Exec. Ambulatory Surgical Ctr. v. Allstate Fire & Cas. Ins. Co.

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EXECUTIVE AMBULATORY SURGICAL CENTER, LLC and JIAB SULEIMAN D.O., P.C., Plaintiffs, v. ALLSTATE FIRE AND CASUALTY INS. CO., Defendant.

No. 21-10985

United States District Court, E.D. Michigan, Southern Division

February 15, 2022

Sean F. Cox, United States District Judge.

ORDER GRANTING IN PART, DENYING IN PART MOTIONS AT ECF Nos. 21, 28, 32, AND DENYING WITHOUT PREJUDICE MOTION AT ECF No. 35

Curtis Ivy, Jr. United States Magistrate Judge.

I. BACKGROUND

Plaintiffs Executive Ambulatory Surgical Center (“Executive”) and Jiab Suleiman, D.O., P.C. (“Suleiman PC”), filed this action against Allstate Fire and Casualty Insurance Co. to recover payment for medical services rendered to a third party. Allstate removed the action from the Third Judicial Circuit in Wayne County, Michigan, to this Court on May 3, 2021. (ECF No. 1). Plaintiffs and Defendant have each filed two discovery motions. A hearing was held February 1, 2022. The matter is now ready for determination.

According to Plaintiffs' complaint, on November 15, 2019 third-party Tommi Mason was injured in a motor vehicle accident. Defendant is first in priority to pay for Mason's claim for no-fault personal protection insurance benefits under Michigan law. Because of the injuries Mason sustained, Plaintiffs provided products, services, and/or accommodations to aid in her recovery and rehabilitation. (ECF No. 1-2, PageID.13). This included physical therapy and surgery on her shoulder performed by Dr. Jiab Suleiman. Plaintiffs submitted a bill to Defendant for $100, 051.04 on behalf of Executive and $42, 725.00 on behalf of Suleiman PC. Plaintiffs also submitted supporting documentation and forms for Defendant to determine the reasonableness and necessity of the medical services rendered. (Id. at PageID.14). Defendant denied payment after an independent medical examination revealed the injury was not caused by the auto accident.^[1]

Plaintiffs sue Defendant for payment of the insurance claim under M.C.L. §§ 500.3142 and 500.3157 and for breach of contract.

II. LEGAL STANDARDS

Parties may obtain discovery related to any nonprivileged matter relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Fed.R.Civ.P. 26. Information within this scope of discovery need not be admissible in evidence to be discoverable. Id. “Although a [party] should not be denied access to information necessary to establish her claim, neither may a [party] be permitted to ‘go fishing,' and a trial court retains discretion to determine that a discovery request is too broad and oppressive.” Superior Prod. P'ship v. Gordon Auto Body Parts Co., 784 F.3d 311, 320-21 (6th Cir. 2015) (citing Surles ex rel. Johnson v. Greyhound Lines, Inc., 474 F.3d 288, 305 (6th Cir. 2007)). A party seeking discovery may move for an order compelling an answer, designation, production, or inspection. Fed.R.Civ.P. 37.

In Plaintiffs' response to Defendant's motion to compel, they asserted Michigan law applies to the discovery dispute. This is incorrect and they appear to drop that assertion given that they did not apply Michigan law in their own later-filed motions to compel or in their response to Defendant's motion for protective order.

III. DISCUSSION

Before the hearing, the parties resolved several issues. The Court heard argument on those that remained unresolved and described in the four statements of resolved and unresolved issues (ECF Nos. 39, 50, 51, 52).

A. Defendant's Motion to Compel (ECF No. 21)

Of the remaining disputed discovery requests propounded by Defendant, two relate to the determination of whether Plaintiffs' charges for Mason's treatment are customary and reasonable. Defendant seeks an itemization of Plaintiffs' actual costs for the treatment (Interrogatories 10 and 11) and production of bills to and payments from patients who paid cash (i.e., those who did not use insurance) to pay for services (RFP 14). Broadly speaking, Plaintiffs argue the discovery is irrelevant, it would be unduly burdensome to calculate the cost of personnel (including the surgeon) and prorate the cost of medical equipment used during Mason's surgery, and they do not keep track of cash payments apart from payments from insurance, so it would be burdensome to chronicle them.

Michigan's no-fault statutory scheme prescribes the parties' burdens and provides the basis for what information is relevant to the claims or defenses here. In the case of motor vehicle injury, M.C.L. § 500.3157 entitles physicians and other medical caregivers of the injured party to “charge a reasonable amount for the products, services and accommodations rendered . . . not exceed[ing] the amount the person or institution customarily charges for like products, services and accommodations in cases not involving insurance.” The statute requires that “(1) the expense must have been incurred, (2) the expense must have been for a product, service, or accommodation reasonably necessary for the injured person's care, recovery, or rehabilitation, and (3) the amount of the expense must have been reasonable.” Moghis v. Citizens Ins. Co. of Am., 466 N.W.2d 290, 292 (Mich. Ct. App. 1990). The plaintiff bears the burden of proof on each of these elements. See Williams v. AAA Michigan, 646 N.W.2d 476, 480 (Mich. Ct. App. 2002)

The statute's “‘customary charge' and ‘reasonableness' language . . . constitute[ ] separate and distinct limitations on the amount providers may charge with respect to auto accident victims covered by no-fault insurance.” Advocacy Organization for Patients and Providers (AOPP) v. Auto Club Ins. Ass'n, 176 F.3d 315, 320 (6th Cir.1999) (citing Hofmann v. Auto Club Ins. Ass'n, 535 N.W.2d 529, 554 (Mich. Ct. App. 1995). In determining “customary” charges, “the relevant inquiry under § 500.3157 is not the amount that is customarily charged to other health insurers, but rather the amount that is customarily charged in cases not involving insurance.” Hofmann, 535 N.W.2d at 554. “[A] no-fault carrier is liable only for those medical expenses that constitute a reasonable charge for the product or service.” Munson Medical Center v. Auto Club Ins. Ass'n, 554 N.W.2d 49, 53-54 (Mich. Ct. App. 1996). That said, § 500.3137 “leave[s] open the questions of what a ‘reasonable charge' is, who decides what is ‘reasonable,' and what criteria may be used to determine what is ‘reasonable.'” Advocacy Organization for Patients and Providers, 176 F.3d at 320 (citing Munson Med. Ctr., 56, 554 N.W.2d 17).

The distinction between “customary” and “reasonable” in the No-Fault Act dictates what evidence is relevant and thus discoverable. The no-fault insurer need pay no more than a reasonable charge and is not liable for any charge that exceeds the provider's customary charge for a like product or service in a case not involving insurance. Hofmann, 211 Mich.App. at 103-107. That a charge is “customary” in cases without insurance does not necessarily mean that the charge is also reasonable. AOPP, 670 N.W.2d at 575-76. “Accordingly, while the ‘customary' limitation establishes a cap on charges, the statutory ‘reasonable amount' restriction on charges also functions as a distinct means of controlling healthcare costs in the context of the no-fault act.” Spectrum Health Hospitals v. Farm Bureau Mut. Ins. Co. of Michigan, 960 N.W.2d 186, 201 (Mich. Ct. App. 2020).

There is a rather limited scope of evidence relevant to the customariness determination. Evidence showing what a particular provider charges for a particular procedure or service to patients who do not have any insurance, no-fault or otherwise, is relevant. However, “the acceptance of discounted payments does not define a health care provider's ‘customary' charge.” Holland v. Trinity Health Care Corp., 791 N.W.2d 724, 732 (Mich. Ct. App. 2010). Evidence of what third-party insurers (i.e., non-no-fault insurers) paid for health services is not relevant to the customariness of a charge because those insurers (for example Medicaid or Blue Cross Blue Shield), are subject to statutory or contractual limitations, “whereas the amounts that [the no-fault insurer] must pay for covered medical expenses are not limited contractually.” Hoffman, 535 N.W.2d at 557. Thus, evidence of third-party insurance payments is not relevant to this determination. See Spectrum, 960 N.W.2d at 203.

The Michigan Court of Appeals has several decisions in which it determined what evidence can be considered or is relevant to the assessment of reasonableness. In AOPP, the court concluded the No-Fault Act did not prohibit consideration of charges by other healthcare providers for the same services. 670 N.W.2d at 579. In Bronson Methodist Hosp. v Auto-Owners Ins. Co., 814 N.W.2d 670 (Mich. Ct. App. 2012), the court concluded the cost to a healthcare provider of durable medical products used in treating an insured patient is an appropriate and discoverable consideration. Id. at 681. The court in Spectrum held “third party payments that are accepted by a healthcare provider as payment in full during the pertinent time frame for products and services are relevant to determining the reasonableness of charges.” 960 N.W.2d at 210. The “third party payments” discussed in Spectrum were not limited to payments made by other insurers; thus, this would encompass payments made by uninsured third-party patients. See Id. at 212-13 (“In sum, when assessing the reasonableness of a medical charge, relevant...