When a client has both health insurance and no-fault auto insurance it should be a good thing. But when the coordinated insurance companies argue over the coverage, it could make your case that much more difficult.
Coordinated insurance is intended to allow Michigan motorists to save money and ensure quality protection after an auto accident. With two sources of benefits, coordinated insurance should make it easier for your client to be compensated for medical expenses. But a recent published Michigan Court of Appeals decision, St. John Macomb Oakland Hospital v. State Farm Mut Auto Ins Co, shows that a no-fault carrier can sometimes make it difficult to get any recovery at all.
St. John Macomb Oakland Hospital V. State Farm Mutual Automobile Insurance Co
On December 9, 2011, Nuo Dusaj was in a serious car accident. He sustained a closed head injury and required partial day hospitalization. Dusaj had coordinated insurance through Blue Cross Blue Shield and State Farm. So the facility submitted its claim to Blue Cross for payment.
Magellan Behavioral of Michigan administers Blue Cross’s mental health program. But the certified psychiatrist who served as a physician advisor determined that St. John’s day program was not medically necessary for Dusaj. Blue Cross therefore denied the claim.
Blue Cross has an internal appeal process that allows a patient, provider, or facility to request a review within 180 days and have a decision within another 30 days. If care is ongoing a telephonic review can be done within 72 hours. Then, a party can request an external review by an independent organization which would respond within another 30 days.
St. John decided not to use this internal appeal process, and instead submitted its bill to State Farm for payment under the No-Fault Act. State Farm denied the claim too, taking the position that St. John had not taken reasonable steps to get payment from Blue Cross.
Coordinated Insurance Benefits
MCL 500.3109a says:
“An insurer providing personal protection insurance benefits under this chapter may offer, at appropriately reduced premium rates, deductibles and exclusions reasonably related to other health and accident coverage on the insured. Any deductibles and exclusions offered under this section are subject to prior approval by the commissioner and shall apply only to benefits payable to the person named in the policy, the spouse of the insured, and any relative of either domiciled in the same household.”
This allows a customer to coordinate his or her health insurance and automobile insurance in exchange for reduced premiums. The intent of this section is to eliminate double recovery, where the same patient submits claims for payment with both insurance companies for the same services. Instead, the medical insurance provider becomes primarily liable for the medical expenses and the no-fault insurer is not liable for anything the medical insurance covers.
Exhausting Coordinated Policy Remedies
Having a coordinated policy requires a plaintiff to “use reasonable efforts to obtain payments” that are available under the health insurance plan first. The question before the Michigan Court of Appeals is what those reasonable efforts look like. State Farm took the position that before St. John could seek no-fault benefits it had to exhaust all of Blue Cross’s appeals.
But the Court of Appeals disagreed. It said that the plaintiff had presented evidence that it submitted the claim to Blue Cross and followed the proper procedure. The denial was based on a determination of medical necessity. The court found that this constituted reasonable efforts to obtain payments available from the medical insurer.
In deciding what reasonable efforts looked like, the court reviewed a similar case involving a Workers Compensation claim and a no-fault policy, Adanalic v Harco Nat’l Ins Co. There, the injured party was not required to appeal a denial of his workers’ compensation benefits before seeking payment under his no-fault policy. The Adanalic court said:
“Both the workers’ compensation system and the no-fault system are ‘intended to provide limited, but prompt payment of benefits to injured persons in order to assure medical care, rehabilitation, and income replacement.’ . . . Indeed, requiring an employee to engage in lengthy workers’ compensation litigation before being paid PIP benefits ‘is wholly inadequate to accomplish the no-fault act’s purpose of providing assured, adequate, and prompt recovery for economic loss arising from motor vehicle accidents.’”
The St. John court agreed with that reasoning. It found:
“[T]he purpose of the no-fault act cannot be met by requiring an injured person to engage in a potentially lengthy appeals process with the health insurance company.”
Preventing an injured person to receive any benefits until the health insurance denial is adjudicated is at odds with the policy underlying the no-fault act.
The court distinguished its decision from Farm Bureau Gen Ins Co v Blue Cross Blue Shield of Mich, where a medical provider assumed liability for the injured person’s medical expenses. In that circumstance, the medical provider’s agreement with the health insurance company controlled the situation and relieved the injured party of any liability. Since no costs were incurred by her they were not payable by the no-fault insurance provider.
The St. John court noted that, while neither medical provider had appealed the health insurer’s decisions, the assumption of liability made the two cases different. Since St. John had not assumed Dusaj’s liability, he had incurred it. The medical provider could therefore pursue no-fault benefits without first appealing the denial of health care benefits.
Coordinated insurance policies seem like a win-win. Michigan residents get two avenues to coverage at lower cost and the insurance companies get to split the bill. But sometimes two insurance companies just mean twice the headache for patients and their auto accident attorneys.
David Christensen is an auto accident attorney at Christensen Law in Southfield, Michigan. He has handled numerous coordinated insurance claims. If your client has a complicated no-fault issue, contact Christensen Law today for a referral.