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Done Deal: Provider Unable to Avoid its Patient’s Settlement with Insurer

Motor Vehicle Litigation / May 14, 2021

MCL 500.3112 states that “[p]ayment by 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 unless the insurer has been notified in writing of the claim of some other person.”

For services rendered after June 11, 2019, § 3112 allows a “health care provider … [to] make a claim and assert a direct cause of action against an insurer” to “recover overdue benefits payable for charges for products, services, or accommodations provided to an injured person.”

For services rendered before June 11, 2019, providers can bring their own suits based on assignments from the injured person. Advance Pain Care, unpub op at 3.

Whether they are relying on assignments or a direct action under the statute, § 3112’s “payment … in good faith” language is often an issue for providers. This is because when the injured person “enter[s] into a settlement which release[s] all claims, past, present, and future that he had against” the insurer, the insurer is protected from provider claims from the same accident unless “a written copy of the assignment was … provided to [the insurer] before the settlement agreement was entered into.” Advance Pain Care, unpub op at 4.

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