First In, First Out? Not So Fast.

I don’t make the rules. But I think it is well-documented that anytime an attorney is asked a numbers question, they are required to respond with “I didn’t go to law school to do math!” [Insert hearty chuckle here]. Cheesy lawyer jokes aside, the 2019 amendments to the No-Fault Act have essentially required both plaintiff and defense attorneys to become glorified accountants – albeit in the most basic sense. Drafting spreadsheets, calculating Fee Schedule rates, and…FIFO?

That’s right. The accounting principle of “first in, first out” has been thrown around as a requirement for how a no-fault insurer should exhaust a capped allowable expense policy. But the recent published case of Michigan Head & Spine Institute, PC, et al v Nationwide Mutual Fire Insurance Company has taken FIFO and made it DOA. [Insert hearty chuckle here].

The underlying facts are fairly straightforward. Daniel Crane suffered catastrophic injuries in a 2021 car accident and was uninsured, so his claim for no-fault benefits went through the Michigan Assigned Claims Plan. Nationwide Mutual Fire Insurance Company was assigned as the servicing insurer. Between Crane’s own care and the treatment billed by several providers – including Michigan Head & Spine – the claimed benefits quickly exceeded the $250,000 cap for allowable expenses under the MACP. In an effort to avoid piecemeal litigation over who gets what, Nationwide filed an interpleader action and deposited the full $250,000 into the court. The trial court divvied up the pot based on “equity,” awarding roughly 91% to Crane and 9% to the providers – without addressing who submitted claims first or whether those claims were even valid.

The Court of Appeals reversed, making clear that the trial court skipped a few critical steps. Most notably, the court rejected any suggestion that “first in, first out” is the law – or even an appropriate default. While FIFO may be one method for exhausting limited benefits, the court held that the only roadmap comes from MCL 500.3112, which requires courts to first determine the validity of each claim and then disburse payment accordingly. The panel emphasized that equitable apportionment – especially without resolving who was owed what and when – undermines the statutory scheme.

So what’s the takeaway? Michigan Head & Spine confirms that the distribution of limited no-fault benefits isn’t a free-for-all – and it certainly isn’t governed by accounting shortcuts like FIFO. We may all be playing part-time accountant these days, but when it comes to capped PIP benefits, the court isn’t bound by who billed first or who built the best spreadsheet. Before any funds are disbursed, courts must determine whether each claim is valid under the No-Fault Act. The only rulebook is the statute—and MCL 500.3112 does all the math that matters.