You’ve been in a car accident. Now your doctor may ask you for an assignment of no-fault benefits. What does that mean? Should you sign the assignment? And why do you need to?
Changes in Medical Provider Lawsuits Put Patients in the Middle
Auto insurance providers are always on the look out for new ways to deny claims for no-fault benefits. On May 25, 2017, the Michigan Supreme Court opened up a whole new avenue for those denials in Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich 191 (2017). That case said that medical providers lacked standing – that they did not have authority to sue on their patients’ behalf. Instead, the court said doctors and hospitals could sue the injured motorists themselves, who would then be entitled to benefits from their insurance companies.
Assignment of No-Fault Benefits Let Medical Providers Sue For You
After Covenant, personal injury attorneys and medical providers’ lawyers worked together to find ways to make sure doctors got paid without dragging patients back into court. Together, the attorneys decided the best strategy was to ask for an assignment of no-fault benefits after the medical services were rendered.
An assignment is a transfer of the right to sue under a contract from one person to another. If you assign your right to no-fault benefits to your doctor’s office, you are saying they should be able to take the insurance company to court, not you. An assignment of no-fault benefits transfers your right to be paid insurance payouts related to a medical provider’s work to that medical provider after the work is done. A well-crafted assignment only applies to the portion of no-fault benefits related to that provider’s work and doesn’t apply to future services you may require.
Insurance Company Says Anti-Assignment Clause Bans Assignment of No-Fault Benefits
The insurance companies don’t want to give up their newly won defense to no-fault claims by medical providers. So when Dr. Jawad A. Shah tried to save his medical provider claim through an assignment of no-fault benefits, State Farm said it couldn’t be done. The insurance company relied on an anti-assignment clause buried in its insurance policy that said:
“No assignment of benefits or other transfer of rights is binding upon us [State Farm] unless approved by us.”
The trial court judge agreed, but a recently published decision Jawad A. Shah MD, PC v State Farm Mut Auto Ins Co, Docket No. 340370 said that part of the contract could not be enforced against patients.
1880 Michigan Supreme Court Case Protects Assignment of No-Fault Benefits
The Shah court agreed with State Farm that the language of the anti-assignment clause in its insurance policy was “perfectly clear”. But it was also unenforceable according to public policy. The court relied on a 138-year-old case about a livery stable for horses, a fire, and an insurance claim.
In Roger Williams Ins Co v Carrington, 43 Mich 252 (1880), Mr. Carrington filed an insurance claim after a fire destroyed his livery stable. While that claim was still pending, he used the benefits from it to secure a debt – possibly for repairs to the stable. The Michigan Supreme Court said:
“It is the absolute right of every person—secured in this state by statute—to assign such claims, and such a right cannot be thus prevented. It cannot concern the debtor, and it is against public policy.”
As old as the case was, it had never been overturned. The court said that the medical providers’ assignment of no-fault benefits after the fact was the same as Mr. Carrington’s stable benefits, so the anti-assignment clause in the insurance policy was unenforceable based on public policy.
Personal injury attorneys are constantly forced to think on their feet to respond to new auto insurance defenses. That includes requesting the assignment of no-fault benefits to protect a claim for medical benefits. If you don’t want to be caught between a medical provider and your insurance company, talk to an experienced personal injury attorney to decide if signing the assignment is right for you.
At Macomb Law Group, our auto accident injury attorneys know the ins and outs of no-fault law. If you or a loved one have been seriously injured in a motor vehicle accident, contact Macomb Law Group and get our team working for you.