                          STATE OF MICHIGAN

                           COURT OF APPEALS


AUTO-OWNERS INSURANCE COMPANY,                                     FOR PUBLICATION
HOME-OWNERS INSURANCE COMPANY,                                     December 18, 2018
and CALEB CASANOVA,

               Plaintiffs-Appellees,

v                                                                  No. 339799
                                                                   Ingham Circuit Court
COMPASS HEALTHCARE PLC d/b/a                                       LC No. 16-000870-CK
COMPASS HEALTH, and LANSING
NEUROSURGERY,

               Defendants-Appellants.


Before: BOONSTRA, P.J., and JANSEN and GADOLA, JJ.

BOONSTRA, P.J. (concurring).

        I concur in the result reached by the majority and in much of its reasoning. I write
separately to offer an alternative rationale. In essence, I conclude that where a healthcare
provider seeks to collect on a “balance bill”1 from an injured person who is entitled to no-fault
benefits, the claim is in the nature of a contract claim; nonetheless, the contract in question is
necessarily subject to principles of public policy as expressed in the no-fault act, MCL 500.3101
et seq. Under the circumstances of this case, those principles preclude defendants from
collecting on their balance bill to plaintiff Caleb Casanova.

        The no-fault act is a statutory scheme that “provides a system of mandatory no-fault
automobile insurance, which requires Michigan drivers to purchase personal protection
insurance.” AOPP v Auto Club Ins Assoc, 257 Mich App 365, 373; 670 NW2d 569 (2003).
“Under personal protection insurance an insurer is liable to pay benefits for accidental bodily
injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor
vehicle, subject to the provisions of this chapter.” MCL 500.3105(1). Generally, “personal
protection insurance benefits are payable for . . . [a]llowable expenses consisting of all


1
  Generally, a balance bill is an invoice from a healthcare provider to its patient, following the
provider’s receipt of a partial payment from an insurer, requesting payment for the difference
between the original charge and the amount of the partial payment received, i.e., the “balance.”


                                               -1-
reasonable charges incurred for reasonably necessary products, services and accommodations for
an injured person’s care, recovery, or rehabilitation.” MCL 500.3107(1).2 “Personal protection
insurance benefits are payable to or for the benefit of an injured person or, in case of his death, to
of for the benefit of his dependents.” MCL 500.3112.

        This means, as is undisputed, that the no-fault act allows an injured person to bring suit
against an appropriate insurer for benefits due under the act. Our Supreme Court has held,
however, that a healthcare provider does not possess “a statutory cause of action against a no-
fault insurer.” Covenant Medical Center, Inc v State Farm Mutual Auto Insurance Company,
500 Mich 191, 217; 895 NW2d 490 (2017).

        This case, however, does not present a claim by either an injured person or a healthcare
provider against a no-fault insurer. Defendants did not bring suit against either plaintiff insurers
(which, as noted, Covenant determined they had no statutory right to do) or against plaintiff
Casanova. Instead, this is an action for declaratory relief brought by the insurers and Casanova
against Casanova’s healthcare providers. Underlying that dispute is defendant providers’ efforts
to secure payment from Casanova for the amount of their balance bill.3

        The questions presented in this case include whether a healthcare provider may seek
payment from its patient (the injured person) for a balance bill, the nature of any such claim, and
the extent (if any) to which the provisions of the no-fault act are implicated with respect to that
claim. As noted, I conclude that it may do so,4 that its claim is in the nature of contract, and that




2
  By its terms, MCL 500.3107(1) limits an insurer’s liability to that of paying for “reasonable”
charges. Consistent with that limitation, MCL 500.3157 provides that “[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 . . . may charge a reasonable
amount for the products, services and accommodations rendered.” Id. However, [t]he charge
shall not exceed the amount the person or institution customarily charges for like products,
services and accommodations in cases not involving insurance.” Id. Where contested, the
question of what constitutes a “reasonable” charge is generally one for the fact-finder. AOPP,
257 Mich App at 380. See also Bronson Methodist Hosp v Auto-Owners Ins Co, 295 Mich App
431, 448; 814 NW2d 670 (2012).
3
  Plaintiff insurers have already made payment to defendants for what the insurers determined to
be reasonable charges for defendants’ medical services to plaintiff Casanova. Defendants did not
bring suit against Casanova for payment of the balance bill, but did send him a series of invoices
requesting payment, even in the face of plaintiff insurers’ demands that they cease doing so.
4
   The caveat to this conclusion, however, is that “the amount chargeable to the patient
(§ 3157) . . . is limited, by statute, to a reasonable amount.” AOPP, 257 Mich App at 374. See
also Covenant, 500 Mich at 217 (“a provider that furnishes healthcare services to a person for
injuries sustained in a motor vehicle accident may seek payment from the injured person for the
provider’s reasonable charges”).


                                                 -2-
the principles of the no-fault act nonetheless are implicated so as to in this case preclude
defendant providers from collecting on their balance bill to Casanova.

        Given that the no-fault act is a statutory insurance scheme, and that defendant providers’
relationship with Casanova is one relating to the provision of healthcare services rather than
insurance, I conclude that a claim or cause of action by defendant providers against Casanova for
payment for those services does not arise under the no-fault act itself, but instead is necessarily
one arising from contract, albeit in this case an implied contract for the provision of healthcare
services. Certainly, the no-fault act is implicated, but only because Casanova is entitled to
insurance coverage from plaintiff insurers with respect to payment for those healthcare services.
But the no-fault act does not itself provide a right of action by a healthcare provider against its
patient for payment for services rendered. That cause of action, to the extent it exists, instead
lies in contract. See McGill v Auto Assoc of Mich, 207 Mich App 402, 406; 526 NW2d
12 (1994), quoting Nasser v Auto Club Ins Assoc, 435 Mich 33, 49; 457 NW2d 637 (1990) (“To
the extent that plaintiff has any liability for these expenses [charged by the healthcare provider]
in the event his insurance does not pay, it is presumably contractual.”).5

       Indeed, no party to this case maintains otherwise. That is, plaintiffs do not dispute
defendants’ general contention that their claim against Casanova lies in contract. Indeed, for the
reasons noted, it must. I therefore conclude that to the extent the trial court held that defendants’
claim against Casanova was not contract-based, it erred.6

        The real dispute in this case is the extent, if any, to which the limitations of the no-fault
act apply to defendants’ claim against Casanova notwithstanding the contractual nature of that
claim. Defendants describe their contractual right as “unfettered.” And they cite Covenant as
“expressly reaffirm[ing] the legal right of medical providers to seek payment of unpaid medical
bills directly from their patients.” Yet they seem to acknowledge that the contractual right is
fettered in at least one respect. That is, defendants acknowledge that they remain subject to the
“reasonable” charge limitation of MCL 500.3157.7 Indeed, in holding that healthcare providers
have no statutory right of action against no-fault insurers, Covenant couched its corollary
acknowledgement (that a provider may still have a claim is against its patient) in terms of that
limitation. Covenant, 500 Mich at 217 (“This conclusion [that a healthcare provider does not


5
  Of course, nothing about this conclusion would, in a different context, support an argument that
a claim of medical malpractice should instead be characterized as one for breach of contract.
See, e.g., Grewe v Mt Clemens General Hosp, 47 Mich App 111, 113-114; 209 NW2d 309
(1973), citing Miller v Toles, 183 Mich 252; 150 NW 118 (1914); Awkerman v Tri-County
Orthopedic Group, PC, 143 Mich App 722, 725-726; 373 NW2d 204 (1985).
6
 Similarly, to the extent that the majority holds that defendants’ claim against Casanova arose
under the no-fault act, rather than as a matter of contract, I disagree. For reasons I will note,
however, the majority and I ultimately end up in the same place.
7
  Although this acknowledgement was equivocal in defendants’ briefing on appeal, it was
express and unequivocal at oral argument.


                                                -3-
possess a statutory cause of action against a no-fault insurer] does not mean that a healthcare
provider is without recourse; a provider that furnishes healthcare services to a person for injuries
sustained in a motor vehicle accident may seek payment from the injured person for the
provider’s reasonable charges.”) (emphasis added; footnote omitted); see also Nasser, 435 Mich
at 55-56 (“It seems unlikely that plaintiff would have an express agreement with [his doctor] or
the hospital to pay unreasonable and unnecessary medical expenses, and equally as unlikely that
he would have an implied contractual duty to do so.”) (emphasis added).

        Of course, defendants did not bring suit against Casanova seeking a determination of the
reasonableness of their charges. Under AOPP, healthcare providers “may challenge [an
insurer’s] failure to fully reimburse them for medical bills as a violation of the act, but they have
the burden of establishing the reasonableness of the charges in order to impose liability on the
insurer.” AOPP, 257 Mich App at 380. Covenant clarified that any such suit must be against the
injured person, rather than the insurer. Covenant, 500 Mich at 217. And in that event, the
insurer is obligated to “defend and indemnify the insured.” AOPP, 257 Mich App at 380. See
also LaMothe v Auto Club Ins Assoc, 214 Mich App 577, 583-584; 543 NW2d 42 (1995),
overruled on other grounds by Covenant.

       What defendants did instead was to accept plaintiff insurers’ August 5, 2014 partial
payment of $1,076.148 and to then almost immediately begin sending Casanova a series of
invoices, and to reject or ignore plaintiff insurers’ entreaties for defendants to cease doing so,
seeking payment of the full amount of the balance bill (for the additional amount of $782.86)
without a judicial determination of the reasonableness of defendants’ charges.9 By doing so,
they effectively tried to circumvent the limitations of MCL 500.3157, denied plaintiff insurers
the opportunity to fulfill their legal obligation to defend and indemnify Casanova with respect to
the balance bill, and did so while failing even to apprise Casanova of defendants’ burden of
proving reasonableness or Casanova’s right to be defended and indemnified by plaintiff insurers.
For the reasons that follow, it is unnecessary for us to determine the propriety of that course of
conduct, but to me it seems highly questionable on its face.



8
  In certain circumstances, healthcare providers are required to accept, as payment in full, the
amount paid by the insurer, and they therefore may not “balance bill” the patient. See, e.g.,
MCL 400.111b(14) (“Except for copayment authorized by the department and in conformance
with applicable state and federal law, a provider shall accept payment from the state as payment
in full by the medically indigent individual for services received.”); 42 CFR 447.15 (“A State
plan must provide that the Medicaid agency must limit participation in the Medicaid program to
providers who accept, as payment in full, the amounts paid by the agency plus any deductible,
coinsurance or copayment required by the plan to be paid by the individual.”) Similar limitations
frequently arise contractually.
9
  If by sending those invoices defendants had been able to successfully induce Casanova to make
full payment short of litigation, then defendants would have successfully avoided a judicial
determination of reasonableness in favor of their own effectively unilateral determination that
their full charge constituted a reasonable charge.


                                                -4-
       The reason that we need not decide that question in this case is that defendants’ own
course of conduct—foregoing a judicial determination of reasonableness in favor of sending
invoices to Casanova on at least nine separate occasions between August 13, 2014 and
August 10, 201610—caused the claim to become untimely and the balance bill therefore to
become uncollectable. Indeed, this points us to the real crux of the dispute in this case, i.e.,
whether the no-fault act’s one-year-back rule, MCL 500.3145, applies. I conclude that it does.

       MCL 500.3145(1) provides:

       An action for recovery of personal protection insurance benefits payable under
       this chapter for accidental bodily injury may not be commenced later than 1 year
       after the date of the accident causing the injury unless written notice of injury as
       provided herein has been given to the insurer within 1 year after the accident or
       unless the insurer has previously made a payment of personal protection insurance
       benefits for the injury. If the notice has been given or a payment has been made,
       the action may be commenced at any time within 1 year after the most recent
       allowable expense, work loss or survivor’s loss has been incurred. However, the
       claimant may not recover benefits for any portion of the loss incurred more than 1
       year before the date on which the action was commenced. . . . (Emphasis added).

        Defendants maintain that because their claim against Casanova is contractual and not
brought under the no-fault act itself, the balance bill charges that defendants seek to collect are
not “benefits payable under this chapter.” MCL 500.3145(1). I disagree. Initially, I find it
impossible to reconcile defendants’ contention with its own conduct and acknowledgements.
That is, defendants acknowledge that Casanova was injured in a motor vehicle accident and that
plaintiff insurers were obligated under the no-fault act to provide personal protection insurance
benefits with respect to Casanova’s receipt of medical treatment for those injuries. Defendants
further acknowledge that their charges for that medical treatment are subject to the “reasonable”
charge limitation of MCL 500.3157, and that plaintiff insurers made payment to them of the
amount that the insurers determined to be a reasonable charge. Consequently, defendants’
position at bottom is that the paid portion of the charges ($1,076.14) constitutes “benefits
payable under this chapter,” MCL 500.3145(1), but that the unpaid portion of the charges
($782.86) does not. While clever, that argument strikes me as too cute by half. If accepted, it
would enable defendants, while facially acknowledging that they are limited under the no-fault
act to reasonable charges, to accept payment for a portion of the charges (i.e., the portion the
insurers deemed to be reasonable), evade a judicial determination regarding whether the balance
of the charges is reasonable (which, if found by a fact-finder to be reasonable, the insurer would
remain obligated to pay), and yet insist that the patient pay the full balance as not subject to the
reasonable charge limitation of MCL 500.3157. The more one parses the contorted and circular
logic of that proposition, the more obvious its ludicrousness appears. Simply put, the fact that
health care providers do not possess a statutory cause of action directly against no-fault insurers,


10
  Defendants also sent an invoice to Casanova on a tenth occasion on December 14, 2016, after
plaintiffs commenced this declaratory judgment action.


                                                -5-
Covenant, 500 Mich at 217, does not mean that the balance bills they direct to their patients are
for something other than “benefits payable under” the no-fault act. Those bills remain subject to
the “reasonable” charge limitation of the no-fault act, the insurers remain liable to the extent the
charges are determined to be reasonable, and the amounts sought to be collected therefore
constitute “benefits payable under” the no-fault act.11

         Defendant further maintains in this regard that a healthcare provider’s balance bill claim
is a “stand-alone contract action between the provider and its patient.” Consequently, defendants
argue, such a claim is subject to a six-year statute of limitations. However, a person injured in a
motor vehicle accident remains subject to the one-year-back rule of the no-fault act. Defendants
effectively posit, therefore, that they are entitled wait up to six years before bringing a balance
bill suit against Casanova—and that they therefore may wait up to six years before seeking a
judicial determination of what constitutes a “reasonable charge”—even though, under the public
policy as set forth in the no-fault act, Casanova would by then be long ago foreclosed from
seeking coverage from his insurers for the services provided by defendants. Further, because the
scope of an insurer’s duty to defend is at least in part dependent on policy language, see
Radenbaugh v Farm Bureau General Ins Co of Mich, 240 Mich App 134, 138; 610 NW2d
272 (2000) (citations omitted), it is at least possible that Casanova would at that juncture be
precluded even from demanding that plaintiffs fulfill their obligation to defend him with respect
to defendants’ balance bill claim.12

        The public policy enacted by the Legislature in the form of the no-fault act affords to
persons injured in a motor vehicle accident a right to personal protection insurance benefits, and
a right to have their insurer defend and indemnify them with respect to a claim for such benefits,
subject to the limitations of the one-year-back rule. It would be anomalous indeed to allow a
healthcare provider to divest an injured person of such rights, and thereby to subvert the public
policy of this state, by failing to act in a manner that would allow the injured person to assert his
or her rights in a timely fashion, all under the guise of a characterization of the provider’s cause
of action against the injured person as a “stand-alone contract action.” I conclude that a
healthcare provider’s cause of action in such a circumstance cannot properly be characterized as
a “stand-alone contract action.” To the contrary, it is a contract-based claim that remains subject
to public policy as expressed in the no-fault act. In other words, it is based on a contract, albeit



11
   I also reject defendants’ argument that the balance bills are not for “benefits payable under”
the no-fault act because they are seeking payment for services rendered to Casanova rather than
seeking benefits payable by Casanova. The fact remains that the insurers remain liable for those
charges to the extent they are judicially determined to be reasonable and therefore they are
“benefits payable under” the act even though payable by the insurers rather than Casanova.
12
   Although not an issue in this case, if Casanova’s claim for no-fault benefits had been assigned
to an insurer through the Michigan Assigned Claims Plan, he would have had to commence “[a]n
action to enforce rights to indemnity or reimbursement against a third party” within “the later of
2 years after the assignment of the claim to the insurer or 1 year after the date of the last payment
to the claimant.” MCL 500.3175(3).


                                                -6-
in this case an implied one, that necessarily is subject to the public policy limitations of the no-
fault act, including the one-year-back rule of MCL 500.3145.

        I find it unnecessary to definitively address the mechanism by which the contract in this
case is subject to the public policy limitations of the no-fault act, because the result is the same in
any event, i.e., defendants are precluded from collecting their balance bill to Casanova under the
circumstances of this case. That is, it matters not for purposes of this case whether, for example,
the contract in question should be reformed in accordance with the public policy of the no-fault
act, see Corwin v DaimlerChrysler Ins Co, 296 Mich App 242, 257, 263; 819 NW2d 68 (2012)
(citation omitted) (noting the ability of a court to reform an insurance policy to be “compatible
with the existing public policy as reflected in the no-fault act,”), or whether the contract should
be deemed, in whole or in part, unenforceable, see Restatement (Second) of Contracts § 178(1)
(“A promise or other term of an agreement is unenforceable on grounds of public policy if
legislation provides that it is unenforceable or the interest in its enforcement is clearly
outweighed in the circumstances by a public policy against the enforcement of such terms.”);
17A CJS Contracts § 278 (“Contracts that violate public policy are unenforceable.”); 17A Am
Jur 2d § 231 (“parties may not privately contract to contravene a state’s public policy or to
circumvent or disregard a statutory prohibition based on public policy”) (footnotes omitted); 17A
CJS Contracts § 271 (“A court will not enforce a contract if it contravenes a statute. . . . A
contract that is contrary to the terms and policy of an express legislative enactment is illegal and
unenforceable. A contract provision is unenforceable if it fails to comply with existing,
governing statutory requirements by attempting to provide fewer rights than legally mandated by
statute, as one cannot do indirectly that which the law does not allow to be done directly.”)
(footnotes omitted).

        It is indisputable that the no-fault act, as a statutory scheme enacted by our Legislature,
reflects the public policy of this state. See Rory v Continental Ins Co, 473 Mich 457, 471; 703
NW2d 23 (2005) (“In ascertaining the parameters of our public policy, we must look to ‘policies
that, in fact, have been adopted by the public through our various legal processes, and are
reflected in our state and federal constitutions, our statutes, and the common law.’ ”) (footnote
omitted).13 Consequently, a contract (including a contract for the provision of healthcare


13
  I do not invoke public policy lightly, and I do so with full appreciation that “public policy ‘is
not merely the equivalent of the personal preferences of a majority of this Court; rather, such a
policy must ultimately be clearly rooted in the law.’ ” Rory, 473 Mich at 471, citing Terrien v
Zwit, 467 Mich 56, 66–67, 648 NW2d 602 (2002). The Court in Terrien further stated:

          In defining “public policy,” it is clear to us that this term must be more than a
          different nomenclature for describing the personal preferences of individual
          judges, for the proper exercise of the judicial power is to determine from
          objective legal sources what public policy is, and not simply assert what such
          policy ought to be on the basis of the subjective views of individual judges.
          This is grounded in Chief Justice Marshall’s famous injunction to the bench in
          Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177, 2 L.Ed. 60 (1803), that the
          duty of the judiciary is to assert what the law “is,” not what it “ought” to be.


                                                 -7-
services) may not contravene the public policy of this state as expressed in the no-fault act. If or
to the extent that defendants’ enforcement of their implied contract with Casanova would do so,
the law will not permit it. For the reasons stated, I conclude that defendants’ efforts to collect
their balance bill from Casanova in a way that would circumvent the reasonable charge limitation
of MCL 500.3157, and in a way that would preclude Casanova from proceeding in a timely
manner under MCL 500.3145 to invoke his insurers’ duty to defend and indemnify him with
respect to the balance bill, is not permitted under the public policy of the no-fault act.
Defendants’ claim against Casanova therefore fails.
        Defendants additionally maintain that MCL 500.3145 does not apply because it only
limits a “claimant” from recovering benefits for losses incurred more than one year before the
commencement of the action, and the Supreme Court in Covenant declared that healthcare
providers are not “claimants” under the no-fault act. However, Covenant merely held that
healthcare providers do not have a statutory right to directly sue a no-fault insurer. In other
words, providers lack standing to bring suit against an insurer under the no-fault act. The Court
did not, however, assess whether a healthcare provider’s balance bill claim against its patient is
subject to the limitations of the one-year-back rule. In my judgment, it is improper to lift the
Supreme Court’s language out of the context in which it was used, see Covenant, 500 Mich at
217 n 37, and employ it as a weapon against the public policy clearly expressed by the
Legislature. Instead, for the reasons stated, I conclude that the contract on which defendants
base their claim against Casanova is subject to public policy as expressed in the no-fault act,
including both MCL 500.3157 and MCL 500.3145.

        Effectively, this means that while defendants’ claim against Casanova is based in
contract, it is not subject to the usual six-year statute of limitations generally applicable to
contract actions. Rather, MCL 500.3145 effectively superimposes upon the contract (whether by
reformation or by a limited-in-time enforceability) a shortened statute of limitations as described
in that section. Specifically, defendants were obliged to commence the action within “1 year
after the date of the accident,”14 with certain exceptions. Id. Because plaintiff insurers made a
partial payment on August 5, 2014, the time for filing suit was extended to “1 year after the most
recent allowable expense, work loss or survivor’s loss has been incurred.” Id. The only
allowable expenses were incurred on July 4, 2014. Consequently, MCL 500.3145 required that
suit be filed by July 4, 2015. See Douglas v Allstate Ins Co, 492 Mich 241, 258-259; 821 NW2d
472 (2012).




          [Emphasis in original.]
Rather, “[i]n identifying the boundaries of public policy, . . . the focus of the judiciary must
ultimately be upon the policies that, in fact, have been adopted by the public through our various
legal processes, and are reflected in our state and federal constitutions, our statutes, and the
common law.” Terrien, 467 Mich at 66–67 (footnote omitted).
Indisputably, the no-fault act represents public policy that is deeply rooted in the statutory law of
this state.
14
     The accident occurred on July 3, 2014.


                                                -8-
        In this case, however, defendants never commenced an action against Casanova.
Defendants’ claim against Casanova is therefore time-barred. Moreover, MCL 500.3145(1)
precludes claims “for any portion of the loss incurred more than 1 year before the date on which
the action was commenced,” MCL 500.3145(1), which in this case is the entirety of the balance
bill.

        For all of these reasons, I conclude that although the trial court incorrectly determined
that defendants’ claim against Casanova was not based in contract, it reached the correct result,
as does the majority. I therefore concur in the majority’s determination to affirm the ruling of
the trial court granting summary disposition in favor of plaintiffs. 15 I also concur in the
majority’s determination to reverse the trial court’s award of reasonable attorney’s fees and costs
under MCL 445.257(2).



                                                            /s/ Mark T. Boonstra




15
   Contrary to defendants’ assertions, this result does not leave healthcare providers generally
without a remedy. Nor does it require that they accept insurers’ unilateral determination of what
constitutes a reasonable charge. To the contrary, providers need only (among other possible
remedies) bring suit against their patients within the time period afforded by MCL 500.3145, see
Douglas, 492 Mich at 258-259, and seek a judicial determination of what constitutes a
reasonable charge.


                                                -9-
