Moon Over Water, LLC v. State Farm Fire Mut. Auto. Ins. Co.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (ECF NO. 20) AND GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (ECF NO. 21) ^[1]

KIMBERLY G. ALTMAN, United States Magistrate Judge

I. Introduction

This is an insurance case. Plaintiff Moon Over Water, LLC (Moon Over Water) is a Michigan-based nursing, attendant care, and adult foster care service provider. Moon Over Water has sued State Farm Mutual Automobile Insurance Company (State Farm), a no-fault insurance company authorized to do business in

the state of Michigan, alleging that State Farm has failed to fully reimburse it for services rendered by Moon Over Water to State Farm's insured, June Berger (the insured), who sustained injuries that require constant attendant care. (ECF No. 12). Moon Over Water asserts claims for breach of contract (under the Michigan No-Fault Act), Uniform Trade Practices Act (UTPA) violations, tortious bad faith, Michigan Consumer Protection Act (MCPA) violations, and for declaratory relief. (Id.).

Under 28 U.S.C. § 636(c) the parties consented to the authority of the undersigned on November 9, 2022. (ECF No. 14). Before the Court are the parties' cross motions for summary judgment, (ECF Nos. 20, 21), which are fully briefed and supplemented, (ECF Nos. 27, 28, 30, 31), and ready for consideration.^[2]

For the reasons that follow, summary judgment will be GRANTED to Moon Over Water on its breach of contract claim based on the Michigan No-Fault Act, and DENIED on its other claims based on independent torts, the UTPA, and the MCPA. State Farm's motion for summary judgment will be DENIED on Moon Over Water's breach of contract claim, and GRANTED as to Moon Over Water's other claims.

Finally, interest on Moon Over Water's breach of contract claim shall be awarded for the payments due for services rendered from November 2021 to June 2022 from the date Moon Over Water submitted supplemental bills on August 23, 2023, to the date they are paid. The parties shall submit a supplemental filing regarding interest, as described below.

II. Background

A. The Insured

Moon Over Water summarizes the past and current state of the insured as follows:

On August 10, 1977 (the date of loss, “DOL”) [the insured] was an unwilling passenger in a fast-moving motor vehicle, being sexually assaulted by a man who was also a passenger. During what is believed to have been a traumatic assault occurring at high-speed, the driver of the vehicle lost control and struck a telephone pole causing the death of both men and catastrophically injuring [the insured]. [The insured] was in a coma following the accident for many months and suffered quadriplegia, traumatic brain injury with damage to her brain stem, severe fractures to her right femur pelvis, hip, and both arms, and required several surgeries to repair an esophageal crush-injury; she often aspirates which causes frequent infections/bronchitis/pneumonia, and she requires a parenteral feeding tube and around the clock attendant care. [Moon Over Water] has provided attendant care services and all care necessary to support [the insured's] life all of which have been reasonably related to the care required as a result of the use of a motor vehicle as a motor vehicle. The services include attendant care, including feeding, bathing, grooming, suctioning trach, dressing, therapies, transferring, care coordination, transportation, room and board, and any other care that supports daily life.

(ECF No. 28, PageID.545).

Moon Over Water billed State Farm $900 per diem for the insured's care, (id., PageID.546), until it began billing at a $515 per diem rate based on the fee cap amendment,^[3] (ECF No. 30, PageID.643). These facts do not appear to be in material dispute, other than State Farm contending that Moon Over Water did not provide some services that it billed for during the period in question, as discussed below.

In 2019, Michigan amended the No-Fault Act to cap the rates that facilities such as Moon Over Water could bill to no-fault insurers like State Farm. This dispute concerns whether State Farm owes Moon Over Water the difference between the $900 per diem rate charged prior to the enactment of the fee cap amendment and the $515 per diem rate charged once State Farm began applying the fee cap amendment to the insured.

B. Billing Records and Evidence

State Farm disputes that it told Moon Over Water to charge a reduced amount from November 2021 to June 2022, in order to recoup the total, greater amount that Moon Over Water sought. Citing its call log records, State Farm says

that none of its employees ever told Moon Over Water what to charge and that no such conversation is documented. (ECF No. 30, PageID.646 (citing ECF No. 302)).

The records show that in June 2021, there were three conversations regarding the no-fault reforms and how this would affect State Farm's reimbursements for Moon Over Water's services. (ECF No. 30-2, PageID.687-688). Moon Over Water expressed concern that the payments from State Farm would be reduced by the new law and that they should not be; at that time, State Farm was unable to confirm anything. (Id.). Up to that point, State Farm had been paying Moon Over Water $27,000 per month, although there had been issues regarding State Farm receiving bills from Moon Over Water on occasion. (Id., PageID.689-690).

According to an affidavit from Jean Wimsett (Wimsett), the owner of Moon Over Water, she was informed in September 2021, that the new no-fault law would impose a “reduced fee schedule” rate for Moon Over Water's services. (ECF No. 28-1, PageID.571). She says that Moon Over Water disagreed with this interpretation, but as directed by State Farm's adjuster, submitted reduced charges from November 2021 to June 2022, that were paid by State Farm in the amount billed. (Id., PageID.571-572). State Farm's call log reflects three conversations with Moon Over Water in September 2021, but none corroborate Wimsett's

assertions. (ECF No. 30-2, PageID.679-681).

On November 4, 2021, the following conversation is recorded on the call log regarding State Farm beginning to reimburse Moon Over Water at a lower rate:

Rec[']d TCF [Wimsett] at Moon over Water regarding residential fees for September. I advised bill was being reviewed. She stated she did not believe she was subject to the fee schedule, I advised since she is a residential facility I believed she was. I stated once the bill was reviewed I would let her know. She stated she may need to file suit if her bills are reduced. I advised that was her option.

(id., PageID.678).

On November 9, 2021, the log shows that an adjustment was made to the $900 per diem rate as follows: $900/day x 55% = $495 + 4.11% = $516.78/day. (id., PageID.677). The note also reflects concern with the “extremely high charge being submitted from Moon over Water” and says that “it is unclear how $900/day is a reasonable rate.” (Id.).

The next day, November 10, 2021, a State Farm adjuster spoke to Moon Over Water regarding the rate adjustment and what was included in Moon Over Water's fee. (Id., PageID.676-677). The State Farm adjuster said that she would “review with management to determine if we would continue to consider the care provided as residential or if it would be more appropriate to consider a monthly rate for rent with additional attendant care considerations.” (Id.).

Analyses on November 11 and 24, 2021, show that State Farm considered the services Moon Over Water provided and did not adjust the $900 per diem rate

other than applying the new fee schedule pricing, which was changed to “$900 x 55% = $495 x 1.0411% = $515.34” per day. (Id., PageID.672-676). In December 2021, the analyses were reviewed and found to be reasonable. (Id., PageID.671).

Moon Over Water says that it billed State Farm the full amount for September 2021, ($27,000, ECF No. 28-3), and the reduced amount for October 2021, ($15,460, ECF No. 28-4), but that both bills were paid only in the reduced amount, (ECF No. 28-5). Then, during the course of litigation, State Farm provided additional payments for each of those months, bringing the totals to Moon Over Water's full per diem rate. (ECF No. 28-6). Thus, Moon Over Water says that its billing of reduced amounts from November 2021 to June 2022 could also have been paid in the full amount by State Farm, had it not, in its opinion, wrongly applied the no-fault changes retroactively. (ECF No. 28, PageID.547-548).

State Farm responds that its records show October 2021 was billed by Moon Over Water in the full amount of $27,000, as reflected in call log notes, (ECF No. 30-2, PageID.678), and a November 24, 2021 Explanation of Review, (ECF No. 21-3, PageID.415). Based on State Farm's records, it paid Moon Over Water's bills in full for both months and going forward.

III. Parties' Arguments

A. Initial Disputes

Moon Over Water initially presented three questions to the Court: whether (1) amendments to the Michigan No-Fault Act, including the imposition of fee caps, apply retroactively, i.e., to services where the injury occurred before the amendments; (2) the fee caps under the amendments apply to the attendant care services Moon Over Water has been providing to the insured, and (3) Moon Over Water is entitled to penalty interest.^[4](ECF No. 20). Moon Over Water relied on the Michigan Court of Appeals' ruling in Andary by & through Andary v. USAA Cas. Ins. Co., 343 Mich.App. 1 (2022) that the fee cap amounts did not apply to the insured in that case, who was injured prior to the fee cap amendment to the Michigan No-Fault Act....