Background
In March 2019, Lawana Jackson was injured in a car accident and subsequently sued her insurer, State Farm, for unpaid personal injury protection (PIP) benefits including medical expenses. A jury returned a verdict of zero on Jackson’s claims. Following trial, Jackson and State Farm executed a settlement agreement in which Jackson released State Farm from all liability for past, present, and future PIP benefits arising from the accident — including all medical bills and expenses — in exchange for State Farm forgoing post-trial motions and any appellate practice. The parties stipulated to dismiss the case with prejudice.
Zaki Anesthesia, PLLC, which had provided medical services to Jackson and had not been paid, sued State Farm directly for the outstanding balance on its bills. Zaki Anesthesia argued it had provided written notice of its claim before the settlement was executed, that Jackson had assigned her PIP rights for Zaki’s services to Zaki, and that State Farm never made a good-faith monetary payment sufficient to discharge its liability under MCL 500.3112. The Washtenaw Circuit Court granted partial summary disposition in favor of State Farm, finding the release barred plaintiff’s claims, while leaving open claims for services rendered before the release date.
Zaki Anesthesia appealed by delayed leave granted, arguing the settlement agreement was ambiguous and that the release was ineffective against a medical provider who had given prior written notice of its claim under MCL 500.3112.
The Court’s Holding
The Michigan Court of Appeals affirmed the trial court’s grant of partial summary disposition for State Farm. The court held that the settlement agreement unambiguously released State Farm from all liability for Jackson’s future PIP benefits, which necessarily extinguished Zaki Anesthesia’s right to recover those same benefits from State Farm. Citing Michigan Head & Spine Institute, PC v. State Farm Mut. Auto. Ins. Co., 299 Mich App 442 (2013), the court reaffirmed that an injured person may waive entitlement to no-fault benefits and release an insurer from future payments through settlement, and that such a release leaves the medical provider with a remedy against the insured — not the insurer.
The court also rejected Zaki Anesthesia’s argument that the release lacked consideration because no monetary amount was identified. Under Michigan law, the parties’ mutual agreement to dismiss their respective claims constitutes adequate consideration, and a settlement releasing an insurer from PIP liability for future medical services need not provide separate or additional consideration for that waiver. State Farm’s promise to forgo post-trial and appellate practice was sufficient.
On the real-party-in-interest question, the court found that regardless of any assignments from Jackson to Zaki Anesthesia, the jury’s zero verdict on Jackson’s medical benefits claim meant State Farm was entitled to protection against the same cause of action being relitigated by a different party. Moreover, medical expenses Jackson incurred after the release date were simply no longer payable under the policy, because Jackson released her interest in such future benefits before those expenses were incurred.
Key Takeaways
- A PIP claimant’s broad settlement release of future no-fault benefits binds medical providers asserting derivative claims against the insurer, even if those providers gave prior written notice of their claims under MCL 500.3112.
- A settlement agreement releases an insurer from future PIP liability without requiring monetary consideration; mutual promises — such as forgoing appellate rights — are sufficient under Michigan law.
- After a claimant releases future PIP benefits, expenses incurred after the release date are no longer payable under the no-fault policy; a medical provider’s only recourse for unpaid post-release bills is against the patient, not the insurer.
- An insurer is entitled to protection against serial litigation by different parties — including assignees — asserting the same cause of action that was resolved by jury verdict and settlement.
Why It Matters
This decision reinforces the broad preclusive effect of PIP settlement releases on downstream medical provider claims in Michigan. Insurers can now point to this ruling to argue that a comprehensive release negotiated with the injured claimant cuts off provider suits — even where the provider separately notified the insurer and held an assignment of benefits — so long as the release language unambiguously covers future medical benefits. Providers who render services after a claimant settles and releases future PIP benefits do so at their own risk of non-payment from the insurer.
For medical providers operating under assignment-of-benefits arrangements in Michigan’s no-fault system, the decision highlights a significant gap in protection: an insured’s post-trial settlement can eliminate the insurer’s obligation on future bills without the provider’s knowledge or consent, leaving the provider to pursue the patient directly. Providers may need to monitor litigation involving their patients more closely and consider intervening before settlements are finalized to protect their billing rights.