In Defense of the Obvious

In Defense of the Obvious

A Look at Tactics Employed by Insurance Company Lawyers in Michigan’s PIP Cases and Competent Provider Preparedness

Litigation is not unusual in personal injury cases.  The Michigan no-fault, a/k/a PIP system is by no means an exception.  It’s actually par for the course.  That said, some arguments offered regularly by insurance company defendants appear to resemble throwing pasta against a wall to see what sticks as opposed to sound legal advocacy.

Let’s examine some examples:

  1. Licensing Expiration Issues

To discredit bills from providers who have cared for the catastrophically injured, some lawyers will argue to judges, juries and/or arbitration panels that the business lacks legitimacy.  Why?  Because a license for adult foster care or as a Home for the Aged has expired.

However, this is a subjective and often misleading argument.  Licenses expire all the time for a variety of reasons, including:

  1. Licensing personnel do not arrive on time to conduct the required licensing inspection.
  2. On other occasions there might have been violations found during an inspection – albeit minor – and the licensee is notified and allowed fifteen, (15) days to issue a Correction Action Plan. This plan could languish on the desk of the Area Manager who serves in the Bureau of Health Systems for an unspecified period before leading to renewal of the license.
  3. There have been instances wherein a licensed home has experienced a licensing inspection and afterward it took months for the assigned licensing consultant to follow-up with a written report. In another case multiple years have gone by as certain issues are resolved.

During this period the business is not barred from continuing to exist and function as a licensed operation. Further, while the findings that led to the need for a Corrective Action Plan are noted on the State’s website, the response from the licensed home that led to the license renewal is not.  This creates an information vacuum that further contributes to how an insurance company counsel can muddy the facts.

When legal counsel for the insurer seeks to use an expiration (not a suspension or revocation) to argue that billings should be tossed, it is generally without regard for whether the license was in place during the time services were billed.  Further, the argument often does not factor in the reality of the aforementioned logistical issues that do not undermine the credibility of the operation or its legally approved right to operate.

Plaintiffs will want to be on the lookout when issues such as these are used to poison judges, juries and arbitrators with a misapplication of state administrative rule or an effort to simply mislead.


  1. River’s Edge Assisted Living – St. Clair, Michigan
  2. Embrace Group Home – Canton, Michigan

2.  Licensing Scope

There are also regular arguments about the scope of a license.  Insurance company lawyers will seek to assert that an adult foster care home’s operation more resembles a skilled nursing center than a group home. They will use this line of reasoning to further discredit bills by painting a picture of a rogue operation. This too is a frivolous argument.  Why?  An adult foster care home is required by licensure to ensure the needs of each resident are cared for.

This includes regular visits by medical professionals.  Included are physicians, nurses, rehabilitative therapists and mental health personnel.  These visits are even more common in specialized homes, i.e. those licensed to serve the developmentally disabled and mentally ill.


See Rule Reference that follows:

R 400.14301 Resident admission criteria; resident assessment plan; emergency admission; resident care agreement; physician’s instructions; health care appraisal.

(2) A licensee shall not accept or retain a resident for care unless and until the licensee has completed a written assessment of the resident and determined that the resident is suitable pursuant to all of the following provisions:

(a) The amount of personal care, supervision, and protection that is required by the resident is available in the home.

(b) The kinds of services, skills, and physical accommodations that are required of the home to meet the resident’s needs are available in the home.

It should also be noted that while an individual rendering skilled therapy services must be licensed, i.e. physical therapists, occupational therapists, etc. the State of Michigan does not license outpatient rehabilitation clinics in and of themselves just as adult day programs do not require licensure.  This does not mean there are no published standards,as the Office of Services to the Aging has several related to personal care, staff training, medication administration and more.  Centers contracting with Medicaid waiver agents are required to comply.  Those focused as cognitive day programs that serve the delicate needs of those with traumatic brain injuries typically are self-policed and are deeply clinical in function.


3.  License Capacity

This is another easily impeachable argument.  In some cases, a state employed licensing consultant may even misapply the rule in investigating allegations of over-capacity.  There can also be confusion as some outsiders seek to define or differentiate between “occupant” and “resident”.

The reality is that a home should not be more than six, (6) persons over the licensed capacity in its occupancy at any time.  When this happens, the State of Michigan wants that capacity reduced to what the home is licensed for within thirty, (30) days. If the home is licensed for six, (6) and there are four, (4) residents and two, (2) others present for other reasons, i.e. day services, there is no capacity violation provided the licensing department was made aware of and approved the program revision.

If there is a violation related to capacity or notification, the home must come into compliance.  This does not remove either the legitimacy of the home nor the credibility of the services being rendered.  To say otherwise borders on irresponsible and could be interpreted as an effort to mislead those making a judgment about billings.

See Rule Reference that follows:

R 400.14105 Licensed capacity.

Rule 105. (1) The number of residents cared for in a home and the number of resident beds shall not be more than the capacity that is authorized by the license.

(2) Any occupant of a home, other than the licensee or persons who are related to the licensee, live-in staff or the live-in staff’s spouse and minor children, or a person related to a resident who is not in need of foster care, shall be considered a resident and be counted as a part of the licensed capacity.

(3) The total number of occupants shall not be more than 6 over the licensed capacity.

(4) If a person who is related to a resident lives in the home and subsequently requires foster care, the licensee shall have not more than 30 calendar days to return to the licensed capacity. Failure to do so may result in the department’s refusal to renew a license, revocation of the license, or the issuance of a provisional license.

4.  Billings and Personnel

Of course, a favorite word in these arguments is fraud.  Some may believe that if you throw it around enough, those sitting in judgment will automatically believe it.  How tragic that would be in a credible judicial system.

Generally, when you hear this it occurs when attorneys representing the insurer are referring to care activities such as group outings or various forms of recreational therapy.


For example, let’s presume that five, (5) residents who are catastrophically injured have legitimate physician orders for recreational therapy.  One of the therapeutic items the recreational therapist or supervising occupational therapist outlines is participation in music development, i.e. sound recognition, lyric association, etc.  Often this occurs in a rented music studio.

There is typically a per unit rate that is charged for this therapy, averaging $50.00 to $75.00.  Is double billing occurring because there is also a charge for the daily residential rate?  Absolutely not.  Regardless of activities that consume the resident and that are a part of this person’s daily care, recovery and rehabilitation, that bed and that room are still assigned to them.  Shall the home lease it for a few hours at a time because the resident is temporarily engaged in other activities associated with their care?  When you are hospitalized and during a day you receive physical therapy, dialysis, surgery or counseling while admitted as a patient, does the charge for the bed cease to apply?  Of course not!

How about billing a per unit rate for the recreational therapy and its staffing requirements applicable for everyone?  This too is justified. Even in group settings, the principles of person-centeredness apply.  A provider is not leading cattle to slaughter and only needs to be concerned with keeping the cattle in a straight line.  These are humans with varying needs and who have varying approaches to activity outside of the residence.  Their powers of trained observation are shared amongst all team members in order to properly document the recreational therapy and its results and to contribute to future programming.

Having multiple team members involved in the execution of such activities serves other purposes as well.  From the supervising occupational therapist who programs these events to direct care staff who share in supervising:

  1. Activity participation
  2. Behavioral management
  3. Incontinence and toileting assistance
  4. Wandering
  5. Injury potential, i.e. fall risks

Each serves a purpose and their focus on each therapy recipient justifies individual billing.  The delivery of services routinely has multiple legs that involve staffing, i.e. individual personality and behavioral management and residential care.  To label the combined execution of these as fraud is a clever means (depending upon how you define clever) to convince the unlearned that something nefarious is going on when in fact, each element has a place and contributes to the recovery and well-being of the person being served.

Reference:          Recreational therapy, also known as therapeutic recreation, is a systematic process that utilizes recreation and other activity-based interventions to address the assessed needs of individuals with illnesses and/or disabling conditions, as a means to psychological and physical health, recovery and well-being.

In conclusion:

While no trade article can cover everything that personal injury protection litigation involves, hopefully this one stirs the intellectual juices of those charged with defending the very necessary care a catastrophically injured person needs and deserves.


Direct Care Training & Resource Center, Inc.


Mailing:               36500 Ford Rd. #367 · Westland, MI 48185

Phone:                  866.982.4449



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Direct Care Training & Resource Center, Inc. is a research, analysis, project management and training firm with a strict focus on the needs of providers of long-term care and those they serve.  Offices in Georgia, Florida, Michigan and Pennsylvania.

Our writings do not purport to give legal advice nor recommend strategy; however, we do provide background on and analysis of the most common arguments affecting long-term care and address how when they are used in a misleading way, everyone loses either financially or in credibility. 

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