throbber
Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1123 Filed 12/17/20 Page 1 of 34
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
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`
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`Case No. 2:19-cv-12052
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`HONORABLE STEPHEN J. MURPHY, III
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`EMERGENCY DEPARTMENT
`PHYSICIANS P.C. and
`EMERGENCY PROFESSIONALS
`OF MICHIGAN, P.C.,
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`
`
`v.
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`UNITED HEALTHCARE, INC.,
`et al.,
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`
`
`
`
`Plaintiffs,
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`Defendants.
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` /
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`OPINION AND ORDER GRANTING
`IN PART DEFENDANTS' MOTION TO DISMISS AND DENYING
`DEFENDANTS' MOTION FOR A MORE DEFINITE STATEMENT [29]
`Plaintiffs originally filed a complaint in Wayne County Circuit Court and
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`alleged that Defendants underpaid them for various medical services. ECF 1-2, PgID
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`25–43. Almost a year after Defendants removed the case, Plaintiffs amended the
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`complaint to include claims for medical services covered by Employee Retirement
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`Income Security Act ("ERISA") healthcare plans. ECF 26. Defendants then moved to
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`dismiss the first amended complaint and for a more definite statement. ECF 29.
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`After the parties fully briefed the motions, the Michigan Legislature enacted
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`the Surprise Medical Billing Act, Mich. Comp. Laws § 333.24501 et seq., that
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`regulates emergency room medical billing for out-of-network providers. See ECF 40,
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`PgID 1059. The Court ordered supplemental briefing to address whether the law
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`impacts Plaintiffs' claims under Michigan's Prompt Pay Act, Mich. Comp. Laws,
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`1
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1124 Filed 12/17/20 Page 2 of 34
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`§ 500.2006. Id. at 1060. And the parties fully briefed the supplemental question. ECF
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`41, 42.
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`The Court later held a hearing on the motion to dismiss with the use of video
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`conferencing technology. ECF 43. At the hearing, the parties addressed only whether
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`the Court should dismiss Plaintiffs' Prompt Pay Act and breach of an implied-in-fact
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`contract claims. ECF 40, PgID 1060. For the following reasons, the Court will grant
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`in part and deny in part the motion to dismiss and deny the motion for a more definite
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`statement. The partial grant will effectuate complete dismissal of the case.
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`BACKGROUND
`Plaintiffs are hospital-based physicians in Southeast Michigan who provide
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`emergency care to patients that enrolled in health insurance policies with
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`Defendants. ECF 26, PgID 451, 455, 460. Under the Emergency Medical Treatment
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`Act ("EMTALA"), 42 U.S.C. § 1395dd, Plaintiffs are required to evaluate, stabilize,
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`and treat all patients who seek emergency room care. See ECF 26, PgID 457–58.
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`Since January 2016, Defendants have allegedly underpaid Plaintiffs for the
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`medical care that they had provided to Defendants' insureds. Id. at 464–66. Because
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`of the underpayment, Defendants have allegedly paid Plaintiffs unreasonable rates.
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`Id. at 453–54. The rates are allegedly unreasonable because they are "below the
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`reasonable value of the services rendered as measured by the community where they
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`were performed and by the person who provided them." Id. Given Defendants' below-
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`market payments, Plaintiffs alleged, they are entitled to at least $2.9 million. Id. at
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`454–55.
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`2
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1125 Filed 12/17/20 Page 3 of 34
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`To complicate matters, there is no written contract between Plaintiffs and
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`Defendants because Plaintiffs are out-of-network providers. Id. at 459. As out-of-
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`network providers, they have not bound themselves in writing to Defendants'
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`payment policies or rate schedules. Id. Now, without a written contract on which to
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`sue, Plaintiffs asserted four claims against Defendants.
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`First, Plaintiffs asserted that they have a right to timely payment under the
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`Prompt Pay Act. ECF 26, PgID 464–66. Next, Plaintiffs asserted that Defendants
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`breached an implied-in-fact contract or, in the alternative, an implied-in-law contract
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`with Plaintiffs. Id. at 466–70. And last, Plaintiffs sought declaratory judgment on
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`three separate grounds. Id. at 470–71.
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`For the first claim, Plaintiffs asserted that Michigan law required Defendants
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`to timely pay Plaintiffs, in full, for each billed claim within forty-five days. Id. at 465.
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`Because Defendants have not done so, Plaintiffs believe they are entitled to the fully
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`billed amount plus twelve percent statutory interest under § 500.2006(8). ECF 26,
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`PgID 465–66.
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`For the breach of an implied-in-fact contract claim, Plaintiffs asserted that the
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`parties' conduct created an implicit agreement to pay Plaintiffs reasonable value for
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`their services provided to Defendants' insureds. Id. at 466. The implied agreement
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`arose because Defendants have paid and continue to pay Plaintiffs market-value
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`rates for some services. Id. Plus, Defendants allegedly knew that Plaintiffs never
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`agreed to accept unreasonable, below-market rate payments. Id. at 467.
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`3
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1126 Filed 12/17/20 Page 4 of 34
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`Next, Plaintiffs alleged that Defendants have been unjustly enriched at
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`Plaintiffs' expense. Id. at 468–70. The alleged enrichment occurred because Plaintiffs
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`fulfilled Defendants' obligations to their insureds by providing medical services
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`covered under the insureds' benefit plans. Id. at 468–69. And the enrichment was
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`unjust because Defendants failed to pay the reasonable value of the benefit that
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`Plaintiffs conferred to them through the medical services to Defendants' insureds. Id.
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`at 469.
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`Last, Plaintiffs sought declaratory relief on three grounds. One claim asked
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`the Court to declare that Defendants must pay Plaintiffs "in full, and within forty-
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`five days from the submission of all [c]lean [c]laims covering those services provided
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`to [p]atients" under the Prompt Pay Act. Id. at 471. Second, Plaintiffs requested that
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`the Court to declare that Defendants must pay Plaintiffs "the reasonable value of the
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`emergency medicine services provided to [Defendants' insureds], . . . as well as the
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`time-value of the money that [Defendants] have arbitrarily withheld from
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`[Plaintiffs]." Id. And the last claim sought a declaration that Defendants "must pay
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`[Plaintiffs] prospectively for [n]on-[p]articipating [c]laims in an amount that
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`represents the reasonable value of the services [that Plaintiffs] provide." Id.
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`After Plaintiffs amended the complaint, Defendants moved to dismiss under
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`Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). ECF 29, PgID 677–94.
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`Defendants also moved for a more definite statement under Rule 12(e). Id. at 673–77.
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`LEGAL STANDARD
`"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life
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`Ins. Co. of Am., 511 U.S. 375, 377 (1994). For that reason, courts may dismiss cases
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`4
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1127 Filed 12/17/20 Page 5 of 34
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`for "lack of subject-matter jurisdiction" at any time. Fed. R. Civ. P. 12(b)(1). When a
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`defendant challenges subject-matter jurisdiction, the plaintiff bears the burden of
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`proving jurisdiction. Mich. S. R.R. Co. v. Branch & St. Joseph Ctys. Rail Users Ass'n,
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`Inc., 287 F.3d 568, 573 (6th Cir. 2002). When a defendant facially attacks whether
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`the plaintiff properly alleged a basis for subject-matter jurisdiction, the trial court
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`takes the complaint's allegations as true. Ohio Nat'l Life Ins. Co. v. United States,
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`922 F.2d 320, 325 (6th Cir. 1990).
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`The Court may grant a Rule 12(b)(6) motion to dismiss if the complaint fails to
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`allege facts "sufficient 'to raise a right to relief above the speculative level,' and to
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`'state a claim to relief that is plausible on its face.'" Hensley Mfg. v. ProPride, Inc.,
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`579 F.3d 603, 609 (6th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
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`555, 570 (2007)). The Court views the complaint in the light most favorable to the
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`plaintiff, presumes the truth of all well-pleaded factual assertions, and draws every
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`reasonable inference in the nonmoving party's favor. Bassett v. Nat'l Collegiate
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`Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008).
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`But the Court will not presume the truth of legal conclusions in the complaint.
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`Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). If "a cause of action fails as a matter of
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`law, regardless of whether the plaintiff's factual allegations are true or not," then the
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`Court must dismiss. Winnett v. Caterpillar, Inc., 553 F.3d 1000, 1005 (6th Cir. 2009).
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`DISCUSSION
`Defendants moved for a more definite statement and to dismiss the first
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`amended complaint. ECF 29. The Court will first address the motions to dismiss.
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`5
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1128 Filed 12/17/20 Page 6 of 34
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`I.
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`Rule 12(b)(1) Motion to Dismiss
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`To begin, Defendants moved to dismiss in part for lack of subject-matter
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`jurisdiction under Rule 12(b)(1). Id. at 677–78. Defendants claimed that Plaintiffs
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`lack standing to sue under some claims because ERISA and Michigan common law
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`preempts those claims. Id. at 679–85. The Court will address each ground in turn.
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`A. ERISA Preemption
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`First, ERISA does not preempt Plaintiffs' state law claims. Ordinarily, "ERISA
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`preempts state law claims that 'relate to' any employee benefit plan." Cromwell v.
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`Equicor-Equitable HCA Corp., 944 F.2d 1272, 1275 (6th Cir. 1991) (citing 29 U.S.C.
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`§ 1144(a)). ERISA therefore preempts state law claims that implicate any right to
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`payment unless a provider has a valid assignment of benefits from a patient. Brown
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`v. BlueCross BlueShield of Tenn., Inc., 827 F.3d 543, 547–49 (6th Cir. 2016) (citing
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`Blue Cross of Cal. v. Anesthesia Care, 187 F.3d 1045, 1051 (9th Cir. 1999)).
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`But ERISA stops short of preempting state law claims that implicate the rate
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`of payment for medical services already provided to patients. Brown, 827 F.3d at 548;
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`see, e.g., Lone Star OB/GYN Associates v. Aetna Health, Inc., 579 F.3d 525, 532 (5th
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`Cir. 2009) (explaining that state law claims seeking "the proper contractual rate of
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`payment" for medical services that are "determined to be covered" are not
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`preempted). Indeed, the "amount, or level, of payment" does not depend on any
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`assignment of benefits from patients. Anesthesia Care, 187 F.3d at 1051 (emphasis in
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`original).
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`6
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1129 Filed 12/17/20 Page 7 of 34
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`Here, the first amended complaint disclaimed any assignment of benefits from
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`patients. ECF 26, PgID 454, n. 1. And the first amended complaint also stated that
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`the claims did "not relate to or involve [Plaintiffs'] right to payment, but rather the
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`applicable rate of payment" that Plaintiffs have a right to receive for their services.
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`Id. Specifically, Plaintiffs claimed that they are entitled to "a rate reflecting the
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`reasonable value of [their] services in the marketplace[,]" id. at 466, or "fair market
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`value[,]" id. at 468. Put simply, the first amended complaint pleaded that the dispute
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`arose solely from the "amount, or level, of payment[,]" Anesthesia Care, 187 F.3d at
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`1051 (emphasis in original), and therefore fits into the Brown exception.
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`Still, Defendants claimed that Plaintiffs would fit into the Brown exception
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`only if the parties had worked out a provider agreement, or—as Defendants stated—
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`a "direct contract[.]" ECF 29, PgID 682; see Brown, 827 F.3d at 548 ("[The rate] of
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`payment . . . depends on the terms of the provider agreements.") (citing Anesthesia
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`Care, 187 F.3d at 1051). To recall, the parties never entered into a written contract
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`like a provider agreement. ECF 26, PgID 453. But a written contract is redundant
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`here: Plaintiffs pleaded that their rate of payment arose through an implied-in-fact
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`or an implied-in-law contract with Defendants. Id. at 466–470.
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`Under ERISA preemption, provider agreements and implied contracts are
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`treated the same. See Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d
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`941, 947–49 (9th Cir. 2009) (holding that breach of an implied contract created
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`independently of ERISA was not preempted). So parties—like Plaintiffs—may assert
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1130 Filed 12/17/20 Page 8 of 34
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`a breach of an implied contract claim only if the amount owed is "precisely because it
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`is not owed under the patient's ERISA plan." Id. at 974.
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`In the first amended complaint, Plaintiffs alleged that Defendants owe them
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`more money due to an implied contract to pay the "reasonable[,]" "market value" for
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`Plaintiffs' services. ECF 26, PgID 466, 468. Because Plaintiffs did not claim that the
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`alleged implied contract covered payments owed under any ERISA plan, the claim
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`therefore "does not stem from [a] ERISA plan[.]" Marin General Hosp., 581 F.3d at
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`948. And because Plaintiffs alleged the implied contract with Defendants was an
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`"independent legal obligation[,]" Plaintiffs' claims fit into the Brown exception. Id. at
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`951; see Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004) (explaining that ERISA
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`preempts claims that "at some point in time, could have [been] brought [] under
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`ERISA"); see also Productive MD, LLC v. Aetna Health, Inc., 969 F. Supp. 2d 901, 938
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`(M.D. Tenn. 2013) (noting that federal courts allow Prompt Pay Act claims "typically
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`where a provider sues [under] a separate contractual agreement with the insurer, not
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`[under] a patient assignment") (emphasis in original). Thus, Plaintiffs met their
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`burden to show that ERISA does not preempt their claims.
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`B. Standing Under Michigan Law
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`Second, Plaintiffs have standing under Michigan law to proceed directly
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`against Defendants. Admittedly, healthcare providers are barred from proceeding
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`directly against insurance companies without a valid assignment of benefits from a
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`patient under Michigan's no-fault automobile insurance law. See Covenant Med. Ctr.,
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`Inc. v. State Farm Mut. Auto. Ins. Co., 500 Mich. 191, 213–14 (2017). But Covenant
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`8
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1131 Filed 12/17/20 Page 9 of 34
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`held only that healthcare providers lack a private right to sue "no-fault insurers for
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`recovery of personal protection insurance benefits under the no-fault act." Id. at 196.
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`And Plaintiffs' claims have nothing to do with no-fault automobile insurance.
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`Instead, Plaintiffs alleged that Defendants had underpaid them for their
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`services based on an implied-in-fact contract. ECF 26, PgID 466–68. Nothing in
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`Covenant prevents Plaintiffs from bringing simple breach of contract claims against
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`insurance companies unrelated to no-fault insurance benefits. See VHS Huron Valley
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`Sinai Hosp. v. Sentinel Ins. Co., 322 Mich. App. 707, 713 (2018) (noting that Covenant
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`affected only healthcare providers' rights to "pursue a statutory cause of action for
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`[personal protection injury] benefits directly from an insurer") (citations omitted). In
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`short, Michigan law allows Plaintiffs' claims to proceed against Defendants for the
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`alleged underpayments. The Court will therefore deny Defendants' Rule 12(b)(1)
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`motion to dismiss.
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`II.
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`Rule 12(b)(6) Motion to Dismiss the First Amended Complaint
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`Next, Defendants moved to dismiss the first amended complaint for failure to
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`state a claim under Rule 12(b)(6). Id. at 678–79. Defendants first asserted that
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`Plaintiffs lacked a private right to sue under the Prompt Pay Act. Id. at 685–88.
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`Defendants also moved to dismiss the implied-in-fact and unjust enrichment claims.
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`Id. at 689–93. Last, Defendants moved to dismiss the declaratory judgment claims.
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`Id. at 693–94. The Court will address each ground in turn.
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`9
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1132 Filed 12/17/20 Page 10 of 34
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`A. Prompt Pay Act Claim
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`Plaintiffs frame their Prompt Pay Act claim in two ways. First, Plaintiffs
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`alleged that § 500.2006(12) creates a private right to sue Defendants for the full
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`amount of each claim. ECF 35, PgID 960; see also ECF 26, PgID 465–66. Second,
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`Plaintiffs alleged that § 500.2006(12) creates a private right to sue Defendants for the
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`twelve percent statutory interest on all untimely paid claims. ECF 43, PgID 1101,
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`1107. In brief, the Court finds that Plaintiffs failed to state a claim upon which relief
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`could be granted for both parts of the claim.
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`1. Background
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`Section 500.2006 is also known as the Prompt Pay Act and is part of the
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`Uniform Trade Practices Act ("UTPA"), Mich. Comp. Laws § 500.2001 et seq., which,
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`in turn, makes up part of Michigan's Insurance Code. The Prompt Pay Act creates
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`processing and payment procedures that healthcare professionals must follow for
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`health insurers to pay their claims. § 500.2006(8). The Act requires that "[a] clean
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`claim must be paid within 45 days after receipt of the claim by the health plan. A
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`clean claim that is not paid within 45 days bears simple interest at a rate of 12% per
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`annum." § 500.2006(8)(a). Clean claims are—in essence—valid, medically necessary
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`and appropriate claims. See § 500.2006(14)(a).
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`Defendants asserted that the Prompt Pay Act lacks a private right under which
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`Plaintiffs may pursue their claims. ECF 29, PgID 685. But Plaintiffs argued that
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`interpreting the Prompt Pay Act's "plain and ordinary meaning" establishes the
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`private right that Plaintiffs seek. ECF 35, PgID 960–62.
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`10
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1133 Filed 12/17/20 Page 11 of 34
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`When interpreting a state statute, the Court "must follow state interpretations
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`of [those] statutes, and must predict how the state Supreme Court would [interpret
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`the statute] if it has not yet done so." Bevan & Associates, LPA, Inc. v. Yost, 929 F.3d
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`366, 374 (6th Cir. 2019) (internal quotations and citations omitted)). For statutory
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`text, the Michigan Supreme Court interprets words based on "their ordinary meaning
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`and their context within the statute and read them harmoniously to give effect to the
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`statute as a whole." People v. Peltola, 489 Mich. 174, 181 (2011). The Court must also
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`consider "the placement of the critical language in the statutory scheme." Johnson v.
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`Recca, 492 Mich. 169, 177 (2012) (emphasis in the original). And the Court "must give
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`effect to every word, phrase, and clause in a statute and avoid an interpretation that
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`would render any part of the statute surplusage or nugatory." State Farm Fire & Cas.
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`Co. v. Old Republic Ins. Co., 466 Mich. 142, 146 (2002).
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`When two statutes regulate "the same subject [matter] or [] share a common
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`purpose[,]" the Michigan Supreme Court follows the in pari materia doctrine. People
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`v. Mazur, 497 Mich. 302, 313 (2015) (citation omitted); see generally Antonin Scalia
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`& Bryan A. Garner, Reading Law: The Interpretation of Legal Texts § 39 (2012)
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`(related-statutes canon). Under the doctrine, the two statutes "should, if possible, be
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`read together to create a harmonious body of law." Id. Indeed, "[t]wo statutes that
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`form 'a part of one regulatory scheme' should be read [in a like manner]." People v.
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`Stephan, 241 Mich. App. 482, 498 (2000) (quoting In re Complaint of Southfield
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`Against Ameritech Mich., 235 Mich. App. 523, 527 (1999)).
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`11
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1134 Filed 12/17/20 Page 12 of 34
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`If "a plain reading of the statute does not support" creating a private right to
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`sue, then the Michigan Supreme Court disfavors implying one. Grand Traverse Cnty.
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`v. State of Michigan, 450 Mich. 457, 465 (1995). Indeed, the Michigan Supreme Court
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`has routinely "refused to impose a remedy for a statutory violation in the absence of
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`evidence of legislative intent[.]" Lash v. City of Traverse City, 479 Mich. 180, 193
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`(2007).
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`To establish a private right to sue, Plaintiffs rely on subsection twelve of the
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`Prompt Pay Act. ECF 35, PgID 960. That subsection allows a healthcare professional
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`to "file a complaint with the director[,]" § 500.2006(12), who is the Director of the
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`Michigan Department of Insurance and Financial Services, § 500.102(c). The Director
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`may then impose civil fines for each unpaid clean claim. § 500.2006(13). But
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`subsection twelve also provides that the grievance procedure "does not prohibit a
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`health professional . . . from seeking court action." § 500.2006(12).
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`And now the Court must address whether Plaintiffs have a private right to sue
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`under § 500.2006(12).
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`2. Private Right to Sue for the Full Amounts of Claims
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`Because the claim is one of first impression, the Court will begin by examining
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`the Prompt Pay Act's plain text to determine if it creates an expressed private right
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`to sue. See Grand Traverse Cnty., 450 Mich. at 465. The Court will then determine
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`whether the Court must imply a private right to sue in the Prompt Pay Act.
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`12
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1135 Filed 12/17/20 Page 13 of 34
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`a. Expressed Private Right to Sue
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`Put simply, a plain reading of the Prompt Pay Act's text provides no expressed
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`private right to sue. For one, the only text in the Prompt Pay Act that addresses any
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`court action is the text that explains, "[t]his subsection does not prohibit a health
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`professional . . . from seeking court action." § 500.2006(12). But in the same
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`subsection, the text explains that after a Prompt Pay Act violation, a healthcare
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`professional can "file a complaint with the [Director of the Michigan Department of
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`Insurance and Financial Services.]" Id. Moreover, the next subsection explains that
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`the Director may impose fines for each Prompt Pay Act violation. § 500.2006(13).
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`When considering the text's placement and its ordinary meaning, the Prompt Pay Act
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`no doubt established a public enforcement right. See Johnson, 492 Mich. at 177;
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`Peltola, 489 Mich. at 181. But whether a plain reading of the Prompt Pay Act's text
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`establishes a private enforcement right is less clear.1
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`At the least, the Prompt Pay Act's plain text does not preclude a private
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`enforcement right through, for example, a breach of contract claim. See
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`§ 500.2006(12) ("This subsection does not prohibit a health professional. . . from
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`seeking court action."). But the Court's analysis of an express right to sue does not
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`end there. The Court must interpret the Prompt Pay Act's text—if possible—in a
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`1 Indeed, the Prompt Pay Act's text by itself is unclear—at best—about creating a
`private right to sue because in states that do authorize a private right to sue, those
`states' acts create a right without question. See, e.g., W. Va. Code § 33-45-3 ("Any
`provider . . . is entitled to initiate an action to recover actual damages.").
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`13
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1136 Filed 12/17/20 Page 14 of 34
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`manner that is harmonious to the recently enacted Surprise Medical Billing Act.
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`Mazur, 497 Mich. at 313.
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`Although Plaintiffs did not bring a claim under the Surprise Medical Billing
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`Act, the new law regulates the same subject matter as the Prompt Pay Act: emergency
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`room medical billing. Here, interpreting the Prompt Pay Act and the Surprise
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`Medical Billing Act's texts together necessarily means that the Prompt Pay Act lacks
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`a private right to sue for the full amounts of billed claims.
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`For example, the Surprise Medical Billing Act created a specific scheme for
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`calculating the amount that an insurer must reimburse an out-of-network healthcare
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`provider for emergency services. See Mich. Comp. Laws § 333.24507(2) ("[T]he
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`nonparticipating provider shall submit a claim to the patient's carrier . . . and shall
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`accept from the patient's carrier, as payment in full, the greater of the
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`following . . . ."). Meanwhile, the Prompt Pay Act created a specific scheme for
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`determining when an insurer must reimburse an out-of-network healthcare provider.
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`See § 500.2006(7) ("This section does not affect a health plan's ability to prescribe the
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`terms and conditions of its contracts, other than as provided in this section for timely
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`payment."); § 500.2006(8)(a) ("A clean claim must be paid within 45 days after receipt
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`of the claim by the health plan.").
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`Because of the interplay between the two schemes, the Legislature necessarily
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`intended the two statutes to complement one another. See Herrick Dist. Library v.
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`Library of Mich., 293 Mich. App. 571, 592 n. 13 (2011) (Saad, J.) ("[A] general rule of
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`statutory construction is that the Legislature is presumed to know of and legislate in
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`14
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`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1137 Filed 12/17/20 Page 15 of 34
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`harmony with existing laws.") (citations and quotations omitted). In the end, the
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`Surprise Medical Billing Act regulates how much an insurer must pay a healthcare
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`provider while the Prompt Pay Act regulates how quickly an insurer must pay a
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`healthcare provider. See Mazur, 497 Mich. at 313 ("[S]tatutes that relate to the same
`
`subject or that share a common purpose should, if possible, be read together to create
`
`a harmonious body of law."). If the Legislature had intended the Surprise Medical
`
`Billing Act to regulate the Prompt Pay Act's scheme, then the Legislature would have
`
`repealed the Prompt Pay Act. But the Legislature did not do so. See People v. Higuera,
`
`244 Mich. App. 429, 436 (2001) ("The intent to repeal must very clearly appear . . . .")
`
`(citing Wayne Cnty. Prosecutor v. Dep't of Corrs., 451 Mich. 569, 576 (1996)); see
`
`generally Scalia & Garner, Reading Law: The Interpretation of Legal Texts § 55
`
`(presumption against implied repeal).
`
`In brief, based on basic statutory interpretation, the Prompt Pay Act's
`
`language creates no private right to sue. The Court will now examine whether
`
`Michigan case law requires the Court to imply a private right to sue in the Prompt
`
`Pay Act.
`
`b. Implied Private Right to Sue
`
`Generally, "a violation of the [UTPA] . . . does not give rise to a private cause
`
`of action." Isagholian v. Transamerica Ins. Corp., 208 Mich. App. 9, 17 (1994) (citing
`
`Young v. Mich. Mut. Ins. Co., 139 Mich. App. 600, 604–06 (1984)). That is because
`
`"[t]he UTPA [merely] encourages prompt payment of contractual insurance benefits."
`
`Nickola v. MIC Gen. Ins. Co., 500 Mich. 115, 125 (2017).
`
`
`
`15
`
`

`

`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1138 Filed 12/17/20 Page 16 of 34
`
`To that end, the Court must avoid presuming an implied right to sue for money
`
`damages in a comprehensive regulatory scheme. See Gardner v. Wood, 429 Mich. 290,
`
`304 n. 7 (1987) (cautioning against creating implied rights of action); see generally
`
`Scalia & Garner, Reading Law: The Interpretation of Legal Texts § 51 (presumption
`
`against implied right of action). In fact, for the longest time, there was "no implied
`
`private cause of action in tort for [violating § 500.2006.]" Young, 139 Mich. App. at
`
`606. Still, there is a distinguishable exception.
`
`For example, § 500.2006(4) allows third-party tort claimants—but not
`
`insureds—to make claims against insurance companies to recover the twelve percent
`
`penalty interest. Nickola, 500 Mich. at 132. For the most part, however, "[u]nless a
`
`specific statute says otherwise, only the county prosecutor or the state attorney
`
`general may sue an insurer for violation of the Insurance Code." Waskul v. Metro.
`
`Life. Ins. Co., No. 17-13932, 2018 WL 3647102, at *4 (E.D. Mich. July 31, 2018) (citing
`
`Mich. Comp. Laws § 500.230).
`
`Admittedly, insureds "may assert a private cause of action to recover the
`
`interest penalty in" § 500.2006 if the insurer fails to pay timely claims. Young, 139
`
`Mich. App. at 606 (quoting Barker v. Underwriters at Lloyd's, London, 564 F. Supp.
`
`352, 355 (E.D. Mich. 1983)). But those case holdings do not suggest that § 500.2006
`
`generally creates right to recover the full amounts of billed claims. Young, 139 Mich.
`
`App. at 605. And yet Plaintiffs are claiming just that.
`
`Plaintiffs asserted § 500.2006(12) as a cause of action "for damages in the
`
`amount of their billed charges" against Defendants. ECF 26, PgID 465–66; ECF 43,
`
`
`
`16
`
`

`

`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1139 Filed 12/17/20 Page 17 of 34
`
`PgID 1101. But Plaintiffs cannot sue for those damages under the statute because,
`
`apart from the unclear statutory text, Michigan courts have not recognized that
`
`specific private right to sue. See Young, 139 Mich. App. at 604–06; see also § 500.230
`
`("Every penalty provided for by [the Insurance Code] . . . shall be sued for and
`
`recovered in the name of the people by the [county prosecutor or] . . . the attorney
`
`general.").2
`
`In short, Plaintiffs cannot maintain a claim for "damages in the amount of their
`
`billed charges" for three reasons. ECF 26, PgID 465–66. First, the Prompt Pay Act's
`
`"ordinary meaning and [] context" and its role in the statutory scheme do not establish
`
`that the Michigan Legislature created a private right to sue. Peltola, 489 Mich. at
`
`181; see Grand Traverse Cnty., 450 Mich. at 465. Second, Michigan state courts have
`
`routinely failed to imply a private right to sue under the Prompt Pay Act, Young, 139
`
`Mich. App. at 604–06, and the UTPA, Isagholian, 208 Mich. App. at 17. And third,
`
`Michigan state courts recognize that only state actors may sue under the Insurance
`
`Code. Waskul, 2018 WL 3647102, at *4. The Court will now address Plaintiffs' claim
`
`to penalty interest under the Prompt Pay Act.
`
`3. Private Right to Sue for Twelve Percent Penalty Interest
`
`Plaintiffs have no private right to sue Defendants for the twelve percent
`
`penalty interest rate on untimely paid claims. Admittedly, under § 500.2006(4), an
`
`insured may collect penalty interest. Palmer Park Square, LLC v. Scottsdale
`
`
`2 Almost all States have adopted Prompt Pay Acts and almost all those Acts lack
`private rights to sue. See Michael Flynn, The Check Isn't in the Mail: The Inadequacy
`of State Prompt Pay Statutes, 10 DePaul J. of Health Care L. 397, 404 (2007).
`
`
`
`17
`
`

`

`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1140 Filed 12/17/20 Page 18 of 34
`
`Insurance Co., 878 F.3d 530, 535–36, 539 (6th Cir. 2017) (explaining that
`
`§ 500.2006(4) creates a legal obligation to pay penalty interest at twelve percent). But
`
`§ 500.2006(4) is not at issue; §§ 500.2006(8) and (12) are.
`
`The Prompt Pay Act's plain text dictates that the obligations created under
`
`subsection four do not apply to subsections eight or twelve. See § 500.2006(7)
`
`("Subsections (1) to (6) do not apply and subsections (8) to (14) do apply to health
`
`plans when paying claims to health professionals[.]"). And the Prompt Pay Act's plain
`
`text thus creates two separate regulatory schemes: one for health insurance and one
`
`for all other insurance. See Old Republic Ins. Co., 466 Mich. at 146 (emphasizing that
`
`the Court "must give effect to every word, phrase, and clause in a statute . . . ."). The
`
`separate treatment is justified because the Michigan Legislature amended the
`
`Prompt Pay Act to regulate health insurance in 2002—decades after the Legislature
`
`created the existing regulatory scheme for other kinds of insurance. See 2002 Mich.
`
`Pub. Acts 316.
`
`It follows, then, that Michigan case law creating a private right to sue for
`
`penalty interest is inapplicable to Plaintiffs' claims because the Michigan cases dealt
`
`specifically with subsections one through six of the Prompt Pay Act—not subsections
`
`eight or twelve. See, e.g., Palmer Park Square, LLC, 878 F.3d at 537, 539 ("[T]he
`
`language of § 500.2006 itself [establishes] that an insured may obtain penalty
`
`interest[.]"); Young, 139 Mich. App. at 605 ("The Court finds that plaintiffs may assert
`
`a private cause of action to recover the interest penalty in section 2006 of the UTPA
`
`since that section provides that the insurer pay the interest penalty to the insured on
`
`
`
`18
`
`

`

`Case 2:19-cv-12052-SJM-MKM ECF No. 44, PageID.1141 Filed 12/17/20 Page 19 of 34
`
`claims not paid on a timely basis.") (quoting Barker, 564 F. Supp. at 355). And because
`
`no court has interpreted a claim exactly like the present one for a private right to sue,
`
`the Court must interpret what the statute permits beginning with an examination of
`
`the Prompt Pay Act's plain text. See Grand Traverse Cnty., 450 Mich. at 464–65.
`
`As the Court already explained, the Prompt Pay Act's plain text—especially
`
`when interpreted with the Surprise Medical Billing Act—creates no private right to
`
`sue. If the Michigan Legislature had intended that the private right to sue for penalty
`
`interest would apply to health insurance, then it would not have created a separate
`
`regulatory scheme for health in

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