Henry Ford Health System v. Everest National Insurance Company

927 N.W.2d 717, 326 Mich. App. 398

• Court: Michigan Court of Appeals
• Decided: November 20, 2018
• Docket: 341563
• Status: Published

Opinion

Per Curiam.

*400 In this action for recovery of personal protection insurance (PIP) benefits payable under the no-fault act, MCL 500.3101 et seq ., plaintiff, Henry Ford Health System, appeals as of right an order granting summary disposition in favor of defendant, Everest National Insurance Company. Because we agree that the trial court erred by enforcing an antiassignment clause contained in defendant's insurance policy, we reverse and remand for further proceedings consistent with this opinion.

I. BACKGROUND

On July 30, 2016, Jennifer Quinn was involved in a motor vehicle accident. At the time of the accident, Quinn was insured under a no-fault insurance policy issued by defendant. Quinn received treatment from *719 plaintiff, incurring medical expenses in excess of $200,000, which defendant refused to pay. On or about July 31, 2017, Quinn executed an assignment of rights, providing, in pertinent part, as follows:

This is an assignment of the right to enforce payment of charges incurred only for Services arising out of the July 30, 2016 accident, for which charges are payable under any policy of insurance, contract and/or statute. Such *401 assignment shall include, in Assignee's sole discretion, the right to pursue appeal of a payment denial under any procedure outlined in any insurance policy, contract or statute and/or the right to file a lawsuit to enforce the payment of benefits due or past due for these Services incurred and resulting charges.

Plaintiff initiated this action the same day, seeking payment for services provided to Quinn.

Defendant moved for summary disposition pursuant to MCR 2.116(C)(10), arguing that the subject insurance policy unambiguously precluded Quinn from assigning her rights without defendant's consent. Defendant also asserted that because Quinn only assigned "the portion of her claim relating to [plaintiff]'s bills," rather than her entire cause of action, the partial assignment was invalid. Plaintiff opposed the motion on numerous grounds. Of significance to this appeal, plaintiff asserted that the purported antiassignment clause was ambiguous, unenforceable in the context of a postloss assignment of the right to payment for past or presently due benefits, and void pursuant to provisions of the Uniform Commercial Code (UCC), MCL 440.1101 et seq ., requiring that security interests in a healthcare-insurance receivable remain freely assignable.

The trial court ruled that plaintiff's complaint against defendant was barred under the terms of the insurance policy. The court reasoned that Quinn's failure to obtain defendant's written consent before assigning her rights triggered a separate clause of the policy that precluded suit against defendant in the absence of full compliance with the terms of the policy. The trial court also rejected plaintiff's contention that the antiassignment clause was invalid under the UCC because "[t]he assignee by operation of the statute is only a secured creditor who may assert rights to the *402 health-insurance receivable against the assignor or lower priority creditors, but not against the account debtor (in this case the insurer)." Accordingly, the trial court granted defendant's motion for summary disposition and dismissed plaintiff's complaint with prejudice.

II. STANDARDS OF REVIEW

We review de novo a trial court's ruling on a summary disposition motion. Robins v. Garg (On Remand) , 276 Mich. App. 351 , 361, 741 N.W.2d 49 (2007). "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." Dancey v. Travelers Prop. Cas. Co. of America , 288 Mich. App. 1 , 7, 792 N.W.2d 372 (2010) (quotation marks and citation omitted). Issues involving the proper interpretation of statutes and contracts are also reviewed de novo. Titan Ins. Co. v. Hyten , 491 Mich. 547 , 553, 817 N.W.2d 562 (2012).

III. ANALYSIS

Plaintiff maintains on appeal that, acting as assignee of Quinn's claim, it was entitled to recover past and presently due benefits for the services it rendered to Quinn for her accident-related injuries. According to plaintiff, to the extent that the pertinent clause in defendant's insurance contract is construed as an antiassignment clause, it was inoperative to bar assignment *720 of an accrued cause of action under Michigan law. We agree.

"Insurance policies are contracts and, in the absence of an applicable statute, are subject to the same contract construction principles that apply to any other *403 species of contract." Id . at 554, 817 N.W.2d 562 (quotation marks and citation omitted). Under traditional principles of contract construction, "unless a contract provision violates law or one of the traditional defenses to the enforceability of a contract applies, a court must construe and apply unambiguous contract provisions as written." Rory v. Continental Ins. Co. , 473 Mich. 457 , 461, 703 N.W.2d 23 (2005). A contract is ambiguous "if it is equally susceptible to more than a single meaning." Barton-Spencer v. Farm Bureau LifeIns. Co. of Mich. , 500 Mich. 32 , 40, 892 N.W.2d 794 (2017). Because the contract at issue involves mandatory PIP benefits required by the no-fault act, the contract and statutes must be "read and construed together as though the statutes were part of the contract ...." Titan Ins. Co. , 491 Mich. at 554 , 817 N.W.2d 562 (quotation marks and citation omitted).

The contractual provision at issue in this case states, in pertinent part, "Interest in this Policy may not be assigned without our [that is, defendant's] written consent." Plaintiff contends that this provision should be read as an antitransfer clause, prohibiting the insured from assigning the policy to someone else without consent, rather than a limitation on the insured's ability to assign an accrued right to recover under the policy. The policy does not define the term "interest." Thus, in determining the meaning of the word, it is appropriate to consult a dictionary. Vushaj v. Farm Bureau Gen. Ins. Co. of Mich. , 284 Mich. App. 513 , 515, 773 N.W.2d 758 (2009). Relevant to interpreting this provision, Black's Law Dictionary defines "interest" in both a "collective" and a "distributive" sense. "Collectively, the word includes any aggregation of rights, privileges, powers, and immunities; distributively, it refers to any one right, privilege, power, or immunity." Black's Law Dictionary (10th ed.). Plaintiff's *404 interpretation is too narrow in that it focuses solely on the first half of the definition, while ignoring the latter. Nor does the dual nature of the term leave it equally susceptible to more than one meaning. Instead, "interest" can only be reasonably understood as referring to both collective rights and "distributive" or individual rights. By using a broad term like "interest" in this provision, the policy should be reasonably construed as prohibiting assignment of any interest-that is, interest in the policy itself or interest in specific benefits arising under the policy-without written consent from defendant. Because we construe this provision as unambiguously prohibiting assignment of any interest without defendant's consent, we must enforce the provision as written unless it violates law or a traditional defense to enforceability applies. Rory , 473 Mich. at 461 , 703 N.W.2d 23 .

Another panel of this Court recently considered the enforceability of an unambiguous antiassignment clause in a no-fault insurance policy in Jawad A. Shah, MD, PC v. State Farm Mut. Auto. Ins. Co. , 324 Mich.App. 182 , 920 N.W.2d 148 (2018). In that case, the Court determined that resolution of this issue turned on application of precedent established in Roger Williams Ins. Co. v. Carrington , 43 Mich. 252 , 5 N.W. 303 (1880), in which the Court declined to enforce an antiassignment clause when the assignment was made after a loss of insured property had occurred. Shah , 324 Mich. App. at 198-199 , 920 N.W.2d 148 . The Shah Court explained:

Our Supreme Court in Roger Williams essentially held that an accrued cause of action may be freely assigned after the loss and that an antiassignment *721 clause is not enforceable to restrict such an assignment because such a clause violates public policy in that situation. Roger Williams , 43 Mich. at 254 [ 5 N.W. 303 ]. In this case, [the insured] had an accrued claim against his insurer for payment of healthcare services *405 that had already been provided by [the healthcare providers] before [the insured] executed the assignment. Under Roger Williams , the contractual prohibition against the [insured] assigning that claim to [the healthcare providers] was unenforceable because it was against public policy. Id .

Therefore, we conclude that the antiassignment clause in the instant case is unenforceable to prohibit the assignment that occurred here-an assignment after the loss occurred of an accrued claim to payment-because such a prohibition of assignment violates Michigan public policy that is part of our common law as set forth by our Supreme Court. Roger Williams , 43 Mich. at 254 [ 5 N.W. 303 ] ; Rory , 473 Mich. at 469-471 [ 703 N.W.2d 23 ]. [ Shah , 324 Mich. App. at 200 , 920 N.W.2d 148 .]

The relevant circumstances presented in this case are identical to those at issue in Shah . That is, like the insured party in Shah , Quinn was injured in an automobile accident and received treatment that was alleged to fall within the scope of allowable expenses for which she could seek PIP benefits under the no-fault act. See id . at 186, 920 N.W.2d 148 . After the services were rendered, Quinn assigned her right to payment for those services to her healthcare provider, despite an unambiguous antiassignment clause contained in the insurance policy. See id . at 187-188, 920 N.W.2d 148 . Given the clear parallels between these cases, we are bound by the resolution of this very issue in Shah . MCR 7.215(J)(1). 1 Accordingly, we must conclude that the antiassignment clause in defendant's policy is unenforceable because it is contrary to public policy. See Shah , 324 Mich. App. at 200 , 920 N.W.2d 148 .

*406 Defendant presents two additional arguments for affirming the trial court's ruling that were not addressed in Shah . First, defendant contends that Quinn could not assign her right to payment of PIP benefits because she had not fully performed her obligations under the policy. According to defendant, Quinn's "duties under the policy are ongoing" and her performance of "these ongoing obligations ... is essential to [defendant]'s ability to review and consider claims." But apart from these vague references, defendant fails to identify what "ongoing" duties or obligations Quinn has concerning the claims she assigned to plaintiff. Therefore, we consider this argument abandoned because a party cannot simply "announce a position or assert an error and then leave it up to this Court to discover and rationalize the basis for his claims, or unravel and elaborate for him his arguments, and then search for authority either to sustain or reject his position." Yee v. Shiawassee Co. Bd. of Comm'rs , 251 Mich. App. 379 , 406, 651 N.W.2d 756 (2002) (quotation marks and citation omitted).

Next, defendant argues that the assignment was unenforceable because it did not assign Quinn's entire cause of action for PIP benefits arising from the subject accident. Relying primarily on *722 Schwartz v. Tuchman , 232 Mich. 345 , 205 N.W. 140 (1925), defendant contends that a partial assignment of a cause of action is unenforceable against the debtor. In Schwartz , the plaintiff was assigned the right to receive one-third of the commission payable from a real estate transaction. Id . at 347-348, 205 N.W. 140 . When the party responsible for payment of the commission failed to do so, the plaintiff sought to enforce the assignment in equity. Id . at 348, 205 N.W. 140 . The trial court dismissed the action, concluding that the plaintiff had an adequate remedy at law against the real estate broker who had assigned the partial *407 commission to the plaintiff. Id. at 348-349, 205 N.W. 140 . On appeal, the Supreme Court observed that although a partial assignment may be enforceable between the parties to the assignment, the assignee had no legal remedy against a debtor who was not a party to the assignment. Id . at 349, 205 N.W. 140 . The Court explained:

The reason for the legal doctrine is obvious. The law permits the transfer of an entire cause of action from one person to another, because in such case the only inconvenience is the substitution of one creditor for another. But if assigned in fragments, the debtor has to deal with a plurality of creditors. If his liability can be legally divided at all without his consent, it can be divided and subdivided indefinitely. He would have the risk of ascertaining the relative shares and rights of the substituted creditors. He would have, instead of a single contract, a number of contracts to perform. A partial assignment would impose upon him burdens which his contract does not compel him to bear. [ Id . at 349-350, 205 N.W. 140 (quotation marks and citation omitted).]

However, the Supreme Court reasoned that these concerns did not arise in a court of equity, in which "the interests of all parties can be determined in a single suit" and "[t]he debtor can bring the entire fund into a court and run no risk as to its proper distribution." Id . at 350, 205 N.W. 140 (quotation marks and citation omitted). Thus, the Court concluded that "partial assignments should be sustained in a court of chancery in all cases where it can be done without detriment to the debtor or stakeholder, whenver [sic] equitable and just results may be accomplished by it." Id . (quotation marks and citation omitted).

Defendant's argument is unpersuasive because it ignores subsequent caselaw stating that " MCR 2.205 has replaced the common-law rule against splitting a cause of action."

*408 United Servs. Auto. Ass'n v. Nothelfer , 195 Mich. App. 87 , 89, 489 N.W.2d 150 (1992). Furthermore, defendant's position rests on the notion that Quinn's claim or cause of action is one for allegedly improper nonpayment of all no-fault benefits. We disagree.

This case is readily distinguishable from the circumstances presented in Schwartz , in which the defendant was obligated to make a single commission payment to a third party and the plaintiff sought to enforce an assignment of a fraction of that payment. Schwartz , 232 Mich. at 347-348 , 205 N.W. 140 . As the Court explained in Schwartz , the partial assignment imposed the burden of multiple creditors and performances on the defendant-a burden that he did not bargain for when he entered into contract. Id . at 349-350, 205 N.W. 140 . In contrast, under the no-fault act, PIP benefits are payable as loss accrues, MCL 500.3142(1), and become overdue if not paid within 30 days of receipt of reasonable proof of the fact and of the amount of loss sustained, MCL 500.3142(2). In other words, the act contemplates and requires a multitude of performances (i.e., payments) by the insurer, such that the rationale for the limitation set forth in Schwartz has no application in the context of PIP benefits required by the *723 no-fault act. In addition, the procedural distinctions between actions in law and equity as described in Schwartz have long been abolished in this state. See Const. 1963, art. 6, § 5 ; Fenestra Inc. v. Gulf American Land Corp. , 377 Mich. 565 , 593, 141 N.W.2d 36 (1966). To the extent that a proper disposition of the benefits sought by the healthcare provider requires the presence of an additional party or parties, modern joinder rules provide a method for maintaining a joint cause of action. See United Servs. Auto. Ass'n , 195 Mich. App. at 89 , 489 N.W.2d 150 . *409 As further support for its contention that the assignment at issue in this case amounted to an unenforceable partial assignment of a cause of action, defendant cites various cases that discuss when an assignee is considered the real party in interest for purposes of bringing a cause of action in his or her own name. Specifically, in Kearns v. Mich. Iron & Coke Co. , 340 Mich. 577 , 66 N.W.2d 230 (1954), the Court reiterated that Michigan jurisprudence has been "committed to the proposition that where an assignment is such that satisfaction of the judgment obtained by the assignee will discharge the defendant from his obligation to the assignor, for the purpose of the suit the assignee is the real party in interest and may maintain an action in his own name." Id . at 582, 66 N.W.2d 230 , quoting Sharrar v. Wayne Savings Ass'n , 254 Mich. 456 , 459, 236 N.W. 833 (1931). According to defendant, because Quinn only assigned her right to recover a limited portion of the allowable expenses potentially available under the no-fault act, the assignment would not relieve defendant of its obligation to Quinn for other benefits. Once again, defendant's argument rests on the mistaken presumption that Quinn's claim can only be viewed as one for all the PIP benefits that she may be entitled to recover as a result of her motor vehicle accident, which is inconsistent with the MCL 500.3142 requirement of prompt payment of claims as they accrue. Furthermore, MCL 500.3112 contemplates that an insurer may discharge its obligation to the insured with respect to particular benefits that have been incurred by directing payment of those benefits to the party providing services to the injured party. Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co. , 500 Mich. 191 , 209-210, 895 N.W.2d 490 (2017). See also MCL 500.3112 (stating that in the absence of written notice by another claiming entitlement to payment, "[p]ayment by *410 an insurer in good faith of personal protection insurance benefits, to or for the benefit of a person who it believes is entitled to the benefits, discharges the insurer's liability to the extent of the payments ....").

This outcome-the ability of a healthcare provider who has provided services to a party injured in a motor vehicle accident to pursue recovery from the provider as the assignee of the injured party's claim-is further supported by the manner in which the no-fault act addresses assignments. MCL 500.3143 provides that "[a]n agreement for assignment of a right to benefits payable in the future is void." This provision is unambiguous and prohibits only assignments of benefits payable in the future, as opposed to a right to payment of past or presently due benefits. Prof. Rehab. Assoc. v. State Farm Mut. Auto. Ins. Co. , 228 Mich. App. 167 , 172, 577 N.W.2d 909 (1998). See also Shah , 324 Mich. App. at 216 , 920 N.W.2d 148 ( SHAPIRO , J., concurring in part and dissenting in part) ("By not including past-due benefits in this statutory prohibition, the Legislature, under the doctrine of expressio unius est exclusio alterius , made clear its intent to adhere to the fundamental principle that assignments of past-due benefits are effective and proper."). If this Court were to hold that the assignment at issue in this case was an unenforceable partial assignment, it would effectively render the insured's *724 right to assign a claim for past or presently due benefits meaningless.

IV. CONCLUSION

In sum, consistently with this Court's recent ruling in Shah , we conclude that the antiassignment clause in defendant's insurance policy is unenforceable because it is against public policy to the extent that it attempts to restrict the insured's ability to assign an *411 accrued claim. We further conclude that Quinn's assignment to plaintiff was not unenforceable as a "partial assignment." We reverse the trial court's order granting defendant's motion for summary disposition and remand for further proceedings consistent with this opinion. 2 We do not retain jurisdiction.

O'Brien, P.J., and Tukel and Letica, JJ., concurred.

1 We recognize that our Supreme Court recently ordered oral argument on the insurance company's application for leave to appeal in that Court, directing it to brief "whether the anti-assignment clause in the defendant's insurance policy precludes the defendant's insured from assigning his right to recover no-fault personal protection insurance benefits to the plaintiff healthcare providers." Jawad A. Shah, MD, PC v. State Farm Mut. Auto. Ins. Co. , 503 Mich. 882 , 918 N.W.2d 528 (2018).

2 Given our resolution of this issue, we will not address plaintiff's alternative argument concerning the enforceability of the antiassignment clause under MCL 440.9408.