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Hospitals and Patients at Risk after Automobile Accidents in Michigan

May 22, 2008 by Steven M. Gursten

Helping people who have been injured in car accidents throughout Michigan, our lawyers have found that some hospitals, for example Bronson Methodist Hospital in Kalamazoo, Sparrow Hospital in Lansing, and Munson Medical Center in Traverse City, do not always aggressively follow-up with auto insurance companies for payment of medical bills for people who have suffered personal injury from automobile accidents. Now, after a recent order by the Michigan Supreme Court, these hospitals may be putting these people at personal risk for their own medical bills.

This change, based upon an order from the Court dated March 7, 2008, will dramatically impact hospitals and doctor billing practices in automobile accident cases throughout Michigan.

Michigan’s No Fault law has a “one year back” rule
The law in Michigan has been that if a year passes on any incurred expense, including medical bills, after an automobile accident, then that incurred expense will be time barred and the person’s no fault auto insurance company no longer has a legal obligation to pay. But what happens when the hospitals do not aggressively seek recovery for bills they have incurred for treating people for personal injury from car accidents? The answer now seems to be that many of these hospitals will still seek recovery from you. People who have gone to emergency rooms, or to hospitals for medical treatment after automobile accidents and given the hospital billers their claim number and insurance information must be especially vigilant and make sure the medical bills being paid on time.

For the medical hospitals, this is another example of how ridiculous the law in Michigan has become. Almost all other states except Michigan now allow partial payment billing so hospitals and people injured in automobile accidents can avoid needless and wasteful litigation. Once again, Michigan goes a different way. Now, hospitals and patients must be hyper-vigilant that all bills are paid within one year.

Community Resource Consultants, Inc. v. Progressive Michigan Ins. Co.:
Community Resource Consultants, Inc. v. Progressive Michigan Ins. Co., dated March 7, 2008, the Michigan Supreme Court has decided that a medical expense is now “incurred” under Michigan law at the time that treatment is rendered, and not when medical insurance is billed.

The real danger is that because Michigan’s No Fault law has a “one year back” rule, auto insurance companies will not be liable for unpaid medical bills unless a lawsuit is filed within one year of the date treatment is rendered.

This case involved a 1997 car accident in which the insured, Richard Fero, suffered major injuries that left him paralyzed from the chest down. Community Resource Consultants (CRC) provided case management services for Mr. Fero and invoiced the costs to his insurer, Progressive Insurance Company. Over the course of treatment, CRC routinely submitted invoices without receiving payment. Progressive would routinely make partial payments after receiving these invoices, but challenging certain invoices because Progressive claimed they lacked substantiation. CRC began to accrue an outstanding balance with Progressive. CRC would apply each Progressive payment first to an overdue balance, and then to current charges. Eventually, CRC filed a no fault lawsuit against Progressive Insurance Company after a long delay in payment and after CRC had accrued more than $58,000 in unpaid medical invoices.

At trial, the lawyer for Progressive Insurance Company argued that Progressive was not responsible for almost $20,000 on the unpaid account. Progressive asserted that, because those charges were for medical treatment that had occurred more than one year before the lawsuit was filed, the expenses should be barred by the no fault one year back rule. CRC responded that they had established an open source billing arrangement, or open account, with Progressive over the course of the treatment, and that the nature of this billing relationship excepted any overdue charges from the one year back rule. Both the trial court and Court of Appeals decided that the nature of the billing arrangement should be decided by a jury, but the Supreme Court disagreed, stating that a medical expense occurs when treatment is rendered, and that CRC could not recover payment for any procedure that had occurred more than one year ago.

This decision highlights that any unpaid medical expense cannot be recovered more than one year after the actual treatment has occurred – no exceptions. Even when there is ongoing partial payment for continuing medical treatment, to properly protect yourself you must now hire a lawyer file a lawsuit against the auto insurance company responsible for full payment. This lawsuit against the automobile insurer must be filed within one year of the date .

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