Michigan Court Revisits No-Fault Benefit Assignments and Rescissions in Sharp v. Tracht

The Michigan Court of Appeals addressed key issues concerning the assignment and revocation of No-Fault benefits in the case Sharp v. Tracht. The case involves a plaintiff, Parsha Shantel Sharp, who was insured under Progressive Mutual Insurance Company's auto policy, seeking No-Fault benefits following a motor vehicle accident on September 1, 2019. Sharp initially assigned her rights to recover No-Fault benefits to various medical providers but later sought to revoke these assignments during litigation. The trial court granted Progressive's motion for partial summary disposition on the basis that Sharp lacked standing due to these assignments. However, the appellate court reversed this decision, emphasizing that Progressive had failed to attach evidence of the assignments in its initial motion and that revocations of assignments could restore Sharp’s status as the real party in interest.

Upon remand, the trial court again ruled in favor of Progressive, citing the irrevocability of the assignments and the one-year-back rule under Michigan law (MCL 500.3145), which limits claims for benefits to those within one year prior to the filing date. Sharp contested this, arguing that the assignments were mutually rescinded and thus void ab initio. The appellate court in its latest ruling found that Sharp successfully restored her real party in interest status mid-litigation through revocations of assignments and remanded for a proper rescission analysis and reconsideration of the applicability of the one-year-back rule.

This case highlights significant regulatory and compliance issues related to the assignment of No-Fault benefits under Michigan’s No-Fault Act. Key considerations include the evidentiary requirements for assignments, the rights of insureds to revoke assignments, and the interaction with statutory limitations on claims. The appellate decisions underscore the necessity for trial courts to thoroughly analyze rescission claims and statutory compliance when addressing disputes over No-Fault benefit payments and assignments.

For insurance professionals, this ruling impacts claims handling procedures, particularly regarding medical provider assignments and coordination with insured claimants. It emphasizes the importance of accurate documentation and timely verification of assignment status to determine the real party in interest. Additionally, the case reinforces scrutiny of the one-year-back rule in evaluating the timeliness of claims and potential defenses.

Overall, the Sharp v. Tracht litigation represents an evolving legal interpretation of assignment and rescission principles within Michigan’s insurance framework, relevant to insurers, medical providers, and litigants engaged in No-Fault benefit disputes. The appellate court’s direction to revisit rescission and statutory rule analyses ensures ongoing judicial oversight in protecting contractual and statutory rights in insurance claims resolution.