Coordinated No-Fault Benefits: No More Payment Delays For Medical Providers


During the past year, medical providers have been operating under the notion that, when a patient has coordinated no-fault benefits, they had to first appeal the denial of the patient’s health insurance coverage before seeking payment for their services under Michigan’s No-Fault Act.

When it comes to coordinated no-fault benefits where health coverage is denied, an appeal of that denial can take months. This means that many medical providers have been under pressure to meet the one-year statutory deadline for submitting their no-fault claims — with some providers not being able to meet the deadline and, therefore, not getting paid at all for their services.

But medical providers can now breathe a sigh of relief, thanks to a recent Michigan Court of Appeals decision.

In St. John Macomb Oakland Hospital v State Farm Mutual Automobile Ins Co (Docket No. 329056, issued 12/8/2016), the Court of Appeals held that medical providers are not required to appeal a health insurer’s denial of benefits before seeking payment of no-fault personal protection insurance (PIP) benefits for the services they’ve rendered.

The St. John decision clarifies last year’s ruling in Farm Bureau Ins Co v Blue Cross Blue Shield, 314 Mich App 12 (2015), where the Court said that, under the “unique circumstances” of that case, a medical provider could not collect no-fault PIP benefits under a coordinated policy where the health insurer had denied coverage

So why is the St. John decision important? Two reasons:

  • it reinforces the intended purpose of Michigan’s No-Fault Act, which is “to provide for assured, adequate, and prompt recovery for economic losses stemming from motor vehicle accidents.”
  • it is a welcome relief for medical providers, who have been burdened by the pursuit of lengthy appeals of a health insurer’s denial before trying to recover rightful payments from no-fault insurers.

No Appeal Necessary

In St. John, the Court of Appeals found that St. John Macomb Oakland Hospital presented sufficient evidence that it made “reasonable efforts” to obtain payment for its services under the patient’s coordinated no-fault benefits. The Court further held that St. John did not have to appeal the health insurer’s denial of benefits in order to make such a showing.

The Court of Appeals relied primarily on Adanalic v Harco Nat’l Ins Co, 309 Mich App 173 (2015), to make its decision. In Adanalic, the Court ruled that a workers’ compensation claimant did not have to litigate a denial of benefits before seeking PIP benefits, because imposing such a requirement would be contrary the No-Fault Act’s goal of prompt recovery for an economic loss.

Similarly, the St. John Court held the claimant did not need to appeal the health insurer’s denial of benefits before seeking PIP benefits from State Farm. The Court of Appeals flatly rejected State Farm’s reliance on Farm Bureau, where the appellate court had ruled that a contract between the provider and the health insurer precluded the insured from satisfying the PIP benefit prerequisite of actually “incurring” the charges.

The St. John Court further held that Farm Bureau did not stand for the proposition that a provider/insured must appeal a health insurer’s denial. The St. John Court explained that, in Farm Bureau, the Court merely observed that the medical provider may have been able to avoid liability by seeking an appeal.

Burden Lifted

The St. John decision is important for medical providers because it offers clarity in cases where patients have coordinated no-fault benefits — that is, no-fault coverage that is coordinated with their health insurance coverage.

Because the St. John opinion is published and binding, medical providers faced with a denial by a patient’s health insurer can now confidently turn to the patient’s no-fault insurer for coverage, knowing they have met the burden of making reasonable efforts to obtain payment from the health insurer. This allows medical providers to act promptly in pursuing payment.

And prompt action is crucial, given that §3145 of the No-Fault Act requires that an action for benefits be brought within one year of the date the expense is incurred. Generally, an expense is “incurred” on the date that services were rendered, meaning medical providers typically have one year from the date of service to bring suit against a no-fault insurer for payment.

With such a short time frame at play, the potential delay associated with having to fully exhaust a health insurer’s internal appeals process – which could take several months from start to finish – can be burdensome on a medical provider. It may also jeopardize a provider’s ability to receive payment from the no-fault insurer.

In the end, the St. John decision lifts this burden off medical providers, allowing them to act swiftly to pursue payment of benefits and protect their rights under the No-Fault Act.

If you’re a medical provider or an accident victim with questions about insurance coverage, the Sinas Dramis team of experienced Michigan auto no-fault attorneys can help. Contact our Lansing personal injury lawyers or Grand Rapids personal injury attorneys today for a free consultation.