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No Notice Means No Money for Providers

Motor Vehicle Litigation / May 13, 2020

Despite the fact that Physiatry & Rehab Assoc v Alhalemi is an unpublished opinion, and thus not legally binding, it may still be used as persuasive authority in lower courts. The case further establishes the rights of an insurance company after a release is executed in good faith and what is required of a provider to protect their interests prior to a settlement.

The Court of Appeals reaffirmed that when a plaintiff signs a release of all past, present, and future claims, they are releasing even their claims that were not specified in their complaint. Even though a settlement and release necessarily arise out of a plaintiff’s initial complaint, if the terms of that release go beyond the instant suit, then those terms may be enforced if they are unambiguous.

The Court further affirmed Michigan law requiring providers to notify an insurer in writing if they hold an assignment of rights from an insured if their rights to benefits are to be protected. MCL 500.3112. In doing so, the Court of Appeals reaffirmed its holding in Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich 191, 210 (2017), which held that Michigan law permits an insurer to “discharge its liability through payment to or for the benefit of a person it believes is entitled to benefits, as long as the payment is made in good faith and the insurer has not been previously notified in writing of the claim of some other person.” (Internal quotations removed.)

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