Whether a party who assigned their claims for PIP benefits to a third party may still sue to recover those benefits; C-Spine Orthopedics, PLLC v Progressive MI Ins Co; Wallace v Suburban Mobility Auth for Reg’l Transp; Real party in interest; MCL 600.2041; One year-back rule; MCL 500.3145(2); Standing; MCL 500.3112; Andary v USAA Cas Ins Co; Relation-back doctrine

In these two cases, the court held that a “plaintiff who has assigned away their claim is not the real party in interest. However, defects in real party in interest status are not necessarily fatal to a lawsuit. The plaintiff may fix such a problem by joining or substituting the proper party, amending their complaint, seeking and obtaining the equitable remedy of rescission, or taking other actions during litigation to cure a real party in interest defect. A plaintiff seeking PIP benefits who cures a real party in interest defect is still subject to the one-year-back rule.” Thus, it affirmed the Court of Appeals’ judgment and disposition in one of the cases, C-Spine, on alternate grounds and remanded “the case to the trial court for proceedings consistent with this opinion.” It noted that its ruling was “without prejudice to either party seeking resolution of other legal issues on remand that have yet to be litigated.” In the other case, Wallace, it vacated the Court of Appeals’ “conclusion that if the ‘mutual rescissions’ were revocations, Wallace’s claims would be barred by the one-year-back rule.” It remanded “to the trial court to consider whether Wallace’s assignments should be equitably rescinded in the first instance.” The issue in these cases was “if and when a patient or medical provider who assigned their claims for [PIP] benefits to a third party may still file a lawsuit to recover those benefits.” The court concluded that (1) both plaintiffs-C-Spine (a medical provider) and Wallace (patient) had standing under MCL 500.3112 “to file their respective lawsuits; however, they were not real parties in interest at the time they filed suit because they had previously assigned away their claims for PIP benefits; (2) defects in real party in interest status may be cured after the filing of a lawsuit; and (3) the one-year-back rule, MCL 500.3145(2), does not affect whether a plaintiff is a real party in interest—though it may bar recovery.” In C-Spine, the court disagreed “with the Court of Appeals’ conclusion that C-Spine remained the real party in interest after assigning away its claims” but it held “that the ‘counter-assignments’ returned C-Spine’s real party in interest status—though they did not alone cure the real party in interest defect in this case.” In Wallace, the court agreed “with the Court of Appeals’ conclusion that Wallace was no longer the real party in interest after assigning away her claims” but it reversed the Court of Appeals’ “opinion to the extent that it held that it would not have been possible for Wallace to rectify this issue.”

Justice Welch concurred fully in the majority opinion but wrote separately to note her “continued belief that several of this Court’s recent no-fault decisions are inconsistent with the reasoning of Andary[.]”

Dissenting, Justice Zahra agreed with two of the majority’s holdings but disagreed with its “holding that defects in the real party in interest may be cured after the filing of a lawsuit.” Thus, he would have affirmed the Court of Appeals in Wallace and reversed it in C-Spine.