When Assignments Complicate No-Fault Claims: Michigan Supreme Court Weighs In

In July 2025, the Michigan Supreme Court issued a significant opinion in two consolidated cases: C-Spine Orthopedics, PLLC v Progressive Michigan Insurance Company and Wallace v Suburban Mobility Authority for Regional Transportation. At the center of both disputes was a deceptively simple question: Who is allowed to bring a lawsuit for personal injury protection (PIP) benefits when those rights have already been assigned to someone else?

The Court’s answer was nuanced but important. It distinguished between having the right to sue in general, known as “standing,” and being the proper party to bring the lawsuit, known as the “real party in interest.” The Court emphasized that a case filed by the wrong party does not always have to be dismissed outright. In some situations, the error can be corrected. 

The Cases in Brief 

A medical provider brought the first case after it had sold its rights under assignments to factoring companies. Despite selling the claims, the provider filed suit against the insurer. The Court concluded the provider was not the real party in interest when it filed the lawsuit but might be able to fix the problem if it properly amended its complaint to reflect counter-assignments it later received. 

In the second case, a passenger involved in a motor vehicle accident assigned her claims to her medical providers, then filed suit herself. Afterward, she obtained assignment rescission agreements from her providers to restore her rights. The Court held she had standing as an injured policyholder but was not the real party in interest when she filed the Complaint. It sent the case back to the trial court to decide whether the rescissions should be recognized as an equitable remedy. 

The Court’s Message 

The Court’s decision highlights that a plaintiff’s standing and status as a real party in interest are related but distinct. A plaintiff can have standing because the law recognizes their right to seek benefits but may still not be a real party in interest if those rights have been transferred away. Crucially, the Court explained that this type of defect is not always fatal. It may be possible to correct it by amending the lawsuit, substituting the proper party, or asking the court to recognize a rescission. Even so, the one-year-back rule under the no-fault act still applies. Correcting a procedural misstep will not revive claims that are already time-barred. 

Why This Matters for Claims Professionals 

For adjusters and claims managers, the ruling underscores how critical it is to understand the flow of assignments in a claim file. The first question to ask is: Who actually owns the right to sue for these benefits? If a patient has assigned their rights to a provider, or if a provider has sold those rights to a factoring company, that chain must be traced. A lawsuit filed by the wrong party may not be dismissed immediately, which means insurers can expect more arguments over whether a defect can be cured. 

This creates additional layers of litigation risk. Claims professionals should anticipate motions to amend complaints, requests for rescission of assignments, or substitutions of parties long after a case has been filed. Each of these steps has the potential to extend litigation and increase costs. 

The decision also places renewed importance on the one-year-back rule. Even if courts allow a plaintiff to cure a real party in interest problem, recovery is still limited by the statutory timeframe. For insurers, keeping careful records of when expenses were incurred and when claims were formally denied remains a critical defense. 

Finally, the Court made clear that rescission is an equitable remedy. This means judges will weigh fairness when deciding whether to honor an agreement between patients and providers to undo assignments. Insurers should be prepared to argue why rescission should or should not apply based on the facts of each case, particularly where granting it would prejudice the insurer. 

The Michigan Supreme Court’s decision reflects a balance between strict rules and flexibility. For claims professionals, it is a reminder that procedural issues around assignments can create uncertainty, but also opportunities. By carefully tracking assignments, monitoring deadlines, and raising equitable arguments, the Slater Seibert team can help insurers protect themselves from paying benefits that were never properly claimed. 

For more information on assignment of benefits and the implications of this opinion, contact the experienced insurance defense attorneys of Slater Seibert.