What rescission is
Rescission treats an insurance policy as if it never existed because it was obtained by fraud, usually a misstatement in the application about who lives in the household, who owns the car, or a driver’s license status. In Bazzi v. Sentinel Insurance Co. (2018) the Michigan Supreme Court held that an insurer may rescind for fraud in the application and that the old innocent-third-party rule did not survive. It also held that rescission is an equitable remedy: when two innocent parties are involved, the court decides which should bear the loss.
Why providers get named
A provider with a direct claim under MCL 500.3112 has its own right to sue for overdue benefits. An insurer that wants a single order ending its exposure must bring the providers into the case. Expect a complaint for declaratory relief naming the policyholder, other household members, and each provider with an open bill. Sometimes the insurer files first; sometimes it raises rescission as a defense to your collection suit.
Your claim is not derivative
Insurers often argue that a provider stands in the patient’s shoes, so if the patient loses, the provider loses. The Court of Appeals has rejected that for direct claims. In Mota-Peguero v. Falls Lake National Insurance Co. (March 2024, with Spine Specialists of Michigan as the provider) and Van Dyke Spinal Rehabilitation Center v. USA Underwriters (published, May 30, 2024), it held that a claim under MCL 500.3112 is a direct action, and that rescission cannot be applied to a provider automatically. The trial court must balance the equities.
The five Pioneer State factors, applied to providers
Courts use the factors from Pioneer State Mutual Insurance Co. v. Wright (2020). In Van Dyke, the court measured the provider’s injury as its unpaid services.
| Factor | How it usually lands for a provider |
|---|---|
| Could the insurer have discovered the fraud before the loss? | Often favors the provider. A title search, license check or follow-up on the application may have revealed it. |
| Did the third party know of the fraud? | Favors the provider, which had no role in the application. |
| Was the third party negligent or reckless in causing the injury? | Favors the provider, which only treated the patient. |
| Is there another source of recovery? | Often favors the insurer, if the assigned claims plan or the patient is available. |
| Would enforcing the policy merely relieve the insured of tort liability? | In Van Dyke, this favored the provider, because it concerns tort exposure, not PIP. |
In Van Dyke, the equities weighed heavily for the provider for services rendered before it received notice of rescission. Insurer delay in acting on what it knew also counts in the balancing, and knowledge of the insurer’s third-party administrator was imputed to the insurer.
Recent decisions, 2025 and 2026
- Boykin v. Rice (Court of Appeals, unpublished, Sept. 9, 2025). The policyholder’s application listed a license as valid when she knew it was not, so rescission against her was proper. The court sent the question of rescission against her child back for equitable balancing.
- Fosmore v. Roth (unpublished, Feb. 17, 2026). Summary disposition for the insurer was reversed because a fact question existed on how the Pioneer factors balanced for an innocent passenger.
- MemberSelect Insurance Co. v. Estate of Clancy (unpublished, Apr. 23, 2026). The first factor weighed against rescission because the insurer could have found the undisclosed vehicle ownership through “minimal due diligence,” such as a title search.
- Reese v. Citizens United Reciprocal Exchange (unpublished, July 15, 2026). The trial court refused to extend rescission to the injured pedestrian or to the intervening hospital provider, and the Court of Appeals affirmed. It rejected the insurer’s argument that the provider’s claim was derivative and applied the same Pioneer analysis to the provider.
These cases are fact-driven. The result turns on what the insurer knew, when it knew it, and what it did about it, which is why discovery matters.
You generally have 21 days after being served in Michigan to answer a circuit court complaint (28 days if served outside Michigan or by mail). Send us the complaint the day it arrives.
What we do when you are named
- Answer and file a counterclaim for your overdue benefits, 12% interest and attorney fees, so the case resolves your bills either way.
- Take discovery on the underwriting file: what the insurer knew, when, and what it did with the information.
- Identify the fallback payer, including another household policy or the Michigan Assigned Claims Plan, and protect that claim within its deadlines.
- Stop treating the case as the patient’s problem. Your interests and the patient’s may diverge.
In Van Dyke, the court protected services provided before the provider received notice of rescission. Once you have notice, treatment you continue to provide may be treated differently. Talk to us before deciding whether to keep billing that insurer. More on priority disputes and interest and attorney fees.
Sources: MCL 500.3112 and 500.3174; MCR 2.108(A); Bazzi v Sentinel Ins Co (Mich, 2018); Pioneer State Mut Ins Co v Wright (Mich App, 2020); Mota-Peguero v Falls Lake Nat’l Ins Co (Mich App, Mar 28, 2024); Van Dyke Spinal Rehab Ctr, PLLC v USA Underwriters (Mich App, May 30, 2024); Boykin v Rice (Mich App, unpublished, Sept 9, 2025); Fosmore v Roth (Mich App, unpublished, Feb 17, 2026); MemberSelect Ins Co v Estate of Clancy (Mich App, unpublished, Apr 23, 2026); Reese v Citizens United Reciprocal Exch (Mich App, unpublished, July 15, 2026).
Questions people ask us
Why would an insurer sue us over a patient’s policy?
If the insurer rescinds the policy for fraud in the application, it wants a court order that it owes nothing to anyone, including providers. Naming you as a defendant lets it ask for that order against your bills in the same case.
We did nothing wrong. Can the insurer still refuse to pay us?
Only if a court decides the equities favor rescission against you. Since Van Dyke Spinal Rehabilitation Center v USA Underwriters (2024), courts weigh the Pioneer State factors for providers, and several of them usually favor a provider that knew nothing about the fraud.
What if we ignore the complaint?
The insurer can take a default judgment declaring that it owes nothing on your bills. A default can wipe out every open balance for that patient. Answer on time.
If the policy is rescinded, is there anyone else to bill?
Possibly. Another policy in the household or the Michigan Assigned Claims Plan may be next in line. The one-year notice deadline for the assigned claims plan in MCL 500.3174 runs from the accident, so this has to be checked early.