Medical Service Providers' Coordination of Primary Health v. No-fault Coverages

Medical service providers must carefully adhere to the procedures and administrative guidelines set forth in participating provider agreements with primary health insurers.  Failure to do so will prove fatal to any secondary no-fault claim.  That is exactly what happened to a medical provider in a recent ruling issued by the Michigan Court of Appeals, entitled Farm Bureau Gen Ins Co of MI v Blue Cross/Blue Shield, et al, ___ Mich App ___ (2016)(Docket No. 322423, dated January 7, 2016).  In Farm Bureau v Blue Cross, the injured patient had coordinated no-fault coverage with BC/BM, being primary.  She was admitted into a Spectrum rehabilitation care facility.  Spectrum and BC/BM had a participating provider agreement which details the process in which claims are considered, appealed and/or waived, etc.  Per the agreement, Spectrum requested pre-authorization for care and was granted only 14 days of coverage.  Per the agreement, Spectrum was required to appeal the decision if it sought more days of coverage; or, obtain in writing from its patient, that its patient would agree to be financially responsible for charges incurred beyond the 14 days approved by BC/BM.  If it did neither, then the agreement provided further that Spectrum “assumes full financial responsibility for the denied claims.”   Spectrum neither appealed nor sought written acknowledgment from its patient.  And, it continued to treat the patient beyond the 14 days.  Spectrum then billed the patient’s auto no-fault insurer, Farm Bureau for the unpaid charges not otherwise covered by BC/BM.  Farm Bureau paid the claim under protest and filed the instant declaratory action.  The court held that Spectrum assumed liability for the expenses beyond the 14 days approved by BC/BM, per the language of the provider agreement.  Even though the plain language of the BC/BM was all that was necessary to decide this case, the court nevertheless engaged in a no-fault jurisprudence discussion about coordination of coverage under MCL 500.3109a and when a charged is deemed “incurred”, as contemplated by MCL 500.3107(1)(a). Relying on Proudfoot v State Farm Mut Auto Ins Co, 469 Mich 476 (2003), the court reiterated that to “’incur’ means [t]o become liable or subject to, [especially] one’s own actions.  When an insured has no legal responsibility for disputed costs, those expenses are not ‘incurred’ by the insured within the meaning of MCL 500.3107(1)(a) and they are not subject to payment by the no-fault insurer.”  Thus, in addition to the BC/BM provider agreement being controlling, the Court held further that Spectrum’s insured had not incurred charges under MCL 500.3107(1)(a), during the period after the initial 14 days; as such, Farm Bureau was not liable and consequently, was entitled to a refund.

Authored by L. Page Graves