How the direct claim works
On May 25, 2017, the Michigan Supreme Court held in Covenant Medical Center v. State Farm that providers had no statutory cause of action against no-fault insurers. The Court said its ruling did not affect a patient’s ability to assign benefits, so providers switched to assignments.
The 2019 reform (2019 PA 21) amended MCL 500.3112. A health care provider listed in MCL 500.3157 may now “make a claim and assert a direct cause of action against an insurer, or under the assigned claims plan,” to recover overdue benefits for products, services or accommodations it provided to an injured person. The amendment applies to treatment provided after June 11, 2019.
Three practical consequences follow:
- You sue in your own name. No patient signature is needed, and the patient is not a party.
- Your claim is not derivative of the patient’s. The Court of Appeals held in Mota-Peguero v. Falls Lake (March 2024) and Van Dyke Spinal Rehabilitation Center v. USA Underwriters (published, May 2024) that a provider suing under MCL 500.3112 brings a direct claim. That matters when the insurer tries to rescind the patient’s policy. See rescission suits that name providers.
- The same deadlines apply. The one-year-back rule in MCL 500.3145 limits what you can recover, measured from the date you file. See the one-year-back rule.
Written notice protects your balance
MCL 500.3112 also says that an insurer that pays benefits in good faith to a person it believes is entitled to them is discharged to the extent of the payment, “unless the insurer has been notified in writing of the claim of some other person.” If the patient or the patient’s lawyer settles the PIP claim and the insurer has no written notice of your claim, your balance is exposed.
Send the insurer a written notice of your claim with every bill cycle, keep proof of delivery, and send the same notice to the patient’s attorney once you know one is involved. A settlement that releases “all past medical expenses” is the single fastest way for a provider to lose a large balance. Notice is also part of a complete reasonable-proof package, and a direct claim carries the same 12% interest and fee rights.
Where assignments still fit
An assignment transfers the patient’s own claim to you. Courts have held that a policy’s anti-assignment clause cannot block the assignment of benefits for services already provided (Jawad A. Shah, M.D., PC v. State Farm, 2018). But an assignment has limits a direct claim does not:
- It covers only accrued benefits. MCL 500.3143 voids an assignment of benefits payable in the future, so an intake-form assignment does not reach treatment you provide later.
- You take the patient’s rights as of the signing date. If part of the claim was already time-barred, you get nothing more than the patient had.
- The patient loses the claim. That can hurt the patient’s own lawsuit, which is the problem the Supreme Court addressed in 2025.
Assignments remain useful for treatment on or before June 11, 2019, and in some multi-provider cases where one party needs to control the claim. We review your intake forms for both kinds of rights before deciding which to plead.
C-Spine Orthopedics v. Progressive (July 3, 2025)
The Michigan Supreme Court decided two consolidated cases, C-Spine Orthopedics, PLLC v. Progressive Michigan Insurance Co. and Wallace v. Suburban Mobility Authority for Regional Transportation, on July 3, 2025. The holdings that matter to providers:
- A party that has assigned away its claim is not the real party in interest. C-Spine had sold its accounts receivable to medical factoring companies under bulk purchase agreements, then sued the insurer in its own name. It was not the real party in interest when it filed.
- The defect can be cured after filing. Counter-assignments from the factoring companies restored C-Spine’s status, but the Court said a plaintiff cannot fix the problem with “unilateral actions taken outside of court.” The fix has to be presented in the case, for example by amending the complaint, joinder or substitution.
- The one-year-back rule still applies. A plaintiff who cures the defect is still subject to it.
In Wallace, the patient had assigned her claims to her providers and then sued. The Court sent her case back for the trial court to decide whether those assignments should be equitably rescinded. In a separate C-Spine case against Auto Club, decided on remand from the Supreme Court, the Court of Appeals held in December 2025 that C-Spine must file an amended complaint reflecting the counter-assignments before the trial court can decide their effect.
If you factor or sell receivables, tell us before we file. Suing on bills you no longer own creates a real-party-in-interest defense and can cost months while the one-year-back rule keeps running.
What to send us
- Your intake packet, including any assignment and authorization forms
- Any funding, factoring or receivables purchase agreements covering the patients at issue
- Copies of written notices you sent the insurer and patient counsel
- An aging report by date of service. The provider intake portal explains the format.
Sources: MCL 500.3112, 500.3143 and 500.3145; 2019 PA 21; Covenant Medical Center, Inc v State Farm Mut Auto Ins Co (Mich, May 25, 2017); Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co (Mich App, 2018); Mota-Peguero v Falls Lake Nat’l Ins Co (Mich App, 2024); Van Dyke Spinal Rehab Ctr, PLLC v USA Underwriters (Mich App, 2024); C-Spine Orthopedics, PLLC v Progressive Mich Ins Co and Wallace v SMART (Mich, July 3, 2025); C-Spine Orthopedics, PLLC v Auto Club Group Ins Co (Mich App, on remand, Dec 16, 2025).
Questions people ask us
Do we still need patients to sign assignments?
For treatment provided after June 11, 2019, MCL 500.3112 lets you sue the insurer in your own name without an assignment. An assignment can still matter for older dates of service and for some coordination problems, but it also changes who owns the claim, so it should be used deliberately.
Can a patient assign benefits for future treatment?
No. MCL 500.3143 says an agreement to assign a right to benefits payable in the future is void. An assignment reaches only benefits already incurred when it is signed.
We sold our receivables to a funding company. Can we still sue?
Not until ownership is sorted out. In July 2025 the Michigan Supreme Court held that a provider that had sold its PIP receivables to factoring companies was not the real party in interest when it sued. The defect can be cured, but the cure has to happen inside the lawsuit.
Can the insurer pay the patient instead of us?
Under MCL 500.3112, a good-faith payment to a person the insurer believes is entitled to the benefits discharges the insurer to the extent of the payment, unless it was notified in writing of someone else’s claim. Written notice of your claim protects your balance.