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Michigan Supreme Court Holds that a No-Fault Insurer Cannot Challenge the Corporate Status of a Provider formed under the Business Corporations Act

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Joseph E. Kozely & Lindsey E. Bosch
Foster Swift No-Fault E-News
July 3, 2008

On July 2, 2008, the Supreme Court held that an irrebuttable presumption of lawful incorporation exists when a company is formed under the Business Corporations Act (BCA), MCL 450.1101, et seq. Miller v Allstate Ins Co, Docket No. 134393.

Plaintiff Miller suffered from whiplash after experiencing two separate car accidents. His doctors prescribed physical therapy. When Miller submitted a bill from PT Works, Inc., to Defendant Allstate Insurance Company, Allstate refused to pay it. Allstate argued that PT Works was improperly incorporated: It should have incorporated under the Professional Services Corporations Act (PSCA) rather than the BCA. Allstate asserted that because PT Works was not properly incorporated, it did not render "lawful" treatment and, therefore, could not recover payment for No-Fault benefits.

The trial court denied Allstate’s motion for summary disposition, and the Court of Appeals affirmed. On remand following an application to the Michigan Supreme Court, the Court of Appeals again ruled for PT Works on the grounds that "improper incorporation under the BCA did not render the treatment ‘unlawful’ under MCL 500.3157." The Supreme Court granted leave to appeal and affirmed, holding that under the plain language of MCL 450.1221, only the Attorney General has standing to challenge corporate status. In the absence of a challenge from the Attorney General, the filing of articles of incorporation under the BCA constitutes "conclusive evidence" that a company is properly incorporated. The provisions of MCL 450.1221 concerning corporate formation prevail over MCL 500.3157.

This case is important because of the Supreme Court’s analysis of standing and its holding that an insurer lacks standing to challenge the corporate status of a provider of medical care under the No Fault Act.