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By Richard D. Weber, J.D.
MDA Legal Counsel
Published in the November 2002 issue of the Journal

Question: I have a long-time patient who was involved in a serious automobile accident and sustained substantial damage to her teeth. She does not have dental insurance, but her no-fault auto insurer is responsible to pay for any health care services. I agreed to submit my bills to the no-fault insurance carrier. The bills have been outstanding for almost four months. The no-fault insurer simply ignores my follow up statements. Do I have any recourse against the insurer?

Answer: The Michigan Court of Appeals rendered two decisions this year that grant significant legal rights to health care professionals who provide services to persons injured in automobile accidents. Prior to these decisions, insurers took the position that no-fault benefits belonged to the injured party and only the injured party could enforce collection against a no-fault carrier.

Under the No-Fault Act, insurers are required to pay all reasonably necessary charges incurred by individuals who are injured in motor vehicle accidents. The benefits must be paid within 30 days after the insurer receives reasonable proof of the fact and the amount of the loss sustained. If not paid within that time, interest is accrued at the rate of 12 percent per annum. The No-Fault Act also provides for reasonable attorney fees to be paid by the insurer for representing a no-fault claimant if the insurer unreasonably refused or delayed making payment. Attorney fees are not available if a good faith question of constitutionality, statutory construction or bona fide factual uncertainty exists.

In both cases, separate panels of the Michigan Court of Appeals recognized the right of health care providers to pursue direct actions against no-fault insurers for reasonable health care charges. Both decisions reject the argument asserted by the no-fault insurers and hold that health care providers are entitled to enforce the penalty interest provisions under the act if insurers do not pay within 30 days after receipt of a proper claim. The court held that the statute requires that benefits are payable to or for the benefit of the injured person, and this would include a claim asserted by a health care professional or facility.

The Court of Appeals held that health care providers were "claimants" under the statute and thus had the right to recover attorney fees expended in pursuit of overdue benefits. The court recognized that the imposition of the penalty provisions of the No-Fault Act, both with respect to interest and attorney fees, furthers the purpose and goal of the No-Fault Act. The no-fault system was adopted in an effort to eradicate problems inherent in the tort liability system, such as long payment delays, high legal costs, and an overburdened court system.

These cases now make it clear that health care professionals have a direct action against no-fault insurers. Health care professionals are entitled to pursue no-fault penalties of 12 percent interest plus attorney fees in the event the insurer unreasonably delays or denies payment of no-fault claims.

It is unlikely that the Supreme Court will reverse these rulings. It is expected that no-fault insurers will heed these decisions and the potential penalties and will timely pay claims submitted by dentists for automobile accident victims, rather than force litigation. If litigation is necessary, however, health care professionals are now armed with substantial rights and penalties in directly pursuing reimbursement.

In addition to your newly recognized rights to directly pursue the no-fault insurer, you can submit your bill to the patient and let the patient deal with the insurer. With the 12 percent interest and attorney fee incentives, however, a direct claim against the no-fault insurer is a viable alternative.

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