its application for
assignment of Bronson’s claim for payment of medical services provided for the benefit of an
injured driver. Before conducting any discovery, the MACP moved to dismiss Bronson’s suit,
arguing that it had no legal duty to assign Bronson’s claim to an insurer. The circuit court
granted summary disposition, ruling that Bronson’s patient either maintained no-fault insurance
from which the patient could seek recovery or the patient illegally failed to maintain insurance,
rendering Bronson ineligible for claim assignment.

We hold that the circuit court jumped the gun, as the evidence presented with the
MACP’s summary disposition motion did not factually support that immediate dismissal is
warranted. Accordingly, we vacate the circuit court orders dismissing Bronson’s claims and
imposing sanctions against it, and remand for further proceedings.

I. BACKGROUND

On July 6, 2012, Cody Esquivel was involved in a single vehicle accident. Esquivel was
intoxicated and peeled out of a driveway, causing his 2002 Jeep to roll over and strike a large
landscaping boulder. Although Esquivel was unconscious at the scene and had to be airlifted to
Bronson, Esquivel ultimately suffered only a broken finger and bruising on his left flank. The
final bill from Bronson for Esquivel’s treatment was $21,914.22.

Bronson discharged Esquivel within 24 hours of his accident. No one from the hospital
collected information regarding Esquivel’s no-fault automobile insurance coverage before he
left. Thereafter, the hospital was unable to locate Esquivel. A bill sent to his last known address
was returned unopened. Further investigation revealed an updated phone number and address.

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By the time Bronson attempted to contact the phone number it had been disconnected, and mail
to the new address went unanswered. Bronson also submitted an investigatory request to the
Secretary of State and learned that the vehicle involved in the accident was titled in Esquivel’s
name.

In the meantime, Bronson filed an application for benefits with the Michigan Assigned
Claims Facility, which has since been reconfigured into the Michigan Assigned Claims Plan
(MACP).1 In response to the application question, “On the date of the accident, did you have
motor vehicle insurance?” Bronson responded, “unknown.” Bronson similarly indicated that it
was unknown whether any relatives living with Esquivel or the “driver of the involved motor
vehicle” carried no-fault insurance. The MACP denied Bronson’s application, asserting “The
owner or co-owner of an uninsured motor vehicle . . . involved in an accident is not eligible for
benefits.”

Bronson subsequently filed a complaint for declaratory judgment and mandamus
requiring the MACP to approve the application and assign the claim to a servicing insurer.
Bronson contended that the MACP was statutorily obligated to assign the claim pursuant to MCL
500.3172(1), which provides:

A person entitled to claim because of accidental bodily injury arising out of the
ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle
in this state may obtain personal protection insurance [PIP] benefits through the
assigned claims plan if [1] no [PIP] is applicable to the injury, [2] no [PIP]
applicable to the injury can be identified, [3] the [PIP] applicable to the injury
cannot be ascertained because of a dispute between 2 or more automobile insurers
concerning their obligation to provide coverage or the equitable distribution of the
loss, or [4] the only identifiable [PIP] applicable to the injury is, because of
financial inability of 1 or more insurers to fulfill their obligations, inadequate to
provide benefits up to the maximum prescribed.

Bronson asserted that it had been unable to identify the insurance applicable to the injury,
supporting its application for benefits.

In lieu of an answer, the MACP filed a motion for summary disposition pursuant to MCR
2.116(C)(8) and (10). The MACP speculated that Esquivel, as the vehicle’s registered owner,
either maintained an insurance policy from which coverage must be sought or he failed to
maintain insurance, in which case both he and Bronson would be precluded from seeking no-
fault coverage from any insurer pursuant to MCL 500.31132 and MCL 500.3173.3 Under either

1
Bronson was required to file its application with the MACP within one year of Esquivel’s
accident or forever lose its opportunity to make a claim for reimbursement. See MCL
500.3145(1).
2
The statute provides that “[a] person is not entitled to paid [PIP] benefits” if “[t]he person was
the owner or registrant of a motor vehicle . . . involved in the accident with respect to which the
security required by [MCL 500.3101 or MCL 500.3102] was not in effect.” MCL 500.3113(b).

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scenario, the MACP continued, neither Bronson nor Esquivel would be entitled to assignment of
the claim to an outside insurance company. The MACP accused Bronson of negligently
releasing Esquivel without securing insurance information and then shifting the duty of
investigation onto the agency. The statute, the MACP contended, places the burden of
identifying applicable insurance on the party filing an application with the agency. The MACP
premised this interpretation on MCL 500.3172(1)’s declaration that “a person entitled to claim”
benefits must show that no insurance coverage is applicable or identifiable. The MACP also
sought to impose sanctions against Bronson for filing a frivolous suit.

Bronson retorted that MCL 500.3172(1) contains four statutory conditions that “trigger
eligibility for assigned claim benefits.” Here, Bronson argued, that no insurance provider could
be identified triggered eligibility. Moreover, Bronson asserted, it complied with the
administrative rules governing applications to the MACP, see Mich Admin Code, R 11.07, and
included all required information and documentation. Upon receipt of this application, the
MACP was required by MCL 500.3173a(1) to “make an initial determination of a claimant’s
eligibility for benefits under the assigned claims plan and . . . deny an obviously ineligible
claim.” Bronson’s claim was not “obviously ineligible,” it argued, because there was no
evidence that Esquivel had not maintained insurance on the day of the accident and Bronson had
not been able to identify any applicable insurance. As such, the Mich Admin Code, R 11.103
required the MACP to assign the claim to a servicing insurer, and the servicing insurer would
then be obligated to conduct an expeditious investigation pursuant to Mich Admin Code, R
11.109. If the servicing insurer’s investigation revealed an applicable insurance policy, it then
would be entitled to reimbursement. And contrary to the MACP’s arguments, Bronson
contended that nothing in the statutes required Bronson to establish at the time of application that
no statutory coverage exclusions applied.

At the summary disposition hearing, the MACP expounded upon situations it believed
should qualify for assignment when applicable insurance could not be identified.

A hit-and-run accident where the claimant is a pedestrian and the car takes
off and they don’t know if there is insurance on that car or not; but, because the
person is a pedestrian, they’re entitled to benefits.

Perhaps a person is a passenger in a car and, for one reason or another, the
insurance can’t be determined for that car. That person would be entitled to
benefits even though . . . there is no identifiable insurance.

But where the injured party was the registered owner of the vehicle, the MACP insisted, no claim
should be permitted. Rather, the hospital was required to establish whether the patient had
insurance or not. And under either scenario, Esquivel would be ineligible for claim assignment,
supporting the MACP’s decision to deny the application.

3
This provision states: “A person who because of a limitation or exclusion in [MCL 500. 3105 to
500.3116] is disqualified from receiving [PIP] benefits under a policy otherwise applying to his
accidental bodily injury is also disqualified from receiving benefits under the assigned claims
plan.”

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 Bronson then clarified the relief it requested in the complaint:

[W]e’re not asking the [MACP] to pay the claim. We have a declaratory
judgment action asking the [MACP] to assign the claim to a servicing insurer to
process and deny the claim potentially or pay the claim. But we’re only, at this
point in time, seeking the assignment of this claim to a servicing insurer. That’s
how this works. The [MACP] gets our application for benefits and then assigns it
to a servicing insurer.

Bronson agreed with the MACP that “this can play out in two different ways,” one ending with
coverage from some insurer and the other ending in no coverage. However, Bronson disagreed
with the MACP that the outcome was clear at such an early stage:

It could play out with the servicing insurer—Let’s assume it’s State Farm, for
example, will get this claim and identify that Mr. Esquivel had insurance—higher
priority insurance, in which case that insurance carrier will pay the claim[.]

Or State Farm, if they’re the servicing insurer, will conclude after the
assignment and with proper discovery where we get our day in court and we have
the ability to litigate it, that, in fact, our patient Mr. Esquivel was an uninsured
owner of a motor vehicle and consequently excluded from coverage.

One of those two situations is going to play out here, I have little doubt.
But scenario number one could play out just as well as scenario number two.
What that means is at this point in time, when all we’re asking for is the [MACP]
to assign the claim to a servicing insurer, we cannot say and the [MACP] cannot
say that this patient is obviously ineligible for no-fault benefits because he very
well may be entitled to no-fault benefits. That’s not the [MACP’s] call, that’s the
servicing insurer’s decision.

The MACP responded that it simply does not have the resources suggested by Bronson to
shift the burden of investigation onto the agency. The MACP thereby ignored Bronson’s direct
averment that it was actually placing the investigatory burden on the insurer assigned the claim.

It’s a—Fishing expedition is [an] understatement. It’s a hail Mary pass
that they can somehow conscript the [MACP] into being a defendant in a
litigation and trying to use resources that they believe it has that the [MACP] does
not, in fact, have to locate a higher priority insurer that they hope exists.

The burden’s on them. They’ve got until September of this year to find
that insurer if it’s out there.

Ultimately, the circuit court granted the MACP’s summary disposition motion. The court
credited the MACP’s declaration that it denied the application for assignment because it
determined that Esquivel owned the vehicle and therefore was clearly ineligible for assigned
claim benefits, reading MCL 500.3113 and MCL 500.3173 together.

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 Under these provisions, because Mr. Esquivel owned the motor vehicle
involved in the accident, neither [PIP] benefits nor benefits under the [MACP]
may be paid out for him. As such, [Bronson] was obviously ineligible for benefits
under the [MACP], and the [MACP] correctly denied [Bronson’s] claims, I find.

The court declared “wrong” Bronson’s assertion that it satisfied MCL 500.3172(1) because it
could not identify applicable insurance:

First, 3172(1) has been characterized by courts as setting forth the
circumstances under which defendant may receive or obtain the assigned claims
benefits, not when defendant must accept a claim, Spencer v Citizens Insurance
Company, 239 Mich App 291 at 301; Spectrum Health v Grahl, 270 Mich App
248 at 251 to ’52.

Instead, MCL 500.3173a governs when defendant must accept or deny a
claim. Thus, 500.3172(1) is not dispositive on the issue of when defendant must
accept or deny a claim.

Second, statutes that relate to the same subject are to be read and
construed together. . . .

Accordingly, 500.3172(1) must be read together with the statutes that
provide limitations and exclusions on who may receive assigned claims benefits
and how [the MACP] is to handle these claims, including MCL 500.3113, MCL
500.3173, and MCL 500.3173a.

When reading these statutes together, 500.3172(1) provides the general
rule for eligibility; MCL 500.3173 provides exceptions to that rule; and MCL
500.3173a requires defendant to take both statutes into account when determining
whether to deem a person obviously ineligible for purposes of deciding whether to
deny assignment of his or her claim.

***

In light of what I think is a plain reading of the above described statutes,
[Bronson’s] pleadings, and the documentary evidence submitted fail to convince
me that genuine issues of material fact exist for trial; and conversely, [the MACP]
has satisfied its burden.

The MACP thereafter renewed its request for attorney fees and costs, claiming that
Bronson’s claims were frivolous. Counsel asserted that with the creation of the MACP, newly
designated investigators discovered that significant waste had occurred under the prior regime:

In January of this year, the Assigned Claims Facility was dissolved, and it
was moved into a semi-governmental organization called the Assigned Claims
Plan from a wholly governmental organization that was operated through the
secretary of state.

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 And, the reason was, it was discovered that there was a lot of claims
coming through the [MACP] that had absolutely no business being there, and a[n]
effort is being made at this time to get those claims out so that the plan can
provide the benefits to the people who are entitled to them and . . . that it will not
be weighed down by claims from people that have no right bringing a claim
against the plan.

The MACP’s counsel continued that he discussed the agency’s stance with Bronson’s counsel,
but Bronson refused to back down. Accordingly, counsel contended, Bronson filed its lawsuit
knowing “that it did not have a right of recovery against the [MACP], and it was an effort to
conscript the [MACP] to do its work for Bronson Hospital and try and locate—if possible—a
higher priority insurer; and that is not what the [MACP] exists for.”

Bronson denied the frivolity of its claims. Bronson argued that it was “unclear” whether
Esquivel was the owner of an uninsured vehicle. As an applicable insurer could not be
identified, Bronson requested assignment of the claim under the language of MCL 500.3172(1).
This was a reasonable interpretation of the statute, Bronson maintained. The complaint was filed
in good faith “where there had been no other clear and unequivocal case law addressing this
precise issue.” That the circuit court rejected Bronson’s interpretation did not render its claims
frivolous, Bronson concluded.

The circuit court granted the MACP’s request for $4,654.85 in attorney’s fees and costs
pursuant to MCR 2.625 (frivolous claims). The court found that Bronson “had no reasonable
basis to believe that” its claims were legally supported. “This wasn’t even a close call on this
case,” the court emphasized. “There just was nothing that I could see that [Bronson] could hang
its hat on here, and it was on a fishing expedition, and it was done at their own peril.”

The circuit court subsequently denied Bronson’s motion for reconsideration, and this
appeal followed.

II. STANDARDS OF REVIEW

The MACP sought summary disposition under both MCR 2.116(C)(8) and (10). The
circuit court considered evidence beyond the pleadings and thereby granted the MACP’s motion
under (C)(10). Lugo v Ameritech Corp, Inc, 464 Mich 512, 515 n 1; 629 NW2d 384 (2001). We
review de novo a lower court’s decision on a summary disposition motion. Island Lake Arbors
Condo Ass’n v Meisner & Assocs, PC, 301 Mich App 384, 392; 837 NW2d 439 (2013).
“‘Summary disposition is appropriate under MCR 2.116(C)(10) if there is no genuine issue
regarding any material fact and the moving party is entitled to judgment as a matter of law.’” Id.,
quoting West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003). “In reviewing a
motion under MCR 2.116(C)(10), this Court considers the pleadings, admissions, affidavits, and
other relevant documentary evidence of record in the light most favorable to the nonmoving
party to determine whether any genuine issue of material fact exists to warrant a trial.” Walsh v
Taylor, 263 Mich App 618, 621; 689 NW2d 506 (2004).

We also review de novo underlying issues of statutory interpretation. Barclae v Zarb,
300 Mich App 455, 466; 834 NW2d 100 (2013).

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 The goal of statutory interpretation is to discern and give effect to the intent of the
Legislature. To that end, the first step in determining legislative intent is the
language of the statute. If the statutory language is unambiguous, then the
Legislature’s intent is clear and judicial construction is neither necessary nor
permitted. [Id. at 466-467 (citations omitted).]

III. SUMMARY DISPOSITION IMPROPERLY GRANTED

The circuit court erred in granting the MACP’s motion for summary disposition before
the parties conducted any discovery. Whether Esquivel failed to maintain statutorily required
insurance for his vehicle constitutes an unresolved question of fact. The MACP presented no
evidence that Esquivel was not insured. And Bronson has been unable to identify any applicable
no-fault insurer. As such, it is not yet certain that Esquivel and thereby Bronson is ineligible for
assignment of this claim to a servicing insurer. Alternatively stated, a fact question exists as to
whether Esquivel was or was not insured, and thereby whether Bronson is “obviously ineligible”
to seek no-fault benefits. Accordingly, summary disposition was at least premature.

“Enactment of the Michigan no-fault insurance act signaled a major departure from prior
methods of obtaining reparation for injuries suffered in motor vehicle accidents. . . . Under this
system, losses are recovered without regard to the injured person’s fault or negligence.” Spencer
v Citizens Ins Co, 239 Mich App 291, 300; 608 NW2d 113 (2000). In the normal course, a party
injured in a motor vehicle accident will seek benefits under his or her own no-fault policy, or
through the policy of a family member. Id. at 301. As a last resort, when a liable insurer cannot
be immediately identified or in some circumstances, when an injured party does not have
insurance, the claim for benefits is placed before the MACP. Id., Hunt v Citizens Ins Co, 183
Mich App 660, 665; 455 NW2d 384 (1990).

As noted, MCL 500.3172(1) provides, “A person entitled to claim because of accidental
bodily injury arising out of the ownership, operation, maintenance, or use of a motor vehicle as a
motor vehicle in this state may obtain [PIP] benefits through the [MACP] if . . . no [PIP]
applicable to the injury can be identified.” The MACP must “make an initial determination of
the claimant’s eligibility for benefits under” the plan but may only deny an application if based
on “an obviously ineligible claim.” MCL 500.3173a. If the claim is not “obviously ineligible,”
the MACP must “promptly” assign the claim to a servicing insurer. Mich Admin Code, R
11.108(3). Upon assignment, the servicing insurer “shall investigate the claim expeditiously.”
Mich Admin Code, R 11.109(1). The insurer assigned by the MACP stands in a position of last
priority, Hunt, 183 Mich App at 665, and may seek to transfer a claim and to secure
reimbursement if a higher priority insurer as identified in MCL 500.3114 or MCL 500.3115 is
discovered. In the meantime, however, the injured party continues to receive benefits from the
assigned insurer.

The MACP correctly states that an injured party “who because of a limitation or
exclusion in [MCL 500.3105 to MCL 500.3116] is disqualified from receiving [PIP] benefits”
from an assigned insurer through the MACP. MCL 500.3173. And MCL 500.3113(b) provides
that “[a] person is not entitled to be paid [PIP] benefits” if he or she is “the owner or registrant of
a motor vehicle . . . involved in the accident” and did not maintain statutorily required no-fault
insurance at the time of the accident. The MACP also correctly posits that if Esquivel or a

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family member in his household maintained no-fault insurance at the time of the accident, that
insurer would take priority under MCL 500.3114(1).

It is not clear on this undeveloped record, however, that one of these scenarios exist.
Esquivel’s insurance status remains unknown. When he is deposed, the material fact missing
from the no-fault equation will emerge. MACP has not yet carried its burden as the moving
party to demonstrate with admissible evidence, rather than speculation, that Bronson was
“obviously ineligible” to make a claim for benefits.

The MACP proffered the Michigan State Police accident report with its summary
disposition motion. The report identified the vehicle involved in the accident, including its
vehicle identification and license plate numbers. The vehicle was at that time registered to Cody
Eleazar Esquivel. The report contains no information regarding Esquivel’s no-fault insurance, or
lack thereof. A corresponding fire department incident report also identified the vehicle and
driver, but left blank sections designated for insurance information. The MACP provided
Bronson’s application for claim assignment, indicating that Esquivel’s insurance information
was “unknown.” Finally, the MACP attached a letter that it had sent to Bronson, expressing its
belief that the burden fell on Bronson to establish entitlement to benefits before the claim would
be assigned.

Bronson supplemented the record evidence with its medical records pertaining to
Esquivel’s treatment. The records indicate that when Esquivel first arrived at the hospital, he
was intubated, rendering him unable to communicate. Once extubated, Esquivel remained too
intoxicated or confused to appropriately answer questions. When Esquivel’s parents arrived,
medical personnel asked them medical and psychological history questions. However, there is
no indication in the medical records that Bronson staff questioned Esquivel, once he was sober,
regarding his no-fault automobile insurance. The records also do not include any reference to
Esquivel’s health insurance provider, if any.

Bronson also provided evidence of its attempts to locate Esquivel to secure insurance
information after his release. Bronson made a Freedom of Information Act request to the
Michigan State Police for the accident report. Bronson submitted the letter it sent to Esquivel
three months after the accident at the address listed in the police report. Bronson included a copy
of the enveloped returned as undeliverable and stamped “Attempted – Not Known, Unable to
Forward.” Bronson attached identification and address information provided by the Secretary of
State and discovered through an “Accurint” Internet search, both of which led to some stale
contact information. Mail submitted to the most current address discovered for Esquivel went
unanswered and unreturned.

Ultimately, nothing in the record establishes that Esquivel was actually uninsured. And
no applicable insurance has been identified, despite Bronson’s efforts. Thus, at this juncture,
Bronson’s claims fall squarely within that portion of MCL 500.3172(1) addressing claims for
which “no personal protection insurance applicable to the injury can be identified.” The
existence of a central material fact question—whether or not Esquivel had insurance at the time
of the accident—precluded summary disposition, and the circuit court erred in granting the
MACP’s motion and request for sanctions.

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 We vacate and remand for further proceedings consistent with this opinion. We do not
retain jurisdiction. As this case involves a question of public policy, Bronson may not tax its
costs under MCR 7.219.

/s/ Jane M. Beckering
/s/ Stephen L. Borrello
/s/ Elizabeth L. Gleicher

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