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MICHIGAN AMBULATORY SURGICAL CENTER, Plaintiff-Appellee, v. FARM BUREAU GENERAL INSURANCE COMPANY OF MICHIGAN, Defendant-Appellant.
Defendant appeals by leave granted 1 the trial court's order denying defendant's motion for summary disposition in this action to collect personal protection insurance (PIP) benefits under the no-fault act, MCL 500.3101 et seq. We vacate the order and remand this case to the trial court.
I. FACTS & PROCEDURAL HISTORY
On October 19, 2015, defendant's insured, Terry Tracy, was injured in a motor vehicle accident in Orion Township and filed suit against defendant to collect unpaid PIP benefits. Tracy and defendant executed a settlement agreement on November 10, 2017, in which defendant agreed to pay Tracy $7,500, and Tracy agreed to release her rights to PIP benefits accrued through the date of the case evaluation, September 25, 2017. The settlement agreement was a separate contract with a merger clause—not an addendum to the no-fault policy, and it did not in any way limit coverage under the policy or prohibit Tracy from seeking additional PIP benefits in the future. Rather, the settlement agreement anticipated that Tracy would accrue additional claims to PIP benefits in the future. The settlement agreement specifically provided that she would “not assign any of her rights to medical benefits to medical providers in the future without the express written consent of [defendant]” with respect to any claim for benefits arising from the motor vehicle accident that occurred on October 19, 2015, in Orion Township.
Thereafter, Tracy sought and received plaintiff's medical services, creating a newly accrued claim for PIP benefits. Contrary to her agreement with defendant, Tracy then assigned to plaintiff her right to reimbursement for plaintiff's billings. Plaintiff sued defendant to recover payment for the assigned, newly accrued PIP benefits. Defendant then moved for summary disposition, arguing that the antiassignment clause in the settlement agreement invalidated Tracy's later assignment to plaintiff. Plaintiff responded that contractual provisions barring the postloss assignment of an accrued claim to payment of insurance benefits are unenforceable as against public policy under Jawad A. Shah, M.D., PC v. State Farm Mut. Auto. Ins. Co., 324 Mich. App. 182, 200, 920 N.W.2d 148 (2018). In turn, defendant argued that Shah only applied to antiassignment clauses in no-fault insurance policies, not to similar clauses in settlement agreements. The trial court denied defendant's motion and this appeal followed.
At the outset, we clarify that the issue in this case is whether the trial court committed error requiring reversal when it concluded that the antiassignment provision in the settlement agreement was invalid pursuant to our holding in Shah, 324 Mich. App. at 200, 920 N.W.2d 148. Specifically, we must determine whether there is a factual distinction between the antiassignment provision in the no-fault policy at issue in Shah and a similar provision in the settlement agreement between defendant and its insured. See In re Houghten's Estate, 310 Mich. 613, 617-618, 17 N.W.2d 774 (1945) (noting that principles of stare decisis apply unless the facts of the subsequent case are distinguishable). For the reasons stated below, we find that Shah is inapplicable to the facts of this case. The antiassignment provision in the settlement agreement does not contravene any portion of the no-fault act, and unlike in Shah, we cannot find that it violates any public policy identified by our jurisprudence.
We review de novo matters of statutory interpretation and a trial court's decision on a motion for summary disposition under MCR 2.116(C)(8). City of Fraser v. Almeda Univ., 314 Mich. App. 79, 92, 886 N.W.2d 730 (2016); Maiden v. Rozwood, 461 Mich. 109, 118, 597 N.W.2d 817 (1999). We enforce unambiguous contracts as written, and we uphold the validity of an antiassignment provision that is clear and unambiguous unless it violates law or public policy. Westfield Ins. Co. v. Ken's Serv., 295 Mich. App. 610, 615, 815 N.W.2d 786 (2012); Besic v. Citizens Ins. Co. of the Midwest, 290 Mich. App. 19, 24, 800 N.W.2d 93 (2010); Shah, 324 Mich. App. at 198, 920 N.W.2d 148, citing Detroit Greyhound Employees Fed. Credit Union v. Aetna Life Ins. Co., 381 Mich. 683, 689-690, 167 N.W.2d 274 (1969); Employers Mut. Liability Ins. Co. of Wisconsin v. Mich. Mut. Auto. Ins. Co., 101 Mich. App. 697, 702, 300 N.W.2d 682 (1980); Rory v. Continental Ins. Co., 473 Mich. 457, 468-469, 703 N.W.2d 23 (2005).
We begin with the relevant language of the no-fault act. MCL 500.3143 states that “[a]n agreement for assignment of a right to benefits payable in the future is void.” By enacting MCL 500.3143, the Legislature codified the public-policy concerns that arise when an insurer's risk is increased by an insured's assignment of a contractual relationship.2 However, MCL 500.3143 neither mentions nor prohibits agreements not to assign benefits—such as the antiassignment provision contained in the settlement agreement in this case. Book-Gilbert v. Greenleaf, 302 Mich. App. 538, 542, 840 N.W.2d 743 (2013) (stating that a court may not “read into the statute a requirement that the Legislature has seen fit to omit”). “ ‘[A] right to benefits payable in the future’ is distinguishable from a right to past due or presently due benefits.” Prof. Rehab. Assoc. v. State Farm Mut. Auto. Ins. Co., 228 Mich. App. 167, 172, 577 N.W.2d 909 (1998) (quotation marks omitted). Similarly, an agreement not to assign future rights is distinguishable from “[a]n agreement for assignment of a right to benefits payable in the future.” MCL 500.3143.
Perhaps, when enacting MCL 500.3143, the Legislature intended to invalidate a preloss assignment of an insurance policy to prevent an insured from substituting in a different party and consequently assigning to an insurer a risk that it had not agreed to cover. But that is not for us to discern or decide here, as we are charged with the responsibility of following the language of the statute as written, not with making policy. Prof. Rehab. Assoc., 228 Mich. App. at 172, 577 N.W.2d 909. MCL 500.3143 pertains to “benefits payable in the future,” and it does not distinguish between a preloss transfer of an insurance policy or a postloss transfer of benefits for a claim that has not accrued under the policy. Presumably, in either scenario, the assignment would be invalid, but neither factual scenario is present in this case because Tracy did not transfer the policy itself, and the assignment was executed after her claim had accrued as part of an agreement that is separate and distinguishable from the no-fault policy that was in effect. See generally Allard v. State Farm Ins. Co., 271 Mich. App. 394, 400, 722 N.W.2d 268 (2006) (“Until the expense is incurred, the insured's entitlement to benefits does not accrue and the insurer's liability to pay the claim does not attach.”).
In Shah, we held that an antiassignment clause contained within an insurance policy was unenforceable to prohibit an assignment of an accrued claim because such a prohibition violates Michigan public policy. Shah, 324 Mich. App. at 200, 920 N.W.2d 148. Our analysis relied entirely on our Supreme Court's holding in Roger Williams Ins. Co. v. Carrington, 43 Mich. 252, 254, 5 N.W. 303 (1880), which states as follows:
The assignment having been made after the loss, did not require consent of the company. The provision of the policy forfeiting it for an assignment without the company's consent is invalid, so far as it applies to the transfer of an accrued cause of action. It is the absolute right of every person—secured in this State by statute—to assign such claims, and such a right cannot be thus prevented. It cannot concern the debtor, and it is against public policy. [Emphasis added.]
Notably, the statute referenced in Roger Williams was not cited or otherwise identified, and Roger Williams was decided nearly 100 years before the enactment of the no-fault scheme 3 and more than 75 years before the adoption of the Insurance Code.4 Nonetheless, this Court found that Roger Williams was binding precedent that precluded the insurer from enforcing the antiassignment provision in the insurance policy. Shah, 324 Mich. App. at 200, 920 N.W.2d 148.
This case does not present the same public-policy concerns regarding insurance policies as were implicated in Shah and Roger Williams. In those cases, the courts concluded that public policy compelled a judicial redrafting of the terms of the respective insurance policies because doing so would not increase an insurer's liability, but we cannot conclude that the same is true in this case. Here, defendant does not dispute coverage of the newly accrued claims, and like in Shah, a judicial redrafting of the settlement agreement would not increase defendant's liability under the terms of the insurance policy with respect to the newly accrued claims. However, doing so may increase defendant's liability under the settlement agreement. The dissent concludes this distinction is unimportant because the antiassignment provision has the same effect regardless of whether it is drafted into an insurance policy or a separate settlement agreement, and therefore, this case lacks any meaningful factual distinction from Shah. In effect, the dissent finds no practical distinction between the insurance policy and the settlement agreement. We cannot reach the same conclusion without declaring, for policy reasons, that a merger automatically occurred between the two documents and invalidating the clause in the settlement agreement which states that it represents the “ENTIRE AGREEMENT” between the parties. Such policy judgments are the province of the Legislature and are not for us to make. See Hanson v. Mecosta Co. Rd. Com'rs, 465 Mich. 492, 501–502, 638 N.W.2d 396 (2002) (“[I]t is not the province of [the court] to make policy judgments or to protect against anomalous results”). Accordingly, we conclude that the issues relating to the settlement agreement here are factually distinct from the facts presented in Shah, and therefore, stare decisis does not compel any particular outcome in this case. See First of Mich. Corp. v. Trudeau, 237 Mich. App. 445, 450, 603 N.W.2d 116 (1999) (noting that a court is not required to apply the precedential effect required by MCR 7.215(C)(2) to a case that is factually distinguishable).
We decline to extend Shah to the facts before us because, here, public policy favors freedom to contract and encourages settlement between litigants—two goals that would be impeded by rendering the antiassignment provision in this case unenforceable. See Wilkie v. Auto-Owners Ins. Co., 469 Mich. 41, 52, 664 N.W.2d 776 (2003) (“The notion, that free men and women may reach agreements regarding their affairs without government interference and that courts will enforce those agreements, is ancient and irrefutable.”); Empire Indus. Inc. v. Northern Assurance Co. Ltd., 342 Mich. 425, 429, 70 N.W.2d 769 (1955) (“Compromise settlements are favored by the law.”). Moreover, under general contract law, although contractual restrictions against assignability are strictly construed, an assignment may be precluded by agreement. Stenke v. Masland Dev. Co., Inc., 152 Mich. App. 562, 575, 394 N.W.2d 418 (1986), citing Miller v. Pond, 214 Mich. 186, 190, 183 N.W. 24 (1921). See also Kaczmarck v. La Perriere, 337 Mich. 500, 504-506, 60 N.W.2d 327 (1953) (providing that there is no prohibition against requiring consent to effectuate an assignment); Restatement Contracts, 2d, § 317(2)(c), p 15 (“A contractual right can be assigned unless ․ assignment is validly precluded by contract.”).
The majority opinion in Shah did not analyze MCL 500.3143, but it was briefly discussed in Shah’s partial concurring opinion:
The no-fault act itself speaks to the issue of assignment. It provides, “An agreement for assignment of a right to benefits payable in the future is void.” MCL 500.3143 (emphasis added). Notably, the Legislature elected not to void assignment of past-due benefits. By not including past-due benefits in this statutory prohibition, the Legislature, under the doctrine of expressio unius est exclusio alterius, made clear its intent to adhere to the fundamental principle that assignments of past-due benefits are effective and proper. [Shah, 324 Mich. App. at 216, 920 N.W.2d 148 (Shapiro, J., concurring in part and dissenting in part).]
It is a misapplication of the expressio unius maxim to conclude that the Legislature must have intended by implication to render invalid all antiassignment provisions. The maxim expressio unius est exclusio alterius (the expression of one thing is the exclusion of another)5 “has force only when the items expressed are members of an associated group or series, justifying the inference that items not mentioned were excluded by deliberate choice, not inadvertence.” Esurance Prop. & Cas. Ins. Co. v. Mich. Assigned Claims Plan, 330 Mich.App. 584, 591, 950 N.W.2d 528 (2019), rev'd on other grounds, ––– Mich. ––––, ––– N.W.2d ––––, 2021 WL 3161031 (2021) (Docket No. 160592), quoting Barnhart v. Peabody Coal Co., 537 U.S. 149, 168, 123 S. Ct. 748, 154 L. Ed. 2d 653 (2003) (quotation marks omitted). Rather, the more appropriate canon of construction is casus omissus pro omisso habendus est (nothing is to be added to what the text states or reasonably implies), which prohibits courts from supplying provisions omitted by the Legislature. See Scalia & Garner, Reading Law: The Interpretation of Legal Texts (St. Paul: Thomson/West, 2012), p. 93. Thus, although MCL 500.3143 prohibits the assignment of future benefits, it is silent regarding agreements not to assign benefits. The reasonable implication of the Legislature's omission regarding agreements not to assign benefits—as in the case before us—is that parties are free to contract according to their wishes.
Because the antiassignment provision at issue here does not violate law or public policy identified in our jurisprudence, and because Shah does not apply to the facts of this case, the trial court erred when it concluded that Shah required denial of defendant's motion for summary disposition.
The trial court erred when it concluded that the antiassignment provision in the settlement agreement was invalid pursuant to our holding in Shah, 324 Mich. App. at 200, 920 N.W.2d 148. Accordingly, we vacate the trial court's order denying defendant's motion for summary disposition and remand this case to the trial court for further proceedings. We do not retain jurisdiction.
Philosophically, I have deep sympathy for the majority opinion. The freedom to contract is one of the cornerstones of the rule of law, along with due process, equal protection, private property, and the First Amendment. There is nothing in this record to suggest that, when entering into the settlement agreement with the antiassignment clause, Tracy was incompetent or somehow coerced into agreeing to the clause. Tracy received valuable consideration in exchange for the clause and the settlement agreement's other provisions, and ordinarily, that would be the end of the story—enforce the antiassignment clause and grant summary disposition in favor of defendant.
Jurisprudentially, however, I cannot sign onto the majority opinion, as this case does not come to us tabula rasa. Rather, we are bound by another cornerstone of the rule of law—the principle of stare decisis, especially in the context of binding precedent from both a prior panel and a higher court. See MCR 7.215(C)(2). Because I can find no legitimate basis for distinguishing this case from this Court's earlier published decision in Jawad A. Shah, M.D., PC v. State Farm Mut. Auto. Ins. Co., 324 Mich. App. 182, 200, 920 N.W.2d 148 (2018), I must dissent.
From my reading of Shah, the material factual points are these: (1) the insured had coverage for no-fault benefits with the insurer; (2) the insured was injured in a motor-vehicle accident; (3) the insured and the insurer had a contract with an antiassignment clause; (4) after executing the contract with the antiassignment clause, the insured received medical services, and, in exchange for the services, the medical provider was owed payment; (5) the insured had an accrued claim against the insurer for payment of the medical services; (6) the insured assigned the accrued claim to the medical provider in satisfaction of the insured's liability to the medical provider; and (7) the medical provider sought payment from the insurer, but based on the antiassignment clause, the insurer refused to pay. Id. at 186-190, 920 N.W.2d 148. Despite the general freedom to contract, the Court in Shah held that the antiassignment clause was unenforceable as against public policy, and as a result, the medical provider could pursue an action against the insurer for the unpaid claim. See id. at 200, 920 N.W.2d 148
Each one of the material factual points in Shah exists in the current case. Why it matters that the antiassignment clause was found in the original insurance contract (Shah) or in a subsequent settlement agreement (here) is lost on me, given that the key feature—the insured “had an accrued claim against his [or her] insurer for payment of healthcare services that had already been provided ․ before [the insured] executed the assignment”—is the same in both situations. Id.
The majority places great weight on the rather thin reed that the antiassignment clause in this case is found in a settlement agreement with a merger clause, whereas the antiassignment clause in Shah was found in an insurance contract. But while asserting that the distinction matters, the majority does not explain why it matters, except to say that setting aside the antiassignment clause in the settlement agreement may increase the liability of the insurer under the terms of that separate agreement.
As all rather thin reeds must do, this one collapses upon inspection. In Shah, while setting aside the antiassignment clause did not increase the insurer's liability under the insurance policy, it certainly did increase the risk that the insurer would be exposed to future litigation by unanticipated assignees. Thus, in Shah, the insurer did not get the full benefit of its bargain with the insured, as the insurer presumably put some value on the antiassignment clause in the insurance policy and factored that value into the price of the policy. Similarly, were the majority to follow Shah here, setting aside the antiassignment clause would not increase defendant's liability under the insurance policy (as the majority recognizes), but it certainly would increase the risk that defendant would be exposed to future litigation by unanticipated assignees—as this lawsuit aptly demonstrates. Thus, here (and tracking Shah), defendant would not get the full benefit of its bargain with Tracy, as defendant presumably put some value on the antiassignment clause in the settlement agreement and factored that value into the consideration paid. From both a contractual and an economic perspective, the two scenarios are identical with respect to the risk of increased liability to the insurer. Simply put, the majority's argument makes a distinction without a difference.
Likewise with the merger clause. Whether found in a single insurance policy or in an insurance policy and a subsequent separate agreement, the fact remains that the relevant contractual provisions and factual scenarios are materially indistinguishable between the two cases. If the existence of a merger clause is actually the material distinction, then the majority has pointed future parties to a simple way to get around Shah at the outset—(1) enter into an insurance policy that (a) has no antiassignment clause but (b) does have a merger clause; and, immediately following execution of that policy, (2) enter into a separate agreement that (a) has an antiassignment clause and (b) also has a merger clause. The substance of the contractual relationship will be no different than in Shah, though the legal import will now be 180 degrees different.
With respect to MCL 500.3143, I have no truck with the majority's analysis, as the statute is silent with respect to antiassignment clauses. Rather, the fundamental problem in Shah and in this case is the weak foundation underlying our Supreme Court's decision from over 125 years ago, Roger Williams Ins. Co. v. Carrington, 43 Mich. 252, 5 N.W. 303 (1880). In that case, the Court referred to a purported “statute” that granted “the absolute right [to] every person ․ to assign such claims, and such a right cannot be thus prevented.” Id. at 254, 5 N.W. 303. The Court did not actually cite a statute, however, and my research has not yet unearthed that statute. The Court seems to have announced the absolute right to assign such a claim as a matter of public policy. Maybe there are good reasons to have this policy, but it does fly against the bedrock principle of freedom to contract. In my opinion, exceptions to the freedom to contract should be few and far between, and certainly should be better supported with law and logic than what is found in Roger Williams.
With that said, the holding in Roger Williams is clear, as is the holding in Shah, and I do not believe that we have a sound basis for distinguishing either one. Until (hopefully) our Supreme Court revisits Roger Williams, we are bound by the holding in that decision, as Shah recognized. Accordingly, contrary to the majority's holding, I conclude that Shah controls here and the antiassignment clause in the parties’ settlement agreement should not preclude the medical provider's cause of action.
For these reasons, I respectfully dissent.
1. Mich. Ambulatory Surgical Ctr. v. Farm Bureau Gen. Ins. Co. of Mich., unpublished order of the Court of Appeals, entered September 6, 2019 (Docket No. 349706).
2. See 2 Couch, Insurance, 3d, § 34:2, p. 34-8 (“[A] provision in a policy of insurance which prohibits its assignment except with the consent of the insurer does not apply to prevent assignment of claim or interest in the insurance money then due after loss.”); 3 Couch, Insurance, 3d, § 35:8, pp. 35- 15–35-17 (“[T]he great majority of courts adhere to the rule that general stipulations in policies prohibiting assignments of the policy, except with the consent of the insurer, apply only to assignments before loss, and do not prevent an assignment after loss, for the obvious reason that the clause by its own terms ordinarily prohibits merely the assignment of the policy, as distinguished from a claim arising under the policy, and the assignment before loss involves a transfer of a contractual relationship while the assignment after loss is the transfer of a right to a money claim. The purpose of a no assignment clause is to protect the insurer from increased liability, and after events giving rise to the insurer's liability have occurred, the insurer's risk cannot be increased by a change in the insured's identity.”) (citations omitted); 17 Williston, Contracts (4th ed.), § 49:126, pp. 130-132 (“Antiassignment clauses in insurance policies are strictly enforced against attempted transfers of the policy itself before a loss has occurred, because this type of assignment involves a transfer of the contractual relationship and, in most cases, would materially increase the risk to the insurer. Policy provisions that require the company's consent for an assignment of rights are generally enforceable only before a loss occurs, however. As a general principle, a clause restricting assignment does not in any way limit the policyholder's power to make an assignment of the rights under the policy—consisting of the right to receive the proceeds of the policy—after a loss has occurred. The reasoning here is that once a loss occurs, an assignment of the policyholder's rights regarding that loss in no way materially increases the risk to the insurer. After a loss occurs, the indemnity policy is no longer an executory contract of insurance. It is now a vested claim against the insurer and can be freely assigned or sold like any other chose in action or piece of property.”).
3. The Michigan No-Fault Insurance Act became law on October 1, 1973. See 1972 PA 294; Shavers v. Attorney General, 402 Mich. 554, 578, 267 N.W.2d 72 (1978).
4. Michigan adopted the Insurance Code in 1956 by enacting Public Act 218.
5. See Detroit City Council v. Detroit Mayor, 283 Mich. App. 442, 456, 770 N.W.2d 117 (2009).
O'Brien, J., concurred with Riordan, P.J.
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