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# Medical Providers’ Collection Lawsuits Against Michigan No-Fault Auto Insurers Remains Valid With A Patient Assignment
- URL: https://www.legalexaminer.com/smith-johnson/health/medical-providers-collection-lawsuits-against-michigan-no-fault-auto-insurers-remains-valid-with-a-patient-assignment/
- Published: 2018-05-09T17:27:38.000Z
- Updated: 2025-10-17T19:17:30.000Z
- Description: On May 8, 2018, the Michigan Court of Appeals issued a binding decision in Shah, et al v State Farm Ins Co, ___ Mich App ___ (2018). This is the first post Covenant v State Farm Ins Co, case that has decided a substantive issue…
- Author: Smith & Johnson, Attorneys, P.C.
- Tags: Health

On May 8, 2018, the [Michigan Court of Appeals](http://courts.mi.gov/courts/coa/pages/default.aspx?ref=legalexaminer.com) issued a binding decision in [*Shah, et al v State Farm Ins Co*, \_\_\_ Mich App \_\_\_ (2018](http://publicdocs.courts.mi.gov/OPINIONS/FINAL/COA/20180508%5FC340370%5F36%5F340370.OPN.PDF?ref=legalexaminer.com)). This is the first post [*Covenant v State Farm Ins Co*](https://www.legalexaminer.com/content/files/OPINIONS/FINAL/SCT/152758%5F73%5F01.pdf), case that has decided a substantive issue born out of *Covenant*, itself. As a reminder, our [Supreme Court](http://courts.mi.gov/courts/michigansupremecourt/pages/default.aspx?ref=legalexaminer.com) held in *Covenant* that medical providers did not have an independent statutory right to bring a lawsuit to collect unpaid medical bills against a responsible no-fault insurer. The court, however, made clear in its ruling that its decision did not prohibit other legal theories, e.g., by way of an assignment from the patient/insured. In fact, it was[ State Farm’s](https://www.statefarm.com/?cmpid=ps:google:generalbrand:National%20-%20Brand%20-%20General%20-%20Exact:Pure%20-%20HV:state%20farm:Exact:B&gclid=EAIaIQobChMIh4-gmJH52gIVxB2BCh2iCgQDEAAYASAAEgKmRfD%5FBwE&gclsrc=aw.ds&ref=legalexaminer.com) appellate counsel that advocated to the Supreme Court that such an action would still be viable, were it to rule in State Farm’s favor disavowing the independent statutory theory. Following *Covenant*, medical providers began initiating their collection lawsuits pursuant to assignment. And predictably, State Farm and its brethren no-fault insurers immediately defended the claims arguing that their insurance policies did not allow their insureds to assign their rights under the no-fault policy. Well, the answer to that question has now been decided in favor of the insured and his/her medical provider: Yes she can, thus permitting the medical provider to sue the no-fault insurer and collect the unpaid medical bill the insurer should have paid in the first place. The reasoning of the court in *Shah* is that the anti-assignment clauses only pertain to pre-loss risk that the insurer clearly did not bargain for. On the other hand, once the loss has occurred, that risk was bargained for; all that remains is who the payee is; and the insured may assign the right to that owed benefit. This has been the common law in Michigan for over 100 years, without rebuke. See, e.g., [*Roger Williams Ins Co v Carrington*, 43 Mich 252 (1880](https://www.ravellaw.com/opinions/19bfb3de73ce88183d0976f287b9206e?ref=legalexaminer.com)). So until our Supreme Court says otherwise, medical providers’ collection lawsuits against no-fault insurers remains valid with a patient assignment. Individual insured/injured persons and medical providers with questions about the *Shah* decision or how to draft a proper assignment compliant with the no-fault law are free to contact Smith & Johnson, Attorneys, P.C.

Authored by [L. Page Graves](https://www.smith-johnson.com/attorneys/l-page-graves?ref=legalexaminer.com)