Lawyers’ Corner: Adult Foster Care in Keys of Life v Auto-Owners Ins Co

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Adult foster care bridges the gap between inpatient care independent living. But a recent Michigan Court of Appeals case warns that not all facilities are created equal. Licensing can be the difference between easy no-fault benefits and a long court battle.

After a serious auto accident or brain injury, a crash victim often needs constant care and supervision. But whether those services can be translated into no-fault benefits depends on whether the facility is providing legal adult foster care. A recent unpublished Michigan Court of Appeals decision, Keys of Life v Auto-Owners Insurance Co, explains what that means.

When Auto Accidents Turn Into 24-hour Care

Keith Mowrer, Sr., was seriously injured in a car crash in July 2010. Two years later, in 2012 he still had the mental capacity of a young child, and was unable to work or live independently. He needed constant supervision, including assistance with:

  • Cooking
  • Grocery Shopping
  • Dressing
  • Showering
  • Bathroom
  • Laundry
  • House Keeping.

He no longer needed in-patient treatment, but he needed assistance with almost every part of life. Beginning in 2012, Mowrer moved into a Keys of Life licensed group home. Later, he leased a residential apartment from the facility, which included a number of care services. But Keys of Life was not a licensed adult foster care provider.

No-Fault Benefits and Licensed Adult Foster Care Facilities

When Keys of Life submitted its bill to Auto-Owners Insurance Company, the insurer denied coverage, claiming that Keys of Life was providing illegal adult foster care services without a license. MCL 500.3157 applies to medical providers’ no-fault claims on behalf of their patients. It says:

“A physician, hospital, clinic or other person or institution lawfully rendering treatment to an injured person for an accidental bodily injury covered by personal protection insurance, and a person or institution providing rehabilitative occupational training following the injury, may charge a reasonable amount for the products, services and accommodations rendered. The charge shall not exceed the amount the person or institution customarily charges for like products, services and accommodations in cases not involving insurance.”

Previous Court of Appeals cases have held that, to be “lawfully rendering treatment” a service provider must have all appropriate licenses. That includes a license to render adult foster care.

When Adult Foster Care Licensing is Necessary

The Adult Foster Care Facility Licensing Act explains when a license is necessary to provide care to injured adults. It defines “foster care” as:

“[T]he provision of supervision, personal care, and protection in addition to room and board, for 24 hours a day, 5 or more days a week, and for 2 or more consecutive weeks for compensation.”

Each of the aspects of foster care is defined by the statute:

  • “Supervision” Is Guidance In Daily Living Activities Including Medication Schedules, Scheduling, And Appointment Keeping.
  • “Personal Care” Means Assistance With Dressing, Hygiene, Grooming, Medication Maintenance, And Development Of Personal And Social Skills.
  • “Protection” Is Ensuring The Health, Safety, And Well-Being Of A Resident.

If the facility does any of these things, it is considered an adult foster care facility, and it must be licensed. The court held that because the services the Keys of Life provided fell within that definition, it could not collect for adult foster care services provided to Mr. Mowrer.

Attendant Care V. Adult Foster Care

However, the court refused to treat everything Keys of Life did as adult foster care. While Keys of Life had submitted blanket billing, the court said it should be allowed to itemize its services and recover no-fault benefits for those attendant care services that do not require a license. The court did not, however, explain what might count as attendant care but not fall within the licensing requirements of adult foster care.

Missing Licenses, Fraudulent Billing

Auto-Owners next argued that, because it lacked the necessary licenses, Keys of Life had committed fraud by billing for illegal medical services. (The insurer also claimed that the company had misrepresented its service by saying it provided 24 hour care continuously, but this ignored the language indicating that some exceptions existed, such as when Mowrer visited family.) Specifically, Keys of Life billed for “one on one rehabilitation aide” care, even though none of its caregivers were trained in rehabilitation.

However, the care provider stated in an affidavit that rehabilitation was a “euphemism not intended to correlate to a higher rate of pay.” The court held that, even if this was a misrepresentation due to the lack of licenses, it was not done with the intent the insurer would rely on it. Therefore, it did not amount to fraudulent billing or fall within the policy’s fraud exclusion.

Proof of Billing

Finally, Auto-Owners tried to argue that the Keys of Life invoices did not provide reasonable proof of the loss sustained. But this was directly contrary to prior court decisions that said a letter and a billing statement was enough. If an insurance company questions the legitimacy of a claim, such as when licensing is unclear, it has 30 days to do the investigation or challenge the amount paid. Because the insurance company was aware Mowrer required 24-hour attendant care as the result of an accident, and received invoices indicating Keys of Life provided that care, it had reasonable proof to support the payment of no-fault benefits.

Representing Attendant Care Providers After Keys of Life

Keys of Life reminds medical provider attorneys of the need to be proactive in protecting clients’ interests. By reminding provider clients of their licensing requirements, attorneys can streamline their subsequent no-fault claims later on. This will protect professional care providers’ bottom lines, and build a stronger relationship with medical provider clients.

David Christensen is a medical provider attorney with Christensen Law in Southfield, Michigan. He files and litigates no-fault claims on behalf of doctors, hospitals, and care providers against insurance companies. If your client needs no-fault representation, contact Christensen Law today for a referral.