A Michigan court of appeals holds that Medicaid's mistaken payment of part of a hospital bill does not release an auto insurer from liability for the remainder of the bill.
LaTonya Hicks, a minor, was struck and seriously injured by an automobile while crossing a highway. Because no one in the Hicks family had auto insurance and no other insurance was available, on January 31, 1989, coverage of LaTonya was randomly assigned to Citizens Insurance Company under Michigan''s assigned risk plan. LaTonya was hospitalized on two different occasions at Children''s Hospital of Michigan. The bill for the first hospitalization, from September 11, 1988 until October 28, 1988, was paid in full by Citizens. During the second hospitalization, between December 22, 1988 and June 22, 1989, medical expenses totaled $145,942. Apparently believing that LaTonya''s family was indigent, Children''s billed the Michigan Department of Social Services (DSS) for Medicaid benefits to partially cover the cost of the second hospitalization. DSS reimbursed Children''s a total of $62,948. DSS later received from Citizens full reimbursement of this amount. But Citizens refused to pay the remainder of the Children''s bill, contending that the Medicaid payments had discharged LaTonya and her family--and by extension their insurer--from any further liability.
The court disagrees. The availability of benefits under the assigned risk plan rendered LaTonya medically non-indigent and thus ineligible for Medicaid benefits. The fact that such benefits were mistakenly paid on her behalf, the court rules, does not release her from responsibility for unpaid expenses. Citizens may not rely on the unenforceable agreement between Children''s and DSS, the court finds, and is therefore responsible for the remaining amount due on the Children''s bill.
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