Mr. Tullio's automobile insurer, Pioneer State Mutual Insurance Company, refused to pay Michigan Head & Spine.

Michigan Head & Spine sued Pioneer, alleging that Pioneer had violated its statutory duty under Michigan's no-fault law to reimburse it for the services it had rendered to Mr. Tullio.

While that case was pending, the Supreme Court of Michigan decided Covenant Medical Center, Inc. v. State Farm Mutual Automobile Ins. Co., 895 N.W.2d 490 (Mich. 2017), in which it held that that healthcare providers had no statutory cause of action against a no-fault insurer. The court also stated, however, that its conclusion was “not intended to alter an insured's ability to assign his or her right to past or presently due benefits to a healthcare provider.”

Before the Covenant decision, between December 16, 2013 and December 7, 2015, Mr. Tullio executed 12 assignments of rights that provided:

I, Larry A. Tullio, do hereby assign my right to collect no-fault insurance benefits for services rendered by Michigan Head & Spine Institute (MHSI) to date, to MHSI and attorneys operating on its behalf.

Additionally, after the Covenant decision, on September 21, 2017, Mr. Tullio executed an assignment of rights that provided as follows:

I, Larry A. Tullio (patient), do hereby assign my right to collect (including the right to sue for) no fault-insurance benefits, for unpaid services rendered by Michigan Head & Spine Institute, P.C. to date, to Michigan Head & Spine Institute, P.C. This is an assignment for services already rendered only; this is not an assignment of benefits for services rendered in the future or after the date of this document. . . .

The trial court granted summary disposition in Pioneer's favor after concluding that it had to enforce the anti-assignment clause in Mr. Tullio's no-fault policy, which provided that Mr. Tullio's “rights and duties under this policy may not be assigned without [Pioneer's] written consent.”

Michigan Head & Spine appealed.

The Michigan Appellate Court's Decision

The Michigan appellate court reversed.

In its decision, the appellate court acknowledged that Pioneer had not consented in writing for Mr. Tullio to assign his right to benefits to Michigan Head & Spine.

The appellate court then pointed out that, in Shah v. State Farm Mutual Automobile Ins. Co., 920 N.W.2d 148 (Mich. Ct. App. 2018), it held, relying on Roger Williams Ins. Co. v. Carrington, 5 N.W. 303 (Mich. 1880), that an anti-assignment clause in an insurance policy contract was unenforceable because it violated Michigan public policy.

The appellate court found no authority rejecting the analysis in Roger Williams and it ruled that, like the anti-assignment clause in Shah, the anti-assignment clause in the no-fault policy issued to Mr. Tullio “was unenforceable because of public policy.”

The appellate court concluded that Mr. Tullio had an accrued claim against Pioneer for the payment of health care services that already had been provided by Michigan Head & Spine; that the claim existed before the assignments were executed; and that Mr. Tullio was free to assign this claim to Michigan Head & Spine, despite the anti-assignment clause in his no-fault policy.

The case is Michigan Head & Spine Institute PC v. Pioneer State Mutual Ins. Co., No. 342979 (Mich. Ct. App. March 26, 2019).  

Learn more:

Michigan Appeals Court Strikes Down Auto Insurance Policy's Anti-Assignment Clause

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Distinguishing Michigan Supreme Court Ruling, Court Allows Health Care Provider's Suit Against No-Fault Insurer to Proceed

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