Stand Up Multipositional Advantage MRI, P.A. v. American Family Insurance Company et al.
(Published, No. A15-0843)
Minnesota Court of Appeals, April 25, 2016
The issue in this case is whether a patient’s assignment of no-fault insurance benefits to a medical provider is invalid and unenforceable where the applicable automobile insurance policy disallows such assignments and where the patient makes the assignment “pre-loss,” or prior to the medical provider billing the patient for services.
Stand Up Multipositional Advantage MRI, P.A. (SUMA) is a diagnostic facility that provides MRI testing to patients. Prior to providing MRI services, SUMA would have each patient sign a one-page document that purported to create an assignment and lien agreement. In July 2013, SUMA initiated a lawsuit against sixteen different defendants, including eight patients, seven attorneys who represented the eight patients, and American Family, an insurance company that provided no-fault insurance benefits to each of the eight patient-defendants. In its lawsuit, SUMA alleged that American Family failed to make payments of no-fault benefits directly to SUMA pursuant to the assignments that it had obtained from its patients. SUMA’s claims against American Family were the only issues considered on appeal. The court also notes that the American Family no-fault insurance policies at issue in this case contained anti-assignment provisions.
The court first considers whether the assignments were valid. The court states that, in general, anti-assignment provisions in contracts are valid and enforceable. However, insurance policies are treated differently. In Minnesota, an anti-assignment provision in an insurance policy is unenforceable for post-loss assignments. Therefore, if the assignment of benefits was made after the loss was incurred, then the assignment would be valid and enforceable. The court then applies the majority rule from other jurisdictions which holds that anti-assignment provisions are enforceable with respect to pre-loss assignments. Therefore, if the assignment of benefits was made before the loss was incurred, then the assignment would be invalid and unenforceable due to the anti-assignment provision in the insurance policy. As such, the court next considers whether the assignments in this case were made pre-loss or post-loss.
The court cites the No-Fault Act, which states that “Loss accrues not when injury occurs, but as…medical…expense is incurred.” Minn. Stat. Sec. 65B.54, subd. 1. The court also cites a Minnesota Supreme Court case, Stout v. AMCO, which found that “an injured person incurs medical expense [under the No-Fault Act] as he or she receives bills for medical treatment.” 645 N.W.2d 108, 113 (Minn.2002)(emphasis added). The court finds, therefore, that the loss is incurred when SUMA bills the patient. In these cases, SUMA had acknowledged on the record that it required patients to sign the assignment agreements prior to receiving the MRI scans. The court notes that SUMA could not have billed for its services before the services were provided. The court found that the assignment agreements were pre-loss assignments and, therefore, that the anti-assignment clauses in American Family’s insurance policies were valid and enforceable, yielding the assignments at issue in this case invalid and unenforceable.
The court reversed the district court and granted summary judgment in favor of American Family.
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